ConclusionThe past 18 months have been unprecedented in many ways. It is therefore not surprising that company leaders are looking for solutions to help them stay ahead of the curve, and for many strategic alliances are on top of the agenda. Show
Indeed, strategic alliances offer characteristics that make them an attractive option in today’s world. For companies operating in an industry undergoing rapid digitisation, like the financial services industry, strategic alliances can offer a fast and sometimes less risky access to assets and intellectual property compared to ‘build’ or ‘buy’ strategies. In financial services, two specific use cases for strategic alliances are co-investing with existing suppliers in new / improved technology solutions, or forming a strategic alliance with other industry players to build a marketplace or ecosystem of service offerings. Importantly, Corporate Strategy and M&A departments that have a track record of successful alliances, use this as a convincing argument to win over new potential alliance partners. But harvesting value from alliances is no simple task. When entering into an alliance, partners need to be aware that delivering the ambition and achieving the benefits does not happen on auto-pilot. At Deloitte, we have identified five factors that companies should consider when entering an alliance:
While strategic alliances are not the ‘silver bullet’ for all the strategic challenges companies are facing in today’s world,
they offer specific opportunities in certain circumstances. Strategic alliances have therefore an important place in the toolbox of each Corporate Strategy and M&A department. German corporations operate with two-tier governance structures, a management board, and a separate supervisory board that does not contain any current executives. In addition, German law requires large companies like Volkswagen to have at least 50 percent supervisory board representation from workers. This structure is meant to provide more oversight by independent board members and greater involvement by a wider set of stakeholders. In Volkswagen's case, these objectives were effectively circumvented. The company continued to elevate management to the supervisory board even though they had presided over past scandals. Volkswagen also had a unique ownership structure where a single family, Porsche, controlled more than 50 percent of voting shares. The company lost numerous independent directors during the most recent decade, leaving it with only one nonshareholder, nonlabor representative. Business growth doesn’t come from wishful thinking. As you know, it takes a lot of hard work. The growth of your business is not an option – it is a necessity. Coordinating the right mix of strategies to gain market share and improve client acquisition rates is essential to advance your firm in today’s economy. Many advisors share a common thread of business development initiatives: referral campaigns, capturing new assets from existing clients, and forming strategic alliances with other professional teams. During difficult market times, uniting with attorneys, insurance agents, CPAs, and other professionals is one of the best investments you can make for your firm. While cost and skill sharing are notable reasons to form an alliance, an association with suitable partners will extend the depth of your team and provide a means to offer clients a full spectrum of services. What is a Strategic Alliance?To ensure alliances are truly successful for your firm, you must understand what they are and more importantly what they aren’t. A strategic alliance is an agreement between two or more parties to pursue a set of agreed upon objectives while remaining independent organizations.¹ Often advisors attempt to organize informal alliances and merely hope a reciprocal referral pattern will fall into place. Picture this – it may sound like a familiar situation to you: You invite a potential alliance to lunch and spend time chitchatting about your firm. You talk about your shared niche market(s) and try to persuade them to understand how your firm is different from the competitor down the street. You end up having a nice lunch and agree to refer clients to one another over a hand shake. Heading back to your office, you reflect on your meeting and give yourself a pat on the back – thinking you have formed a solid strategic alliance that will provide a flow of referrals to your firm. You may even go so far as to start referring clients to their company. But something happens; you notice you’re not procuring a significant level, if any at all, of qualified referrals in return. Why and how does this happen?It’s simple; you have formed an informal arrangement that doesn’t represent a true strategic alliance. An unorganized plan that lacks an imperative reason for others to provide referrals will fall short of your desired result. Strategic Alliances — Where to StartAdvisors who take the time to invest in building strategic alliances generate higher revenues and profits. Done correctly, it only takes a small number of strategic partners to have a positive impact. Begin to structure your extended team with other professionals whose efforts are symmetrical with the needs of your clients. Identify professionals that share your niche market and can provide solutions for your clients beyond your existing realm of services. Measure the value of a potential partnership by assessing the quality of solutions you can provide for your client’s problems, needs, and wants. Brainstorm! You can form alliances with a host of different professionals; get creative and explore your opportunities. Potential Alliance PartnersStrategic Alliances = Long-Term SuccessStrategic alliances will help catalyze your firm’s growth because they empower each partner to serve clients better. Through the alliance, your clients benefit from the expertise of trusted professionals and feel satisfied knowing you are working together as a team to help them achieve their financial goals. A successful alliance is a formal affiliation between two parties that creates a vested interest to help the other grow. In a study performed by CEG Worldwide, it is noted that referrals from other professionals are a key source of new clients for 81.9% of today’s top financial advisors.²
Benefits of Strategic Alliances
Follow the 10-Step ProcessStep 1: Identify Potential PartnersOften financial advisors choose to work with professionals that clients have already secured for outside services. Expand beyond this inner circle and explore other firms that focus on people in your niche market. Start by making a list of the top three local attorney, CPA, and insurance firms in your area. Identify potential partners through Google searches, LinkedIn profiles, city information, and any other resources you have access. Choose counterparts that you can easily collaborate with, develop good connections, and those that will actively introduce you to new clients rather than waiting for an opportunity. Step 2: Research Potential PartnersGather data and research your potential alliances. Your goal in this step is to support your position that a strategic alliance with this firm will be mutually beneficial. Step 3: Make the First CallIn a tough economy where all professionals are feeling the crunch, everyone can use extra help with business development. Contact your selected alliance prospects and schedule an appointment to discuss opportunities for working together. Tell them you will share data about your mutual niche market, how to market to them, and the most effective way to earn their business. Step 4: The First MeetingYour goal in this step is to determine suitability to form an alliance.
Step 5: Identify Specific OpportunitiesBrainstorm about every opportunity to work together. Focus on core interests and business themes you have in common. Discuss objectives, obstacles, and expectations for your future relationship. Determine what your alliance should accomplish over the next 12 months. Step 6: Establish Revenue/Profit GoalsDetermine ideal and minimum revenue and/or profit goals for your alliance. Your ideal goal should represent the revenue and new assets under management it will take to make the program a success. The minimum goal is what must be achieved in order to continue the partnership. Step 7: Develop an AgendaCreate an agenda that includes any event or campaign you plan to execute with your strategic alliance over the next 12 months. Identify the goal for each item, the strategy you will use to obtain results, when the event will take place, and who will be responsible for implementation. While creating your strategy, include the following best practices to ensure your partnership is effective and creates an opportunity for new clients. Step 8: Present the PlanSchedule a meeting with your potential alliance to present your plan. Review your opportunities, strategy, and the specific steps you will take to reach your goal. Discuss profit and revenue goals as well as expenses. Look for any gaps in your initial plan and make necessary modifications. Step 9: Commitment and ImplementationUpon mutual agreement, make a commitment and implement your plan. Identify team members who will act as a point person to ensure implementation takes place as scheduled. Step 10: Analyze and Follow UpContinually refer back to your alliance plan to monitor and celebrate successes and make changes when you find something isn’t working. You can have the most brilliant plan in the world, but it will do no good if it isn’t implemented and followed up on regularly. What are the three factors that can lead to the success of a strategic alliance?The most outstanding factors affecting alliance success are shown to be a good relationship with the partner, mutual trust, a minimum commitment between the parties, and clear objectives and strategy.
What makes a strategic alliance to be successful?In a strategic partnership the partners remain independent; share the benefits from, risks in and control over joint actions; and make ongoing contributions in strategic areas. Most often, they are established when companies need to acquire new capabilities within their existing business.
What are the three strategic alliances?Three Different Types of Strategic Alliances. Joint Venture. A joint venture is a child company of two parent companies. ... . Equity Strategic Alliance. ... . Non – Equity Strategic Alliance.. What are success factors of alliance performance?Both cited studies concluded that factors such as trust, commitment, communication and managers' relationship are crucial for the success of alliances.
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