A Lone Wolf? As a very independent person, you started a business and it is very

ID: 414427 • Letter: A

Question

A Lone Wolf?
As a very independent person, you started a business and it is very successful. You are looking at expanding to another location in the same city, but cannot afford that total expense right now. An opportunity exists to partner with another small firm that has complementary products. Discuss the advantages and disadvantages of such an alliance. A Lone Wolf?
As a very independent person, you started a business and it is very successful. You are looking at expanding to another location in the same city, but cannot afford that total expense right now. An opportunity exists to partner with another small firm that has complementary products. Discuss the advantages and disadvantages of such an alliance.

Explanation / Answer

Advantages:

Knowledge for the local market:

This established firm will provide expert knowledge of the local market to the firm which is making an alliance with it. This will be helpful in making easy segmentation, targeting or product designing strategy. The cultural, legal, governmental related policies and atmosphere can be accessed.

Less requirement of infrastructure:

The hosting firm will provide offices premises, real setup etc. needed for the development of the mutual beneficial business opportunities. The new company will save its money in setting offices and other requirements.

Talented, skilled employees can be easily sourced:

The local firm will help in sourcing the candidates suitable for this new company. As, this company will have better recruitment and selection strategies as well as experience then it will be beneficial for another company which will be in partnership with this older company .

Reduced cost in doing business will be possible due to sharing of cost and investment.

Disadvantages:

Privacy issue:

This will be a crucial part as local firm might cheat that partnering firm. It will be dangerous for the new firm.

Reduced share of profit:

It will be dividing between two players. If, the firm takes its own initiatives then it can earn all the profit margin.

Lack of independent decision:

The investor firm in this local company cannot make its own decision. So, it will reduced its genuine growth and development.