Introduction: The Importance of Strategic Partnerships
A strategic partnership is a business agreement between two or more entities. It is a formal way of saying that they are working together with the intention to create and share value.
The importance of strategic partnerships has increased in recent years, as they have become the norm for business success. In the past, many companies would work in isolation and not collaborate with other companies. However, this has changed over time and now we see many partnerships being formed.
There are many benefits to forming strategic partnerships. A partnership can help increase awareness for both parties involved by giving them access to each other's networks and resources.
What is a Strategic Partnership?
A strategic partnership is an agreement between two or more entities to cooperate in order to achieve a common goal. The strategic partnership agreement can be in the form of a joint venture, merger, acquisition, or any other type of agreement.
A strategic partnership has to be beneficial for both parties involved. It provides an opportunity for companies that are looking to expand their business and increase their profit margins by developing new products or services.
There are 5 types of strategic partnerships most commonly seen which include:
- M&A: a full acquisition , merger or majority investment
- Equity Joint Venture: Majority (50% + X) or Minority (50%-X) Equity JV
- Minority Investment: Acquisition of a non-controlling stake in a company
- Alliances: typical a joint R&D, Production or even Co-Marketing cooperation
- Supplier / Distribution Agreement - from a strategic supplier relationship to a one-time purchase at arm’s length principle
How to Build and Manage an Effective Strategic Partnership?
A strategic partnership is a relationship between two or more parties that is built on trust, shared vision and commitment. It is not just an agreement to do business together but also an agreement to work together in order to achieve common goals. The success of the partnership depends on how well the partners can work together, how committed they are and how well they understand each other's needs.
The first step in building an effective strategic partnership is determining what your company needs from the partner and what you can offer them in return. The second step is choosing a partner who has something you need as well as something that your company can offer them.
Partnership Evaluation Framework - Download free PowerPoint Template
The Partnership Evaluation Framework is a free PowerPoint template and model that can be used to evaluate strategic partnerships.
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