A strategic alliance is a long term formal relationship between two or more parties that is mutually beneficial. It allows the parties to work together towards a common set of goals whilst remaining independent organizations. The two parties agree to cooperate, bringing complimentary strengths and capabilities to the alliance.
A strategic alliance brings a number of benefits to the parties:
o Increases available funds for research and development whilst lowering risk
o Decrease the time to market of products, i.e. get your products to the market quicker
o Brings together complementary skill sets without the cost of developing them
o Access to skills and knowledge that an individual party does not have
o The ability to quickly expand into different markets
o Build credibility
o Build brand awareness
o Provide more value to your customers
Strategic alliances can also be known as joint ventures, but are subtly different. They are where you join forces with another person for business purposes. Now this may be where you are promoting your product (a joint venture), but can also be a strategic alliance based on a trade of skills, knowledge or experience.
Joint ventures are important because they can often help you get your business up and running quicker and possibly cheaper.
Think about how an offline company run a strategic alliance. Companies align themselves with other companies that add to their skills and fill a hole in their service or product portfolio.
For example, you may do a joint venture with an advertiser for advertising space, or with a web designer for his services. You may exchange your time or your products for their services.
If you are looking to promote your product, you may well approach someone with a large list or website in your target market segment and develop a strategic alliance with them. This strategic alliance could even stretch into developing products together, promoting them and sharing the profits.
How does a strategic alliance fit into your business plan?
Particularly if you are working on a business plan for an offline business, you need to detail your joint ventures. This influences your cash flow forecasts, your sales forecasts, your marketing plans and so on.
It’s a case of determining what your skills are and what skills you are lacking in order to develop your business. It may also be that you decide to outsource some of the work with strategic partners in order to free up more time for you to focus on the core of your business. For example, you may decide to outsource your website design work and focus on developing and marketing products rather than do the design yourself rather than making money.
When you are planning your business determine what strategic alliances you require in order to make the business a success and then find the best strategic partners to help you achieve this. Strategic alliances can fast track your business to success and free up your time for other activities.