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Business Partner Search And Business Matchmaking


Introduction

To survive in today's dynamic and competitive environment, companies must deliver integrated and flexible solutions to customers and, in all likelihood, they can be better achieved through collaboration. In other words, alliances are no longer an option but a necessity for the success of a company. This view is shared by 80% of the companies, thereby recognising that alliances become a vital tool for the growth and development of the company.

It is remarkable that for the time being, most companies have a less professional approach to selecting and forming strategic alliances. Often no action is taken based on a strategic plan, choices and the limited selections of partners are based on coincidence or existing relationships. Moreover, if steps are being taken towards alliance plans, these will remain superficial and will not be sufficiently formal. The result is that the joint venture activity gets stuck. Ultimately, after all, intensive and time-consuming exercises, it is sad and can even lead to considerable damage.

Some contemporary developments that lead to an increase in cooperation configurations are:
- the fading of competitive distinction
- customers demand solutions instead of just products and services
- globalisation of markets
- increased competition
- value creation through synergy (own core activities combined with the partner's strengths)
- (changing) requirements that are set for standards and compatibility
- increase in business risks and uncertainties (less predictable outcomes)
- a recognisable trend of building alliance skills within companies
- technology development


Advantages and disadvantages of business partnerships

Alliances as a strategy offer the essential benefits, to name some of these advantages:
• transformation
- provides access to new technologies, skills, insights, processes and culture that other (partner) organisations can possess, it encourages changes
• flexibility
- in uncertain markets or times, one can experiment a little due to shared risk (trial and error) with, for example, new product/market combinations
• raise entry barriers
- improve competitiveness and, if possible, eliminate competitors
• cost reduction
- to be achieved by sharing costs and efficiency improvements
• effective market entry
- combine sales organisation/distribution structure, acquisition of and knowledge, licenses, permits and product standards
• chain management
- value creation through complementary activities and knowledge of joined partners
• efficient product development
- through joint production/development, the product/service can be introduced to the market faster at lower investment costs
• develop & learn
- facilitating faster learning and development because partners are complement to each other
• (pre)-mergers and acquisitions
- closer cooperation to understand a potential future acquisition, candidate as a company for a successful acquisition/merge

Naturally, alliances are not a panacea that offers the optimum solution in every situation. In addition to the benefits mentioned above, there are also extensive costs and risks associated with alliances, for example
• coordination costs
- management time, conflict resolution;
• competitive costs
- loss of competitive advantage, creation of a (future) competitor, interdependence
• negative mutual relationships
- opportunistic behaviour of the partner, lack of sincerity, unequal development, superior negotiation skills and no equivalent agreements


Characteristics of successful business partnerships

The main characteristics of well-structured and successful alliances are;
• critical motives
- strategic and operational persuasive and beliefs of the business partners must be complementary
• strategic synergy
- complementary forces, together, partners must have more strength than separately (1 + 1 = 3)
• benevolent chemistry
- the organisation must be able to work well together, possess the same "cooperation culture" with unity, mutual trust and appreciation, positive image, purposeful
• win win
- the implementation, risks and rewards must be shared equally (and fair), with a certain degree of willingness to adapt, create and transform
• operational integration
- management style and working methods should be compatible; corresponding goals, reward systems, procedures and cultures promotes a collaboration
• growth opportunities
- the alliance must offer opportunities for growth, as a partnership must imprimis lead to a higher chance of success
• strong focus
- the goal must be crystal clear; specific concrete intended end results, schedules, responsibilities, monitoring measurable outcomes including analysing and adjustment
• commitment and support
- leadership, consensus/support of middle management and available resources are essential to achieve a common goal


image: Collaboration success factors & Collaboration failure factors (in brief overview)

In summary, we can name the following success and failure factors of alliances
• success factors
- perfect strategic fit (strengths eliminate weaknesses)
- cultivating perfect chemistry
- selection of the right partner with compatible intention and culture
- creation of added value for the customer
- committed to a long-term win-win
• failure factors
- lack of commitment
- lack of mutual trust
- poor cultural/operational integration
- no or lack of synergy (strategically weak)
- rigid posture, little adaptability
- focused on internal stakes and alliance issues (and not on mission and the customer)


Collaboration disciplines

image: Collaboration disciplines: 23 reasons and intentions to cooperate, to create a strategic alliance

Beneficial is starting to map perspective, preferred and currently existing business connections by determinate possibilities in value of interaction, conditions as well as assumptions by identifying the collaboration discipline needed.
• business partner as a co-shareholder, capital provider (financing need)
• new business opportunities (by combined and add strength of partner(s))
• corporate housing, multi-tenanted centres/colocation
• shared business services (administrative and supportive services, back-offices)
• procurement (integrated/preferred supplier, joint purchasing)
• logistics & distribution
• product development, innovation, technology/engineering
• expertise & professional information
• market & sales (complementary offerings, shared channels/agents)
• manufacturing facilities & capacity (insourcing or outsourcing)
• shared business lines, product services (repair, installation, returns)
• shared resources & machines/equipment
• project consortia JV
• regulations licenses/permits
• customer loyalty & integration


Cooperation/partnership forms

First, some forms of cooperation that are easier to realise that setting up a new, joint venture. It may also be that these forms of collaboration can be an exploration of formalising and establishing a new company.
• strategic purchasing
- far-reaching integration of the activities and knowledge of a particular supplier, in our opinion, procurement enters into a form of cooperation
• unofficial cooperation
- agreements have been made, whether recorded or not. Activities are occasionally or permanently taken up jointly from your own existing company, such as joint purchasing, selling complementary services/products, shared services or loan of machines/equipment etc.
• project alliance
- an agreement between the parties for a joint project with a specific purpose and as projects end, these agreements are usually also for a specified period (for example, product development

With the options below, the company explicitly strives for a lasting business relationship and acts from a joint legal entity
• general partnership
- two or more co-owners formally carry out a business activity for profit. From a legal point of view, a partnership is seen as a group of individuals rather than an entity. Each partner has his share in the profit, is entirely jointly and severally liable and has an individual or personal tax liability.
• joint venture
- two or more companies unite under a contractual agreement to establish a specific company. In addition to the new joint venture, the founding companies continue to exist, and these parties share the profit and loss of the joint venture.
• merger
- a bundle of two equivalent previously separate equivalent companies.
- a merger occurs when two companies dissolve their own assets and liabilities and then place them together in a third, newly established unit.
• acquisition
A company acquires entirely or partially from a company by taking over activities and/or assets and/or shares. This can, therefore, be a buy-out or a divestment.

The cooperation form also determined the characteristics of the collaboration:
- whether or not to invest in a new joint venture?
- is the collaboration permanent, project-based or incidental/opportunity based?
- or does the cooperation aim to integrate a supplier optimally?

Also, note;
- potential partners can be all companies or entrepreneurs; companies in the same sector or a different industries, but also inside or outside the production chain, competitors, all business-like; competitors, colleagues, suppliers, customers, governments and other bodies (groups are already subconsciously excluded, which unnecessarily limits the business partner search strategy)
- partner together achieve agreed common goals while each partner may have different reasons for making these shared objectives.


Business partner search and business matchmaking skills  

After determining the collaboration disciplines and cooperation form and before starting the business partner search and business matchmaking process, it is advisable to make a quick scan of the expected complexity (importance, scope), internal knowledge (required management tools) and capacity (time use, lead time). Based on this, one can determine whether external expertise is necessary or desirable and which specific tasks to outsource to an independent consultant who is a specialist in business partner search and business matchmaking. Below is a summary for making this assessment.

Importance
- operational, tactical or strategic
Geographic scope
- regional, national, international or global
Management tools
- partner selection
- legal knowledge
- alliance portfolio management
- alliance project organisation/team  
- strategy plan and management/organisation plan of the alliance
- alliance implementation program
Schedule
- lead time and milestones
- required time
Specific knowledge (of business partner search, business matchmaking)
- assignment to an independent consultant needed/desired
- if so, determine the task/role of the independent consultant


Consultdustry Business partner search and business matchmaking services

Appointing an independent consultant such as Consultdustry will save valuable time and can considerably increase the success rate of an alliance. We manage companies in business partner search and business matchmaking;
- lead companies from the strategy formation through the entire alliance process
- explore and select potential business partners by defined alliance & business partner criteria (long and shortlist)
- conducting exploratory discussions with potential partners
- analysing the added value and feasibility of a (possible) cooperation
- co-draft and/or, if desired, the project management, of alliance principles, policy plans and organisational structure
- conducting the negotiations and the written recordings
- draft "Memorandum Of Understanding" and other (legal) agreements
- support or the project management of the alliance implementation
- analysis of the on-going alliance results and advise in future alliance policies


Partnership formation process


image: Partnership formation process - 6 phases

The formation process to come to the collaboration has 6 steps, which are;
Phase A - Business strategy
Phase B - Partnership strategy
Phase C - Partner selection
Phase D - Design & develop
Phase E - Implementation & operationalization
Phase F - Management & evaluation


Phase A - Business strategy

The objectives of this phase are the following
- identifying important trends and developments, opportunities and threats
- identifying the strengths and weaknesses of the organisation
- recognising the shortcomings of the organisation
- determining the strategy of the organisation, how to dissolve the shortcomings.
To achieve the above objectives, the following steps must be taken:
1. external analysis
2. identify competencies
3. develop vision and mission
4. identify shortcomings
5. strategy determination

The strategy can be formulated based on the insights gained in the shortcomings and the surplus of competences. This comes down to determining how competencies are developed, and the unneeded skills and assets will be disposed.
Concerning the shortcomings, and developing competencies, a business has three options. These are the following:
• autonomous growth
• mergers and acquisitions
• alliances
Of course, a combination of these options is also possible and is even desirable. In principle, every company should have a core competencies portfolio in which autonomous growth, mergers and acquisitions and alliances are in full force and effect. The effective deployment and acquisition of strategic core competencies have proven to be a practical and profitable strategy for countless companies, including (larger) SMEs. However, many misbelieve that a strategic portfolio is only a strategy reserved for MNCs. Our position is that the policy regarding the development of core competencies is the essence of entrepreneurship!

Considerations regarding the most effective core competencies strategies will mainly be based on the pros and cons associated with the chosen solution.
A brief overview of these advantages and disadvantages can be found below:
• pros and cons of autonomous growth
+++ benefits of autonomous growth
+ strengthens internal skills + tuning growth to needs + control of assets and technology + preservation of core competencies
--- disadvantages of autonomous growth
- expensive, costly - time-consuming - value creation delayed - success is uncertain - limited growth/expansion - possible competitive disadvantages
• pros and cons mergers & acquisitions
--- benefits of mergers & acquisitions
+ rapid entry into equal markets + proven capacity + product differentiation + reducing supply/demand for disruptions + developing competencies
--- disadvantages of mergers & acquisitions
- a lot of capital needed - large integration problems - uncertain legal permission - high risk - complex negotiations - disruptions in normal business operations
• pros and cons alliances
+++ benefits alliances
+ fast access to new markets + proven capacity + shared risk + no buying premium (such as M&A goodwill) + multiple alliances possible + development of competences + change of position + leverage
--- cons alliances
- shared revenues - management challenges - need to define results )and policy) - lack of alliance management/knowhow - portfolio management challenges (potential obstacles) - control challenges

The table below shows the different characteristics of the strategic options to the consequences of the chosen policy, to
- risk
- realisation speed
- required resources
- change momentum


Phase B - Partnership strategy

The objectives of this phase are as follows:
- establishing the overall alliance strategy
- determining the policy of the various optional alliances.
As the above purposes show, this phase consists of two different elements.
Firstly, explaining the overall alliance strategy of the company. The alliance strategy follows from the trade-off between independently developing options, mergers and acquisitions and working together through one or more alliances.
The alliance strategy must then provide a specific answer to the question of how the strategic objectives can be optimally achieved through alliances, taking into account the risks as well as the availability of resources and the changes to be made.
On the other hand, the individual strategy for the alliances needs to be established, i.e. specifying the role of the various partnerships within the (existing) alliance portfolio.
To achieve the above objectives, the following steps must be completed:
1. design optimal alliance portfolio, with acknowledging:
- strategic partners
- indispensable partners
- supporting partners
2. managing the alliance portfolio
- matrix classification/evaluation according to required investment size and additional income and/or the size of value creation
3. identify the drivers of the alliance
- determine the objectives of the individual partners and the coalition
- prepare a SWOT analysis of possible collaboration
4. determining the strategy of the partnership, whereby the main points can be chosen;
a. cooperation
- competitors become allies and suppliers of complementary products and services to achieve a certain critical mass to realise a competitive advantage and/or to act defensively by binding a competitor
b. co-specialization
- creating synergy by combining (unique) knowledge and resources offers opportunities by reducing complexity and innovative business models
c. internalising
- adopt the knowledge and skills of the partner, learning and development through conscious assimilation
d. restructuring
- as a means to change and restructure the organisation (over time), by terminating and expanding, if possible by disinvesting and acquisitions of activities and business units
5. identify the added value of optional alliances
- an analysis of the added value in terms of market and competitive position, profitability, effectiveness & efficiency, productivity and other criteria, as well as possible disadvantages such as risks and success rate, seizure of management and resources, possible alternatives etc.


Phase C - Partner selection

The objectives of this phase are as follows:
- searching and approaching potential partners
- conducting first exploratory contacts
- determination of the feasibility of the proposed alliance
- selecting the optimum partner for elaborate alliance plan
In order to achieve the above objectives, the following steps must be taken:
1. prepare the optimal partner profile
The intended strategy of the alliance, the drivers and the added value proposition constitute the basis for the profile of the optimal partner, but a further supplement is desirable with;
- management
- financial position & results
- commercial power
- research & development
- production
- marketing & distribution
- required alliance skills
- required/needed investments and resources
- (stand-alone) strategy and culture
- the intended legal entity of the alliance
2. drawing up the principles and conditions
3. drawing up a long list of potential partners
4. orientating conversations
- if an alliance advisor is recruited, the first contacts can be arranged anonymously!
5. prepare a shortlist of potential partners
6. fit analysis
- a partnership fit study can be done at 4 levels
--- strategic: vision, mission, strategy, objectives, competencies, opportunities and threats
--- operational: remuneration system, personnel policy, decision-making, task distribution, result measurement, skills
--- interactional: personality, prestige, culture, trust, respect, integrity
--- alliance skills: partner selection process, process approach and consequences, alliance plans and realisation power, alliance promoter(s), managers and specialists, management and policy-making of the alliances
7. risk and return analysis
- risks: about the determination of risks, consideration should not only be given in terms of money, but should also be included in the analysis to determine the strategic position: market, environment, management, technology, politics, resources, capital and investment, culture and
- return: dimensions of the financial gain include; market growth, organisational capacity, innovative effectiveness, competitive advantage and financial returns.
8. consensus value evaluation of the intended alliance
- by repeating steps 6 and 7 (fit analysis, risk & return analysis) with the alliance partner clarity and homogeneity arise between the potential partners and one can make a decisive decision about the alliance progress


Phase D - Design & develop

This phase of shaping the collaboration aims to:
- setting up a project organisation to make the plans concrete
- negotiate individual position and role based on the made detailed plans
- reach a memorandum of understanding and principles, with which the cooperation becomes a fact
To achieve these goals, the intended alliance partners will have to take the following steps in succession
1. assignment
- jointly with the intended partner(s) formulating the job of the alliance plan and the associated frameworks (policy, organisation, finance, commerce, management, budget, etc.)
2. project structure
- setting up a project organisation that should shape the alliance, the overall project management can best be given to one or more external alliance consultant(s) (working on behalf of the parties involved) while each party must contribute.
- the project alliance team consist of
a. independent alliance consultant - with the main tasks
- supervise the entire alliance process
- coaches the promoter and project manager
- can, if desired, fulfil the role of project manager alliance
b. alliance promoter - with the main tasks
- each party in the coalition appoints an alliance promoter
- who has access, trust and delegated authority of management board
- reports to the management board
- has an unconditional belief in the future of the alliance
- has a future vision for the cooperation
- directs the alliance project manager (could be an independent alliance consultant)
- monitors the defined principles and conditions
- update the fit analysis and risk and return analysis (and if necessary will take measures)
- participates in the negotiations and formulates the final proposals
c. alliance project manager - with the main tasks
- an external consultant can best fulfil this role
- receives and executes the assignment from alliance promoter (or the independent alliance consultant)  
- preparation of the alliance program; policy plan and structure of management and organisation of the alliance
- lead the operational team on a project basis
- report to both to the alliance promoter and the independent consultant(s) and
(Note: if the board opts for an internal candidate (difficulty will arise when choosing one person from one of the intended parties, while several persons will increase internal support but will be extremely time-consuming
d. operational team - with the main tasks
- is composed by merging various employees of the alliance parties
- open-minded to create a basis for harmonious cooperation
- development (and writing) of the plans
- preparing proposals for decisions
(Note: as an operational team, avoid too much one-sided thinking, look after primarily the interests of the alliance, negotiations take place at a later stage)
3. execution
- the preparation of the alliance policy plan and organisation proposal by the team, with regular review and progress discussions that are led by the project manager in the presence of the alliance promoter
4. negotiations
- jointly determine with the potential partner the win-win that must be achieved with the alliance
5. MoUP, memorandum of understanding and principles
- is a binding legal agreement with all the aspects that have been agreed:
--- strategic intention, objectives and operational basics
--- the principles for completing or discontinuing the alliance process
--- the foundation for the alliance agreement
- the MUoP should, in any case, contain the following subjects (table of contents); agreement objectives, cooperation principles, alliance goals & responsibilities, decision making, resources, financial consideration, risks & returns, alliance/project specific topics, structure, transformation, planning, binding clause, dispute settlement


Phase E - Implementation and operationalisation

The objectives of this phase are as follows:
- preparation of the definitive cooperation plan
- formalise the collaboration and start to operate
In order to achieve the above objectives, the following steps must be taken:
1. prepare the definitive policy plan and organisation plan
- the alliance has got in outline its final structure
- a further specification of the management and conduct of business should still be detailed, such as management board, result measurement, control & governance, conflict management, internal and external communication, development and learning, flexibility in strategy, future strategic plans
2. legal agreement
- this legal agreement is usually a simple standard agreement, depending on the corporate entity, it is the legal recording of ownership, powers, responsibilities, guarantees, liabilities, disputes and changes therein
3. starting the partnership business
- finally, after proper preparation, the joint business activities can start for fruitful returns and towards the desired constructive cooperation


Phase F - Management & evaluation

The objectives of this phase are:
- secure value creation
- monitor progress and result
- adjustment of the alliance policy
To achieve the above objectives, the following steps must be followed:
1. establishing evaluation criteria
- the cooperated forces to concrete goals, in the absence of these, owners/management can never jointly determine the (degree of) success or failure
- evaluations of starting alliances are considered subjective and the longer an alliance exists, the more objective the assessment will be
- since every alliance is unique, there is no standard list of evaluation criteria
- an evaluation must include the development of start (input) and the (expected) results (output) in the short and longer term
- although the evaluation criteria for the alliance must be made specific, we list below some commonly used general evaluation criteria;
--- state of the alliance: harmony between partners, moral, productivity, ability to raise resources, adaptability, innovativeness
--- learning and maturation: unknown market, unknown technology
--- marketing: market share, customer satisfaction, relative product quality, the relative price
--- financial criteria: profitability, cash flow
2. result measurement
- periodically evaluate together with the business partner(s), to analyse and discuss the causes and consequences of both the negative and the positive variations compared to the original plans
- in fact, there are three options regarding the future of the alliance, which are
a. continue the alliance in its current form
- continuation, the operation is going according to plan
b. repositioning the alliance
- most of the analyses will lead to repositioning, in particular, due to developments in the market (regulations, competitors and changes in the strategy of the alliance partners)
c. terminate the alliance
- does not always have to be the alliance's failure, sometimes the goal has been achieved (for example in product development), or there is a change in the partners' policies
3. adjust business plans of the alliance
- if sufficient permanent value is assigned to the alliance, the policy plans will have to be updated periodically, and these plans must be implemented.