Basic Categories of Alliances:
According to Kuglin and Hook, there are five basic alliance categories:
- Solution-specific alliance
- Sales alliance
- Investment alliance
- Geographic-specific alliance
- Joint venture alliance
In most cases, the partnerships between companies involve a combination of two or in some cases, more than two of the stated categories. A solution-specific alliance becomes operative after two companies make a joint agreement for developing and selling a specific marketplace solution. The sales alliance is an agreement between two companies, to sell complementary services or products jointly.
An investment alliance takes place when companies come to an agreement to combine their funds for mutual investment. The geographic specific partnership takes place when there is a joint agreement between two companies, to jointly brand the products or jointly market the services in a particular region geographically. A joint venture partnership is developed when companies decide to take on the economic activities together.
How to Make Alliances Work?
According to the available statistics, about 50% of all alliances created in the United States fail due to a number of reasons. Listed below are some of the personal qualities that a business owner and alliance partner should ideally possess:
Vision: It is a bad idea to develop the alliance just because it seems to be the right thing to do or in line with existing trends. It is essential to develop a mutually beneficial vision, along with the ability to look at the future prospects and not become dependent on your alliance partner. However, if you become too independent, you may no longer need an alliance partner. You need to develop the vision to work towards becoming interdependent.
Curiosity: You should keep looking for opportunities to raise your profits and improve your capabilities. It pays to be open to new and unexpected opportunities and to be curious about alliance possibilities.
Communication: A lack of communication can lead to the failure of an alliance. This is important and every business owner needs to focus on transparency and effective communication.
Organize: Organizing the alliance structure and procedures can have a huge impact on the longevity and ultimate implementation of the alliance. If the adopted alliance structure is complex, you should keep all the details and documents organized. This helps to develop a long-lasting and profitable alliance.
Leadership: You should develop leadership that highlights your willingness to focus on getting things done, rather than being obsessed about being right all the time. This will affect and determine the success of your alliance. This attitude should be present at the very beginning of starting the business.
Compassion: Compassion and tolerance are characteristics you should strive to maintain in an alliance. They help you to handle difficult situations and maintain your sanity.
Contracts: Written agreements are vital to the success of an alliance, no matter how loyal and trusting each alliance partner is. Your expectations of one another and the promises you make initially should be documented and available for viewing whenever required.
Alliance relationships can be extremely profitable for all the parties involved. If you are confident and aware of all the steps involved, you will be well on your way.