What Is a Strategic Alliance?
A strategic alliance is a mutually beneficial arrangement between two businesses that do not directly compete with one another. It’s a model that is about pursuing partners not only because they provide value to you, but also because they can benefit from your company’s products, services, or brand recognition.
The purpose of the alliance is to help each side reach their joint outcomes. It is ultimately an act of leveraging costs versus return.
Let’s look at 5 common types of strategic partnership agreements:
- Strategic marketing partnerships
If you’re a small business with a limited selection of products and services, this type of strategic partnership agreement would be beneficial. For example, you might be a company that provides one service, such as graphic design, so you might do well to partner with a web developer or printer who can refer you when graphics are necessary, and vice versa.
Whilst fairly basic and informal as a strategic alliance, referral agreements are worth considering in many situations. 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.
- Strategic supply chain partnerships
For those who produce a physical product, this kind of partnership could be extremely valuable. For example, this is worth considering if you can hand off manufacturing to a dedicated factory and maintain profitability without sacrificing quality. However, supply chain partnerships can also be among the hardest types of alliances to maintain as often a partnership only works if each party involved can meet the demands and expectations for quality and price while both remaining profitable.
- Strategic integration partnerships
Strategic integration partnerships have become common in the digital age. These partnerships can encompass agreements between hardware and software manufacturers or agreements between two software developers who partner to have their respective technologies work together in an integral (not always exclusive) way.
For instance, Uber and Spotify partnered together to create their “Soundtrack for Your Ride” campaign seeing customers have a choice over their music selection during their Uber rides. And Nike and Apple famously partnered up to support customers reach their health goals. In this technology age, strategic integration opportunities are only limited by your imagination.
- Strategic technology partnerships
This type of strategic partnership involves working with IT companies to keep your business operational. This could be working with a web design firm or a specific computer repair service that you always call in exchange for a discounted rate on services. It could also include partnering with a cloud-based storage platform to handle all of your file storage needs. Essentially, any kind of technological expertise that is necessary for your business can be relegated to a strategic technology partnership. Choosing a technology partner should be based on an assessment of your needs and the identification of a positive benefit from entering into the agreement.
- Strategic financial partnerships
Many modern companies wholly outsource their accounting to strategic partners like AccSource. Strategic financial partnerships are helpful because when you use a dedicated company for accounting, for example, they can monitor your revenue with greater focus than you can do in-house. Because finances are critically important to any business, strategic financial partnerships are amongst the most important relationships you can develop and foster.
What’s in a strategic partnership agreement?
Once you’ve found a strategic partner to work with, you need to create and sign a proposal or strategic partnership agreement with them. This type of document can range for relatively simple to utterly complex, depending upon the scope of the partnership, the terms of the agreement, and the scale of the businesses involved.
In all cases, a basic strategic partnership agreement should include the following:
- The parties involved in the agreement;
- The services to be performed by each partner;
- The terms of the agreement (percentages of profit, method of billing, etc.);
- The reporting structure, person of contact, etc.;
- The duration of the agreement;
- The signatures of company officers or their designees.
Many companies opt for quality control and auditing clauses in their partnership agreements to help maintain the integrity of the products or services that result from the partnership. Always best to do your due diligence before entering into any agreement and make sure you and your partner are clear on objectives, expectations and the conditions of agreement.
Boobalan Madhavan | AccSource | www.accsource.com.au
48/237 Miller Street,
+ 61 406 727061