What is a consortium? Definition and meaning
A consortium is an alliance of companies, individuals or other entities that got together to achieve a specific objective that benefits all the parties, such as lobbying for regulatory changes, bidding on a large project, or simply increasing partners’ purchasing power to get better deals.
It is similar to a syndicate, but is shorter-lived – it does not last as long. The plural form is consortia or consortiums.
In banking, however, a syndicate is a consortium of financial institutions that get together to arrange a large loan – a syndicated loan.
In the UK, consortia are created to buy out football (US: soccer) clubs that are struggling, the aim being to keep them going. In such cases, the benefit for the members is the survival of the club rather than profit – they love their club and don’t want it to die.
According to CambridgeDictionary.org, a consortium is:
“An organization of several businesses or banks joining together as a group for a shared purpose.”
There are many advantages to belonging to a consortium. You can share relevant skills, experience, expertise and unique selling points in a way that complements each partner. Development costs can be shared, which in turn reduce overheads and the amount of resources needed for each business.
Consortium can take many forms
Consortia are short-term arrangements in which a number of entities, either from the same or different industry sectors, pool their human and financial resources to undertake a major project from which they will all benefit. Even entities from different countries can get together and form one.
Members might be individuals, companies, organizations or even governments, and any combination of these entities.
According to iqconsortium.org: “The International Consortium for Innovation and Quality in Pharmaceutical Development (IQ) is a technically-focused organization of pharmaceutical and biotechnology companies with a mission of advancing science and technology to augment the capability of member companies to develop transformational solutions that benefit patients, regulators and the broader R&D community.” (Image: iqconsortium.org)
Consortium is Latin for ‘partnership’, ‘association’ or ‘society’. The word derives from the Latin word Consors ‘partner’, which is a combination of ‘con-’ ‘together’ and ‘sors’ ‘fate’, meaning comrade or owner of means.
Consortia in the travel industry
In travel and tourism, consortia are common. Independent travel agents and agencies get together to increase their purchasing power, commissions and amenities they are able to provide their customers.
In order to be invited to join a consortium, agencies and agents need to meet threshold sales volumes. Benefits for members include commission overrides, agent training & education, networking opportunities, and client referrals.
Consortiums negotiate with cruise lines, airlines, hotels, resorts and other travel and tourism suppliers on behalf of their members. Agency clients benefit in the form of upgrades, special promotions and room amenities not available to members of the general public.
The best known consortia in the travel/tourism industry are Travel Group, Vacations.com, Signature Travel Network, and Virtuoso.
Coopetition – a combination of cooperation and competition – is a consortium of competitors that cooperate in areas non-strategic for their core businesses.
They form alliances to reduce their costs in these non-strategic areas. For example, the GENIVI Alliance is a non-profit-making consortium between rival automobile manufacturers in order to facilitate building an in-vehicle infotainment system.
The Word Wide Web Consortium (W3C) standardizes web technologies like CSS, XML and HTML.
Setting up a consortium
Consortia provide huge benefits for their members. By working with a number of organizations which add value, each member can secure additional income, diversify and provide better services.
However, setting one up is a major undertaking – there are administrative and cost burdens – and takes a big commitment from all partners.
If you are considering setting up a consortium you should take your time to carefully consider the work involved before you begin.
Before taking any steps toward creating one, you need to determine who you plan to invite to become a partner.
Video – The World Wide Web Consortium (W3C)
The aim of the W3C is to bring the web to its full potential, which means that the web is the open mechanism where we all share information to use for commerce and entertainment.