Joining Forces

Sometimes you can learn a lot from your competition, what they're doing right, what mistakes they make along the way. Your competition can also learn from you. Maybe your competitor is a genius when it comes to design and production, but has no idea how to market - while it just so happens you have a real knack for that aspect of the business. After keeping an eye on each other for some time, you may decide that you could increase profits by joining forces.

You don't have to limit your analysis of potential alliances to the person down the street. You can align yourself with businesses and companies from other countries to capitalize on the skills you have and different resources available to each of you. Nor do you have to limit your partnership to just one other business or even to a similar business. A coffee shop, a bookstore and a laundromat could form a very successful alliance, given the right circumstance.

There are things you should be aware of before you decide to form or join any alliance. First of all, you need to ascertain whether there's enough of a market to support both you and your potential partner. If there is, proceed with caution. Look closely at what each of you is bringing into the relationship and make sure that profits will be divided accordingly. Legal assistance and a solid contract are strongly advised.

Mergers and Takeovers

Two companies coming together is not always a matter of mutual agreement. If a business is in danger of going bankrupt, the owners may agree to merge with a competitor just to stay alive. In the case of a large, public company, the fate of the business could be in the hands of a shareholders majority. A predator company may approach a target company with a business plan, and even if the directors of the target company reject the plan, the shareholders of the company can accept the new offer and force a merger. This type of business practice is sometimes called an acquisition or a takeover.