Strategic alliance vs competition

March 15, 2019 11:23

A strategic alliance is an arrangement between two companies to gain additional business by combining their resources. Entrepreneurship and the business sphere is a very competitive industry thus one always needs to find innovative ways to enhance their brand identity. Here are several ways that you can collaborate with another person or company to bring added value and expertise to your small business.

Partner with a key customer

Always explore opportunities for a strategic alliance when selling a significant amount of your product to one company. Establishing a long-term alliance will mitigate the risk of losing your biggest customer and market.

Partner with a brand leader

Association with a well-established brand will bring instant credibility to your business. Advertising and marketing for your company will leverage off this partnership.

Cross-sector partnerships

In business, you must always strive against the norm. Consider joining forces with non-profit organizations, this type of partnership offers extensive opportunities for financing advertising and distribution expenses. In this form of alliance, you would be creating value through business and social sector partnerships.

Partner with a former employee

Often many entrepreneurs generate business ideas based on previous work experience as an employee. There is always a partnership opportunity between you and your former employer that you can capitalize on in order to grow your newly established brand as well.

Partner with a competitor

Collaborating with your competitor over business ventures that are too large for you to handle. This way you can understand their capabilities and capacity, evaluate and use their unique strengths for your advantage.

Partner for Cross-marketing

When two distinct businesses pool their resources to collectively market to a target customer base. This will cut costs for the company and provide additional leverage for their products/services to generate greater marketing impact. Small business owners can benefit from co-operative arrangements with already established business entities. However, if the details of the partnership are not handled/processed correctly this could result in one partner's vision being extremely under-represented. Do you see the value in making partnerships?

Post By: SimplyBiz This article has been repurposed for the purpose of this blog original article can be sourced from Powerhomebiz.com

16 comments

Michela Gordon

This is a very interesting article as it really made me think about partnerships... We have often partnered with other agencies who offer different marketing services to ourselves and then were able to pick up a piece of business from an existing client (of either of our businesses) or even a new client but I've never thought to collaborate with a direct competitor or a key customer. If you've tried any of these collaborations please share your experiences with us - I'd love to hear how you did it and what worked and what didn't...

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Dionne Kerr

Michaela we have partnered extensively in the past 19 years since Siyakha started. In fact we developed a particular model to do this. We launched the Siyakha Accredited Partner Programme (SAPP) in 2003 because we need to in-source subject matter specialists or large numbers of resources to deliver large projects and we couldn't hire or justify employing people for project-specific needs. Through SAPP we engage with 130 professionals nationally at any time and they work with us to deliver projects. These individuals are essentially our competition but over the years they have referred business to us where they need a larger business behind them and we advertiseopportunities as they arise and our SAPP's partner with us in delivery. It has allowed our business to scale up or down as required which is vital for SMME's Of course as with any business partnership there needs to be an understanding of the roles there needs to be a contract between the parties and there needs to be rules of engagement so that everyone's expectations are met. Our partners are critical to our success

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Dionne Kerr

The notion of partnership needs to go beyond inter-business partnerships and extend to how South Africa operates. SA has an strategy for SMME growth it has created policy funding structures and significant national intent. Every small business wants to see opportunities for growth but struggle to access funding and find the processes laborious and very expensive. Business wants to include SMME's but have to implement stringent tender criteria and bidding and quality processes to align to global standards. The deisred results are lost in the quagmire of all of these requirements. Business and Government need to partner to facilitate access to opportunity for small businesses. The dti has recently launched a new supplier development partnershipfund specifically for this purpose. Partnership is vital for South African's economic growth.

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Michela Gordon

Thanks dionnekerr - this is very helpful :)

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Clint Murray

I recently read an article about partnering with competitors and found it fascinating. Here's the link - https://hbr.org/1989/01/collaborate-with-your-competitors-and-win

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Clint Murray

Thanks dionnekerr when you put it this way it really sounds easy but I've recently started my business and I'm feeling a bit lost in the paperwork... I've also heard that going to the DTI is not so easy - can you offer any suggestions on how to approach them??

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Michela Gordon

Another thought that popped into my head as I was reading the article is the idea of shared workspace. When we were looking for new offices last year we went to see a few of these and it was really interesting to see how businesses of any size and in any industry were quite happy to share workspaces. Thinking about it now this would make it easier to collaborate with other businesses because you're in each other's pots and pans all the time so you could potentially feed off each other's ideas clients etc etc.

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Dionne Kerr

As well as the obvious that many of us are intrinsically pack animals....working together is a great way of keeping your morale high and getting motivated (and competitive) about the people around you. So finding a shared workspace allows you to have the benefits of working with a team whilst building your business and being self-employed. Particularly on those days when you you are feeling low or despondent - when you arrive at the office to someone celebrating a win or a chasing a deal - the excitement is contagious and you get your mojo back.....

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Dionne Kerr

Clint the biggest advice I can give you is to use their website - it is very informative understand what you need to prepare or do before you go and see them because the wheels of government do move slowly - so each time you see them takes time - whereas if you are fully prepared and have over-supplied information that is detailed and complete - you will receive a warmer response and a faster response time. Also - take the time to build personal relationships - the first time you go and meet with someone get their name and try and continue to go back to them because otherwise you will become frustrated having to tell your story again and again.And lastly specifically if you are looking for funding work with a development organisation who manages funding applications on your behalf. There are many of us around so it is about finding someone that you feel will work on your behalf in understanding your business. Typically they will clean up your business plan and formalise your funding application - they match your business to the funders' investment philosophy and they take a percentage only when the application(s) is approved.

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Tanya Page

What's really interesting about the shared workspace model is that it really took off in tech and creative industries – the two industries where innovative people-driven solutions are the greatest source of capital and wars are faught over IP. So is sharing space a driver of innovation? We certainly need our ideas to be challenged ecspecially creatively. I need sounding-bpards to bounce ideas off to get my process started and then there is the overwhelming benefit of well-placed critique. But when does my idea become our idea? – What are the rules of engagement? While collaboration is essential for adding new vision and values into the mix there is an element of risk attached to allowing an individual or another company into your process.

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Michela Gordon

This whole idea of collaborating with competitors really got me thinking this afternoon soI did some research and came across some insights from Entrepreneur.com and I quote - 5 Reasons You Need to Work With Your Competitors 1. Mentors keep industries thriving. 2. That competitormight eventually acquire you. 3. Sharing information can be mutually beneficial. 4. It’s good for the industryasa whole. 5. Teachingaccomplishesmore than withholding does. What do you think about these 5 reasons? Do you agree or disagree?

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David Bate

Everyone loves partnerships. It is the new mantra for business in the 21st century. Indeed someone could say both our investment banking business and our wine businesses are built around a series of long term and short term partnerhsips. But I am not sure these are partnerships. We have RELATIONSHIPS. We have relationships with customerrs. We have relationships with suppliers. We have relationships with collaborators. We work together with all these people to identify win and execute business. There's nothing new about that. It has been done for hundreds of years. Sure modern technology has made it easier to find work with and communicate with a lot more customers suppliers and collaborators in ways that we could not do before. But what makes the difference between RELATIONSHIPS and PARTNERSHIPS? Is a partner someone you share sensitive information with? Most business owners do that with third parties on a transactional basis all the time with proper safeguards. Is a partner someone you share office space with? Lots of businesses do that all the time - but I am not sure that is a partnership. Spending money together on a marketing campaign? That is not a partnership - that is collaboration on a specific project where you are sharing costs and maybe sharing an upside but not revenues. To me a partnership means that you are 'in the same row boat together' and that you share the risk and rewards of revenues in any particular project. It;s kind of like the difference between dating and marriage. Datng is a relationship . Marraige is a partnrship. For us we are very selective about our partnerships. There are reputational risks cultural risks performance risks and all sorts of other perils to partnering with peoples or competitors or others who you do not know well. So I would say that there is no harm to have LOTS OF RELATIIONSHIPS (in fact that is pretty much the definition of 'networking' to some extent) but try and limit yourself to a handful of STRATEGIC PARTNERSHIPS where you align yourself(make yourself vulnerable financially in terms of risk and revenues)on either a short term basis (like a bid on a contract) or long term basis (like entering into a joint venture).

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Dionne Kerr

Very true David. I love your analogy of a marriage.Real partnerships needs to be entered into with an ANC agreement - one never intends of the partnership dissolving but if it does it is imporant to protect your business your clients your employees and your market share. As much as we work extensively with partnerships - we have also had bad experiences. One of the largest consulting firms in the world used to outsource much of their South African work to us in a particular discipline which worked beautifully for 4 years or so until they decided to headhunt two of our teams from our business. This left us enormously exposed as we had lost not only our teams but our methodologies and processes were adopted as theirs and we lostthe revenue from this relationship. A big hurt for our business but also a big learning (as is the case with a small business - the school fees are expensive). We still partner now but with tighter protection stronger legal contracts and greater emphasis on protecting our identify and our IP.

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Sarah Murray

A strategic alliance can strengthen both companies against outsiders even as it weakens one partner vis-à-vis the other. During my research into this it seemsalliances between Asian companies and Western rivals seem to work against the Western partner. Cooperation becomes a low-cost route for new competitors to gain technology and market access. Yet the case for collaboration is stronger than ever. It takes so much money to develop new products and to penetrate new markets that few companies can go it alone in every situation. Alliances can provide shortcuts forcompanies racing to improve their production efficiency and quality control.

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Sarah Murray

I think successful companies view each alliance as a window on their partners’ broad capabilities. They use the alliance to build skills in areas outside the formal agreement and systematically diffuse new knowledge throughout their organizations.

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Nhlalala Ngobeni

Im new in security services and theres just a lot of competition out there so how do i challenge them and ask to partner with them when i do not have enough capital?

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