Profitable Strategic Alliances

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The most enduring and profitable strategic alliances are those in which each company brings something to the table the other company lacks. There are certain situations when it simply makes sense to form a strategic partnership. For instance:

  • Partner when one business lacks wide access to the market, and the other has a large customer base or access to the market, but needs more products or services to bring to its customers.
  • Partner when one business is highly specialized or has a strong niche skill. Large businesses often outsource to smaller businesses that specialize in certain areas.
  • Partner when trying to break into a new market, while keeping costs contained.
  • Partner in government contracting situations in order to win the contract. A larger company may partner with a smaller enterprise in order to qualify for certain contracts that are reserved for minority-owned businesses or small businesses. Sometimes the smaller company will need the resources of the larger business in order to adequately fulfill the government contract requirements.

Also, consider strategic alliances when there is a need to access the market quickly. By focusing on your core competencies, weighing the options of creating a product or service versus finding someone who already offers the same thing, you can bring a potential opportunity for partnership to a company with whom you would like to work. Keep in mind that you need to think about how all the parties in a partnership benefit, not just your company. If you are only out for yourself, your alliance will fail.

A strategic alliance can also take form in finding profit by cutting costs. For instance, two small businesses might find a way to reduce rent by sharing space in a warehouse or office complex. Or perhaps you can share the cost of a database subscription or business group membership with a strategic partner to help defray the costs. Small businesses can also lease space from larger companies. One woman runs her small coffee shop out of a local gas station. Her lease monies were more than the retail profits being generated by the few items that were selling in the space. She had a steady stream of clientele so both businesses found the arrangement profitable.

Think ahead when looking to develop profitable strategic alliances. You can increase market share, reduce costs and keep more money in your pocket by partnering with large or small firms. Whatever you decide, keep your partner’s best interest in mind and you’ll be able to develop partnerships that create a better business environment for everyone involved.

christian fea is CEO of Synertegic, Inc. A joint venture marketing firm. He exemplifies how to profit from Joint Venture relationships by creating profit centers with minimal risk and maximum profitability.

To discover more joint venture marketing Strategies join his free Joint Venture Marketing Wealth Report

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