Valley First

Alliances

Mutually beneficial business relationships can help you create the leverage you need to compete. The right way to think about partnering is negotiating win-win agreements.

 

Joining forces

  • You’ll need the right framework—start by creating a strategy for partnership so that you clearly outline how an alliance will help you achieve your business goals.
  • Look at which partners might be suitable from your options—partners which share your vision will help reduce risk and minimize conflict.
  • Make sure there's enough of a market to support both you and your potential partner.
  • Select an alliance manager to head the process of joining forces so that there aren’t too many cooks in the kitchen, so to speak.
  • Build a solid relationship with your new partner—at the end of the day, the success of the alliance will be based on how healthy and strong the relationship is. The largest reason that alliances fail is due to a lack of trust so be upfront from the beginning.

EXPERT TIP

You don't have to limit your analysis of potential alliances to the person down the street. You can align yourself with businesses and companies from other countries to capitalize on the skills you have and different resources available to each of you.

Benefits of alliances

  • You’ll be able to respond to rapid changes in the market more quickly if you have access to the resources of an alliance partner.
  • You’ll be more effective in your operations because you can take advantage of economies of scale and supplier relationships you didn’t have previously.
  • You’ll be able to lessen expenses if there is a way to borrow employee resources from each other.
  • You’ll be able to respond to the customer demand from a larger market—even global.

EXPERT TIP

Even if you aren’t considering an alliance at the current moment, it is a great idea to plan ahead and create an alliance strategy as part of your company’s overall strategic toolbox. That way, when an opportunity presents itself, you’ll be ready to act on it.

Mergers and Takeovers

Two companies coming together is not always a matter of mutual agreement. If a business is in danger of going bankrupt, the owners may agree to merge with a competitor just to stay alive. In the case of a large, public company, the fate of the business could be in the hands of a shareholders majority.

A predator company may approach a target company with a business plan, and even if the directors of the target company reject the plan, the shareholders of the company can accept the new offer and force a merger. This type of business practice is sometimes called an acquisition or a takeover.

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