2. What is a Partnership?
True partnerships are about shared agendas as well as
combined resources, risks and rewards.
They build on the respective strengths and core
competencies of each partner, optimize the allocation of
resources and achieve mutually beneficial results over a
sustained period.
They imply linkages that increase resources, scale and
impact.
3. Partnership Defined
“ A partnership is a voluntary collaborative agreement between
two or more parties in which all participants agree to work
together to achieve a common purpose or undertake a specific
task and to share risks, responsibilities, resources,
competencies and benefits.”
5. Why Partner?
Partnerships enable business to gain competitive advantage
through access to a partner’s resources, including markets,
technologies, capital and people.
Teaming up adds complementary resources and capabilities,
enabling participants to grow and expand more quickly and
efficiently.
Allows each partner to concentrate on activities that best
match their capabilities.
6. Why Partner?
Learning from partners’ developing competences that may be
more widely exploited elsewhere.
Many fast-growth companies use strategic alliances to
benefit from more-established channels of distribution,
marketing, or brand reputation of bigger, better-known
players.
More-traditional businesses tend to enter alliances for
reasons such as geographic expansion, cost reduction,
manufacturing, and other supply-chain synergies.
7. Why Partner?
As global markets open up and competition grows, midsize
companies need to be increasingly creative about how and
with whom they align themselves to go to the market.
Meaningful partnerships are the key to success. They enable
companies to:
Tap into more resources
Achieve greater capacity
Develop increased technical expertise
Access established markets and distribution channels
8. The 80/20 Principle
80% of results come from 20% of effort.
Thus, to achieve more with less, you must be selective, not
exhaustive.
For every project, work out where 20% of effort can lead to
80% of returns.
Strive for excellence in the few key areas, rather than for good
performance in many.
9. Do what you do best
Focus on your core competencies and let your partner do his
duties
This leads to:
Increased Productivity
Due to specialization
Increased efficiency
All parties focus on their competencies
Larger Service Portfolio
More valuable to customer
Larger Client Base & Distribution Network
11. Entity with Complimentary
Offerings
By partnering with such a firm you effectively increase your
product portfolio while keeping your overheads the same.
Such partnerships can be especially beneficial in adding value
to your offering and increasing your distribution/sales network.
Instead of reinventing the wheel, partnerships allow us to offer
non competing services/products that the customer may be
interested in.
12. Investor
New businesses often suffer from cash flow inadequacies or
may be at a pivotal moment where there is a need for
significant cash injection.
In this scenarios it is a good option to bring an investor on
board. The investor can add further value if he/she has
relevant experience.
You should be prepared to give up some equity and rights in
exchange for the investment.
13. Supplier
Forming partnerships with suppliers is a strategy that's been
around for many years.
By forming partnerships with suppliers, you increase your
chances of always having the product you want — when
you want it.
Many retailers work directly with suppliers to ensure that stock
levels are optimum which leads to a win-win situation for both
parties
14. Employees
Some employees make wonderful partners. You may use
employees to build stronger relationships with customers,
vendors and distributors, or to perform special projects or
promotions.
By offering bonuses or stock options, you can motivate your
current staff to take on added responsibilities, and they in turn
will feel more ownership for your organization. This type of
alliance tends to be straight forward since both parties are
familiar with the business.
15. Competitor
You may consider competitors to be your enemies, but have
you ever imagined the possibilities if your organizations got
together and pooled your resources?
Take some lessons from giant corporations that are hooking up
with rivals and achieving phenomenal results.
Due to the film's exorbitant costs, Paramount Pictures and 20th
Century Fox teamed up to produce the blockbuster movie
"Titanic."
17. Informal
These tend to be opportunity driven partnerships which require
both partners to have a trust-based relationships and
complementary assets.
Be prepared to take advantage of unexpected opportunities to
learn from each other and to explore additional marketplace
possibilities
Monitoring costs are reduced and opportunities to create value
through cooperative relationship are maximized because alliance
partners can pursue potential rent-generating opportunities that
aren't available to partners in more contractually restricted
alliances.
18. Strategic Alliance
As global markets open up and competition grows, midsize
companies need need to be increasingly creative about how
and with whom they align themselves to go to market.
A Strategic Alliance refers to any number of collaborative working
relationships in which:
no formal joint venture entity is formed
two independent companies become interdependent by entering into a
formal or informal agreement built on a platform of mutual objectives,
mutual strategy, mutual risk, and mutual reward.
Commonly referred to as teaming, strategic partnering, alliances, cross-
licensing, and co-branding.
19. Joint Venture
Typically structured as a partnership or as a newly formed
and co-owned corporation in which two or more parties are
brought together to achieve a series of strategic and financial
objectives on a short-term or long-term basis.
Joint ventures involve sharing the risks and rewards in an
enterprise or project co-owned and operated for mutual
benefit by two or more business partners.
There are good business and accounting reasons to create
joint venture with a company that has complementary
resources, skills or assets, such as distribution channels,
technology, or finance.
20. Franchising
Franchising is a business model in which many different
owners share a single brand name.
A parent company allows entrepreneurs to use the company's
strategies and trademarks; in exchange, the franchisee pays
an initial fee and royalties based on revenues.
The parent company also provides the franchisee with support,
including advertising and training, as part of the franchising
agreement.
22. Success Factors
The success of an alliance depends on matching
complementary resources and capabilities which allow
partners to fill gaps in each others capabilities.
The core factors of success can be broken down into:
Trust
Senior Management Support
Ability to Meet Performance Expectations
Clear Goals
Partner Compatibility
Commitment to long-term win – win relationship and results
23. Risks
Mistakes
Low commitment (no champion, minimal executive support)
Poor operational planning/integration
Strategic weakness (diverging strategies/under-developed
value added proposition, unclear strategic return on
investment)
Rigidity/poor adaptability
Focus on internal alliance issues, and not the customer
mission
Not enough preparation time
24. Risks
Hidden agenda leading to distrust
Lack of understanding of what is involved
Unrealistic expectations
Fails the ‘public perception test’ & damages your reputations
Complex to manage
Reactive, not prepared & proactive
Overdependence
Legal problems
26. Are partnerships right for your
company?
There is no clear answer. Based on individual situations
partnerships can succeed or fail. It may be a time to think
about partnering if you are:
Struggling to keep up with goals (sales or otherwise)
Unable to sustain growth
Lagging behind in technological advances
Facing tough competition
27. So you want to partner… What’s
next?
If upon careful deliberation you feel that partnerships are right
for you then the next step is to look for potential partners. A
potential partner can be chosen for different reasons but
should always:
Share the same core values as you
Fill in gaps in service or internal processes
Be financially sound
28. Doing your due diligence
Before attempting to further talks of partnership you must do
your due diligence and determine the following:
Financial Situation: Will the company enter into any
financial trouble in the future? Are they meeting set goals for
sales, profit, margins etc.
Operations: Understand the structure of the company and
their workforce. Are they scaling up or down? Who are the
decision makers and what is their background and
experience.
29. Doing your due diligence
Market Presence: Study the companies’ operational
markets. Understand what market share the company has
and weather its future market goals compliment/meet yours.
Desire: This can be hard to ascertain at times, but one must
always gauge the other parties interest in a partnership. A
low level of interest or a lackadaisical attitude may spell
trouble in the future.
Quality of Goods/Service: Does your potential partner
share your focus on quality? If a company’s standards don’t
meet up to yours then it is an indication of a poor partnership
30. Doing your due diligence
Views on Customers and Service: It is important to share
customer service values. This can be easily measured by
talking to the company’s customers to gauge their level of
satisfation/complaints regarding the service.
Marketing: Understand your proposed partners’ marketing
strategy and structure. Things to keep in mind are budgets,
marketing personnel, ability to launch new products in the
market.
31. Quiz
The following quiz is designed to help you determine whether
or not the alliance you are considering is right for you:
I have checked into and am comfortable with my potential
partner's financial situation.
I know how much my potential partner makes in annual
revenue.
I am aware of the company's annual growth.
I have a clear understanding of how the company is
organized.
I am familiar with the experience and background of the
company players.
32. Quiz
I have carefully assessed the market presence of this
company.
I am familiar with all the markets in which this company does
business.
I feel this is a market that represents true growth
opportunities for my company.
I have closely examined the company's quality standards.
I believe this company places the same value on quality that I
do.
33. Quiz
I have spoken with my potential partner's customers and
obtained valuable feedback.
I have a clear understanding of how this company handles
customer complaints.
I approve of the way this company markets its product or
service.
I agree that this company has both the money and personnel
to effectively market our new alliance.
I believe that this company shares my enthusiasm to form
this alliance.
34. Result
If you have answered true to at least 12 of the 15 questions,
you can be reasonably sure that you are well prepared to
enter into an alliance with your potential partner. Though you
should consider all of the factors listed above, you should
give the heaviest weight to those areas that are most
important to you and your company values.
35. How to Approach Potential
Partners
Ensure that both parties will gain equally from the relationship.
Going to a potential partner and explaining everything they can
do for you but nothing you can do for them will not entice the
company to join forces.
Once you have a potential partner's interest, discuss all details
of the alliance. It's always best to identify potential issues up
front and try to work through them rather than to wait until you're
already involved in an alliance.
Discuss all possible partnership opportunities with your potential
partner. Talk about resource planning and turning individual
opportunities into mutual advantage. Come to definitive terms
on exactly what needs to happen in order to bring this product or
service to the market. Discuss future goals of the alliance,
including future product or service offerings.
36. Must address the following
What is the business opportunity at hand?
What are the financial resources and responsibilities of each
company?
What specific steps need to be taken in order to get the alliance
up and running?
If you are jointly developing a new product or service, what
specific steps need to be taken in order to get it off the ground?
Which company will supply which employees to the project?
Is this a long-term commitment or an alliance only for a specific
product or service?
What are the future products or services that the alliance could
potentially produce?
37. Build a rapport
Trust can be a major issue especially if your partner is a former
competitor. Building trust takes time, but it can be as simple as
spending time with the potential partner doing day to day
business activities. Go to business lunches and trade shows
together, do a joint presentation at an industry conference, or
call on a customer together.
Start making small commitments to each other. At this time you
may choose to divulge a little information about your company
and your partner does the same. In cases where the shared
information is sensitive, you may want to ask each other to
sign non-disclosure agreements.
38. Legal considerations
Any type of alliance requires that you consult a lawyer to
ensure you protect yourself and your assets. You will want
your attorney to take enough time to protect your company
against any liabilities resulting from the alliance.
It will generally take some weeks to months depending on
the scale of the two companies becoming partners. Be
prepared to spend time on minor details.
The one thing you should insist on is an exit strategy that
allows you to get out of the contract if in fact the alliance
does not work out.
39. Making Alliances work
Once the legalities have been fulfilled and you are about to
start doing business together it is time to think about potential
issues that could hamper progress:
Discuss who is in charge
With both partners used to heading their business it is important
to talk about responsibility and decision making matrix
Outline your goals and objectives at the onset of the
partnership
Periodically meet with your partner to review progress made
and discuss aspects of the alliance that are working well and
those that could be tweaked
40. Making Alliances work
To keep things running smoothly, ensure that there is a sence
of balance in the workload undertaken by each partner.
It is imperative to discuss key financial details like:
Investment responsibilities of each partner
Sharing profits between partners and employees
A key entity to successful partnership is an informed
customer. It is vital to get the word out.
Always remember that a partnership means you are no
longer the sole decision maker and must keep your partner
informed and on board.
41. Self Assessment
The following questions are designed to help guide you
through the beginning of a new alliance:
Have we clearly defined which duties will be assigned to
which parties?
Have I openly expressed my expectations for the alliance?
Have I put my expectations in writing?
Have we established clear lines of communication?
Have we talked through all money matters?
Do we have a clear plan for dealing with customer service
issues?
42. When Alliances Don't Work
If, for whatever reason, you are dissatisfied with the outcome
of your alliance then take a step back and analyze the issues.
Many companies make mistakes while entering into
partnerships and instead of identifying and fixing them at an
early stage they let the relationship sour virtually beyond
repair.
This is why a bi-monthly recap is important so that you can
identify and correct issues emerging from the partnership
43. When Alliances Don't Work
A common occurrence is where partners keep vital
information from each other due to lack of trust. If your
relationship is not founded on solid trust then a partnership is
not the way forward.
Partners sometimes tend to have unreasonable expectations.
Always ensure you define reasonable and achievable
targets.
Partners can sometimes make unreasonable demands or
view themselves as the boss
Talk to your partner about issues you may have and discuss
weather they can be resolved before ending the alliance.
44. Self assesment
Before giving up on an alliance, ask yourself the following
questions:
Do I trust my new partner?
Is it possible I am withholding information?
Am I disappointed things aren't moving quicker?
Do I treat my partner as an equal?
Are there actions that I can take to improve the relationship?
Are there actions we can take together to achieve better
results?
45. Exiting an Alliance
If you have tried all possible avenues to overcome issues
faced and the alliance is still suffering then it may be to time to
ask your lawyer to execute the exit strategy. This should be
your last resort.
Majority of alliances work out to both partners’ advantage. It’s
well worth your time and resources to do whatever you can to
make the relationship work.
46. Examples of Various Partnership
Types
Seven Up Bottling Company – Franchise
Nigerian Bottling Company – Joint Venture
Park n’ Shop SPAR – Franchise
Ascent Worldwide Impex
Strategic Alliance
Joint Venture
Informal Partnership
Especially fast-growing companies rely heavily on alliances to extend their technical and operational resources.
You have likely built a reputation by providing quality to your customers. If you tarnish that image through an alliance, you may well lose the customers you have fought so hard to get.
. — even those you would rather not bring up for fear of putting your partner off or because you are afraid of the answer. Remember important that you both lay all of your cards out on the table. In these situations, it's
You will also want to talk about resources and your plans for turning each opportunity into an advantage. Additionally, you will want to talk specifically about how you will get your new alliance up and running, and
If you have tried to overcome all of the above issues, but the alliance still is not working, you may want to ask your lawyer to execute the exit strategy to get you out of the agreement. However, this action should be taken only as a last resort.
The majority of business alliances work out to both partners' advantage. It's well worth your company's time and resources to do whatever you can to make the relationship work. The synergy that a business alliance provides can supply your company with increased revenues, improved brand awareness, and higher market share for many years to come.