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Negotiating Strategic Alliances

By John D. Baker

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From the close of World War II in 1945 through today, many of the peoples of the Earth have found themselves to be participants in seemingly unending social, political, intellectual and economic revolutions. One of the most volatile and well-publicized of those seismic quakes has been the globalization of major segments of traditional economic life.

The forces of “globalization” have impacted production, labor, capital, regulatory oversight and seemingly every aspect of economic activity throughout most of the world. Surprisingly, of course, the basic transformative instrument for this vast change is no more revolutionary than the negotiated contract that transfers the performance of specified in-house functions to an outside and separate organization. “Outsourcing,” as the practice is termed, is fundamentally contracted performance on a fee for service basis. Its primary driver is cost reduction.

Examples of “globalization” activities are legion. In the United States, for examples, we might cite such events as the move of garment industry production to South East Asia: the transfer of customer support activities to The Republic of the Philippines; or the shift of computer services to India as clear illustrations of such agreements.

Strategic alliances, on-the-other-hand, are similar but importantly different from “outsourcing” agreements. Strategic alliances are not primarily fee for service agreements. Instead, they are agreements predicated primarily upon the sharing of resources between two or more entities in order to accomplish specific goals that benefit each of the parties. Strategic alliances by their nature usually combine players in the same field. Essentially, they are collaborative enterprises in which risk and reward are shared by the participants individually. Ordinarily, strategic alliances are designed to enhance embedded capabilities, not to replace them. Importantly, since these agreements are intended to create new relationships, achieve stipulated objectives and still preserve the privacy of organizational secrets for all of the parties, written contracts are essential.

Unlike “outsourcing” agreements that live in the media spotlight and generate government, union and community reaction instantly, “strategic alliances” generally reside beneath the radar. Thousands of these agreements are negotiated throughout the world in any given year, usually without more than passing notice from the business and organizational community. And yet, the group is a major and growing contributor to organizational success.

Negotiating Strategic Alliances By John D. Baker


Copyright © 2012 John D. Baker
Copyright ©   2012  The Negotiator Magazine
The Negotiator Magazine  (October, 2012)