Strategic Alliance: Supercharge Your Business Growth with the Right Partnerships

Companies both big and small often form strategic alliances and partnerships as a fundamental part of their business plan. However, while many of these partnerships are created with high hopes and expectations, not all of them prove to be successful.

In business, partnerships and alliances are a form of networking. They can bolster abilities and make up for shortcomings by joining forces with other companies that have complementary strengths. They can also give businesses access to products or services they otherwise wouldn’t have, increase customer loyalty when they partner with businesses that are already a trusted name in the marketplace, or even help them to enter a new market. These alliances are collaborations where two or more organizations come together to pursue a unified aim while preserving their own autonomy. But why are alliances and partnerships so important for business growth, and what kind of partnerships should you be aiming for in order to achieve maximum scalability?

What are Strategic Alliances & Partnerships?

A strategic alliance is a partnership between two businesses to pursue a common goal while still maintaining their own individual identities. This type of agreement is less complicated and less restricting than a joint venture, where two companies join forces to build a completely new enterprise.

Companies can maximize their talent and individual strengths by collaborating with other organizations within the same – or similar – industry. Everybody and every company has strengths and weaknesses, so developing your partnership plan to capitalize on those strengths and compensate for the weaknesses can help you stand out.

Different Types of Strategic Alliances and Business Partnerships

Strategic alliances can assume a variety of shapes and sizes, but typically they can be classified into three distinct areas.

Joint Ventures

A joint venture is a business entity created by two or more parent companies. Resources and ownership are divided between the participating companies, with a legally binding contract in place to ensure compliance. The joint venture can be formed with a short-term goal or long-term strategy, and the profits are distributed between the parent companies.

Equity Alliances

An equity alliance is established when a company acquires partial ownership of another business, or when both companies mutually invest in each other by purchasing equity shares. Equity alliances allow companies to combine resources, mitigate risk, and access new markets, customers and suppliers. They provide a range of strategic benefits that can help companies grow and succeed in today's competitive business environment.

Non-Equity Alliances

When two organizations enter into a non-equity alliance, they are simply creating an agreement to exchange assets without forming a new venture or dividing ownership. These kinds of alliances are usually more lenient and casual than those that involve equity, and it is the most common type of business partnership.

• General Partnerships
  When two or more proprietors team up to operate a business, the default business organization they form is a general partnership. This is in the same manner that a single entrepreneur automatically establishes a sole proprietorship.
• Limited Partnerships
  A limited partnership is a type of business that has a unique financial and legal setup. One person – the general partner – is in charge of running the company, while the other people involved – the limited partners – provide the funds but are only liable up to the amount of their initial investment.
• Limited Liability Partnerships
  With Limited Liability Partnerships (also known as LLPs), those involved in the partnership arrangement have their liabilities restricted to the amount of money they have invested in the enterprise.