Identifying and handling the strategic relationships efficiently can make an organization successful. This means that, if you tend to mismanage or underrate the strategic relationships then it may hamper the core of your business, which may be difficult to restore or restructure. This article will throw light on how to manage your strategic alliance as it can impact the achievement of enterprise objectives and goals.
How to identify whether any alliance is strategic?
Pivotal and crucial to enterprise goals and objectives
What if a relationship comes to end? Does it hamper your fundamental corporate objective? Does it totally hinder your growth objective or hamper your revenue target? Then this must be one of your strategic alliance, since strategic alliance has close relation with
- Growth potential – With respect to technical and innovative developments
- Revenue maximization – With respect to untapped potential opportunities through networking
- Cost savings – Through restructuring of internal operations and technological developments
Individual strategic alliances grouped together may even be core to one or all the crucial enterprise goals as above.
Contributes to achieve competitive edge
Strategic alliance contributes to have and flaunt your competitive attribute. However, understanding and adhering the corporate mission and vision to your enterprise goals and objectives would influence and benefit a great deal. However, competitive advantage can be achieved only when you
- Open up to your alliances, especially about the enterprise objectives
- Competition is at very primary level or almost nil
- Can achieve synergy and leverage effect since the business model or portfolio is similar
- Enterprise vision and mission encourages corporate governance which places importance on learning at all management levels.
Avoids or eliminates any intimidation from the competitors
When SWOT analysis comes up with the competitive threat and you turn to your most trusted and reliable stakeholders (be it supplier or be it customer), then such relations are strategic alliances. In addition to achieving the favorable competitive position, these strategic partners can even help to evade or manage the competitive threat. Adapting the enterprise capabilities with that of competitor from the parallel markets will bring in a bigger synergy effect which may block the competitive threat for e.g. penetration pricing strategy with strategic alliance of mass volume competitors.
Aids to great achievements
Certain alliances can become strategic in future (even if not now), if these relationships have long term vision and you succeed in identifying the necessity of such valued stakeholders for future great achievements. Hence, it is very much important to value current as well future potential of the alliances to evaluate of these turn out to be strategic, since these alliances will improve your revenue earning and growth potential opportunities.
Risk management
Risk management may come in any shape and size. For e.g. if a new product is announced by existing customer, the supplier can mitigate future risk of losing the business by
- Either ensuring his product is still required in the operations
- Or adapting his product to suit the new requirements
If your alliances are those which will stand out from the crowd to help you achieve your corporate goals, then it is strategic alliance and will need careful management.
How to manage?
Once you identify the strategic alliances, next step is effective and efficient management of the same. Here are some of the pointers which will help you nurture those special relationships.
- Devotion and willingness of the executive management to fostering strategic alliances
- Your enterprise goals and objectives are a open book to your strategic alliances. This will help align their goals to that of yours, resulting in synergy effect.
- Clear understanding and conformance to shared benchmarks and standards to improve the alliance
- Regular acquaintance with stakeholder companies
- Adapting with changing external environment
- Optimal allocation of available resources so as to suit the requirements and needs of the strategic alliance
Chintan is the Founder and Editor of Loyalty & Customers.
