Developing successful product strategies for a business starts with understanding and leveraging the power of collaboration. Strategic alliances, also known as strategic partnerships, are one of the most powerful tools for creating long-term business success and growth. Strategic alliances are agreements between two or more entities with a mutual objective. As any successful business leader knows, partnerships increase resource allocation and open doors to potential opportunities, allowing businesses to achieve greater success than they could alone. In this article, we explain the concept of strategic alliances, explain the benefits of strategic alliances, and provide examples of successful strategic alliances.
What are strategic alliances?
A strategic alliance (also called strategic partnership) is an arrangement between two or more companies to work together on a project or achieve a shared goal. These alliances can be used to gain market access, share costs, leverage resources, and forge new competitive advantages. The key difference between strategic alliances and other business arrangements is that each partner contributes and makes use of unique resources and expertise. Unlike acquisitions and mergers where one partner gains control and decision-making power over the other, strategic alliances involve mutual cooperation and decision-making.
Benefits of strategic alliances
Strategic alliances have several benefits for businesses. By linking two or more companies together, strategic alliances allow businesses to access the resources, abilities, and insights of each partner, creating a “whole” that is greater than the sum of its parts. These alliances often result in a reduced cost, faster growth, and greater potential for innovation.
Access to competencies and resources
Strategic alliances allow your business to access new capabilities and resources you may not have had access to before. Many alliances involve sharing resources, allowing each partner to gain access to technologies, expertise, funding, customers, and supply chain pathways that they may not have had access to alone. This partnership gives you access to shared experiences and the ability to reduce costs, while also increasing the potential for innovation.
Quicker expansion and innovation
Strategic alliances can help businesses expand quickly, enabling them to reach new markets faster. Alliances can also foster knowledge-sharing and allow for increased levels of innovation by leveraging the skills, resources, and technology of two or more partners. This can help drive market growth and develop new products and services that can help businesses remain competitive.
Examples of strategic alliances
In 2014, Airbnb and JetBlue launched a strategic alliance. JetBlue is a low-cost US airline, while Airbnb is a platform for short-term rentals. JetBlue’s passengers gained access to Airbnb accommodation while earning airline rewards points, while Airbnb customers have gained access to JetBlue flights. This strategic alliance maximizes the resources of both airlines, allowing them to reduce costs while expanding their reach.
In 2020, Harry’s, a men’s shaving products company, partnered with Target, a big-box retail chain, to expand the reach of Harry’s products. Harry’s ships direct to customers, and using the Target partnership, it is able to offer customers access to its products in-store. This alliance provides Harry’s with access to Target’s large customer base, while Target is able to offer its customers a wider variety of products.
In 2014, Apple partnered with IBM to create an enterprise platform that combines Apple mobile devices with IBM’s enterprise computing and analytics capabilities. By combining these capabilities, the companies are aiming to create a mobile enterprise platform that will be used in industries such as retail, banking, transportation, and healthcare. This strategic alliance provides each partner with access to the other’s resources, allowing them to create new customer experiences and increase customer satisfaction.
How to create a successful alliance
Creating a successful strategic alliance takes time, collaboration, and commitment from both sides. Here are some tips for creating a successful alliance:
- Assess negative risks and make sure each partner is comfortable with the levels of risk involved.
- Define the terms of the partnership and create agreements to hold each partner accountable.
- Set clear objectives and goals that are mutually beneficial.
- Choose a partner who complements your goals, resources, and capabilities.
Strategic alliances are a powerful tool for creating long-term business success and growth. By combining the resources, capabilities, and expertise of both partners, businesses can access new opportunities and markets while expanding their reach. Strategic alliances also foster a sense of collaboration, honesty, and trust that can be beneficial to the success of any business.