What is an Alliance?

A business alliance is a formal association of two or more business parties to further their common interests, presumably over the long term. As such, these alliances can take many forms with varying degrees of complexity and difficulty. In its simplest form, an alliance can be described as a buy/sell arrangement. On a more complex level, a long term relationship and alliance may result from an effort to co-develop or share technology, or possibly from a technology licensing agreement. Even more complex are partnerships or joint ventures especially when the global aspect of business is introduced, and especially if the parties to the alliance are from different countries and different cultures.

Before attempting to form an alliance, you need to make sure that you are familiar with the steps. Preparing in advance is like practicing the dance steps before your first dance. It will help you avoid possible mistakes, and perhaps stepping on someone else’s toes.

To begin with, you will need to answer the following key questions before you take that first dance step:

o Do we truly need an alliance or do we have the expertise and the resources required to succeed on our own?
o What benefits do we expect from an alliance versus going it alone (both financial and non-financial)?
o Who are the potential alliance associates?
o What alternative forms of alliance have we considered and what form should the alliance take?

To answer these questions you will need to perform a thorough, objective and honest assessment of your company’s business environment, the internal and external challenges it faces, its resource capabilities and limitations, AND its strengths and weaknesses. You’ll also want to evaluate the opportunities and threats facing your business. To complete this assessment, you will need to develop a detailed business plan.