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Strategic Alliances 

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Strategic Alliances

By Catherine Kitcho

What are strategic alliances and what is the benefit?

Anyone who is in business or is in the process of starting a business.

Strategic alliances are partnerships between business entities that are created for one of many business reasons and are documented by means of a written contract between the parties.

Companies seek strategic alliances to meet many different objectives. They may partner to:
  • distribute products to customers
  • develop products or conduct research
  • obtain value-added services
  • create new markets
  • get to market faster
  • enter new geographies
  • obtain additional technology components
  • enhance each other's products
  • bundle products together
  • participate in joint promotional campaigns
  • invest in new technologies
  • develop standards

The process for identifying strategic partner candidates is very much like doing competitive analysis. First you need to determine the criteria you are looking for in a partner, and then you need to do your homework in terms of candidates, whether they meet your criteria, and also "what's in it for them?" Before you contact a partner candidate, you need to know as much as possible about their business operations, their strengths and weaknesses, and what some of their needs might be.

In contacting a candidate, try to find the person in that organization who is your counterpart. It's best not to start at the top of the organization, but identify someone who is one or two levels below the person who would have to approve the alliance. That way, you will have an internal champion in the partner organization who can move the discussions and negotiations along.

Strategic alliances have become very commonplace in the 1990s, especially in fast-moving high tech industries. There have been many successes as well as a few failures, but the important thing to keep in mind when forming an alliance is to have an exit strategy. When the business relationship is no longer effective and ceases to serve the needs of the partners, it's time to end it.

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