How to Create a Strategic Alliance that Actually Works
If two heads think more than one, two companies together undertake better projects than one. A strategic alliance can make your brand increase its scope and profits. In addition, you can reach more people and make friends, commercially speaking.
Of course, alliances are not something you should take lightly. We can’t choose to work with our friends just because we like them.
You must consider some essential elements to determine whether the strategic alliance will be viable and convenient. Below, we will tell you what a strategic partnership is, how to make it, and what it takes to succeed with your next joint project.
1. What Is a Strategic Alliance?
It is a project that arises when companies —that do not compete directly— join.
These companies do not have to be from the same industry or sell complementary services or products (such as fries + ketchup). What matters is that they have the same target audience.
You may ask yourself then, what other products or services do my customers like?
These strategic business collaborations generate increased visibility and attract potential customers because they also reach the partner’s market. However, they only work when they are win-win relationships. Besides, both companies need to deliver the quality necessary to ensure success.
No matter how good a company is, it can only carry another firm whose products or services attract the audience. Again, both companies must bring the same level of performance and commitment. After all, it takes two to tango.
It pays to know that strategic alliances are not mere transactional relationships. Both companies desire to develop, benefit from, and meet similar goals with their alliance. Hence, there must be a balance between powers, aligned interests, and complementary skills.
Besides, the joint projects must be carried out conscientiously and patiently.
The common objectives and the benefits must be apparent from the beginning, as well as the times, commitments, limits, powers, and social contributions. Its structure must be well-defined, and everyone must agree to its components.
2. Why Should You Consider Making a Strategic Alliance?
- Customer Loyalty: the actions generated by the alliance strengthen customer retention and increase attraction by both companies.
- Cost: as a collaborative project, it can generate some costs. Yet, these projects exist to increase sales and, therefore, short or long-term income.
- Competitiveness: these alliances increase the competitiveness and the quality of the service or product offered, thus strengthening the clients’ satisfaction.
- Innovation: creates an environment of constant improvement and alliances with other types of companies, which leads to other products or projects that increase the brand’s added value.
3. What Would Help You Nail a Strategic Alliance?
Be transparent about why you want to partner
First, define how the allies can generate mutual value for their companies. Knowing this facilitates the writing of the proposal and the approach to the possible partner.
Identify common goals
The needs may differ substantially between the companies involved, but they must share goals and values: similar objectives, common markets, or the search for the same social impacts. One way or another, they must have the same focus.
Define what will be the winning mix
Every company should have a product or service that combines well with the allied brand’s commodities. Although they do not have to be complementary services, designing a mix that makes sense and makes them attractive is the way to go.
Keep good communication
It must be constant before and during the alliance’s execution. Both companies must be transparent with their information and processes, among other relevant data. If honesty, clarity, and commitment are poor, it will be a time waste.
4. How Do You Make a Solid Strategic Alliance?
- Start by defining the strategic needs supplied by the alliance. Both companies must be transparent about them to choose the correct partners. It is about joining forces with a view of the same market instead of simply offering shared services.
- Identify which companies are potential allies. They must be non-competitor companies that coincide with the market, needs, or shared values.
- Approach the desired ally and make a value proposition. The idea is to investigate the company and then look for the right person from said company, the one who has the exact needs you want to supply.
- Determine common expectations, as well as the balance of benefits and commitments. This one is a critical point. No one should feel disadvantaged or misunderstood to prevent the alliance from dying halfway.
- Alliances must be nurtured constantly. To be worthwhile, they need to last a long time. Hence, the periodic reviews are vital; they will help monitor achievements, study future tasks, and review the fulfillment of rights and duties.
5. What Should You Include in a Partnership Agreement?
This part is substantial for the upcoming success. If possible, seek professional help. If you can’t do it, check out the key points that should go into a strategic alliance contract.
- What is the alliance about?
- Who is involved in the alliance?
- Main clauses
- What is it done for?
- Where will it take place?
- Who will be the managers (of both companies)?
- What will each ally contribute?
- How long will it last?
- Applicable laws to the strategic alliance.
- Signature of commitments.
Conclusion
So, strategic alliances are a good idea if you want to take your brand to another level and generate good trade relationships. They are not hard to do, but they require care and responsibility.
Define what you need, search for one good partner, make them a proposal, and when you have a green light, determine the best way to do it —one in which both parties are happy—.
And remember to give it love and care so it grows healthy and strong.
The better the planning, the better the execution and, therefore, the results. Apart from what we saw above, you must trust your intuition and do some thorough investigative work. Decide well who to do it with, and keep sight of the ultimate goal.
We hope this information helps you make good decisions and alliances with your dream partner.
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See you in the next chapter of El Trece’s blog.
