What is an example of a strategic partnership?

Question

I need to write a report on strategic partnerships for an entrepreneurship class. I don't need the definition, just some good real examples to use. Thanks.

Answer 1

Many different types of strategic partnerships exist. An organization might form a partnership with its customers, suppliers, or competitors. It might form a partnership with an organization in its own country or at the opposite end of the world. The partnership can be wholly owned by one partner (a contractual agreement) or jointly owned by multiple partners (a joint venture).

In a contractual agreement such as a licensing agreement, franchising agreement, distribution agreement, or technical assistance agreement participants contribute resources to a shared activity, but do not share in the ownership or profits of that activity. For example, U.S.-based Sun Microsystems has licensed its most powerful microprocessor designs to the Dutch electronics giant N.V. Philips, hoping that its chips will be used in new designs of consumer electronics products such as televisions.

A joint venture, on the other hand, is a separate entity that the partners jointly own (through shared equity) and manage. The partners share in the joint ventures profits, risks, and decision making. One partner may be dominant, or the partners may hold equal ownership. However, each partner has only partial ownership and control. For example, Texas Instruments and Hitachi on the one hand, and IBM and Siemens on the other, formed joint ventures to develop and manufacture complex microcomputer chips.

Responsibilities are divided between the players in a strategic partnership. For example, when Quadra Logic Technologies, a small Vancouver-based biotechnology firm, teamed up with pharmaceutical giant American Cyanamid Company, the latter obtained exclusive worldwide marketing and distribution rights to some of Quadra Logics products. Quadra Logic shared sales revenue from these products and received up to $8 million (U.S.) in staged payments for product development. American Cyanamid paid marketing and distribution costs, Quadra Logic paid manufacturing costs, and the partners shared product development costs equally.

Besides the partnership between Quadra Logic and American Cyanamid, several strategic partnerships have been formed in Canada, including the following:

· Delrina Technology, a Toronto-based software products firm, needed capital for expansion, but banks were reluctant to lend the company any money because of the intangible nature of its software. Because IBM already sold Delrina products to its customers through a marketing partnership, it was in IBMs interest for Delrina to continue to innovate. To give Delrina the necessary capital, IBM acquired 11% of the company for $1.9 million. This capital infusion allowed PerForm, Delrinas software for designing business forms on personal computers, to capture a 70% market share (Lorinc 1991).

· Grand & Toy entered into formal partnerships with selected suppliers in order to decrease supply costs (Mason 1993). Its agreement with Acco, a Toronto-based office supplies company, allows Grand & Toy to reduce inventory levels while Acco guarantees delivery. The two companies share data and a forecasting system, which reduces handling costs.

· High-technology firms, such as Northern Telecom and Hewlett-Packard, are subcontracting out more of their plastics manufacturing instead of doing it in-house (Turriff 1993). Indeed, Hewlett-Packard has closed two of its three North American molding facilities in order to subcontract to world-class molders. The company selects subcontractors based on such criteria as quality programs, tolerance requirements, turnaround time, lead time, and cost competitiveness. Sub-contractors benefit in turn from closer relationships with their customers.

Answer 2

Strategic Marketing Partnerships

This type of agreement is most beneficial to small businesses that have a limited selection of products and services to offer their customer. Maybe you have a company that provides one service, say logo design. You might do well to partner with a web developer that will always refer you when graphics are necessary, and vice versa. Referral agreements are probably the most basic and informal type of strategic alliance, but strategic marketing partnerships can be considerably more complex. Case in point: pharmaceutical company Abbott India’s agreement to market Zydus Cadila drugs across India. An agreement like this one allows each company to focus on what it does best. In this case, Zydus Cadila gets to focus on manufacturing medications while Abbott India hones in on marketing the drugs. Marketing partnerships are extremely common in the automotive industry, like the Toyota IQ also being marketed as the Aston Martin Cygnet. The idea is that one company makes a product and another adds its own marketing spin to it in order to tap into a new market. The same logic can be applied to a variety of different products, so it’s something worth considering in many situations. If you’re interested in forming a strategic marketing partnership, you want to look for either a referrer that you share a customer base with or a company operating in a related field that can market your goods or services to a new audience.