Strategic Alliances in the insurance industry can be extremely advantageous for the companies involved in the partnership. At the same time, there are some challenges that must also be addressed if the alliance is to be successful. In this part of our Strategic Alliance series, IAS will explain what the main benefits, the challenges, and offer some advice for handling these challenges.
Ability to Offer Additional Services
One of the most attractive benefits of an alliance with another business is the opportunity to offer supplementary services to clients that they would not be able to offer otherwise. An alliance allows a company to offer its clients a new spectrum of services without losing focus on its core competencies and unique services.
Opportunity to Access New Markets and Customer Base
The companies share expertise, technology, skills, and resources that they did not have on their own prior to entering into a strategic alliance. As a result, the companies are able to enter new markets and increase their client base.
Increased Company Exposure
The strategic alliance also creates the ability to increase the company exposure and brand awareness. By increasing the company’s market size, a broader audience is able to be reached without additional investments in time, resources and capital.
Selecting the Right Partner
When considering a company to form a strategic alliance with, it is very important to select a partner that will add value and help grow business. One also should choose a company who has a positive reputation, and has similar dedication, honesty, and integrity. Choosing the wrong partner can be damaging in many ways, from wasted resources to tarnishing company reputation, and possibly legal implications.
Building and Maintaining a Mutually Beneficial Alliance
In order for the alliance to benefit all of the companies involved, the people involved need to think and act in the best interests of the alliance, rather than their respective companies or individual interest. Commitment and communication are also important to keep the alliance mutually beneficial throughout its duration.
Having Diverse Expectations and Values
A strategic alliance needs to have a firm foundation in order for it to work well. Troubles can arise from conflicting operating practices, objectives, strategies, corporate values, ethical standards. Therefore, it is very important for the companies to communicate and set their expectations clearly at the onset of the partnership. Another important thing to discuss is potential issues down the road and how they will be addressed.
Another challenge is becoming too dependent on the other company for critical expertise over the long term. This could potentially be very detrimental, especially if the alliance dissolves for whatever reason.
Dealing with Changes Down the Road
Change is inevitable, and the initiatives that worked at the onset may need to be adjusted later on. The aim of the alliance is to mutually benefit all parties. The alliance may need to be re-assessed or re-structured. It is a good idea to reassess the strategic alliance to make sure it is still working as intended.
Stay tuned next week on more ways of forming a strategic alliance and tips on forming a successful partnership!