Definition: A trade association is an institution that groups many businesses from certain industry to increase political influence and create networking opportunities. Its members are industry participants that meet to tackle different subjects related to their work field.
What Does Trade Association Mean?
The main purpose of trade associations is to improve the conditions within the business sector that they participate in. By reuniting their efforts companies can impose more leverage into government, suppliers and even international instances. They are normally organized as a non-profit entity and they are normally funded by its own members plus other events and strategies employed to gather resources. These organizations frequently elect a set of members to form an executive body to conduct the association’s activities and to promote the industry’s agenda in different spheres like politics and society.
Also, environment-care associations often direct their complaints towards these entities, since they represent the whole group of businesses that participate in that particular field. There are other advantages in having a trade association, like networking opportunities, bulk negotiations with key suppliers of the industry and strategic alliances with partners from different business sectors like consulting, technology and training. Members include themselves voluntarily and they are free to exit whenever they desire to.
Example
The Bicycle Manufacturers National Association is a trade association that reunites more than 300 bicycle producers located in different places of the U.S. This association was founded by only ten companies 20 years ago with the purpose of establishing a place where networking within industry participants occur and to promote a trade agreement between the association and key suppliers like iron and aluminum producers.
After a few years, the association had 100 members and its Board of Directors was formed by 7 renowned business executives with vast experience in the field. The association also provides statistics for the whole industry by compiling all different financial results coming from its members. This helps businesses to understand their competitive position and to comprehend the industry environment more accurately.
