Strategic Partnership - Essay Sample

A strategic partnership involves a business relationship between two viable enterprises and is formalized through a business agreement. The strategic partnership works well for companies having common goals and missions and mainly focuses on helping each other share resources and opportunities to promote growth for the two companies. There are no complicated formal requirements in entering partnership since most firms just work together without developing a structure or commission requirements. In most instances, a company chooses one or more partners to work mutually to enhance their distribution networks, product marketing, improvement of the customer base, and other market opportunities (Pellicelli, 2012). The partnership aims at minimizing expenses incurred by these companies in the market and subsequently utilizing their operational resources efficiently.

There are five types of strategic partnership available for businesses. These include outsourcing, joint ventures, equity, technology licensing, and distribution marketing. Outsourcing involves the delegation of duties by one company to be done and completed by the other firm. This is common among manufacturing companies to reduce the cost of production (Isoraite, 2009). Joint ventures entail merging of two or more companies to form a new venture and will share revenues, profits, and expenses. Equity partnership is where a firm acquires a minority stake in another business in exchange for cash. Technology licensing, on the other hand, involves authorizing trade secrets, intellectual property, and trademarks to a related company. Lastly, companies may choose distribution marketing which involves where one firm hires marketing platform of another company to market their products (Todeva & Knoke, 2005).

A strategic partnership has four main advantages to both companies under the partnership. Firstly, the firms can easily penetrate international market because of sufficient knowledge of business cultures, languages, and global business styles. Secondly, there will be increased human and financial capital for the firms who may have a challenge in getting funding from financial institutions. Thirdly, the companies are likely to experience faster growth due to efficient use of resources and marketing channels. More ideas will be generated that translates to increased productivity. Finally, the firms will experience substantial cost savings because raw materials will be bought in bulk while other costs such as marketing, distribution, and advertisement costs will be shared (Isoraite, 2009).

However, a strategic partnership may have several challenges during and after its implementation. Challenges during implementation may arise as it requires close monitoring, tracking, and evaluation to determine its effectiveness. Additionally, conflict of interest may arise where a decision may benefit one partner at the expense of the other hence derailing their relationship. Similarly, a strategic partnership may result in the excessive draining of resources due to unplanned commitments that could have required additional financial support from an outside source. Finally, the partners may experience clashing cultures and management styles due to different business strategies (Todeva & Knoke, 2005). Therefore, problems will arise in choosing the best policy that fits the two firms.

One of the successful strategic partnership in recent history is a partnership between Apple, and AT $ T. These two companies entered partnership whereby Apple wanted AT $ T to help them in the global distribution of products in exchange of new technologies (Zamir, Sahar & Zafar, 2014). The move gave Apple an opportunity which propelled them to be one of the best brands in the smartphone market. They managed to experience raped deployment that later resulted in selling through other carriers. AT $ T, on the other hand, managed to receive sophisticated technologies that translated to improvement in the data services revenue. Within a short period, both companies gained international recognition and became vital players with broad market base (Johnson, Li, Phan, Singer & Trinh, 2012).

References

Isoraite, M. (2009). Importance of strategic alliances in company's activity. Intelektine Ekonomika, (1).

Johnson, K., Li, Y., Phan, H., Singer, J., & Trinh, H. (2012). The Innovative Success that is Apple, Inc. Theses, Dissertations and Capstones, 1-43.

Pellicelli, A. C. (2012). Strategic alliances. Economia Aziendale Online, (2), 1-21.

Todeva, E., & Knoke, D. (2005). Strategic alliances and models of collaboration. Management Decision, 43(1), 123-148.

Zamir, Z., Sahar, A., & Zafar, F. (2014). Strategic alliances; A comparative analysis of successful alliances in large and medium scale enterprises around the world. Educational Research International, 3(1), 25-39.