Strategic Alliances for Cost Savings, Financial Stability and Buying Parity

Three important money areas where developing strategic alliances will serve you well are: Cost Savings, Financial Stability and Buying Parity.

Cost Savings

Cost savings is an important area for most organizations. I’m not suggesting that you only play the game of business from a defensive position, yet not wasting money is important for any business in an effort to increase net abundance.

In manufacturing elements of your product or entire product that could be built in plants (owned by others or in joint venture) with up to date technology, cost savings can be great. Sharing resources, or outsourcing, rather than owning and operating a manufacturing plant, will allow a synergistic partnering agreement allows you concentrate on your core strengths. This is the idea behind the Donnelly Corporation and their venture with Applied Films Laboratory, Inc. for manufacturing and supplying the world market in display coated glass for liquid crystal displays (LCDs).

Strategic alliances in the world of distribution allows access to orders that can be economically and efficiently produced also that generates reasonable profit through collaboration.

Cost savings has been realized my many organizations through shared locations such as Bank of America and many other banks across the country are that are locating branch offices in suburban and rural supermarkets. They are saving resources while simplifying the lives of their consumers by reducing the amount of their consumers’ daily running around.

Wal-Mart has a partnering alliance with Ronald McDonald. In many of their units across the country, proudly displayed, are signs on the store’s entrance doors announcing, McDonald’s inside and a life-size plastic Ronald, who sits inside on a bench to greet customers. Stores within stores have become commonplace through alliance relationships.

Another common location sharing situation seen across America is at truck stops. It is now common place to visit a truck stop and have a choice from two or three nationally franchised fast food chains. This also successfully achieves cobranding there by increasing the appeal of the particular location.

Financial Stability

Partnering in a poor economy or recession makes good sense especially, when sales are flat and prices are deflating. A while back, Continental Airlines accessed optical industry consumers by partnering with Swan Optical, Inc., an industry supplier, to increase business through an air travel discount certificate program for purchasers of optical frames supplied by Swan Optical.

Access to capital is a primary reason for smaller organizations developing alliances with larger ones. An example, Bruce Bendoff, CEO of Craftsman Custom Fabricators, Inc., Schiller Park, IL, a 275-employee sheet-metal bending company learned how to grow through trusting a corporate behemoth–Motorola.

More potential profit is generally the outcropping of shared resources. Achieving economies of scale is also possible in alliance relationships when partners share facilities, equipment and employees as mentioned above.

In strategic alliance relationships, prompt payment per agreed terms is increased, especially in customer/supplier alliance relationships.

Alliance relationships allow partners to share the financial risks associated with developing new products and entering into new markets.

Buying Parity with Giants

In the distribution industries, cooperatives, alliances and marketing groups are serving individual distributors well. In these relationships they can generally buy at prices far closer to the 800 pound gorillas than they could on their own. Today, most of the distribution industries have at least one of these kinds of organizations to help their members level the playing field.

Various collaborative organizations deliver additional discounts and services for in depth marketing and technical expertise. Win/win pricing becomes more possible in this kind of long-term buyer/seller alliance relationship.

To increase the health and potential growth for your business, consider alliance relationships to improve your cost savings, financial stability and buying parity.

Organic Coffee – Green Office Products

Eco friendly choices in coffee and office break room supplies include:

Fair Trade Certified Coffee Fair Trade coffees help farming families by paying a guaranteed fair, above market price for their harvest, thus providing them with a decent, living wage. This is accomplished by avoiding middlemen and dealing directly with farmers and their cooperatives. Not all Fair Trade Certified coffee is necessarily organic. However, Fair Trade Certified does require strict environmental stewardship such as prohibiting the use of genetically modified organisms (GMOs) and the most hazardous pesticides. All Fair Trade coffee must be certified by TransFair USA, an independent non-profit international agency that monitors and certifies Fair Trade products in the United States.

Certified Organic Coffee Certified organic coffee is grown without synthetic pesticides or other prohibited substances, according to U.S. standards for organic production and certified by an agency accredited by the U.S. Department of Agriculture. Organic coffee farming relies on sustainable crop rotation, and is mainly shade grown, producing delicious, pure coffees.

Rainforest Certified Coffee The Rainforest Alliance, an international nonprofit conservation organization, works in partnership with eight Latin American conservation groups to ensure that coffee farms meet a set of exacting standards that protect forests, waterways, soils and wildlife as well as the rights and welfare of workers and local communities. The standards require ecosystem and wildlife conservation as well as agro-chemical reduction. They also verify that workers have access to basic human services, such as health care, education, dignified housing and just wages. On average, workers on Rainforest Alliance Certified farms earn twice the local minimum wage. Farms that meet the standards are awarded the Rainforest Alliance Certified seal. Look for the Rainforest Alliance Certification logo with a small green frog on the packaging.

Green Office Products: Reduce, reuse and recycle office supplies. Supply office break rooms with biodegradable plates, utensils and eco container cups and lids.

Increase Sales With Strategic Alliances Or Partnerships

Formal joint ventures or what is now called strategic alliances are common for larger businesses where one business cannot handle a specific project, does not have expertise in a particular field or needs help with a new product. However by uniting forces with one or even two other organizations, these innovative firms can divide and successfully conquer the project. The results are increased sales and additional loyal customers.

Some examples of successful strategic partnerships or alliances include CISCO/IBM; CISCO/SalesForce.com; SalesForce.com/Dell; and not let us forget ATT/Apple Phone. In the book, Strategic Alliances: Three Ways to Make Them Work by Steve Steinhilber, he shared that CISCO through its strategic alliances increased overall revenue by $4.5 billion. Yes, you read right billion not million dollars.

With so many small businesses to single office home office (SOHO) firms being established, this proven strategy of uniting with another company just makes common sense. However, because of the fear that working with a perceived competitor might be damaging, those folks who could dramatically benefit the most quite often ignore the idea of such a strategic partnership.

What I know to be true is this is a proven way to increase sales, expand market presence and truly be recognized as an innovator. During the last 10 years, I have established numerous strategic alliances and most of them have been beneficial.

My first strategic alliance was with Laura Novakowski who I meet at a conference where I delivered a keynote to over 150 executive coaches and consultants. After my presentation, she purposely came up to me to introduce herself. She was a nurse with a MBA located in southeast PA and I was a sales professional, public educator with a Masters in Instructional Design. However from that initial connection, we shared conversations, wrote an e-book together, co-authored a monthly Ezine (Power Choices) and helped each other with marketing to actual facilitation challenges. We have made joint sales calls since that first encounter. Laura continues to be a strong strategic partner and a great friend.

More recently I have united with another proactive business professional Theresa Valade. We have known each other for several years. During one of our regular catch up meetings, we realized that we both shared some similar target markets and both had different contacts. After several brainstorming meetings, we conceived a specific joint marketing plan and already have a couple of organizations interested.

In reviewing why my these alliances have worked, I realized three key elements were present in each and everyone. First, there must be shared positive core values. If you and the other small business owner have different core values, then this is a deal breaker. One of those key values is commitment to the relationship.

Second, each person must be willing to do 50% of the work at all stages. When a strategic partnership is one way, this will not work. For example over the years, other consultants who wished to work together have approached me. They wanted me to do 100% of the marketing and selling and they would do the facilitating. The profits would be split 50/50 and this demonstrates someone who is one way.

Third, results must be measured. Unless you set benchmarks and monitor your progress, this strategy will not render the results that are possible.

Strategic alliances can and do work provided you get out of your own way and find others who share the same values as you. Just think of it, instead of you just pounding the pavement, attending all those business to business (B2B) events, now you have another person working with you. Bottom line is you can reach more people in less time and quickly increase sales.