Sometimes business opportunities are such that, a single service provider may find it difficult to provide all the services. Alternatives might be available that hold expertise in the areas which would complement your services. Under such business circumstances, Consortium comes handy. A Consortium is a common term used for the association, it can be an association of companies, institutions working towards the objective of participating in a common activity. The consortium is a Latin word for partnerships but however, in business endeavors both differ largely. The consortium is a more structured form of partnership, with a well-formed governance in arrangements. In partnerships both the parties are equally responsible for the profits and liabilities of the business venture whereas in consortium each entity is only responsible for the group in respect to the obligations set in the consortium contract and has no say over other business operations besides consortium contract.
Investopedia defines consortium as “A group made up of two or more individuals, companies or governments that work together toward achieving a chosen objective. Each entity within the consortium is only responsible to the group in respect to the obligations that are set out in the consortium’s contract. Therefore, every entity that is under the consortium remains independent in his or her normal business operations and has no say over another member’s operations that are not related to the consortium.”

Consortiums are prevalent usually among non-profit organizations, educational institutions, Banks etc. Profit consortium also exists but are very less prevalent. One of the best examples of profit consortium is Airbus- Airbus entered into a profit consortium in 1960 is four members being Aerospatiale-British Aerospace, Construcciones Aeronautics of Spain, Daimler- Chrysler Aerospace of Germany. This consortium was seen as an essential step for the European aircraft industry. The reason for forming a consortium was the
• To share R&D Costs
• To generate economies of scale
• To compete successfully with Boeing and Mc Donnell Douglas.
The consortium can be made up of partners from different industries and sectors.

The consortium has benefited businesses in various ways, some of the benefits are shared below:

• Consortium gives the partners involved a free hand in exercising their relevant skills and expertise in such a way that each of the businesses is benefited especially in terms of delivery and tender participations

• Forming of consortium gives you an opportunity to have an access over the core competencies of your partners that otherwise, you might have needed to buy to secure a contract.

• Risk can be spread across the businesses.

• Being into a consortium gives you a competitive edge over tender submissions and capabilities to deliver into the geographical areas that were earlier not accessible to you.

• You may also have access to unique selling points of your other partner and can utilize its core competencies for the betterment of your businesses.

• Sharing your expertise over a consortium can increase your chances of tender evaluation and winning contracts.

• With shared responsibilities as per the contract, consortium helps businesses to reduce their overhead costs and resources.

The consortium is flexible enough to be shaped according to the contract you want to win as well as the services you want to deliver. Entering into consortium provides you with huge benefits by working with the organization that holds expertise and competencies that add value to your businesses and lets you offer more better services.

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