Questions to Ask When Forming an Alliance

Before you sign on the dotted line, make sure you get the answers to these questions.

Emer Dooley, a University of Washington lecturer on strategicmanagement, suggests you and your potential partners discuss thefollowing three questions before finalizing your alliance:

  • What are everyone's objectives? There are three setsof objectives: yours, your partners' and the alliance's.Figure out all three in advance and determine whether they'recompatible.
  • Is it a great deal for both sides? Don't justnegotiate to get the best for yourself. If the other side thinksthe deal is unfair, they won't put much effort behind itssuccess. uWho's holding the reins? Know how dependent you willbe on your partner. Negotiate a credible commitment so you'renot subject to "hold up," where they've got you overa barrel.
  • What happens if you break up? Establish a set of exitconditions around default and failure to meet objectives. Make sureyou understand and have control over how (and in what jurisdiction,if it comes to that) these disputes will be resolved.

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