Strategic Alliances – Bridging the Gap!

You may have read in the news recently that Globe Careers had formed a strategic alliance with Eluta.ca, a job search engine, to create a new platform for employers and job-seekers.  The new service combines The Globe and Mail’s audience and GlobeandMail.com with Eluta’s search capabilities, providing employers and job-seekers with online recruitment tools.

And, did you know that Nike, the athletic, leisure shoe and apparel company, does not manufacture shoes, but has long relied on “leveraging other firms’ resources” through strategic alliances?

Strategic alliances are not only for large corporations.  In the right circumstances, they can also work well for small businesses, particularly if you are looking to increase and grow your business.

A Strategic Alliance “is a collaboration in which two or more companies jointly invest in an activity, sharing in the risks and potential returns but remaining independent economic agents.” (The Boston Consulting Group).

A strategic alliance should never be taken lightly or for granted.   You need to make sure that the parties involved have common goals.  This is vital to the success of any alliance.

When an alliance is formed it can be through a verbal or written agreement.  In today’s society, it usually involves a written document that could be legally binding.  There are generally two or more parties  made up of like minded business people.  The alliance relationship needs to be taken very seriously by both parties.  Strategies need to be defined up front so that each party can understand how the alliance will work and what the objectives are going to be.  Synergy is the key because it determines how well the parties will work together.  When you form a business-to-business alliance, you do not become a single  entity, rather you continue to remain separate and independent.

An alliance can become an essential driver to your business growth.

An advantage of a strategic alliance is that you are not alone and you gain support that you otherwise would not have.  Additionally, a strategic alliance:

  • Is affordable
  • Increases marketability
  • Increase competitiveness
  • Reduces cost
  • Reduces time (many can share the workload)
  • Can reduce risk
  • Brings organizations together
  • Increases knowledge and resources
  • Improves quality
  • Helps you be competitive
  • Offers greater opportunities

The advantages of sharing resources and knowledge, along with high returns and shared expenses, make good business sense. However, there can be enormous risks involved if the alliance fails.

One of the goals should be to minimize risk and maximize your profit.   That is why the process needs to be well planned.   You need clear guidelines along with step by step accountability.  Business Development Bank of Canada’s article, “Know your strategic alliance options suggests a series of questions designed to help you assess the risk.

Strategic Alliances are becoming more and more common. This type of relationship can be a formed between companies, not–for-profit, cooperatives, organizations, suppliers and even competitors.

An alliance can help you to succeed in today’s economy.  Just make sure that if you enter into any type of arrangement, you are totally aware of the pros and cons.  Take a look at the Ministry of Economic Development and Trade’s Growth Builders Report chapter on Alliances (page 70) for a useful table that outlines advantages and disadvantages of alliances.

If you find that the strategic alliance you formed is not working as planned then quickly dissolve it if possible and move on.

At Halton Region’s Small Business Centre, we are here to help you with all your business questions.  One of the goals of the Centre is to empower small and medium-sized enterprises and give you the tools to achieve success. For more information about any of Halton Region’s Small Business Centre resources and services, and how we can help direct you to the right resources, contact us at 1-866-4HALTON (42-5866), www.haltonsmallbusiness.ca, smallbusinesss@halton.ca or visit us at 1151 Bronte Road, Oakville. Don’t forget to follow us on Twitter @haltonecdev and Facebook at www.facebook.com/HaltonSBEC.

Have you ever formed a strategic alliance? Was it a success? Tell us about it! At the end of the month we’ll submit all entries into a draw for a chance to win a voucher for one of our upcoming seminars (value $25).

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