With the increasing level of competition in the global business environment, organizations are coming up with strategies that can help them become competitive in the market. One of the strategies that are currently being used by organizations to increase their competitiveness in the market is the strategic partnership. A strategic partnership occurs when two or more firms enter into an agreement to pursue a common objective in the market ( Capaldo, 2014) . It is increasingly becoming a critical strategy of companies with executives setting aside huge resources to develop and maintain partnerships. In the globalized economy, strategic partnership is helping businesses to pool together knowledge, resources and diversify their products among others. The reasons for strategic partnership can differ from one situation to another and depends on the objectives of the management and the nature of the company. As many firms continue to use the strategic partnership to increase their competitiveness in the market, it has become important to determine how it has helped them achieve their major objectives in the market as well as gain a competitive edge in the market ( Albers et al., 2016) . The assessment of the effectiveness of the strategic objectives can help companies to determine if it's a worthwhile strategy that should be pursued by the management to gain a competitive edge in the market. The paper analyses the importance of the strategic partnership by considering its benefits to the company. It assesses some of the recent strategies partnership and examines their successes or failures to help make informed decisions on whether that contributes to the enhanced performance of companies or not.
The Concept Strategic Partnership
The strategic partnership has been in use for many decades as firms continue to implement strategies that can help them to experience rapid growth in the domestic and global business environment. Initially, firms depended on their own branches and other affiliate companies to market and sell their products at different locations across the world ( Brouthers et al., 2015) . This implied that a company must set up its plant in a foreign country in order to enable it to sell its products to the targeted customers. However, as the cost of starting new firms increased coupled with the differences in the cultural background, it was necessary that firms identify an appropriate partner to help them market and sell their goods and services in the foreign country. In essence, many companies found it appropriate and easy to partner with others to enable them access and penetrated the new market ( Capaldo, 2014) . For example, it countries that are characterized by unique cultural differences, it can prove difficult for a new company to penetrate such markets without the assistance if a local company which is reputable in the market. As a result, many companies started using strategic partnership as a means to penetrate new markets with unique cultural practices.
Delegate your assignment to our experts and they will do the rest.
Besides, setting a firm in a new location to help market and sell the products of an organization can be costly due to the many requirements. The company can spend huge resources to establish a new company in new geographical areas. Due to this, many executives found that the only feasible way to market and sell the product in new markets is to establish an appropriate partnership with some of the local companies that are reputable in the market ( Brouthers et al., 2015) . Such arrangements can help reduce the cost of operation and help the company to access and penetrate such markets. For example, a company such as Coca-Cola has a strategic partnership with Water Bottling companies that are located at different regions around the world. These companies are responsible for packaging its products in the regional market where they are marketed and sold to the market. It is interesting to note that such partnership agreement has enabled Coca-Cola to access many regional markets around the globe as well as respond to the unique needs of the customers.
The Benefits of Building Strategic Partnership
Strategic partnership plays an important role in improving the performance of companies. Majority of the companies that have entered into such partnership agreement have been able to record positive results in their financial performance. Although there are some few challenges of the strategic partnership, its benefits can be seen to outweigh some of its limitations that can impact its effective implementation. Evidently, building a strategic partnership is associated with many benefits to the companies in such arrangements ( Warner & Sullivan, 2017) . The benefits of the strategic partnership can be assessed by considering its contribution to the performance of the company. There are many benefits that are attributed to the strategic partnership and can include access to the new customers, the opportunity to reach the new market segments and sectors, building brand awareness, expand the geographical reach, share resources, win more business, increase revenue and access new technologies among others.
Access New Clients
One of the major reasons for building the strategic partnership is to enable an organization to increase its market share as well as access new markets. Notably, approximately 68 % of the executives indicated that the leading reason for entering into a partnership agreement is to acquire new customers ( Warner & Sullivan, 2017) . In essence, the main benefit of the strategic alliance is to access new customers and enabled the company to increase its market share both in the global and domestic markets. The businesses can enter into a new supplier-vendor relationship or establish ongoing deals with import or export forms to increase market access and share. Currently, the major goal of many companies is t grow their customer base. In essence, customers are the core to the performance of businesses and thus it is appropriate that a company finds effective means to attract new customers. Once new customers have been attracted to a company, a proper customer retention strategy should be put in place to ensure that the business is sustainable and enjoys enhanced customer loyalty. By entering into a partnership agreement with other companies offering similar products, the firm can immediately have access to a pool of new customers who are aware of the products and are served by the partnering company ( Warner & Sullivan, 2017) . This also applies to the second partners who also enjoys new customer base from the agreement. Ideally, all the customers of the company will enjoy a new customer base from the partnership arrangements.
Opportunity to expand to new sectors and market segment
Another benefit that a company can gain from the strategic partnership is the opportunity to expand to new market segments and sectors. As firm make an agreement to form a strategic alliance with another a company, it is likely that it will be able to enter into new market segments and sectors. Although it is likely that a chosen partner in the strategic partnership will be offering similar products and services or operating in the same field, there are high chances that the partners will be having customers from different market segments and sectors ( Brouthers et al., 2015) . In essence, firms normally prefer to choose partners that operate in new market segments to help them gain new customers and increase their market share ( Capaldo, 2014) . Evidently, the strategic partnership makes it easier for firms to expand to new market segments than starting from a scratch with experience and credibility in those markets. A firm that is already established in a market will make it easy for a new firm to access and penetrate such markets.
Expansion to the new market segment can enable a firm to improve on its sales and acquire a new base of customers from such regions. The new market segment can be in terms of the demographic characteristics of customers such as high-income earners or online customers. The companies in such partnership arrangements will often share the customers with each other thus gain mutual benefits associated with the client base and market share of each firm ( Warner & Sullivan, 2017) .
An example of a strategic alliance that has enabled a company to expand to new sectors and market segment is evident in the Starbucks and Barnes & Noble. Barnes and Noble is a brick and mortar bookstore company while Starbuck is a coffee company. The strategic partnership between these two firms has helped them share their customers and outperform their competitors in the global market. It is evident that the two companies operate in different market segment and industry. However, they have successfully entered into a strategic partnership that has enabled them to enjoy new client base. The Starbucks location in several places was the main attractive factor that made Barnes & Noble to consider the strategic partnership. The strategic alliance enables the customers of Barnes & Noble to shop at Starbucks and browse the latest bestsellers shelf all in one stop. It can be argued that the strategic alliance has helped increase the competitiveness of Barnes & Noble and lead to the closure of many of its competitor's businesses as it gained a huge market share from such arrangements. On the other hand, Starbuck has also gained new customers from such arrangement and this has lead to its increased market share. The arrangement between these companies is unique since both of them are from different industry and market segments as well as offer different products. Interestingly, the strategic partnership has enabled the two firms to acquire new customers from different market segments which have contributed to their success in the market.
Increase Revenue
The major objective of companies in the business environment is to increase the sales and revenues from their products. Revenues play an important role in determining the profitability of companies in the market. As the revenue of organizations increases, their financial performance is seen to improve. The major challenge that the majority of companies nowadays faces is the decline in revenue and profitability ( Brouthers et al., 2015) . The current trend in the market shows that majority of the companies are experiencing is a decline in their revenue and profitability owing to the increased competition in the market. As more firms enter a given market, their level of competition among the rival firms become intense and thus firms start to experience a decline in their market share and profitability. As a result, there is a need for companies to come up with innovative ideas that can help them increase their revenues and profitability. One of the innovative ideas that a company can use to improve its sales is the strategic partnership. Through a strategic alliance, a company can enter into new market segments by leveraging on the reputation of its partner in the alliance to acquire new customers.
Approximately 66 % of the executives of companies view strategic alliance as a means of improving revenues ( Albers et al., 2016) . This implies that increased revenue is one of the core benefits associated with strategic partnership of companies in the business environment. Any successful strategic alliance should lead to an increase in revenues of the companies and this help to improve the financial health of a firm. The new revenue streams realized due to the strategic alliance can help a firm to become productive and enjoy sustainable growth in the business environment.
Share Resources
Majority of the companies especially the smaller ones often finds it difficult to acquire the resources that are important for their growth and development. As a result, they can be attempted to seek assistance from other organizations with a similar vision in order to access the resources that are critical for their business development and growth. The creation of strategic partnership is one way that can help companies to share their resources and gain mutual benefit. An effective strategic partnership can enable a company to get in access to important resources that it could have not to afford on its own ( Capaldo, 2014) . For example, it can prove difficult for small companies to afford some technical resources due to a number of reasons such as high cost and diseconomies of scale. As a result, entering into a strategic alliance is the only sure way that can help such companies to acquire such important resources to spur their growth in the business environment ( Garg, 2016) . Notable, the access to technical resources can enable a company to come up with new and innovative products leading to their enhanced competitiveness in the business environment.
The sharing of important resources can also help a company to reduce the cost of operation. In essence, it will enable the companies to share the cost associated with these resources and thus mutually benefit from each other. There are many examples of companies that have entered into strategic alliance with the sole aim of sharing resources. One perfect example of a strategic partnership that was established with the primary objective of sharing resources is the one between Hewlett-Packard and Disney. The Hewlett-Packard and Disney strategic alliance were established to enable the two companies to share the important resources that are key to their business operation. The strategic alliance between these two companies can be traced back when Mr. Packard, Mr. Hewlett, and Mr. Disney were all involved with the management of their respective businesses. During the establishment of Fantasia, Disney acquired certain audio equipment from the Hewlett-Packard. This strategic alliance continued for sometimes as Disney heavily depended on the HP’s IT team and development for its infrastructure ( Garg, 2016) . In fact, the Imagineering team is still attached to the architecture of the HP system. The alliance between these companies have seen them sharing important resources as well as technical expertise that has enabled them to develop innovative products thus become competitive in the marketing environment.
Expand Geographic Reach
Another major benefit of strategic alliance is that it can enable a company to expand its geographical reach in the market. The geographic reach of a company can enable it to reach other foreign markets through the use of a strategic alliance. The strategic alliance can help the company to expand its distribution network to the new markets. The strategic partnership has helped firms to access the markets that are new and especially those with new culture ( Garg, 2016) . For example, some of the firms that operate in Chinese markets have established some special partnership to ensure that they are accepted by the new customers. The culture in China is completely different from those from other markets such as the United States. As a result, companies that need to operate in these market segments should find an appropriate strategic partnership to enable them to successfully enter such regions. It is noted that McDonald and Starbucks success in the Chinese market is associated with their strategic partnership.
McDonald and Starbuck are two global fast food companies that have continued to expand their businesses and operations in the Chinese market by entering into strategic alliances with local companies. Recently, McDonald has announced plans to open several new restaurants in China to help it reach to about 4,500 within the next five years. The company announced its expansion plans after finalizing the new joint venture with CITIC Ltd, Carlyle Capital, and CITIC Capital. Under this partnership arrangement, the state-owned group will assume full ownership of all the existing McDonald restaurants in the Chinese market as well as any additional outlets for the next twenty years. The aim of this strategic partnership is to enable the company to secure a better location for expansion. The partner of McDonald has experience in real estate and this will play a pivotal role in ensuring that the company expands its footprints in the Chinese market. Besides, it will enable McDonald to increase the proportion of its market outlets in the developing cities from approximately 35 to 45 % ( Warner & Sullivan, 2017) .
Build Brand Awareness and Trust
Building brand recognition and awareness is another important benefit for the companies who have entered into a strategic partnership. Brand awareness and recognition is an important element for many businesses regardless of their nature and size ( Warner & Sullivan, 2017) . It is the desire for all the management of companies to build a brand awareness and recognition that can enable them to gain a huge reputation in the global business environment. The interest of companies is to develop trust and confidence with their customers and thus facilitates the creation of customer loyalty. By partnering with other companies, a firm might increase its level of confidences in the market and increase its brand awareness and recognition ( Garg, 2016) . In essence, the companies in the strategic partnership can support the business of each other by marketing and selling each other's products in the respective markets. For example, a company in the United Kingdom can establish a partnership with one from the Asian market where each of the market and sells the products of the other in the respective domestic market. The strategy can ensure that there is the creation of brand awareness and recognition for both the companies in the foreign markets.
From small sized companies, entering into a strategic partnership with large and reputable companies can play a critical role in marketing their products ( Albers et al., 2016) . Small companies or new entrants might lack adequate resources to conduct effective marketing campaigns to ensure that the customers are aware of their products. Also, the products of new companies are not familiar with the customers and thus without appropriate strategic partnership, it can prove difficult for the companies to sell those products to the new customers. In essence, it can be argued that one of the major role strategic partnerships is to help increase the exposure of each of its partner in the marketplace. In fact, having two complementary and leading companies in an industry combining forces can lead to creating a strong marketing effect that can help improve the performance of a company in the business environment. For example, many football clubs enter into an agreement with many companies with an aim of marketing their products. As an example, Arsenal Football Club in England has enjoyed a strong partnership with the Fly Emirates with is an aviation company. In this deals, the Fly Emirates advertised its products by branding the Arsenal stadium and uniforms with its own name so as to increase its brand awareness and recognition. Since Arsenal gas huge followers across the globe, the company is significantly gaining from such initiatives and this helps it to improve its competitiveness in the aviation industry. Also, Arsenal also gains from such partnership by increasing its sales and revenue thus enhancing its profitability.
The Prime Examples of Successful Partnership
From the analysis, it has been established that a strategic partnership can play a significant role in improving the competitiveness of companies in the market. Through a strategic partnership, a company can gain significantly from each other owing to their strategic position in the market ( Albers et al., 2016) . In order to determine how the strategic partnership has helped companies to improve their performance in the market, it is important to assess and evaluates some of the prime examples of the successful partnership in the global business environment.
Apple Pay and MasterCard Strategic Partnership
The Apple Pay and MasterCard are one of the recent strategic partnerships that have proved successful in the global business environment. The strategic alliance between these two companies was the one where they share their customers, resources, and technology to enable them to gain a competitive edge in the market. Although it might seem that the two companies are direct competitors, their strategic partnership proved to be successful in the credit card industry. Ideally, MasterCard is the largest provider of a credit card in the global market and thus Apple was able to gain credibility in the merchant service services industry and processing arena through this strategic partnership. The two companies benefited from each other from the partnership agreements and this contributed to their enhanced performance in the market. Apple Pay benefited from the reputation of MasterCard in the credit card industry while MasterCard got the opportunity to become the first authorized Apple Pay option. Notably, the experience of MasterCard helped Apple as it continued to work on some of the potential issues as its new product Apple Pay increases its brand awareness and prevalence. Ideally, this partnership has contributed to an increased market share, sales, and revenues of the companies.
HP and Microsoft Global Strategic Alliance
The HP and Microsoft Global strategic alliance is considered as one of the successful and long-standing alliances of its nature in the industry. The alliance has been existence for more than 25 years and continues to benefit both the companies in the pursuit to accomplish their strategic objectives in the marketplace. The HP and Microsoft partnership emphasizes the combined marketplace leadership that is focused on helping the customers and other channel partners in the global market to enhance productivity through the application of innovative technologies. The partnership which is known by its brand name HP and Microsoft Frontline Partnership has been the key to the advancement of the companies in the global business environment. It enables the two companies to share engineering capabilities, technology, and marketing resources so as to create and promote appropriate solutions that are based on the computing platform industry standard ( Garg, 2016) . The platform has helped the companies to solve and address some of the most challenges and issues associated with information technology. Since the establishment of this special partnership arrangement, the two companies have jointly engineered effective solutions that deploy seamlessly, smoothly and ensure a competitive edge in the market. The alliance between the two companies has expanded from the earliest purpose which was primarily focused on the Desktop personal computers to include innovation in the data industry as well as the emerging technologies for all businesses. In addition, the strategic partnership has expanded to provide opportunities for approximately 32,000 ecosystem partners and joint resellers.
Jet Airways-Etihad Strategic Partnership
Another successful strategic partnership is that for Jet Airways and Etihad aviation companies. The strategic partnership involves the investment of Etihad into Jet Airways. The alliance has been delivering strong results since its establishment across various areas that include revenue generation, network growth and cost, and operational improvements. Under this strategic alliance, the two companies share resources and customers to enable them to improve their competitiveness. The agreement enables Jet Airways to connect to other cities in the global aviation industry using the reputation and brand image of Etihad,
The collaboration between the two companies has enabled them to become the leading airways company in the Indian market. Specifically, Jet Airways and Etihad are nowadays the leading airline operators in the Indian market. The collaboration between these two companies has also grown strongly over the years and led to the increase in the number of passengers for the companies.
A strategic partnership has become a major business strategy for companies who are interested in improving their market share in the business environment. Currently, there is a high level of competition in the business environment and these forces firms to identify appropriate strategies that can help them gain a competitive edge over their rival firms. One of the strategies that have been widely applied by many firms can be argued to be the strategic alliance. Through the strategic alliance, companies have been able to enter new market segments, increase their market share, enhance revenue and eventually improve profitability. Although there are many reasons that explain the motivation for firms to enter the strategic alliance, the benefits attributed to these alliances are common and share by many of the firms in such agreements. Real examples of strategic partners such as the one for HP and Microsoft, Apple Pay and MasterCard and Jet Airways and Etihad demonstrate its effectiveness in improving the competitive edge of companies in the market. As a result, strategic partnerships a perfect business strategy that firms should apply to increase their competitiveness in the market.
References
Albers, S., Wohlgezogen, F., & Zajac, E. J. (2016). Strategic alliance structures: An organization design perspective. Journal of Management , 42 (3), 582-614.
Brouthers, K. D., Nakos, G., & Dimitratos, P. (2015). SME entrepreneurial orientation, international performance, and the moderating role of strategic alliances. Entrepreneurship Theory and Practice , 39 (5), 1161-1187.
Capaldo, A. (2014). Network governance: A cross-level study of social mechanisms, knowledge benefits, and strategic outcomes in joint-design alliances. Industrial Marketing Management , 43 (4), 685-703.
Garg, C. P. (2016). A robust hybrid decision model for evaluation and selection of the strategic alliance partner in the airline industry. Journal of Air Transport Management , 52 , 55-66.
Warner, M., & Sullivan, R. (Eds.). (2017). Putting partnerships to work: Strategic alliances for development between government, the private sector, and civil society . Routledge.
