Modern organizations are finding more ways to remain competitive and relevant to their respective markets, and one way an organization can do this is to form business partnerships or strategic alliances. .
One reason an organization may seek to form an alliance with another, is to overcome a company weakness (Gibbs & Humphries, 2009). Another reason for a partnership is that an organization may be seeking to acquire new competencies so that they can advance within the market (Gibbs & Humphries, 2009). Each company is different, with a set of strengths and weaknesses unlike any other organization. Therefore, each company should determine what it is seeking to gain through the partnership, because no organization can do it all on their own (Mitchell, 2004).
Factors for Effective Business Partnerships.
Jerry Mitchell suggests that there are four factors that are vital to the success of a business partnership. Those four factors are shared risks, shared resources, shared rewards and shared values (Mitchell, 2004) and creating relationships that produce the desired results requires hard work from both parties (Mitchell, 2004).
Factors Explained.
Shared Risk. .
Shared risks involve determining the level of risks that each company has in the partnership (Mitchell, 2004). Each partner should have a fair and disproportionate rate over another as this may turn out to be an unethical or ineffective partnership (Mitchell, 2004).
Shared Resources. Shared resources involve determining how much of its resources is a partner willing to commit (Mitchell, 2004). What also is determined is how will each partner contribute their resources and if it will be through capital, people, knowledge, technology or another form (Mitchell, 2004).
Shared Rewards. Shared rewards put in clear view what each party will gain from the alliance (Mitchell, 2004).
Shared Views. Shared views provide the needed insight to determine what values the partners have in common (Mitchell, 2004).