Internal Market, Industry, Entrepreneurship and SMEs

Transnational business cooperation

Transnational business cooperation

Tourism SMEs face challenges and fierce competition when developing international activities – so partnerships and business cooperation could prove useful for diversifying business activities.

Regardless of the size or legal status of your company, you could develop business cooperation to help you:

  • survive in the market
  • vary your operations
  • expand into other markets

Business cooperation takes various forms and could help your company enter the international market. 

You could also join forces with companies in other countries to develop joint projects.

This article will discuss the following:

Definition of transnational business cooperation

Transnational business cooperation takes place when businesses in different countries join forces. They could apply an internationalisation strategy or work on joint activities with an international focus.

In the tourism sector, this type of cooperation usually happens:

  • independently and autonomously, initiated by a group of companies
  • as part of transnational tourism projects, funded by the EU – these can often involve creating transnational routes or itineraries

Transnational business cooperation gives you access to new ideas and information, and could encourage innovation within a company. It also helps SMEs to overcome constraints such as:

  • limited financial capacity
  • restrictions on larger projects
  • limited ability to attract more customers 

Each enterprise in the cooperation is independent, with its own legal and organisational development.

Advantages and disadvantages of transnational business cooperation

Advantages:

  • increases capabilities without major outlay
  • provides greater business flexibility
  • helps to overcome the competitive challenges of new markets
  • facilitates knowledge sharing
  • allows for a better competitive advantage and increased specialisation
  • accelerates the learning process, reducing the time required to implement a new product and/or service
  • reduces costs for the joint development of new products and complementary tourism services

Disadvantages:

  • reduction in the strategic autonomy of the companies
  • harmonisation is needed across structures, systems and cultures
  • it may be difficult to combine different objectives and interests

Main stages of transnational business cooperation

There are several stages of transnational business cooperation:

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Diagram showing the stages of transnational business cooperation. First stage: cooperation and planning. Second stage: Finding and selecting partners. Third stage: negotiation process. Fourth stage: formalisation of the cooperation agreement, leading to the definition of a common strategy and the commitment of all partners

Cooperation plan

This should include:

  • your cooperation objectives
  • planned processes and services
  • the geographic locations to be covered
  • expected results

Search for a selection of partners

It’s important to find the right partners. Be clear about what you can offer and what you are looking for. All partners must contribute and benefit equally. There are a number of factors to consider when finding and choosing business partners.

Negotiation process

This should determine the scope and responsibilities of those collaborating. It is important to define the organisational structure and how it will work, as well as elements such as:

  • shared decision-making
  • financial contributions
  • personnel
  • shared knowledge

Formalisation of the cooperation agreement

It’s important to formalise what you have agreed with your collaborators in a cooperation agreement. This should define your common goals and strategy, and could take the form of a contract or work programme.

The agreement should include:

  • clear partner objectives
  • planned activities
  • the roles and responsibilities of each partner
  • your evaluation system
  • the available budget and resources

You can begin operating together once the agreement is official.

Business cooperation must be rooted in mutual trust, and you must also keep regular and flexible contact.

Once you have gained contacts and experience from the cooperation, it could also prove to be an excellent starting point for the future internationalisation of your own travel services.

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