Strategic Partnerships and Alliances are essential tools in your business’ growth arsenal. But getting them right requires deliberate efforts involving strategic decisions, partner evaluation, and longer-term alliance management.
Developing and managing strategic alliances can be challenging, but can also be rewarding. Successfully leveraging these relationships depends on understanding the five criteria that differentiate strategic from conventional alliances:
Complementary expertise is the ability to use two or more independent skills that when combined, create more value than either skill alone. For example, you could be very good at User Experience Design (UX) and at User Interface Design (UI), but you would need both to build anything meaningfully complex.
In business, complementary skills are critical for teams that achieve their goals. For example, a team that wants to build a new software system needs both a front-end developer and a back-end engineer.
Companies that want to take advantage of complementary expertise often engage in strategic partnerships and alliances with other companies. These alliances can help businesses better understand their target markets, expand their brand awareness, and produce higher quality products and services.
Access to New Markets
Access to new markets can be a major driver of business growth. Companies that want to grow and compete must expand into new markets.
This can be done in a number of ways. One way is through strategic partnerships and alliances.
These partnerships can be a great way to access new markets. For example, Uber and Spotify have teamed up to create a personalized music experience for customers who ride with Uber.
However, this type of business partnership is only possible if the companies are willing to overcome some risks.
These risks include political risk, a potential for government interference that could impact business operations and a business’s ability to operate in the new market. It is also important to consider the cost of entering a new market.
Strategic Partnerships and Alliances are formed when two or more businesses come together to form a relationship that is beneficial for both parties. They help companies share knowledge, pool resources and add profit to their bottom line.
One way that a business can offer Shared Resources is to build an asset, like a museum or amusement park, that they charge users for the use of. This allows them to serve many people and create an asset that will last a long time.
However, shared resources are a challenge to manage. They require careful monitoring of usage levels to ensure that the resource is being used appropriately.
The key is to make sure that the resource is being used at a level that will allow the resource to be maintained and improved over time. If the resource is overcrowded, the quality of the experience will be diminished and customers may become frustrated. This is why it is important to carefully monitor usage levels and to offer a service that is priced appropriately to cover the cost of up-front maintenance and ongoing improvements.
As a strategy for acquiring new capabilities and improving your business performance, strategic partnerships and alliances can be a useful tool. They can include minority equity investments, joint ventures or non-traditional contracts.
In addition, they can also be used to help you improve your resilience in the event of a disaster or crisis. For example, you can work together on emergency preparedness strategies, or share a risk of supply chain disruption.
Once a shared risk has been identified, it’s important to discuss it with your potential partners and establish effective governance to manage it. Getting buy-in early will help you to build the foundations of your partnership.
Despite the positive outcomes that can be achieved, many strategic partnerships and alliances fail due to a number of common issues. These include: