Globalisation : Charting Your Global Strategy : Consider Cross-border Alliances and Partnerships
Laurel Delaney is a successful entrepreneur, speaker, educator and author with more than twenty years of experience in global business. She runs Chicago, Illinois-based Global TradeSource, Ltd. - online arm is GlobeTrade.com and LaurelDelaney.com - both focusing on international entrepreneurship.
Ms. Delaney is a member of the International Editorial Advisory Board of the Journal of International Entrepreneurship, a recipient of SBA’s “Exporter of the Year” award and has written numerous articles and books, including “Start and Run a Profitable Exporting Business” ( Self-Counsel Press Inc. ). In addition, she is a contributing author in The Research Handbook For International Entrepreneurship ( Edward Elgar Publishing, U.K., April, 2004 ), a breakthrough guide on global entrepreneurship, and the Chicago chapter facilitator for the Women Presidents’ Organization.
Ms. Delaney writes and publishes a free monthly, 12-page e-newsletter called “Borderbuster,” which is highly regarded in the big as well as small business community for its information on global business. She also oversees The Global Small Business and Escape From Corporate America blogs.
In charting your global strategy, consider joining forces with another company of similar size and market presence that is located in a foreign country where you are already doing business, or would like to. Gauge your readiness -- or willingness -- to take on a 50/50 partnership and what it can and cannot do for you.
Are you willing to take on the world as part of a partnership ? Are you ready to create an alliance with the business across the street ? Or do you hope to create an alliance with a business in a foreign country where you are already doing business or would like to ? Whichever you decide, it's only a matter of time before you consider an alliance as a logical step in expanding your business.
Until now, you may have cemented strategic alliances with agents and distributors to maintain access to markets. You may find this is no longer enough to remain competitive, and you want to explore alternatives for kicking your bu siness into high gear. You're prepared to exchange a limited measure of creative control if it will get you established in lucrative new territories worldwide.
If you've reached this point, it's a good time to consider joining forces with another company of similar size and market presence. But first, it's important to understand exactly how an alliance works, as well as what it can and cannot do for you.
What is an Alliance ?
An alliance is usually established when a company wishes to edge into a related business or new geographic market. Typically, alliances are formed between two or more corporations, each based in their home country, for a specified period of time. Their purpose is to share in ownership of a new venture, maximizing competitive advantages in their combined territories.
The cost of an alliance is usually shared equitably among the corporations involved, and is generally the least expensive way for all concerned to form a partnership.
Your choice of a partner is arguably more important than how the partnership is structured. You want someone with an active contribution to make, flexibility and the ability to resolve conflicts as the alliance evolves. You should have clear goals for what you hope to gain from the alliance, choosing a partner whose contribution will help you achieve those goals.
Where Should Small Business Look for Partners ?
Mutually advantageous alliances sometimes come from unlikely allies. Many companies form partnerships with complimentary or competing companies that offer new and attractive market share.
See which one of your contacts, colleagues and competitors might have compatible needs and objectives. You'll probably feel most secure with a company you already have a relationship with, especially if you have achieved substantial sales growth together. It could be your distributor in South Africa, a manufacturer who took on distribution of your product locally or a trading company across the state that can't keep up with consumer demand! Any one of your contacts with a problem you can solve or a need you can fulfill serves as a potential partner.
Advantages of an Alliance
There are many specific advantages of an alliance. You can get instant market access, increased sales, enlarged distribution channels or even new skills and technology.
However, it's critical to explore all the legal and financial implications before entering into a partnership. Seek legal counsel that is well-versed in partnerships, acquisitions, joint ventures and divestitures to go over the best and worst-case scenarios with you. This will give you a better idea of what kind of risks you will incur, if any, if you go ahead with the alliance.
A good partnership allows both parties to retain a fair degree of autonomy, with minimal restrictions on complementary business opportunities. To have a reasonable chance of success, the merging parties should share three vital elements: (1) good communication; (2) corporate cultures; and (3) corporate philosophies. If you don't see these elements when negotiating, you never will. Cut your losses and look for a more compatible partner.
Considering the Alliance: What Can We Learn ?
Before you decide to enter into an alliance, make an excruciatingly honest appraisal of your own goals, strengths and limitations. Determining at the outset what you can realistically expect to accomplish and if you're really ready will save you losses down the road. Appraise your potential partner just as carefully.
Remember, no two deals are alike. The final structure of any alliance depends on what each party has to offer the other and what each hopes to gain. The best strategy for global market expansion, when all is said and done, is one that makes you feel like you have the whole world in your hands.
© Copyright 2006 Laurel J. Delaney. All rights reserved.