HOW TO INCREASE YOUR BUSINESS IN ITALY
You can't improvise when it comes to finding a potential partner, setting objectives, negotiating contracts, and finally, setting up on-site cooperation.
- What precautions should you take?
- Which procedure should you follow?
- What kind of obstacles you will have to clear?
- When all is said and done, how can you be sure that your partnership and its background will be well managed?
You will find answers to these questions by consulting the chronological process of setting up a partnership, which we offer you.
DETRMINE THE PARTNERSHIP'S PURPOSE AND PROFILE
The partnership must attain to your company's objectives, which are based on its growth strategy. You will first have to define these objectives before you can establish the criteria for a potential partnership: i.e. its purpose, type and profile.
1.1 You have to perform a strategic analysis beforehand!
Your decision to look for a partner to work together for a long-term partnership must fit in with your company's overall strategy. Accordingly, the first phase will be to make the necessary analyses based on your growth strategy. First of all you will have to answer to the following questions:
- What are your company's strategic factors?
- What are the resulting strategic objectives?
- Working with another partner will help you to attain these objectives?
If so, what is the type, the profile, the purpose and the criteria for a successful cooperation?
If your strategy is not clearly identified, it is essential that you clarify it, before going any farther on the path towards cooperation. To help you to define and assess your ability to implement Italian partnerships, we offer you an assessment grid which, naturally, must be adapted to your circumstances
1.2 What strategic factors must you take into account?
Analysing strategic factors requires a systematic approach that primarily includes the following points:
- An analysis of your strengths and weaknesses. You must assess the level of expertise and mastery of the tasks defining your business: i.e.the areas of activity in which you are competitive. Defining this area is the foundation forestablishing any corporate and partnership strategy;
- An analysis of the market It is important to determine your competitive advantage by placing your business on a scale of comparative value vis-
à- vis your competitors;
- An analysis of the technological, regulatory and social environment.Analysing your business also means assessing your company's ability to cope successfully with the major changes affecting it.
1.3 What objectives you have to you pursue?
The next logical step of the process is to define the various policies that formalise the strategy selected. These policies are reflected in overall objectives: increasing market share through exports, broadening the product line, reducing the cost of production, shortening delivery times, etc. Cooperation may well be effective in attaining these objectives.
It is important to provide a foundation for this cooperation. You should not work with other companies just because partnerships are the current fashion. You should base your decision starting from an analysis of the existing situation considering the company's strengths and weaknesses (and therefore, its needs). This phase will enable you to think about your next step rationally. You must always keep in mind that if you need a partner it is to attain a clearly defined objective that reflects your company's overall strategy.
CARRY OUT AN EFFECTIVE SEARCH FOR THE PARTNER
How can you find the right partner? In other words, how can you find a relevant partner based on the aforementioned purpose, type and profile? Although it is true that things sometimes occur by chance, in the complex world of business, this is not the way to go about it.
It is necessary to set up an information system that enable potential partners to demonstrate their characteristics and to discover the complementary areas sought after.
It is also possible that you have already identified one or more potential partners (through contacts made during a trade show, personal contacts, or prior business contacts).
We strongly advise you anyway not to go beyond the preliminary phase of a strategic analysis and the partner research, because these phases enable you to find new partners other than those identified by chance.
This phase leads to the establishment of an exhaustive list (between 2 and 8) of potential partners that could satisfy your objectives.
2.1 Preliminary selection
Based on this list of potential “candidates”, you will begin the selection process by choosing only those characteristics that enable you to attain the overall objectives that you have set for your company and that therefore satisfy the characteristics determined beforehand.
You may make this preliminary selection by yourself, or with our assistance.
It is preferable for the preliminary selection to take place without direct contacts with the partners. In this way it will be more “rational”.
At the end of this selection you will have a closed list and you will be able to start contacting potential partners with our support.
These initial meetings are crucial from the relationship point of view, because some things can only be gauged on- site, when you are in the presence of the other companies representatives.
The human dimension is critical. A partnership is not only a technical and legal matter, but also a meeting between men and women in which human relationships are created and evolve.
Although mutual gains are assessed at the organisational level, the mutual trust, the desire to listen to one another and the faith that cooperation is genuine are expressed at the human level rather than at the organisational one.
This means that the outcome of a cooperation agreement depends on a series of details that can lead to disproportionate effects vis- à- vis the initial stimulus.
The impression given during the first contacts can be decisive to determine the chances of success of a potential partnership. Do not forget that at least two parties are involved in the set up a partnership and that you must also make a good impression through your professionalism.
2.2 The final selection
If the two companies have consistent objectives, are complementary and have compatible dispositions, if they get along well, and if the financial and commercial bases are sound, the ideal partner has been identified.
Having said that, do not think that your efforts have come to an end. You have still to begin the difficult phase of negotiation, which may not be successful, despite the precautions taken.
This means that it would be prudent to keep a second, or a third candidate in reserve, just in case negotiations with the first company fail.
The negotiation phase is essential in the set up of a partnership.
Understanding and respecting the partner's interests during negotiations is fundamental for this phase's success.
A stable partnership can only be established if the agreement offers the two parties long-
term benefits.
Moreover, the negotiation phase always reveals the designated partner's real involvement.
You will be able to check the validity of the information collected during your selection, get to know the decision-
makers and final participant, and assess their motivation and involvement.
At the end of this phase, the various meetings will have enabled you to establish a partnership in terms of resources, objectives and sharing of decision-
making power.
Conclusions
To summarise, there are two types of partnerships: the participatory form and the conventional form.
The participatory form includes companies whose main concern during the preparation of the agreements is to choose their partner carefully, to get to know each other well, and to build a long- term project by clearly defining its guidelines.
In the case of the conventional form the partners remain independent, without participatory links, with the result that commercial losses (stolen clients), technical losses (know-
how unduly acquired and used) and financial losses (exchange rate fluctuations), directly benefit one of the parties, at the other's expense.
Accordingly, this kind of cooperation may be more volatile, because each party can regain its freedom more easily.
In the case of the participatory form, the negotiators tend to be more attentive to the human issues than negotiators looking to form a contractual partnership.
However, it is important to keep in mind that the negotiations approach don’t have to differ based on the circumstances: the human dimension must play a critical role in the negotiations.