Have you ever noticed that most of the time it is more fun and rewarding to do things with a partner…in the cooperative business-sense? Oh for goodness sake, get your mind out of the gutter. This is not that kind of blog! I’m doing serious stuff here. If you are still with me then please by all means carry on.
Have you considered using strategic partnerships to break into new markets or to introduce a new products or service? If so, you are as they say, on the right track! Maybe you are using strategic partnerships currently, I say, GOOD FOR YOU!” Partnerships provide economies of scale to businesses that were not previously available…synergy if you will.
Strategic partnerships should only be formed between complementary, not competing, firms…and only for the short-term. If the relationship tends to be more long-term, then that is a whole other animal that I will address at a later time. Stenzel (2011) says these partnerships are described as arrangements where 2 or more businesses cooperate for mutual benefit. Firms that utilize strategic partnerships do so for some of the following reasons:
- Sharing knowledge
- Gain entry to new markets
- Gain competitive advantage
I will go into detail on each of these reasons.
SHARING KNOWLEDGE & EXPERTISE
Partners contribute skills, brands market knowledge and assets. Firms are able to combine strengths and compensate weaknesses. In the case of Motorola in 1999, the firm formed an alliance with 4 other firms. This alliance successfully developed and implemented a world-wide, space-based communications network. Okay, in this example these are large companies, yet the principle still holds true. Find other companies that not only can assist you in achieving your objectives, yet that you are able to come along side to provide them access to competencies they do not possess on their own.
SHARING RISK & EXPENSES
Firms can come together to develop and provide a product and / or service where expenses are shared and risk is minimized because the companies may team-up to introduce a new product and / or service where said product and / or from each company would competed for market share. In this area both revenue and expenses are able to be shared.
Strategic partnerships are able to especially ease entry into foreign markets. Local (foreign) forms are able to provide domestic organizations with such tools as:
- Knowledge of the market
- Customer preferences
- Distribution networks
GAINING COMPETITIVE ADVANTAGE
Partnerships help firms to gain a competitive advantage by taking advantage of a favorable brand image that one of the partners has established. As you are well-aware, establishing a brand image can take much time and resources. Competitive advantage can also be realized by the gaining of shelf space for products. An example may be a tea and coffee company breaking into the soft drink company by utilizing the brand strength of the soft-drink company’s brand.
Small Business Notes.com cites 10 reasons why businesses utilize strategic partnerships:
- Achieve advantages of scale, scope and speed
- Increase market penetration
- Enhance competitiveness in domestic and / or global markets
- Enhance product development
- Develop new business opportunities through new products and services
- Expand market development
- Increase exports
- Create new business
- Reduce costs
Jenner (May 2009) says, “A strategic outsourcing partnership can give start-ups and network carriers a technological jump-start.” Some experts believe that partners will progressively be called upon to see what platform solutions they can provide, particularly for back office tasks. This would especially true in the area of financial administration. Consider your options, use your network contacts, and do your research. There are partners out there for you to join to help you both take your companies to the next level.
So, come on let’s jump on this partnership bandwagon together! What? Are you afraid you won’t see a reasonable return? Hey I’ll tell you this; if you do your research and identify the right partner you may see returns that you have only seen in your dreams. Okay, probably not that good…but close.
Anonymous. (2011 February), Imation Unveils Strategic Direction as Technology Company Focused on Growth Opportunities in data Storage, Protection, and Connectivity. [4 pages] Business Wire. Available: http://www.electricpaving.com/amme/tip4.html
Endo, Emi. (2011 January), EXECUTIVE SUITE: Enhancing spaces with light and sound. [2 pages] Newsday. Available: http://proquest.umi.com
Jenner, Gillian. (2009 May), MUTUAL BENEFIT. [5 pages] Airline Business. Available: http://proquest.umi.com
Koteinikov, V. (2011), Strategic Alliances. [2 pages] 100Ventures.com. Available: http://www.100ventures.com/business_guide/strategic_alliance_main.html
Lamoreaux, M. & Nevius, A. (2010 December), Highlights of the Small Business Stimulus Act. [5 pages] Journal of Accountancy. Available: http://proquest.umi.com
Roberts, CR. (2010 October), Staying, growing. [6 pages] The News Tribune. Available: http://proquest.umi.com
Small Business Notes (2011), Strategic Alliances. [2 pages]. Available: http://www.smallbusinessnotes.com/managing-your-business/startegic-alliance.html
Stenzel, P (2011), Strategic Alliances. [4 pages] References for Business. Available: http://www.referencesforbusiness.com/encyclopedia/Set-Str/Strategic-Alliances.htmlTweet