Introduction
Depending on the main profile of their work, companies focus on attracting employees with specific skills or on building a diverse set of resources. However, they can expand their field of activity and increase profits by developing innovations through a collaborative approach. Strategic alliances formed to develop new products or services offer significant opportunities for the parties involved, such as access to knowledge or greater visibility. Nevertheless, despite the advantages of such alliances, many fail because they are unable to address all challenges and concerns.
Importance and Challenges of Strategic Alliances
Various companies have made successful or unprofitable attempts to adopt a collaborative approach. De Man and Luvison’s (2019) study describes a case of Air France-KLM, Air Lines, and Alitalia (DAFK) alliance. Its benefits included expanding flight routes that these organizations could offer passengers through cooperation, increasing profits, and boosting visibility among potential customers.
In practice, companies have faced concerns such as coordinating their work, sharing revenue fairly, and managing change (De Man & Luvison, 2019). The case of this alliance demonstrates that it is crucial to recognize the complexity of a collaborative approach and be ready to invest significant effort to achieve the expected benefits.
The work of the alliance seeking to develop innovations is a complex process with both advantages and challenges. For instance, employees from both parties gain new knowledge and skills through mutual training and feedback (Dyer et al., 2001). Moreover, when alliances are announced, companies often increase their visibility with the public, and their stock prices and market values rise (Dyer et al., 2001).
Nevertheless, companies need to overcome potential challenges to achieve partnership goals. In particular, choosing a future business partner determines the nature of the collaboration, and therefore, parties’ similar objectives and values are critical. Many alliances failed because their priorities and purposes did not match (Dyer et al., 2001).
Other influential challenges are cooperation, organization, and mobilization of relevant resources to create conditions for collaborative work (Dyer et al., 2001). All companies have established processes, but collaboration requires significant changes that can lead to confusion or resistance. For this reason, organizations entering the alliance need additional tools.
Companies need outstanding practices to adopt a collaborative approach and successfully overcome challenges in the process. Following the study by Dyer et al. (2001), which examined various successful alliance stories, one of the best solutions is to establish a dedicated alliance function. This separate structure, with its director and staff, facilitates the coordination of collaboration at various stages (Dyer et al., 2001).
The dedicated function develops tools and procedures to assess companies’ operational compatibility, negotiate cooperation terms, and manage the process. It addresses challenges such as setting common goals, coordinating work, allocating resources, and maintaining accountability (Dyer et al., 2001). As a result, companies reduce the risks associated with joining the alliance, increase their operational efficiency, and maximize their benefits.
Conclusion
Thus, strategic alliances aim to establish partnerships and cooperation between companies to create new products and services and expand their businesses. They bring significant benefits, including sharing knowledge, combining skills and efforts, or developing new ideas. However, companies must be convinced of the alliance’s usefulness before joining and efficiently organize work during the collaboration to achieve the expected results. A dedicated alliance function is a tool aimed at establishing and supporting alliances. Practice proved that a dedicated function can effectively address challenges to the collaboration process and increase advantages.
References
De Man, A. P., & Luvison, D. (2019). Collaborative business models: Aligning and operationalizing alliances. Business Horizons, 62(4), 473-482.
Dyer, J. H., Kale, P., & Singh, H. (2001). How to make strategic alliances work. MIT Sloan Management Review, 42(4), 37-37.