Laying ground for a stable business strategic alliance

Today businesses are appreciating the need for forming strategic alliances for a number of reasons.

In a highly competitive market, it makes more sense for businesses to unite in a mutually benefiting synergy.

Most of the times where one business is deficient in one resource, another business is endowed with that same resource.

It could be that your business has the clientele base but lacks technological knowhow or that you have the technological capacity but no adequate clientele base.

Supposing you own a parcel of land in a prime area and would wish to put up residential house but do not have the capital to do this.

Forming an alliance with an established developer would solve your problem.

The developer would inject equity capital while your contribution towards the venture would be in the form of land.

Rather than spend a lot of time and capital re-inventing the wheel, it is faster and cheaper to form a strategic alliance with another firm.

A strategic alliance is a formal relationship between two or more firms formed with the objective of pursuing a set of agreed goals while maintaining independence.

Strategic alliances are difficult to define legally as there are many types.

An alliance can be formed by a series of contracts whereby no separate entity is formed or it can involve the establishment of a new entity as in the case of a joint venture company.

Once it is decided that a strategic alliance should be formed, the first thing one should do is look for potential partners.

Start by determining what you need for the project but you do not have and then determine who has what you need.

Once you identify your partner, it is important to ensure that you also have something to bring to the table so as to avoid loss of control.

It is better to have many potential partners to ensure your bargaining power is not lost.