What Is a Strategic Partnership?

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A strategic partnership is a formal alliance between two organizations, with each possessing assets that will help the other. Strategic partnerships are usually formalized by contracts, but partners are relatively independent of each other, stopping short of legal partnerships or corporate affiliation relationships.

Commercial Partnership

  • Strategic partnerships are often formed to reach new markets: A company with a superior product but little market share can find a partner with a middling product but an established customer base, for example. Strategic partnerships of this type can be formed when two companies offer related but non-competing products, or by making a joint delivery of complementary products to make a complete solution available to customers.

Technological Partnership

  • Strategic partnerships can be formed to share technological assets, developing a product for which each of the partners is holding key patents. The formation of technological partnerships has become widespread because of the rising costs of research and development and the shrinking product life cycles, as partners can share development costs and reduce time to market.

Public-private Partnerships

  • Although strategic partnerships are usually commercial in nature, there are some problems that because of their complexity requires coordination between public and private partners. A partnership composed exclusively of public or private actors is unlikely to posses all the knowledge, information and clout required to solve complex dynamic and diversified problems like transitions to sustainable technologies, for example, or urban renewal projects.

Challenges

  • Strategic partnerships are inherently challenging because of the tension between cooperation and competition, as partners may be afraid of creating a new competitor or strengthening an old one. Good leadership and defined management structures are crucial for the success of strategic partnerships, otherwise distrust and status quo are likely to result in collaborative inertia instead of the expected collaborative advantage.

References

  • "Local Strategic Partnerships-Lessons from New Commitment to Regeneration"; Hilary Russell; 2001
  • "Strategic Management Journal; Understanding the Rationale of Strategic Technology Partnering"; John Hagedoorn; 1993
  • "Strategic Partnerships -- An Entrepreneur's Guide to Joint Ventures and Alliances"; Robert L. Wallace; 2004
  • Photo Credit Jupiterimages/Photos.com/Getty Images
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