Running a business is not a piece of cake, especially when you have so many competitors around you. Managing clients and taking it up a notch in such a saturated environment is, therefore, an essential trait modern companies should master.
Strategic partnerships between two companies can improve your chances of succeeding and acquiring more customers. Nearly 60% of organizations exercise such partnerships, as they dramatically increase the chance of success and help penetrate deeper into the market.
However, strategic partnerships depend on how you approach or respond to partnership offers. Therefore, it’s critical for enterprise businesses to streamline contracts and monitor the process elaborately to yield the best results.
In this post, we will scrutinize strategic partnerships and how you can use them to your benefit.
What’s a Strategic Partnership?
A strategic partnership is a formal agreement of partnership between two companies. Usually, it involves the sharing of information, finances, skills, and other resources to benefit both agreeing parties.
In some cases, such a partnership involves more than two parties. This is called a network partnership, and it helps companies pursue common goals with a more thorough approach.
What’s a Strategic Partnership Agreement?
A partnership agreement is a document that contains strategic proposals that were decided on for the duration of the partnership. This document legally binds the agreeing parties to prevent the chances of future differences.
Main Types of Strategic Partnership Agreements
Depending on the interest of the parties, there are a few types of partnerships between companies. Let’s dig a little deeper.
Strategic Marketing Partnership
Such partnerships focus on finding new clients and customers. Generally, both partnering companies belong to related fields, which makes it easier to devise strategies for marketing and promotion.
For example, Shein and Myntra are online shopping stores. They partnered with Delhivery to promote each business and reap the utmost benefits. Shein and Myntra provide goods to shoppers, while Delhivery ensures that the packages are delivered efficiently.
Strategic Supply Chain Partnership
This type of partnership involves companies that work together to complete a product. They share resources and tasks, which allows both parties to accelerate the results.
For instance, the technology sector opts for partnerships to develop its products faster. Intel produces preprocessor chips that are later used by other companies to create their tech products.
A strategic partnership is a formal agreement of partnership between two companies.
Strategic Integration Partnership
Integration partnerships are designed to promote customer interaction with businesses on a daily basis. The more they interact, the higher the customers’ chances of buying the services or products.
For example, aiming at boosting their rides, Uber entered into an agreement with Google in order to be provided with software for mapping services. When a person enters a destination in the Uber app, Google Maps technology identifies the current place, route, traffic jams, and estimated arrival time.
Strategic Technology Partnership
In this type of partnership between two companies, one company uses the technological solutions from the other one. The idea is to run business operations smoother and enhance productivity.
For instance, the Nokia and T-mobile agreement is a good example of a strategic technology partnership. T-Mobile leverages Nokia’s deep understanding, sustainable solutions, and expertise to advance their digital development, ensure their service reliability, and obtain cyber protection.
Strategic Financial Partnership
This one lets you transfer control of your financial matters to a company outside your firm. Financial partnerships encircle areas like stock programs, accounting, benefit plans, and much more.
Generally, when companies use specialized accounting services from any other firm, it’s a typical example of a strategic financial partnership.
Is a Strategic Partnership a Good Way to Grow Your Business?
While handing over your company’s details and information under a contract may seem like a questionable idea, there are obvious advantages to it.
Here are some major benefits of a strategic partnership:
- Efficiency. When you partner with a firm, you are using their expert services to benefit your business. It helps you grow faster and address problems that may not directly relate to your business. So, there is less effort and time needed to reach specific goals. As a result, you can speed up the expansion of your business too.
- New opportunities. While drafting a strategic partnership agreement, businesses can afford to be creative in setting the terms and conditions. So, it helps you innovate and devise new strategies that can prove to be beneficial for both parties. Also, it helps you gain better results.
- Integration. Especially with integration partnerships, there is less room for smaller brands to make mistakes when they partner with more renowned brands. Moreover, affiliation with popular brands increases your brand awareness, and more customers learn about your products and services.
- Improved performance. Partnership demands better performance from both parties to be successful. So, it automatically raises the quality of your products and services.
- Monetary support. If you are running a small business or start-up, your partner may even provide financial services just to help you get started.
Drawbacks of Strategic Partnerships
When you’re partnering with a new company, there is an element of risk too. This means your strategic partnership is vulnerable to a few drawbacks.
- Employee crossover can be pretty common. In some cases, your team may be overused by the partnering firm.
- Dispute matters like ownership declarations for products and production sites can lead to disagreements. They are often dealt with in courts and usually cause financial drawbacks for both parties.
- Sharing expenses and splitting profits can be a point of difficulty.
- An unclear agreement often results in discrepancies about how long a partnership lasts.
Automating Strategic Partnership Agreements
Like most other documentation, it is fairly simple to automate your strategic partnership agreements too. The major benefit of using automation services like AXDRAFT is that you can manage all your contracts on an in-browser application.
Moreover, handling documentation, managing partners, and defining the key parameters of a partnership is pretty smooth. Therefore, you won’t have to worry about tedious documentation; hence, managing different aspects of the agreement becomes easier.
Automation tools like AXDRAFT can remedy labor-intensive workflows, eliminate human error, and provide exceptional security. Thanks to flexible pricing plans, it is a convenient option for both large enterprises and fresh start-ups.
Finally, when there is a software-based commitment, it facilitates and speeds up the negotiation process and helps track obligations.
When you enter into a strategic partnership, you pave your way towards success by covering your flaws at the expense of another expert. However, such partnerships demand smart monitoring and management, meaning that tools like AXDRAFT can be effective for the flawless execution of such partnerships with respect to the contract.
Moreover, when the ethical bounds are met and companies respect their partner’s interest, a strategic partnership can help the parties grow substantially and expand into new markets. Due to this collaboration, both partnering teams relieve the financial burden.
Frequently Asked Questions (FAQs)
The main types of strategic partnerships are strategic marketing partnerships, supply chain partnerships, strategic integration partnerships, strategic technology partnerships, and strategic financial partnerships.
A good strategic partner is one who is willing to cooperate, provide access to new audiences and new perspectives, and work toward your goals.
Clear key objectives, mutual benefits, common values, and a shared audience are part and parcel of a strategic partnership.
To identify a key strategic partner you should flesh out your business goals, outlining the types of companies that would benefit your business and the ones that would get the most benefits by partnering with you. It is also crucial to list what a potential partner could obtain from your alliance.
To build up a successful partnership it’s paramount to articulate your values, have an out-of-the-box mindset for exploring new opportunities, align your objectives with your partner’s, sign a rock-solid contract, and implement it creatively.