Seek to Form Partnerships and Alliances

Guerilla have limited resources. The work best by being small and agile. But most of the time the availability or unavailability of certain resources means the difference between winning or losing a battle. You cannot cross a chasm in small steps, you have to leap. If a guerilla unit cannot make a big enough attack on their own, they must seek the assistance of other units by forming partnerships and alliances.

Big companies form partnerships and alliances to enable them to expand and gain competitiveness. They call it “vertical” and “horizontal” integration of the supply chain or simply supply chain management.

The Taiwanese industrial cluster[1] started with the influx of Multinational Companies (MNCs) in Taiwan as a manufacturing base. Small companies then formed around these MNCs delivering raw materials and services. As these small companies prosper, as they increase their quality and profitability, they grow large enough to require the service of newer, smaller firms to supply them with raw materials and services. Thus, today, the network of electronics and computer peripherals in Taiwan is the largest in the world.

The Taiwan model, which is a big company surrounded by small companies, is one way of developing industrial clusters. Another way is for a small company to actively search and network with other companies for them to complete the innovation chain. In this case, one company that is strong in product development doesn’t necessarily have their own manufacturing and marketing division. Besides the bigger capital requirement, they may find it difficult to be good at everything. It is possible for them to identify partner companies that specialize in manufacturing the particular product they’ve developed. This partner firm could then concentrate on optimizing their manufacturing processes while the original firm could concentrate of product development – their respective strengths. Other enterprise functions such as marketing, distribution and sales could be approached in the same manner. This way, the innovation chain is completed, the strength of each is fully utilized and an alliance of individually cooperating companies is formed.

This is the guiding principle for the Rapid Enterprise Development concept. With this, Filipino SMEs, just like their guerilla counterparts, can become small and agile most of the time. But in times of need, they can be big and strong through their network of allies and partners.