Executive Briefings

Where's the Greater Risk - Entering Into Collaborative Relationships or Going It Alone?

While the financial crisis often drove stronger companies to cozy up to suppliers in hopes of extracting better terms and prices, the focus has now moved to collaborative process improvements and shared risk exposure, among other aims. Companies are also taking a more strategic view of partnerships, thinking less in terms of tactics for winning bids and more about longer-term goals, like nurturing new markets.

Forging deeper ties requires delicacy and due diligence. Forming third-party relationships can be a distraction, particularly if they are "one-off ventures that dilute resources from the core focus" of the company. And, while such partnerships can play a crucial role in penetrating new geographies (thanks to the local knowledge of the partner), there's always the risk that the third party will drift away from its original intentions or ethical standards. Like any relationship, corporate couplings need to establish - and maintain - strict ground rules to uphold a shared vision.

It's hard work, but in an uncertain economy the greater risk may be in going it alone.

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While the financial crisis often drove stronger companies to cozy up to suppliers in hopes of extracting better terms and prices, the focus has now moved to collaborative process improvements and shared risk exposure, among other aims. Companies are also taking a more strategic view of partnerships, thinking less in terms of tactics for winning bids and more about longer-term goals, like nurturing new markets.

Forging deeper ties requires delicacy and due diligence. Forming third-party relationships can be a distraction, particularly if they are "one-off ventures that dilute resources from the core focus" of the company. And, while such partnerships can play a crucial role in penetrating new geographies (thanks to the local knowledge of the partner), there's always the risk that the third party will drift away from its original intentions or ethical standards. Like any relationship, corporate couplings need to establish - and maintain - strict ground rules to uphold a shared vision.

It's hard work, but in an uncertain economy the greater risk may be in going it alone.

Read Full Article