Contact Us Advantages and Disadvantages of Strategic Alliance A Strategic Alliance is an agreement among companies to do business together in such a way that goes beyond normal company-to-company dealings, but fall short of a merger or a full partnership. In a business it is a relationship between two or more companies which enables each to accomplish specific strategic objectives neither would be able to achieve on their own. On the contrary, they could be extremely complex, involving a number of organizations, positioned in different nations around the world. These companies may in turn be associated with other businesses in separate alliances.
While forming business alliances can be beneficial to a company, aligning yourself with another business entity also brings potential downsides. Interweaving your business with another, whether via formal or casual alliance, requires thoughtful consideration.
Going into an alliance without pre-planning can damage your personal branding and lead to other potential liabilities. Lack of Control When you align with another company, you lose some degree of control over the way your business is perceived.
For example, if you run a hair salon, and you form an alliance with a nail salon a few blocks away, you are not responsible for hiring or training the manicurists and therefore have no control over how they do their jobs.
If the nail salon manager hires unprofessional individuals and you refer your clients to them, any bad experience your customers have there will be reflected back on your business as well. Unequal Benefits Unless you have a carefully vetted contractual agreement, you have no assurance that your business alliance will be beneficial to you, or that you'll get as much as you give in terms of referrals.
For example, if you agree to refer all of your hair salon clients to the nail salon in exchange for them doing the same, unless you have some sort of tracking system in place you'll never know if the other business is holding up their end of the deal.
Merged Reputations When you form an alliance, you open yourself up to being judged based on the actions of your alliance partner regardless of whether your customers actually use the services of your business partner or not.
For example, if the nail salon you're aligned with is closed down by the health department because of unsanitary conditions, the fact that you have an alliance with them can tarnish your reputation by association, even if you run the cleanest salon in town and even by customers who don't patronize that nail salon.
Liability In the event something goes wrong with your business alliance partner, you can be held liable as well.
For example, if it turns out the nail salon was so unsanitary that it resulted in numerous serious fungal infections that required medical treatment, that nail salon may face a class action lawsuit from disgruntled customers.
If you referred those customers, you may be drawn into the legal battle as well. Even if you are not found to be negligent in a court of law, you still run the risk of having your reputation tarnished and incurring hefty legal fees.
References 2 Ko Ellay: Inshe launched a full-service marketing and communications firm. McQuerrey's work has garnered awards from the U.
She is also the author of several nonfiction trade publications, and, inhad her first young-adult novel published by Glass Page Books.Disadvantages of Strategic Alliance A Strategic alliance is a partnership where two or more companies decide to cooperate for their mutual benefit by combining their resources- financial, managerial, and technological as well as their competitive advantages.
Advantages and Disadvantages of Strategic Alliance A Strategic Alliance is an agreement among companies to do business together in such a way that goes beyond normal company-to-company dealings, but fall short of a merger or a full partnership.
Strategic alliances certainly come with inherent difficulties. Perhaps foremost of these disadvantages is the fact one party that handles all of its business internally must now rely on a second party.
Advantages. Strategic alliances permit a company to pursue an opportunity more quickly, leveraging the resources and knowledge of the other party. The Advantages & Disadvantages of Joint.
Benefits of Strategic Alliances Access to Supplementary Services One of the most attractive benefits of an alliance with another business is the opportunity to offer supplementary services to clients that otherwise would not be available.
3 What Are Strategic Alliances? 4 What Is the Difference Between a Joint Venture & Strategic Alliance? Advantages & Disadvantages of Licensing the Rights to the Company's Production Process.