French medium-sized companies find themselves in an environment that is not always theirs: development of a liberalism, often excessive, in a world that technological progress has globalized, for a time ruled out any effective economic regulation. Alliance operations therefore remain the best means of strengthening their capacity to resist competition and to develop on the European market. The Alliance offers companies that want to remain independent, particularly in terms of capital, to pool human, material or financial resources to achieve a common objective. So why adopt an alliance strategy?
Compared to their German, British or Italian counterparts, French SMEs suffer from a profound handicap linked to their small size and their under-capitalization, which makes them particularly vulnerable in the context of international competition and a merciless struggle. The size or threshold effects of turnover are responsible for a large number of bankruptcy filings, which also translates into a fall in State revenue (VAT, IS).
The Alliance strategy, regardless of the legal terms chosen, from the commercial contract to the creation of joint subsidiaries, now constitutes a new mode of organization of companies and provides a solution to companies whose turnover is insufficient to be viable. The “critical thresholds” in turnover make it possible to make economies of scale and improve financial profitability in order to cope with the increase in necessary investments.
Strategic alliances are agreements between two or more independent companies to cooperate in the production, development, sale and / or distribution of products / services according to business objectives …
In a strategic alliance, Company A and Company B combine their respective sources, capacities and skills to generate common interests.
There are three types of strategic alliances
Joint-Venture : A joint venture is formed when parent companies create a new subsidiary. For example, Company A and Company B (parent companies) can form a joint venture by creating Company C (subsidiary company). If the companies each own 50% of the subsidiary company, it is a 50/50 joint venture . If one company owns 70% and the other 30%, the joint venture becomes a majority-owned subsidiary .
The strategic alliance by actions
A strategic equity alliance is created when a company purchases a certain percentage of interest from another company.
The strategic alliance without equity participation
A strategic alliance without equity participation is established when two or more companies sign a contractual agreement to pool their commercial resources and capabilities.
The search for and the constitution of Alliance can be applied at all stages of a company’s activity:
- shared “research and development” costs
- collection of shared economic and legal information
- sharing of a workforce that a single company could not assume
- pooling of certain accounting resources and financial risks
- constitution of joint subsidiaries to gain market share in France or abroad
- shared-cost advertising and communication, etc.
A large part of the economic fabric in France is made up of small -scale subcontracting companies (mechanics, sheet metal, leather, textiles, footwear, clothing, electronics, etc.) which are constantly obliged to improve their performance. to maintain their market share and the orders of their major contractors.
The pooling of financial, technical and commercial resources, within the framework of an alliance strategy, allows medium-sized companies to maintain their capital independence and to find a third way to the alternative which is posed to them, to absorb a colleague or to be absorbed.
In this new “economic situation”, SMIs / SMEs who want to remain partners with their “prime contractors” customers must be able to meet new market requirements and be able to compete in calls for tenders whose volume is significantly higher than what they usually treat. They need to have brainpower, which will enable them to act upstream of the manufacturing process of a product. Finally, in order to be able to lower the cost prices imposed by customers, they are forced to improve their productivity and to be able in turn to play the role of prime contractors at the level of their own subcontractors and suppliers of parts in order to produce complete “sub-assemblies”.
The PMI / SME company confronted with this evolution of its environment, with a social capital most often reduced, for historical and family reasons and which does not have the possibility of resorting to the stock market, has only one alternative , carry out an “external growth” operation. For this, it must have the necessary financial means, which is rare, or be absorbed with painful consequences for the transferor manager who loses his job.
The Alliance is a third way which is encouraged by the major contractors of our country, in particular in the automobile, aeronautics, armaments, haute couture, etc. It constitutes a real development project for the entrepreneur who wants to perpetuate his company, increase its technical potential and its commercial efficiency.