- Get instant market access, or at least speed your entry into a new market.
Alliances open access to each partner's
network of customers and distribution channels. As an example, airline business
alliances related to code-sharing increase efficiencies within the airline
industry. A code-share agreement is a business arrangement between airlines
that cooperate to sell space on the same flight to manage capacity on shared
routes.
Knowledge Sharing
A
business alliance provides access to the unique know-how of the partner
company. For example, a tutoring company might find itself challenged to meet
the demand for math tutors within the community it services. Understanding each
party's underlying interests and concerns is a key part of contract
negotiation. That same understanding must carry over into the implementation
stage of an alliance. Each side needs to be attuned to the other's expectations
for the alliance and open to new ways of doing things. That understanding can
give partners the ability to be creative and innovative in how they work
together to sustain or evolve the collaboration
Economies of Scale
Economies
of scale might develop from business alliances. Economies of scale relates to
the cost advantages that a company gains from expansion. In business alliances,
this might include access to wider marketing channels, which a company might
not otherwise be able to afford outside the partnership. Costs reductions might
also result from joint investments on matters like research and development, or
access to a partner's operational facilities.
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