“There is nothing new about businesses forming either joint ventures (in which they establish jointly owned subsidiaries) or looser alliances. There are ample studies to show how often they have been tried—and how often they have ended in tears. However, despite the difficulties of making partnerships work, firms are under a number of pressures to keep trying,” the Economist notes.
The reasons include sharing the cost of new technologies, using technology to bridge different industries or different geographic markets and meeting the growing demands and expectations of consumers.
“There is no shortage, then, of good reasons why companies should seek to join hands with even their eternal foes. However, the drubbing that the Liberal Democrats—the Conservatives’ former coalition partners—received at the polls this month is a reminder of how easily alliances can go wrong. Sometimes even the best-intentioned partner can squeeze the lifeblood out of another. Companies entering an alliance must learn how to trust each other—but also guard against being taken for a ride.”
“Businesspeople have much to learn from politicians and diplomats in this. Politicians have always lived in a world where the boundaries between friends and enemies are blurred. They recognize that your closest ally can soon become your bitterest adversary. (Mr Cameron may soon be looking back at how much easier it was to work with his “enemies” from the Liberal Democrats than with his “friends” on the right wing of his own party). Diplomats understand the importance of maintaining relations through thick and thin: whatever their underlying rivalries and occasional spats, America and China have a mutual interest in remaining on tolerably good terms and co-operating on global problems. And both politicians and diplomats realize that all alliances are marriages of convenience. Lord Palmerston, a British prime minister, once said that Britain has no permanent allies or enemies, only permanent interests. That is the view business leaders should take as they enter partnerships.”
The Globe and Mail has an interesting piece on how alliances are increasingly ruling the business world.