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Guidelines for Managing an Alliance

May 1, 1995
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Related Topics: Strategic Planning, Featured Article
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Guidelines for managing an alliance:

  • Conduct a cost-benefit analysis of favorable and unfavorable conditions. Control them to maximize revenues, minimize costs and lower risks
  • When possible, start an alliance small and build on trust
  • Avoid exchanging market access between competitors
  • Identify and address conflicts over activities critical to success, time horizons or government regulation
  • Generate widespread internal political support
  • Place operating managers on the negotiating team
  • Send divisive topics to higher-level negotiation groups
  • Structure the alliance with its own board of directors to speed up the approval process
  • Select a CEO on the basis of appropriate skills, style and ability to develop an understanding of goals and competitive advantages that are to be shared between the alliance partners
  • Do not require the alliance to prepare two sets of financial control reporting systems, one for each partner
  • Stay alert to early signs of termination: inflexibility in adapting operating procedures; combative negotiation style; conflict over management appointments; politicking; and a reluctance to reinvest
  • In the termination process, determine what must be accomplished in order to allow the remaining partner to keep the former joint activity going
  • When negotiating termination procedures, do not establish a precise termination value formula nor take a detailed, legalistic approach that breeds mistrust.

SOURCE: The Conference Board

Personnel Journal, May 1995, Vol. 74, No. 5, p. 30.

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