Intelligent Business Alliances

PUBLISHERS WEEKLY JUL 29, 1996

Citing statistics that 55% of strategic business alliances fail and that the successful remainder last an average of only 3.5 years, the author believes managers involved in or contemplating an alliance should welcome any help they can get. Segil, president of the Lared Group, an international consulting firm, defines an alliance as "a relationship that is strategic or tactical... entered into for mutual benefit by two or more parties having compatible or complementary business interests and goals." She goes on to explain the various diagnostic tools for verifying and testing potential agreements. Chief among these is her own "mindshift method," for understanding different types of business personalities. An organization, she suggests, must decide where on the "alliance pyramid" to focus. Joint marketing and distribution is the simplest agreement; the most complex, a merger or takeover. Each step up requires greater risk, more human resources and higher costs. Knowing the place of partners in the corporate life cycle and their cultures and strategies is critical for creation of a successful arrangement. The author advocates the SWOT (strengths, weaknesses, opportunities, threats) analysis technique and presents a variety of considerations for companies contemplating an international alliance. At times the plethora of procedures here might appear redundant, but considering the high likelihood of failure, managers at both large and small companies could learn much from following the book's prescriptions. Author tour.