This paper tries to synthesize the scope and role of marketing functions in the determination of effectiveness of strategic alliances. Several propositions from a marketing viewpoint concerning the analysis of alliance process are formulated.
On the basis of the propositions, a framework is developed for future research. Keywords strategic alliance; strategic management; types of strategic alliance. Full Text: PDF. Every business will experience constant flux and change and initiatives that have once been prosperous may not be right two to three years down the road. To ensure that a business alliance continues to mutually benefit both parties, it is important to know when to reassess the alliance and change the foundation. Both businesses must understand that change is inevitable and must be able to work together to reach new agreements over time.
Sometimes the need to restructure will be clear, while at other times it will take the initiative of one or both sides of the partnership to actively seek whether or not the partnership is still working. It is a good idea to reassess a business alliance at regular intervals. Strategic business alliances could be the next step in the growth and marketing initiatives for your franchise as they offer a wealth of benefits including increased brand awareness and the ability to reach new markets and offer supplementary services to your clients, but there is a certain level of risk involved and partnerships should be approached carefully.
Business alliances should be approached just as one would approach a friendship. Both need constant nurturing to grow and prosper. There must be consistent and quality interaction as well as thorough, clear communication to obtain the best results. In the end, strategic alliances offer tremendous potential benefits to both parties. John F. Buckles is co-founder and president, as well as a member of the Board of Directors of Caring Transitions.
He can be reached at JBuckles caringtransitions. By John F. Buckles To prosper and grow as a franchise, more often than not, there will be a point when it will be necessary to find creative new ways to expand and develop into new markets. Benefits of Strategic Alliances Access to Supplementary Services One of the most attractive benefits of an alliance with another business is the opportunity to offer supplementary services to clients that otherwise would not be available.
Opportunity to Reach New Markets Entering a strategic alliance will automatically increase awareness of a brand among an entirely new market that the franchise business has not had the resources to reach beforehand. Once an organization has defined its vision and strategy and has identified the assets and capabilities required to win in the markets in which it chooses to play, it is faced with the question of how best to obtain those assets and capabilities: build, buy, or partner. When industry dynamics are well understood, and an asset or capability is central to a well-defined strategy, internal organic development or acquisition inorganic may provide the optimal growth path.
Forming alliances can create strategic optionality by allowing organizations to learn rapidly about a new capability or a new market space without devoting an outsize investment of time or capital.
In industries where competitive dynamics and sources of advantage are changing quickly, or remain unclear, business leaders should be prepared to work in an unstable environment, to function well amid uncertainty. One specific benefit of a strategic alliance is the potential for accelerated speed-to-market. This dovetails with the concept of minimum viable transformation MVT , which aims to reduce initial investment and time-to-market through incremental product and service development.
The choice between the big bang and the MVT paths is analogous to the buy-versus-partner decision. Buying represents a more traditional inorganic growth path that requires time-intensive deal planning and integration, along with greater capital commitment. Partnering represents a more agile approach that enables companies to quickly access external capabilities, test growth strategies, and refine their investment priorities iteratively. In addition to creating strategic optionality and accelerating the time to value capture, alliances can provide the added advantage of reducing capital requirements and thereby reduce risk.
As much as strategic alliances are an important tool to drive growth and deliver needed capabilities, they come with their own challenges and risks. Many organizations either lack an understanding of the leading practices that can foster the success of a strategic alliance or do not have the necessary management structures in place to implement them.
To successfully execute alliances and realize their potential value, organizations need a robust alliance management capability that provides for appropriate strategic alignment, due diligence, and operational excellence. A strong alliance management capability is characterized by the ability to formulate a clear vision, define growth pathways, and then develop a partnership with rigorous diligence and effective negotiation.
Consider the following framework, which identifies specific phases in partnership creation and execution as well as specific activities within each phase:. The initial phase is when the organization should define its overarching strategic objectives and determine if external partnerships can enable that strategy. This requires close alignment among corporate strategy, business development, and functional leadership to assess desired capabilities and examine strategic decision factors. The most common potential pitfall in the initial phase is misalignment between business strategy and alliance strategy.
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