Sometimes it seems that Starbucks coffee shops are popping up everywhere. You can even find their shops in popular retail establishments like Target and Barnes & Noble. However, it took more than a stroke of luck for you to find your favorite Americano coffee while shopping for a new pair of jeans. It took a strategic alliance.
How a Strategic Alliance Works
Two or more companies choose to work together for a common goal. Unlike a merger or acquisition, the two companies remain independent of each other. They also do not form a new organization.
In the example above, Starbucks remains Starbucks while selling its products in an entirely independent store. The two companies probably share expenses and rent but don’t commingle funds. Though the businesses share a space, they are separately managed.
Reasons for Forming an Alliance
Businesses might decide to form this type of coalition for a number of reasons, including:
- The relationship tends to be flexible and less restrictive than forming a more formal partnership.
- A strategic alliance might help both companies expand into new markets.
- Often, both parties to the alliance gain an edge over a mutual competitor.
The goals each company hopes to accomplish vary but could include developing, manufacturing, and selling products or services.
Still, There Are Risks
Few business ventures exist without a little danger. With a strategic alliance, each party will have its own operating rules and protocols. Sometimes, these will conflict. Companies may clash over hours, holidays, cooperation between their employees, or duration of the alliance.
Confidentiality may become a concern. In some cases, the companies involved in the strategic alliance might be required to share proprietary information. Trust is important, but the parties will likely ask their attorneys to draw up non-disclosure or confidentiality agreements.
Finally, parties to the strategic alliance might become a little too dependent upon each other. This could lead to confusion among employees, management, and customers.
Legal Advice Is Critical When Forming a Strategic Alliance
Having clear, unambiguous written contracts could help avoid future problems that might crop up during the alliance’s lifetime.
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.