The social fabric of human society is the foundation of ever growing production, services, commerce and trade without which businesses would be obsolete.
The fact that people can communicate and connect to one another creates only an opportunity for doing something together, to collaborate. The very heart of collaboration is the concept that defies the conventional law of mathematics: One plus One is Greater than Two (1+ 1 > 2). Without realizing that multiple people, multiple businesses or any kind of multiple entities can increase performance beyond the sum of their individual output by joining forces, we’d have never formed alliances, we’d have never partnered with each other.
Being fundamentally social creatures we rarely think about the necessity, the importance and the magnitude of collaboration. Business managers, rarely think about their organization as a place for collaborative activities. They rather think about their company as an array of assets mobilized by a set of business rules and organized along the unity of purpose. While the latter approach might be sufficiently functional, overlooking the importance and the potential of collaboration either at intra- or at an inter-organizational level jeopardizes the company’s market position and creates a huge opportunity for your competition.
Intra-organizational collaboration is a chapter of human resource management hence – in the frame of our Partner Services – we rather focus on creating opportunities for your business through fostering relationships between your organization and others.
The notions of alliance, partnership and relationship have often been used, overused and sometimes misused in the past and many times these notions have been applied interchangeably which is not only incorrect but can also lead to unwanted misunderstandings.
A business alliance – a broader term – is an agreement between businesses, usually motivated by cost reduction and improved service for the customer. Alliances are often bounded by a single agreement with equitable risk and opportunity share for all parties involved and are typically managed by an integrated project team. An example of this is the code sharing in airline alliances.
There are five basic categories or types of alliances:
- Sales alliance – occurs when two companies agree to go to market together to sell complementary products and services.
- Solution-specific alliance – occurs when two companies agree to jointly develop and sell a specific marketplace solution.
- Geographic-specific alliance – is developed when two companies agree to jointly market or co-brand their products and services in a specific geographic region.
- Investment alliance – occurs when two companies agree to join their funds for mutual investment.
- Joint venture alliance – occurs when two or more companies agree to undertake economic activity together.
In many cases, alliances between companies can involve two or more categories or types of alliances.
Business partner is a term used to denote a commercial entity with which another commercial entity has some form of alliance. This relationship may be a highly contractual, exclusive bond in which both entities commit not to ally with third parties. Alternatively, it may be a very loose arrangement designed largely to impress customers and competitors with the size of the network the business partners belong to.
The meaning of the term is quite different from that implied in partnership, and it is because of the potential for confusion between the two that the widespread use of ‘business partner’ has been discouraged at times in the past.
A business partner can be:
- A supplier
- A customer
- A channel intermediary (such as an agent or reseller), or
- A vendor of complementary offerings (for example, one party sells the hardware, while the other sells the software).
There are numerous variations of all the above and the ideal portfolio of partnerships and/or alliances can only be determined by the individual needs and strategies of the involved parties, in the context of the actual market situation.
Our job at London BBD is to help your business to identify potential partners, initiate and – if needed – mediate negotiations as well as to help you to navigate through the legalities in order to protect your business from potential pitfalls.
Please don’t hesitate to contact us for a free consultation on our Partner Services. While there is nothing to lose with a no hassle, no obligation conversation, the potential of conducting a Better Business™ is well worth it.