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Advantage and Disadvantage of Strategic Alliance

Ask @ David Ananth is a special column made available to iTimes.my readers where questions and opinion sharing will be answered by one of the prominent Business Growth Consultant, Mr David Ananth. He will answer questions asked by the readers through ask@DavidAnanth.com. Readers can also share articles and contents in this column based on various topics. The best piece will be published.

Referring to question on 29/09/2014 – Naveen, Seri Kembangan

To secure a strategic alliance, define what type of partner you are seeking, along with the ideal characteristics of a partner. Clearly identify what strengths you could offer the other party and why the potential partner would want to forge a relationship with you. Develop a list of potential alliance candidates. If possible, contact alliance partners through someone you both know. If that isn’t feasible, send out a direct letter outlining your interest and asking for an opportunity to explore a relationship. Have an exploratory meeting and, if there is an interest, develop a letter of understanding outlining how both partners will work together and how money will be allocated.

Have your attorney prepare a formal agreement for both of you to sign.

Strategic alliances permit a company to pursue an opportunity more quickly, leveraging the resources and knowledge of the other party. Fewer resources are required than if a company pursued an opportunity on its own. An alliance can provide easier access to new opportunities and a lower barrier to entry.

Implementing and managing a strategic alliance may be difficult because each alliance partner has a different way of operating. Mistrust could occur, particularly when competitive or proprietary information is involved. The alliance partners could become more dependent on each other, making it difficult to operate again as separate entities if required.

A successful alliance builds on the strengths of each party. Do not quickly relegate the details of a relationship to an attorney without your involvement. Successful strategic alliances are built on establishing and nurturing relationships. This is particularly important during the early stages.

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