5 Reasons to Embrace Strategic Partnerships in Business
About the Author:
Nick Den Heijer
Director at Bentleys Chartered Accountants
Nick’s valued advice is sought by clients in many areas including succession, strategy, business sales and acquisitions, financing, outsourcing and processes and systems.
There are many reasons why businesses form strategic partnerships, and mutual advantages can be substantial when the right partnership synergy is achieved.
We speak with experience, having done this ourselves. Benefits include enhanced brand awareness, access to more resources in more countries and involvement in innovation programmes that support a shared commitment to common goals. Here are the top five reasons for forming a strategic partnership, and how it can benefit your business.
1. ENTER NEW MARKETS
With Australia and New Zealand accounting for only two per cent of the world's GDP, geographic expansion to new markets and customers can deliver lucrative results. With the right partnership in place, risks can be reduced, and opportunities optimised. Recently, an indoor trampoline company was considering setting up another operation in Australia. However, after some research and analysis, it was found that cost would be reduced if the operation were to set up in Shanghai, and the earnings would be substantially increased given access to a larger market.
We located the right local investor, who had the resources, connections and local market understanding to enable a successful joint venture.
2. DEVELOP A COMPETITIVE ADVANTAGE
International business often involves specialist skills from people in different fields. Rather than developing and maintaining new skills in-house, it can be commercially advantageous to partner with a business that offers the complementary skills required.
For example, experts in their respective fields and markets are available to deliver quick responses to complex and challenging issues.
The partnership should deliver winning results for all involved, and enable each company to focus on maintaining their core competencies.
3. BUILD BRAND AWARENESS
Strategic partnerships are formed on shared values and vision, so the association serves to strengthen the respective brands. Strategic partners can also collaborate in shared campaigns to build brand awareness across their respective memberships, opening up more opportunities for generating new business.
There are many examples of successful co-marketing partnerships, where the companies involved - like GoPro and Redbull, Uber and Spotify, and Apple and MasterCard - offer mutually beneficial services to customers with a strong brand fit.
4. SHARE RESOURCES
Imagine the resources required to develop your business's success into the future. This could include software, high quality vendors, social media communities, or a connected network of aligned professionals - and imagine what you could achieve by immediately accessing these resources.
Strategic partnerships can generate the economies of scale that enables access to a rich range of resources and achieves the critical mass that is often needed for international success. Such critical mass can also attract other 'like' business partners and improved vendor arrangements.
5. ENABLE INNOVATION
A strategic alignment, along with the collective skills and resources of each strategic partner, opens the opportunity to drive innovation for the benefit of all. This can be achieved through shared programmes that have a concerted focus on advancement.
CONCLUSION
An alliance can build group strength providing expanded resources, shared expertise, extended geography and global connectivity. Partners help each other with key elements such as leadership, strong competency and broad capabilities. Combining all this with added scale allows all parties to benefit from a wider and stronger presence and serve customers better.
Director
Bentleys Chartered Accountants
09 600 3900
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