STRATEGIC PARTNERSHIPS OR TIE UPS FOR

A NEW VENTURE
Introduction

Strategic alliances are agreements between

two or more independent companies to
cooperate in the manufacturing,
development, sale of products and services or
other business objectives.

For example, in a strategic alliance,

Company A and Company B combine their
respective resources, capabilities and core
competencies to generate mutual interests in
designing, manufacturing, or distributing of
goods or services.

2
 TYPES OF STRATEGIC ALLIANCES

A non-equity strategic
alliance is created
A joint venture is when two or more
established when companies sign a
the parent contractual
companies relationship to pool
establish a new their resources and
child company. capabilities together.
An equity strategic .
alliance is created
when one company
purchases a certain
equity percentage of
the other company.
 REASONS FOR STRATEGIC
ALLIANCES

To understand the reasoning for strategic alliances,

let us consider three different product life cycles:
Slow cycle, Standard cycle, and Fast cycle.

The product life cycle is determined by the need to

innovate and continually create new products in an
industry.
 The reasoning for strategic alliances are
different

In a fast cycle, the

In a slow cycle, company’s competitive
the company’s advantages are not
competitive protected and companies
advantages are operating in a fast
shielded for product lifecycle need to
constantly develop new
relatively long products/services to
periods of time. In a standard cycle, survive.
the company launches .

a new product every

few years and may or
may not be able to
maintain their leading
position in an industry.
 Strategic alliances create value by:

Changing the competitive

environment

1 2 3

Improving current Ease of entry and exit

operations.
 The ability to learn
from the other
partner(s)

1 2 3

Economies of scale Risk and cost being

from successful shared between

strategic alliances partner(s)

 This would help set a new
standard in the competitive
environment.

1 2 3

Creating technology standards (for

Creating tacit
example, Sony and Panasonic
announced to work together to
collusion.

produce a new-generation TV).

 A Low-cost exit from industries

1 2 3

A low-cost entry into new industries

A new entrant can form a strategic alliance with a
(A company can form a strategic
company already in the industry and slowly take
partnership to easily enter into a
over that company, allowing the company that is
new industry).
already in the industry to exit.
 Partners may fail to
commit resources and
capabilities to the other
partners.

1 2 3

Partners may misrepresent what

Partners may fail to use their
they bring to the table (lie about
complementary resources effectively.
competencies that they do not
have).
 STRATEGIC PARTNERING
FRAMEWORK

The Strategic Partnering Framework is intended to

be a guide to the process of forming and
maintaining strategic partnerships.
The approach is comprehensive, i.e. it begins
before a partnership is established with
organizational self-assessment, and progresses
through the process of building and maintaining a
partnership, with evaluation and reassessment
integrated throughout the entire process.
 ASSESSMENT CRITERIA
Organizational Assessment

 Know your personal /organizational goals

 Know your organizational mission

 Determine your organizational and project

specific priorities

 Assess your organizational leadership

 ASSESSMENT CRITERIA

Partner Selection

 Determine your common goals or mission

 Evaluate your previous history, if any,

with the other organization(s)

 Articulate a common project/task/reason for

partnering
 Agree upon the level and type of partnership

(formal, informal, one-time, long term).
 MAINTENANCE AND EVALUATION

Maintaining a partnership

 Follow up on progress reports as

necessary

 Revisit measurable outcomes

 Monitor any conflict and resolve issues as

they arise

 Promote transparency in decision-making

 MAINTENANCE AND EVALUATION

Evaluating a partnership

Share findings. Are you sharing

often enough? Is there collective
learning?
If these goals are not being met – do you need
to re-assess the outcomes, priorities, and division
of labor between groups?

 Revisit expectations frequently

Revisit collective and individual missions. Have



they changed? If so, how does it affect the

partnership? How will you adapt?
Thank You