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STRATEGICALLIANCES—THEWAY TOSUCCESS INBUSINESS 341Partnerships vs. Strategic Alliances
A “partnership” in business typically suggests a legal
agreement of participating in a venture of some sort for
a very specific outcome. Real estate partnerships, for in-
stance, might be formed to accumulate funds to buy real
estate for the partnership. InWebster’s New Collegiate
Dictionary,partnership is defined as a legal relationship
existing between two or more persons contractually asso-
ciated as joint principals in a business. A partnership may
or may not be represented by a written contract but could
still be formed legally. “Strategic” in the same dictionary
is defined as “of great importance within an integrated
whole or to a planned effect.” “Alliance” is defined as
“an association to further the common interests of the
members.”
Strategic alliances is a term that has been used most
recently as it has related to commerce through the use
of the Internet. On Cisco’s corporate Web site page is an
explanation of their philosophy: “Our strategic alliances
form a customer-centric, total solution approach to solv-
ing problems, exploiting business opportunity, and creat-
ing sustainable competitive advantage for our customers”
(Cisco Systems, 2002a).
At Cisco,strategic alliancesengage inimpact part-
neringthat is differentiated by eightunique but inte-
gratedcharacteristics:Industry Leaders,
Multiple Touch Points Across Both Companies,
Cross Value Chain Impact,
Joint Solution and/or Technology to Address Customer
Needs,
Long Term Investment of Resources and IP,
Anticipate Competitive Threats,
Create New Global Markets and IP, and
Weave Multiple Partners Together to Target New Mar-
kets (Cisco Systems, 2002b).Although partnership and strategic alliance can be
used interchangeably in some circumstances, the forma-
tion of a strategic alliance seems to insinuate a relation-
ship of interdependence, so important that the entity can-
not exist without the sum of all of those involved. As stated
in theASCI Journal of Managementin 1992, strategic al-
liances have brought about a new dimension to a global-
izing economy. They have led as well as are being led by
various shifts in the global markets (Asma, 1992).Partnerships as Strategic Alliances
Development Prior to E-commerce
Creating partnerships, legal or otherwise, is not a new con-
cept in business. In ancient history, bartering was a com-
mon form of existence because it provided a way to obtain
products or services through an exchange. Typically, mer-
chants focusing on developing a certain skill to create a
product or service depended on others for products or
services that they had no skill or abilities to produce. This
type of business arrangement provided a certain amount
of stability and peace to a village.Franchising concepts have been another form of cre-
ating partnerships. Franchising is at least 150 years old.
One early example resulted in the characteristic look of
historic hotels (bars) in New South Wales, with franchis-
ing agreements between hotels and breweries. An Ameri-
can example was the telegraph system operated by various
railroad companies but controlled by Western Union.
Multilevel marketing (or network marketing), such as
used in the Amway business, is another partnering busi-
ness model. Typically, independent business owners are
associated with the company in a contractor-like relation-
ship. A percentage of the profits from the sale of goods is
distributed between the relationships.Strategic Alliances in E-commerce
As the Internet has grown so exponentially in use, so has
commerce activity over the Web. Businesses have been
forced to create specific partnerships as a means of work-
ing through the complexities of producing, selling, and
distributing products over the Web. At the same time, they
have been required to create a strategy for a totally new
way of connecting to the customer. The broadened expo-
sure to the market and the speed requirement induced
by that exposure coupled with the speed expectations of
the customers has furthered the need to find and develop
appropriate strategies. In contrast to earlier times when
skills were limited, the use of the Internet has added so
much complexity that it has once again forced business
owners to focus on doing one thing really well.
The speeding up of finding, ordering, paying, and de-
manding for delivery has caused a need for companies to
focus on their strengths, and at the same time, eliminate
the processes within their company that others can do
better. As downsizing and financial burdens have in-
creased in recent years, businesses are more focused on
“outsourcing” their needs as a means of balancing the
budget. Focusing on the highest and best use of com-
pany resources has required development of synergism
with other companies.Identifying and Developing Core
Competency
The processes identified to develop a clear understanding
of a firm’s core competency must begin with the simple
question: What do we do better than anyone else? Some
of the most important core competencies are listed in
Table 1. As a company begins a process to consider the
advantage they have over competitors, they also need to
assess how important, or not, those characteristics might
be to the overall strategies. Table 1, for instance, gives the
opinion that while a company might be the first company
to come into the market with a particular invention, they
might not be the company that ultimately makes a success
of that invention. The table estimates a value of 3 out of a
possible 10 for how the importance of being first to mar-
ket might be compared to other indications of a company’s
ability to be successful. The intent of the graph is to show
the likelihood of a competitor being able to surpass a firm’s
particular competency. This graph, obviously, values em-
ployee stability as one of the most important factors in