Basic Ingredients for successful Alliances

Thorough assessment of participant: Build a relationship based on those identified strengths that provide necessary elements for successful operation of the partnership.

Value consistency: Identify a partner with similar corporate values to ensure that both firms are able to commingle human and financial resources without substantial debate.

Clear understanding of objectives: Ensure that clearly defined goals and objectives are discussed in preliminary negotiations for the facilitation of further coordination of activities.

Agreement of measurement standards: Establish measurement criteria that clarify the initial partnership vision at the activity level for employees of both participants.

Long term focus: Create a long term perspective on the relationship that does not endanger the initial investment through expectation of immediate results.

Multiple level commitments: Provide continuity and depth of commitment through approval and reinforcement of the partnership across several management levels (including the CEO).

Working relationship at interface level: Foster coordination of the partners at the interface level to ensure that daily activities are successfully accomplished once the task forces have clearly established the goals and objectives.

Limited number of relationships: Limit the number of legitimate partnerships in which either firm is actively engaged to acknowledge the extensive time requirements at key levels in the company.

Elimination of ‘quid pro quo’ mentality: Maintain an attitude that allows for changes in the original agreement which benefit the entire product supply chain, regardless of the timing of individual costs or returns (i.e. permits sub-optimization).
Prices are negotiated, not bid and subjected to change: Remain committed to ultimate resolution of conflict through negotiation in the interest of continuing the relationship over the long term.

Integrating a VMS Arrangement- Electronics Linkage:
The growth of VMS arrangements has been facilitated by the rapid expansion of formation technology. One impact of formation has been to caret the technical basis for channel alignments. A firm today is more receptive to long term channel arrangements than in the past in part because of increased control capabilities. Increased receptivity also is a result of internal organization trends that encourage outsourcing. The combined result is increased interest in the formation of channel alliances.

The glue that holds many channel alliances together is information. The rapid development of electronic data interchange (EDI) is discussed, including the range of specialized services such as value added networks (VANs), interface translators and Universal product Code catalogs (UPC catalogs) that have a resulted from the rapid proliferation of information technology.

The marketing channel represents the primary arena in which EDI linkages can facilitate coordinated operations between trading partners. It is becoming common practice to integrate information flows to and from specialized service provider who regularly participate in a channel. From customers order entry to product deliver, every aspect of operations can be electronically coordinated to ensure high-quality performance.

In order for a channel to effectively perform in the value added process, information exchange among participants should become highly routine. The establishment of advanced or sophisticated communication is referred to as electronic linkage. Electronic linkage, which builds a business relationship around information technology, assumes that critical data will freely flow among joined in a cannel.

Channel leadership and extended enterprises engagement become far practical when information is openly shared. The VMS represents an informal span of control that extends beyond the legal boundaries or operating domain traditionally afforded to a single organization by virtue of its channel position. For example, when Owens Corning Fiberglas actively collaborates in the planning and implementations of joint marketing strategies with its independent contractor-installers, what results is an effective organizational structure that is larger in scope and intensity than any of the individual organization in the business of Fiberglass.

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