Strategic Alliances – They Didn’t Work For Hone and DotCom But They Could For You

October 7, 2014

One way to grow your business is with a strategic alliance.  A strategic alliance in business is a formal relationship between two or more businesses that enables each to achieve certain strategic objectives neither would be able to achieve on their own.   It is a mutually beneficial relationship to both parties and a growth strategy very popular amongst small businesses, managed well it’s win win.

Strategic Alliances - They Didn't Work For Hone and DotCom But They Could For You

Who you choose as your strategic partner is key. Do your homework first!

Benefits in forming an alliance:

  • The ability to offer your customers a larger variety of products or services.
  • Allows you to spend less time developing more products or services.
  • Shared advertising and marketing costs.
  • An increased offering to your existing customers, thus increasing your sales and profits.
  • A point of difference over your competitors.
  • A wider audience as you gain exposure to your alliance partner’s clientele.

Examples of a strategic alliance

  • A life coach may form alliances with a personal trainer and a nutritionist.
  • A real estate agent may form an alliance with a home image consultant.
  • A distribution company may form an alliance with an importer.
  • A social media marketer may form alliances with a graphic designer and copywriter.

On a bigger scale, a strategic alliance can help a firm gain a competitive advantage. PepsiCo formed a joint venture with the Thomas J. Lipton Co. to market ready-to-drink teas throughout the United States. Lipton contributed brand recognition in teas and manufacturing expertise. PepsiCo, as the world’s second-largest soft-drink manufacturer, shared its extensive distribution network.

Selecting alliance partners

Of course there are risks.  In order to minimise these  risks follow the checklist below in selecting and formalising your alliance:

  • Be proactive.  Don’t wait for the phone to ring with a proposed alliance, you’ll be waiting a while.  You need to drive this.
  • Start with compiling a list of possible companies you would like to align your business with.  How do these companies add value to your offering and solve a problem your customers have.
  • Do your homework.  Talk to the possible partners, their customers, their staff.  Research the companies thoroughly and use social media listening tools to see what their online reputation is like.
  • Discuss with your proposed partner the objectives and benefits you expect to achieve.  Do you both follow the same agenda, have the same agenda and ideas on how to reach these objectives.
  • Write down what each side will do or contribute in order to make the alliance a successful one.  Do the contributions seem fair and proportionate to the benefits of each partner?
  • Really important: make sure you like the people you’re dealing with and share their values.
  • What do you want to achieve? What is the desired outcome? Look for an alliance that will help you achieve this.
  • Are you prepared for worse case scenario?  It’s a good idea to have an exit clause in case the alliance does not work out as expected.
  • Test the waters before you jump in.  Start with an alliance on a project, promo or marketing campaign before you commit.
  • Make sure your branding is protected and enhanced by the alliance.
  • Protect your business. Clarify who will end up owning what in the way of intellectual property through the alliance. Should your strategic partner have full access to your intellectual property, or are there limitations?

Credit: I researched this article on the ANZ BizHub site.  Here’s the link for more information on strategic alliances.

Image Credit: Maori Television

Soooo, who could you align your business with and how would this help you achieve your goals?

 

 

Categories and tags

Categories:
Do you like what you see? Hire us!