Strategic Allies

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We have recognized the idea of Strategic Alliances developed from an option to a necessity in many markets and industries. Variation in markets and requirements leads to an increasing use of Strategic Alliances. It is of essential importance to integrate Strategic Alliance management into the overall corporate strategy to advance products and services, enter new markets and leverage technology and Research&Development.

Nowadays, we think that global companies have many alliances on inland markets as well as global partnerships,

sometimes even with competitors, which leads to challenges such as keeping up competition or protecting own interests while managing the Alliance.

So our management of an alliance focuses on leveraging the differences to create value for the customer, dealing with internal challenges, managing daily competition of the alliance with competitors and Risk Management which has become a company-wide concern.
Perfect Access practices many types of strategic alliances with its partners, and have practiced the experience to manage the strategic allying process between our clients:

  • Horizontal strategic alliances which are formed by firms that are active in the same business area. That means that the partners in the alliance used to be competitors and work together in order to improve their position in the market and improve market power compared to other competitors. Research &Development collaborations of enterprises in high-tech markets are typical Horizontal Alliances.
  • Vertical strategic alliances which describe the collaboration between a company and it´s upstream and downstream partners in the Supply Chain, that means a partnership between a company and it´s suppliers and distributors. Vertical Alliances aim at intensifying and improving these relationships and to enlarge the company´s network to be able to offer lower prices. Especially suppliers get involved in product design and distribution decisions. An example would be the close relation between car manufacturers and their suppliers.
  • Intersectional alliances are partnerships where the involved firms are neither connected by a vertical chain, nor work in the same business area, which means that they normally would not get in touch with each other and have totally different markets and know-how.
  • Joint ventures where we decide to form a new company. This new company is then a separate legal entity. The forming companies invest equity and resources in general, like know-how. These new firms can be formed for a finite time, like for a certain project or for a lasting long-term business relationship, while control, revenues and risks are shared according to their capital contribution.
  • Equity alliances which are formed when one company acquires equity stake of another company and vice versa. These shareholdings make the company stakeholders and shareholders of each other. The acquired share of a company is a minor equity share, so that decision power remains at the respective companies. This is also called cross-shareholding and leads to complex network structures, especially when several companies are involved. Companies which are connected this way share profits and common goals, which leads to the fact that the will to competition between these firms is reduced. In addition this makes take-overs by other companies more difficult.
  • Non-equity strategic alliances which cover a wide field of possible cooperation between companies. This can range from close relations between customer and supplier, to outsourcing of certain corporate tasks or licensing, to vast networks in R&D. This cooperation can either be an informal alliance which is not contractually designated, which appears mostly among smaller enterprises, or the alliance can be set by a contract.
  • Shared risk: The partnerships allow the involved companies to offset their market exposure. Strategic Alliances probably work best if the companies´ portfolio complement each other, but do not directly compete.
  • Shared knowledge: Sharing skills (distribution, marketing, management), brands, market knowledge, technical know-how and assets leads to synergistic effects, which result in pool of resources which is more valuable than the separated single resources in the particular company.
  • Opportunities for growth: Using the partner´s distribution networks in combination with taking advantage of a good brand image can help a company to grow faster than it would on it´s own. The organic growth of a company might often not be sufficient enough to satisfy the strategic requirements of a company, that means that a firm often cannot grow and extend itself fast enough without expertise and support from partners.
  • Speed to market: Speed to market is an essential success factor in nowadays competitive markets and the right partner can help to distinctly improve this.
  • Complexity: As complexity increases, it is more and more difficult to manage all requirements and challenges a company has to face, so pooling of expertise and knowledge can help to best serve customers.
  • Costs: Partnerships can help to lower costs, especially in non-profit areas like Research & Development.
  • Access to resources: Partners in a Strategic Alliance can help each other by giving access to resources, (personnel, finances, technology) which enable the partner to produce its products in a higher quality or more cost efficient way.
  • Access to target markets: Sometimes, collaboration with a local partner is the only way to enter a specific market. Especially developing countries want to avoid that their resources are exploited, which makes it hard for foreign companies to enter these markets alone.
  • Economies of Scale: When companies pool their resources and enable each other to access manufacturing capabilities, economies of scale can be achieved. Cooperating with appropriate strategies also allows smaller enterprises to work together and to compete against large competitors.