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Marketing and Sales Strategic Alliances

  • ID: 42735
  • Report
  • January 1998
  • 71 pages
  • American Productivity & Quality Center, APQC
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Today’s business climate forces companies to cut costs and focus on core competencies. However, increasing competitiveness requires companies also to develop new strengths to deliver products and services quickly and at a lower cost. Companies usually cannot build new strengths without investing time, assuming great risk, and absorbing extensive costs. Strategic alliances allow companies to create successful products and rapidly enter new markets while keeping risk and costs in check. Recent years have seen an explosion in the number of alliances companies create to share resources and benefit from partners’ expertise. Organizations in the United States entered into more than 20,000 new alliances from 1987 to 1992. Nearly 6 percent of Fortune 1000 companies’ revenues come from alliances.1 Successful alliances create a powerful competitive advantage. A recent Coopers & Lybrand, LLP, study showed that firms involved in alliances had 11 percent higher revenue and a 20 percent higher growth rate than companies not engaged in any alliance activity. Alliances clearly have a dramatic impact on an organization’s success.

Benefits achieved from successful alliances include:
- access to new markets for existing products;
- access to new products to serve existing customers;
- added financial leverage;
- improvement in research, product development, and manufacturing capabilities;
- risk sharing;
- access to new distribution channels; and
- decreased time to market.

While the best practices examined throughout this study were mostly marketing
and sales alliances—that is, they were designed to increase the participating companies’ product sales—the key findings discovered are applicable to almost any type of alliance. The company examples that support the findings supply the sales and marketing alliance link.

SETTING A COMMON LANGUAGE

Before we explore the findings of this study, it will be helpful to set some common definitions for relevant terms:

- An alliance is a relationship that is strategic or tactical, and that is entered into for mutual benefit by two or more parties having compatible or complementary business interests and goals.
- A marketing and sales alliance is a relationship entered into specifically to increase the sales of products of one or both of the alliance partners.
- An alliance plan is a business and operating plan for the alliance.
- Being strategic is the process of planning and directing operations into the most advantageous position before entering into an agreement.
- Tactics is the process of reacting or deploying during engagement.
- Operations refers to the process of being in action, the state of being actively involved in business activities and transactions.
- A proactive alliance is an alliance that comes about after one company actively seeks the partnership of another organization.
- A reactive alliance is an alliance that comes about after one company is approached by another organization with a request for partnership.
- Points of interface are individuals within a company engaging in direct, continuous, and substantive contact with a person in the alliance partner’s company regarding a specific alliance.

KEY FINDINGS

The key findings discovered are as follows:
1. Successful alliances occur between companies that either have cultural commonalities or effectively manage the differences.
2. Tiering is a necessity when a company has a large number of alliances.
3. Best-practice companies are looking to create and adhere to an alliance process.
4. Communication between alliance partners must be open and structured.
5. Monitoring customer responses and service complaints is key to alliance success.
6. Companies that partner with competitors must have a process for managing these delicate alliances.
7. Alliance managers should be measured on not only the success of the alliance but also performance of responsibilities.
8. Flexibility is key in all aspects of alliance development, negotiation, and implementation.
9. Successful companies have strategies in place to keep individual personalities from affecting the alliance relationship.
10. Continuous measuring, monitoring, and reviewing throughout the life of the alliance is essential.

These key findings are further explored in the next section of this report. The
Topical Insights section presents innovative learnings discovered in our study of these best-practice companies to facilitate strategic alliances in the marketing and sales arena.
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- Sponsor and Partner Companies

A complete listing of the sponsor companies in this study, as well as the best-practice (“partner”) companies that were benchmarked for their innovation and
advancement in marketing and sales strategic alliances.

- Executive Summary

A bird’s-eye view of the study, presenting the key findings discovered and the methodology used throughout the course of the study. The findings are explored in detail in following sections.

- Key Findings

An in-depth look at the 10 key findings of this study. The findings are supported by qualitative examples of practices employed by the partner companies.

- Topical Insights

An exploration of the partners’ practices in 15 topic areas related to establishing and maintaining marketing and sales alliances.

- Partner Company Profiles

Background information on the partner companies, as well as their innovative marketing and sales alliance processes.
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