A strategic alliance, sometimes referred to as a strategic partnership, is an agreement between two or more parties to pursue a mutually beneficial objective. This is done whilst remaining independent entities. An alliance of this type is not as in depth as a legal partnership entity or corporate affiliate relationship. A company may enter into a strategic alliance to expand into a new market, improve its product line, or develop an edge over a competitor.
Companies may enter into alliances depending on where they are in the product life cycle or may improve in an area in which they are weak. Alternatively, a firm may use an alliance as a defensive measure. By entering into an alliance under contract, it may be difficult for a would be acquirer to break the agreement. If the costs are prohibitive, the acquirer may forego attempting to purchase the target in a hostile takeover.
Types of Strategic Alliance
Strategic partnerships (which should not be confused with legal alliances) can be classified into any of the following types.
Strategic Marketing Partnerships
Strategic Marketing Partnership most beneficial to small businesses with a limited selection of products and services. Referral are the most basic and informal type of strategic alliance.
Strategic Supply Chain Partnerships
Companies usually enter into supply chain partnerships to cut costs, streamline processes, or improve quality. A frequent places in which strategic supply chain partnerships occur the film industry.
Strategic Integration Partnerships
Uber and Spotify partnered together to create their “Soundtrack for Your Ride” campaign. Each firm relied on the other’s technology to create a service which distinguished itself from similar ride sharing services.
Strategic Technology Partnerships
This type of strategic partnership involves working with IT companies to keep your business running smoothly. Partnerships with a web design firm or a specific IT repair service may enable discounts or preferential services.
Strategic Financial Partnerships
Many modern companies wholly outsource their accounting to strategic partners. Dedicated finance professionals offer specific expertise in managing all aspects of accountancy when required. Financing may also be streamlined or more widely available.
