Posted by: rongeri | October 12, 2009

Strategic Alliances

THE STRATEGIC  ALLIANCE—A TOOL FOR BUSINESS GROWTH

By

Geraldine Reed Brown, Esq., M.B.A. and Ronald W. Brown, Esq., M.B.A

 

A strategic business alliance is a mutually beneficial formal relationship between two or more parties to meet identified objectives or needs. A strategic business alliance may permit a business to grow, to build necessary critical mass, to share risks and resources, to develop new skills and competencies, to reach new markets and to satisfy customer requirements. Any business should consider using a strategic business alliance as tool for growth. It is one of the fastest growing trends for business today.

Strategic business alliances are enhancing the power of businesses to collaborate and compete both locally and globally. That enhancement is recognized as a “connect and collaborative value creation model”, one of the most potent driving forces in what Thomas Friedman, in his best selling book[1] calls globalization 3.0. Echoing that observation, according to Booz-Allen & Hamilton, strategic business alliances are sweeping through nearly every industry and becoming an essential driver for superior growth.

The following is an illustration of a very basic business strategic alliance.

RBCG enterprises received a copy of an RFP to which it wanted to respond. RBCG had some of the skills required to meet the deliverables required by the RFP but not all of the skills.  The entrepreneurs in RBCG had a choice and had to reach the correct business decision to either pass up the RFP or figure out a way to pursue it.

What did RBCG do? RBCG went after the RFP by entering into a strategic business alliance with two other small businesses. RBCG’s entrepreneurs went “outside the box” in their thinking about how to get the skills set their business lacked but needed in order to pursue the RFP opportunity. RBCG found strategic allies that had the capabilities that they lacked. These prospective collaborators not only had complimentary skill sets, they had complimentary rather than conflicting ethics and operating styles.

RBCG was the prime contractor and its collaborating firms, GW Enterprises and KIT & Associates, were the subcontractors, under a strategic  alliance Memorandum of Agreement between these three businesses. RBCG won the RFP and in the process each of their strategic  alliance collaborating firms ended up expanding their capabilities.

 A strategic alliance can be a vehicle for maximizing success and minimizing failure. In that sense, a strategic business alliance is simply a business tool, and like any tool it has to be properly used and maintained to be effective.

Increasing your understanding of how and when to use a strategic business alliance as a tool can assist you in progressing on your path to business success. In RBCG’s case, it identified  the three components necessary to go after the RFP project: a necessary attitude (open to the idea of collaboration to achieve the goal that it could not be achieved by itself), action oriented activity (focused attention on identifying, and involving strategic partners with the appropriate skills set to go after the contract), and complementary  ethics and operating styles. This winning combination was a platform for realization of a basic bottom line in business: a percentage of something is better than a monopoly of nothing.

We urge you to consider a strategic business alliance to move to the next level in business. Get in the game of business and win, locally and globally, through a strategic business alliance.

 


[1]           The World is Flat: A Brief History of the 21st Century


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