Strategic Partnership

Growing with synergies

Another way of growing your business is to reach out and seek strategic partnerships with other business entities without complex contractual and legal obligations. Reaching out to strategic partners and entering into a relationship requires a high level of trust; but a sound strategic partnership can greatly benefit both your businesses.

The core of a strategic partnership is the synergy effect you can create by joining forces with another business. The usual way of thinking of synergy is that the effect of the whole is greater than the sum of its parts. In simple terms, synergy effects flows in two ways:

• The synergy of reduction: 2+2 = 3 for example reducing cost of doing business

• The synergy of promotion: 2+2=5 for example increasing sales or profits

Let’s take a high level look at what could make an attractive strategic partnership for your business. Following are some examples of different partnership models.

Complementary products and services

A partner might have products or services that are used in, or that give context to, your offering – so the products are complementary in final use. You could agree with your partner to do a package sale, where each of you commits to sell each other’s products or services together with your own as a complete solution. This will increase overall productivity, as you both have the potential to sell more to existing customers.


You can partner directly with a business that can take your products or services to new destinations that your business cannot presently reach easily. This could potentially take your products and services to a whole new market. You get more sales, and the partner gets a new income stream.


If you partner with a business, your next step could be to co-brand. Co-branding is where both businesses collaborate on a common marketing platform for a common audience. A common example of this is sports marketing, where a bank, telephone company, energy company or car company sponsors advertisements on a prominent sports-club’s apparel. Each party then benefits by being seen in conjunction with the other.


There might be process elements of producing your products or services that another business could actually do better. For example, your potential partner business might manufacture on a larger scale, and so be able to produce your products or services at a lower cost. This is referred to comparative advantage. It might even be possible to exchange comparative advantages, as there might be areas where your business has a comparative advantage you can offer to your partner.


Informal networking within your industry can provide insight into new ideas, inspiration for innovation, and world “best practices”. An example of this could be developing an industry cluster where you can share industry knowledge, trends, market information, knowledge about legislation and its effects, etc.

Purchasing suppliers

You could also establish a partnership with one or two companies to improve your purchasing power, and on that basis, negotiate better prices. Sharing bulk discounts can cut costs dramatically.


Sharing resources has several advantages, the most obvious of which is that it reduces the overall cost of running a business. For example, you could share office space, staff, printers, reception, telephones, storage, and back office functions. Not only does this improve your bottom line, it is also more environmentally sustainable, and can encourage cross-pollination of ideas and innovation too. That said, staff sharing and resource sharing needs to be carefully designed; and open communication is paramount to make this work.

Research and development (R&D)

All businesses should invest in the next generation of their products or services; but depending on your industry this could be expensive, risky, and time-consuming. Sharing R&D costs with another business could not only potentially reduce the total R&D costs, but also reduce risk and development time.

Technology and process knowledge

If you and your prospective partner both use similar technologies (maybe from the same supplier), it might be possible to “share experience” and learn from each others’ best practices. You might do this, for example, through an industry cluster or networking group. This could then super-optimise your production, which could reduce your operating costs.

Joint Ventures

A joint venture partnership is quite involved. This is because it is basically a business agreement in which both parties agree to develop an entirely new business and new assets by each contributing equity. Each of the joint venture partners then injects capital, assets, technology, know how, and people. Due to the level of involvement, and for the peace of mind of all involved, a joint venture will be guarded and ruled by a legal document.

Next steps:

  • Check out the list of partnership models, and identify the most attractive model for your business currently.
  • Survey your business environment for partnership opportunities.
  • Evaluate the synergy potential for the partnership opportunities.

Connect with potential partners to explore the opportunities.