Guidelines for Managing an Alliance

Guidelines for managing an alliance:

• Conduct a cost-benefit analysis of favorable and unfavorable conditions. Control them to maximize revenues, minimize costs and lower risks
• When possible, start an alliance small and build on trust
• Avoid exchanging market access between competitors
• Identify and address conflicts over activities critical to success, time horizons or government regulation
• Generate widespread internal political support
• Place operating managers on the negotiating team
• Send divisive topics to higher-level negotiation groups
• Structure the alliance with its own board of directors to speed up the approval process
• Select a CEO on the basis of appropriate skills, style and ability to develop an understanding of goals and competitive advantages that are to be shared between the alliance partners
• Do not require the alliance to prepare two sets of financial control reporting systems, one for each partner
• Stay alert to early signs of termination: inflexibility in adapting operating procedures; combative negotiation style; conflict over management appointments; politicking; and a reluctance to reinvest
• In the termination process, determine what must be accomplished in order to allow the remaining partner to keep the former joint activity going
• When negotiating termination procedures, do not establish a precise termination value formula nor take a detailed, legalistic approach that breeds mistrust.

SOURCE: The Conference Board