Are alliances the ultimate factor for exponential growth in business?

Autor Francisco Hernández

Until a couple of decades ago, the global business territory was just for a select group of companies with immeasurable power. For those entering the field of business and entrepreneurship, it was almost unthinkable to have global operations within the mandate of the founders. The scaling of the companies was naturally a generational path in which the second or third generations were the ones who had the possibility of scaling and creating operations at an international level. Although the desire and ambition to grow companies globally have always existed, the time-investment-budget relationship was the limiting factor for everyone involved in the business world, including the fact that each negotiation could represent heavy expenses and losses for the companies.

The point of no return within the business world, as in many others, occurred with the dot-com explosion and the innovative business models hatched in Silicon Valley in the late 1990s until it became what we know today: a hyperconnected world in which, with just one click, we can make contact on the other side of the world.

For companies with start-up business models, the international path is implicit in the project's creativity. For slightly more conservative companies, the course chosen is regarding profitability and demand, access to new suppliers, technologies, talent, innovation, or a response to new regulations that encourage foreign investment in new markets.

Now, within a context where communication to almost any corner of the world is within our reach, information and organizational structures are well known to companies with international activity, what continues to limit companies from taking the path of global expansion?

The time-investment-budget relationship continues to be a limitation for companies nowadays to take the global path, even though the business model requires it in terms of competitiveness. Maintaining international structures can imply significant investments in legal figures, buildings, logistics, operations, market analysis, and Human Resources Management, which not every company can sustain in an agile manner over time. And, above all, absorbing the losses generated from learning within poorly executed processes.

The key for any company to scale globally, without the need to maintain extensive operating and legal budgets, comes down to: strategic alliances.

Global strategic alliances are those whose scope of action goes beyond a country's borders and accelerate the company's international expansion [1], covering larger geographical areas and enabling companies to improve their basic capabilities.

However, strategic alliances are not straight magic. Creating and managing effective strategic alliances is a notorious challenge: they have a 50% success rate [2]. Companies must take a disciplined approach by investing in an appropriate partnership model in the context of specific collaboration, new processes and standards, and adopting new managerial skills and behaviors.

Even though technology can offer us infinite options to create new alliances and delegate responsibilities to external organizations, the human factor is essential for the relationship to last and succeed. So, when considering global expansion, it is necessary to be accompanied by companies and people you can trust personally.

Opening doors to 2023, with whom will you be accompanied in your global expansion.

[1] https://www.researchgate.net/publication/41141253_Estrategias_de_Crecimiento_Internacional_basadas_en_Alianzas_Globales

[2] https://greatprairiegroup.com/international-expansion-through-strategic-alliances/

[3] https://courses.minnalearn.com/en/courses/startingup/introduction/startup-history/

[4] https://gcgjournal.georgetown.edu/index.php/gcg/article/view/362