When referring to an alliance, in the context of business, usually, the term refers to agreements made between a company and another one, in order to combine resources for the benefit of both parties. The aforementioned explanation is related to strategic alliances, where the main purpose is creating opportunities for both companies, while maintaining their individuality. The aforementioned explanation of the alliance can be seen limited to other companies. However, a common practice stemming from the same term is the alliance between the organization and its stakeholders, a practice which sufficiently expands the meaning of partnership originally put into the term alliance.
In that regard, this paper analyzes the concept of alliance, based on a virtual company “Baderman Island”, providing a recommendation on the strategy of creating an alliance between the company and its networked stakeholders.
Stakeholder alliance can be defined as “formal and informal relationships with stakeholders that involve two-way communication” (Raucher & AWWA Research Foundation., 2001, p. 5), where no single stakeholder has enough resources, authority of knowledge to resolve particular issues. The formations of alliance are expected from stakeholders with “a high potential for threat along with high potential for cooperation” (Friedman & Miles, 2006, p. 205) In the case of “Baderman Island”, an all-inclusive resort, such stakeholders, from the external side, might include the Kelsey community, a town 12 miles west of Baderman, environmental NGOs, water protection groups and others. Additionally, the internal stakeholders might include the various departments of the company such as the hotel, the convention center, the employees, suppliers and the shareholders. It can be seen that the main area of threat and cooperation can be witnessed in terms of the cooperation between the company and the environmentalists groups, where the nature of the business corresponds to the interests, which the companies and environmental NGOs pursue. The factors influencing such cooperation might include the financial resources, environmental responsibility, consumer concerns, staff values, legislation threats and others (Friedman & Miles, 2006).
The strategy of the alliance can be seen through outlining the objectives of each group of stakeholders, the resources used, and accordingly, the controversial issues that prevent each group from reaching their interest. In that regard, the strategy in forming the alliance might include the following steps:
- Recognizing the opportunities of each party
- Evaluation of negotiation capabilities
- Outlining joint task requirements
- Working interface development
- Establishing the governance system
- Creating the alliance (Serrat, 2009)
It should be noted that the controversy of the issues and the desired objectives can influence the structure of the alliance. In the case of the resort, it can be seen that such issue did not reach a controversial status, where the community can be benefitting from the flow of tourist into the area, Boardman management Group runs the resort providing working opportunities, while the Baderman family receives tax cuts and various incentives from the Town of Kelsey. Nevertheless, the alliance might improve the existing cooperation, specifically related to the environmental NGOs, where the benefits might include, promotion of learning and dialogue between the parties, avoidance of litigation, identification of unknown issues before they become adversarial, and others (Raucher & AWWA Research Foundation., 2001, p. 15).
It can be concluded that the stakeholder alliance is an important aspect that should be considered, in order for the organization to resolve the issues that cannot be resolved with its single authority. In that regard, the case of Baderman Island might indicate how the formation of an alliance might resolve a potential conflict, in which each party will reach its objectives without litigation.
References
Baderman Island (2005). Apollo Group, Inc. 2009. Web.
Friedman, A. L., & Miles, S. (2006). Stakeholders: theory and practice: Oxford University Press.
Raucher, R. S., & AWWA Research Foundation. (2001). Guidance to utilities on building alliances with watershed stakeholders. [Denver, Colo.]: AWWA Research Foundation and American Water Works Association.
Serrat, O. (2009). Learning in Strategic Alliances. Knowledge Solutions. Web.