Forging alliances: A guide to top management

Hardly a day goes by without an announcement of the formation of an alliance among major companies around the world. But many an alliance entered into with great fanfare has turned sour. Indeed, the divorce rate is rather high. A recent study conducted by the authors suggests two major reasons for failed alliances. One is managers' misunderstanding of what an alliance is and what it can do. Too many managers perceive alliance as an undifferentiated concept; they miss the subtle and not so subtle distinctions among types of alliances. Failure of management to critically assess its strategic logic before forging a relationship with another company is the other major cause of failed alliances. To help managers better assess associated opportunities and risks, we have developed a typology for analyzing the strategic implications inherent in different kinds of alliances. We also offer a road map designed to encourage a disciplined, systematic approach to the forging of alliances.