1st QUARTER 2014
37
ALDONNA R. AMBLER, CMC, CSP
The Growth Strategist
A
strategic alliance is the most
frequently considered option on
the continuum of business relation-
ships. But when alliance partners
have different definitions and expectations,
return on investment is just about impossible
to achieve.
Strategic alliances can be forged between
comparably sized companies. One company
that excels in manufacturing or distribution
works with another company that is good at
marketing or sales. In our experience, as long
as money comes in, strategic alliance partners
continue to work together. But when the
next bright idea comes along or a problem
develops, the parties drift apart and one is left
with a much larger loss than the other.
Value Added Resellers (VARs) have
learned this lesson the hard way. In earlier
years, VARs would invest time and money
to work with major telecommunications
and computer software corporations to earn
certifications and premium vendor status.
Later, corporations, wanting to expand their
capabilities to upgrade customer commu-
nications systems (telephones, computers,
servers, and televisions), offered strategic
alliance “opportunities” to VARs. And that
became a nightmare for CFOs of VARs.
Among the reasons many VARs suffered in
such relationships, the corporation might do
an installation without its alliance partners,
get into trouble, and then expect the VAR to
come in and fix the problem, quickly, and at a
discounted rate.
Clarify Expectations
To prevent this kind of expensive life lesson,
the CFO should look at a proposed strategic
alliance through the clearer lens of a joint
venture. Similarly, it pays to look at proposed
licensing deals through the lens of franchising.
If the business relationship were a joint
venture, there would be less competition.
Pricing, work order notification, and the
duration of the relationship would all be firmly
established. In a joint venture, a third busi-
ness entity is usually established. The specific
investment and expected return are spelled
out. A timeframe is declared, roles clarified,
a schedule for meetings is established. Even
when very different-sized companies are par-
ticipating, negotiations are peer-to-peer.
In franchising, there are clear territories.
A value is assigned to marketing. A clear
business model is adopted to help everyone
involved make money. And legal protections
are built into the contracts.
We recommend that clients consider the
rigors of franchising over loose licensing
deals, and joint ventures over poorly defined
strategic alliances. Even if the final relation-
ships are legally viewed as strategic alliances
or licenses, the clear business relationships
that are forged last longer, drive profitability,
and don’t invite expensive lawsuits.
C
Strategic Alliance Pitfalls
Look at proposed business relationships through a clearer lens
Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATE-
GIST
®
. She has won more than two dozen national and statewide “entrepreneur of the year”
awards for the resilient growth of her international businesses across four recessions. Her
midsized B2B clients get on — and then stay on — the published lists of the fastest-growing
privately held companies. She owns and operates a suite of companies that help privately
held midsized companies to achieve accelerated growth with sustained profitability® through
opportunity and resource analysis, four approaches to strategic planning, executive advisory
services, growth financing, and targeted search. 2014 is Ambler’s 10th year hosting a weekly
peer-to-peer-to-peer syndicated online talk show that features interviews with CEOs/Presi-
dents of midsized companies (typically between $20 and $200 million per year) sharing tips
about growth. An archive of more than 300 interviews is available at
-
Show.com. She can be reached toll free at 1-888-Aldonna or at
Learn more about the author
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