Strategic Alliances

1. 1

   Approximately 64 percent of small manufacturers and 63 percent of small businesses in general (all industries) currently hold or have held some type of alliance. The most utilized alliance type by small manufacturers is a long-term production agreement and the most utilized by small businesses is a licensing agreement.

2. 2

   Businesses that keep alliances tend to maintain multiple alliances. Approximately 50 percent of small manufacturers and small businesses that have an alliance maintain three or more of them.

3. 3

   Relatively few small manufacturers and small-business owners who initially form an alliance choose to discontinue that alliance or refrain from using alliances in general. Approximately 9 percent of manufacturers and 10 percent of small-business owners report having formed an alliance at some point, but do not currently maintain at least one.

4. 4

   Alliance use by small manufacturers varies based on the size of the manufacturer, ranging from 53 percent use by those with less than 10 employees to 71 percent use by those with 20 or more employees. The widest variance in use, based on size, is the purchaser-supplier alliance.

5. 5

   Small manufacturers appear to form alliances with larger businesses and similar/smaller businesses at about the same rate, although there are notable exceptions based on the type of alliance. Licensing agreements, product or service-based R&D alliances, and purchaser-supplier alliances tend to be formed with larger businesses. Only long-term outside contracting relationships tend to be more often formed with similar/smaller-sized partners.

6. 6

   Alliances tend to be formed with partners who are drawn from either prior social or business relationships. Over 36 percent of the manufacturers and 40 percent of small-business owners report a prior social relationship with their most recent alliance partner and over 25 percent of the manufacturers held a previous alliance relationship. Almost 50 percent of the responding business owners had known their alliance partners for over 5 years.

7. 7

   For the most part, small manufacturers and small-business owners are just as likely to make equity investments in the alliance as the alliance partner is to make an equity investment. Both groups tend to avoid alliances that involve high levels of non-recoverable investments.

8. 8

   Eighty-four (84) percent of the small manufacturers and 76 percent of the small-business owners report positive alliance experiences. A majority of both small manufacturers and small-business owners indicate that their alliances are profitable, have exceeded expectations and have increased their ability to compete.

9. 9

   Alliance experiences tend to be different given the size of the manufacturer. Smaller manufacturers (less than 10 employees) tend to have slightly higher numbers of alliances that fail to meet their expectations, but these same sized manufacturers also tend to be more optimistic about the futures of their alliances.

Volume 4, Issue 4, 2004
ISSN 1534-8326

William J. Dennis, Jr.
NFIB Research Foundation

• 1AHow many licensing agreements with other businesses does your firm currently hold?
• 1A1How many of them are only with businesses smaller or equal in size to yours?
• 1BHow many export or import trading agreements with other businesses does your firm currently hold?
• 1B1How many of them are only with businesses smaller or equal in size to yours?
• 1CHow many franchise agreements with other businesses does your firm currently hold?
• 1DHow many marketing agreements with other businesses does your firm currently hold?
• 1D1How many of them are only with businesses smaller or equal in size to yours?
• 1EHow many distribution agreements with other businesses does your firm currently hold?
• 1E1How many of them are only with businesses smaller or equal in size to yours?
• 1FHow many production agreements with other businesses does your firm currently hold?
• 1F1How many of them are only with businesses smaller or equal in size to yours?
• 1GHow many product or service-based research and development agreements with other businesses does your firm currently hold?
• 1G1How many of them are only with businesses smaller or equal in size to yours?
• 1HHow many process-based research and development agreements with other businesses does your firm currently hold?
• 1IHow many purchaser or supplier, such as Total Quality Management, agreements with other businesses does your firm currently hold?
• 1I1How many of them are only with businesses smaller or equal in size to yours?
• 1JHow many outside contractor agreements lasting more than ONE year does your firm currently hold with other businesses?
• 1J1How many of them are only with businesses smaller or equal in size to yours?
• 2Though you currently have no such agreements, did you ever have one?
• 3In what year was your first such agreement, also called an alliance, formed?
• 4What type of an agreement or alliance was it?
• 5Do you have a current alliance or agreement that is more than one year old?
• 6In what year was your most recent such alliance formed?
• 7What type of alliance was it?
• 8Did you make an equity investment in the alliance?
• 9Did your alliance partner make an equity investment in the agreement?
• 10Prior to forming the alliance, did you EVER have a social or business relationship with your alliance partner?
• 10aDid the relationship include a prior alliance?
• 10bHow many years have you known this alliance partner?
• 11If this alliance were dissolved today, would your firm’s NON-RECOVERABLE investment in cash and other assets, such as technology or market knowledge, be:?
• 12How has the experience with this alliance been to date? Would you say it has been:?
• 13Have the financial returns from this alliance been:?
• 13aDo you expect the financial returns for the duration of the alliance to get:?
• 14How has the alliance performed compared to your expectations for it?
• 15How much has this alliance improved your ability to compete? Would you say it has improved your ability:?
• 16How does this alliance compare to other alliances you have been involved in? Is it:?