ⓘ Business alliance

Business alliance

ⓘ Business alliance

A business alliance is an agreement between businesses, usually motivated by cost reduction and improved service for the customer. Alliances are often bounded by a single agreement with equitable risk and opportunity share for all parties involved and are typically managed by an integrated project team. An example of this is code sharing in airline alliances.


1. Types

There are five basic categories or types of alliances:

  • Solution-specific: A solution-specific alliance occurs when two companies agree to jointly develop and sell a specific marketplace solution.
  • Joint venture: A joint venture is an alliance that occurs when two or more companies agree to undertake economic activity together.
  • Sales: A sales alliance occurs when two companies agree to go to market together to sell complementary products and services.
  • Geographic-specific: A geographic-specific alliance is developed when two companies agree to jointly market or co-brand their products and services in a specific geographic region.
  • Investment: An investment alliance occurs when two companies agree to join their funds for mutual investment.

In many cases, alliances between companies can involve two or more categories or types of alliances.


2. Horizontal alliances

A type of an alliance is a horizontal alliance. For example, a horizontal alliance can occur between logistics service providers, i.e., the cooperation between two or more logistics companies that are potentially competing. In a horizontal alliance, these partners can benefit twofold. On one hand, they can "access tangible resources which are directly exploitable." In this example extending common transportation networks, their warehouse infrastructure and the ability to provide more complex service packages can be achieved by combining resources. On the other hand, partners can "access intangible resources, which are not directly exploitable." This typically includes know-how and information and, in turn, innovation.

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