Strategic partnership

Source: Wikipedia, the free encyclopedia.

A strategic partnership (also see strategic alliance) is a relationship between two commercial enterprises, usually formalized by one or more business contracts. A strategic partnership will usually fall short of a legal partnership entity, agency, or corporate affiliate relationship. Strategic partnerships can take on various forms from shake hand agreements, contractual cooperation's all the way to equity alliances, either the formation of a joint venture or cross-holdings in each other.

Overview

Typically, two companies form a strategic partnership when each possesses one or more business

win-win” benefits and innovation
based on mutually desired outcomes.

No matter if a business contract was signed, between the two parties, or not, a trust-based relationship between the partners is indispensable.

Types of strategic partnerships

Product development

One common strategic partnership involves one company providing

entrepreneurial firm or inventor to create a specialized new product. Typically, the larger firm supplies capital, and the necessary product development, marketing
, manufacturing, and distribution capabilities, while the smaller firm supplies specialized technical or creative expertise.

Suppliers and distributors

Another common strategic partnership involves a

music distributor with record labels
.

The activities of a strategic partnership can also include a shared

risks of innovation can be spread between the partners.[2]

Business outsourcing

Strategic partnerships also have emerged to solve many company business problems. The book Vested: How P&G, McDonald’s and Microsoft are Redefining Winning in Business Relationships

vested sourcing business models for establishing strategic supplier relationships.[4]

Advantages and disadvantages

There can be many advantages to creating strategic partnerships. As Robert M. Grant states in his book Contemporary Strategy Analysis, "For complete strategies, as opposed to individual projects, creating option value means positioning the firm such that a wide array of opportunities become available".[5] Firms taking advantage of strategic partnerships can utilize other company's strengths to make both firms stronger in the long run.

Strategic partnerships raise questions concerning

exclusivity, competition, hiring away of employees, rights to business opportunities created in the course of the partnership, splitting of profits and expenses, duration and termination of the relationship, and many other business issues. Another risk of strategic partnerships, especially between manufacturer and key supplier, is the potential forward integration by the key supplier.[6] Also different developments or development plans can lead to a broken strategic partnership. The relationships are often complex as a result, and can be subject to extensive negotiation. Strategic partnerships are also prone to conflict.[7] The University of Tennessee has done significant research into strategic partnerships, especially in the area of strategic outsourcing relationships.[8]

See also

References

  1. ^ M&M Consultants, Archived 2021-01-18 at the Wayback Machine "we are having a look at the cooperation between the digital accounting company Lexoffice and the fintech bank Penta. Penta has a big customer base of entrepreneurs and companies who will need a reliable accounting program. Penta offers the accounting solution in its banking dashboard to its customers. Whenever a customer registers through Penta with Lexoffice the banking company most probably receives a lead fee. This strategic decision shows that a new lucrative income stream can be generated with a relatively low investment of resources and time by understanding the customer and its needs."
  2. ISSN 0143-2095. Archived
    (PDF) from the original on 2019-05-02.
  3. ISBN 978-0230341708
    .
  4. ISBN 978-1137552181
    .
  5. ISBN 978-1118634851
    .
  6. ^ Porter, Michael E. (2008-01-01). "The Five Competitive Forces That Shape Strategy". {{cite journal}}: Cite journal requires |journal= (help)
  7. ISSN 1097-0266
    .
  8. ISBN 978-1137297198
    .
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