Presentation on PARTNERSHIP AND STRATEGIC ALLAINCING

1. PARTNERSHIP
AND
STRATEGIC
ALLAINCING

2. PARTNERSHIP AND STRATEGIC ALLAINCING
“Partnership and strategic allaincing leverage
the resources, abilities and gifts while getting
around the weaknesses”

3. PARTNERSHIP
“A Partnership is an arrangement where
parties agree to cooperate to advance their
mutual interests”

4. STRATEGIC ALLAINCING
“Agreement for cooperation among two or
more independent firms to work together
toward common objectives. Unlike in a joint
venture, firms in a strategic alliance do not
form a new entity to further their aims but
collaborate while remaining apart and
distincts”

5. Advantages of Partnership
 Capital – Due to the nature of the business, the partners will fund the business with
start up capital. This means that the more partners there are, the more money they
can put into the business, which will allow better flexibility and more potential for
growth. It also means more potential profit, which will be equally shared between
the partners.
 Flexibility – A partnership is generally easier to form, manage and run. They are less
strictly regulated than companies, in terms of the laws governing the formation and
because the partners have the only say in the way the business is run (without
interference by shareholders) they are far more flexible in terms of management, as
long as all the partners can agree.
 Shared Responsibility – Partners can share the responsibility of the running of the
business. This will allow them to make the most of their abilities. Rather than
splitting the management and taking an equal share of each business task, they might
well split the work according to their skills. So if one partner is good with figures,
they might deal with the book keeping and accounts, while the other partner might
have a flare for sales and therefore be the main sales person for the business.
 Decision Making – Partners share the decision making and can help each other out
when they need to. More partners means more brains that can be picked for business
ideas and for the solving of problems that the business encounters.

6. Disadvantages of Partnership
 Disagreements – One of the most obvious disadvantages of partnership is the danger of
disagreements between the partners. Obviously people are likely to have different ideas on how
the business should be run, who should be doing what and what the best interests of the
business are. This can lead to disagreements and disputes which might not only harm the
business, but also the relationship of those involved. This is why it is always advisable to draft a
deed of partnership during the formation period to ensure that everyone is aware of what
procedures will be in place in case of disagreement and what will happen if the partnership is
dissolved.
 Agreement – Because the partnership is jointly run, it is necessary that all the partners agree
with things that are being done. This means that in some circumstances there are less freedoms
with regards to the management of the business. Especially compared to sole traders. However,
there is still more flexibility than with limited companies where the directors must bow to the
will of the members (shareholders).
 Liability – Ordinary Partnerships are subject to unlimited liability, which means that each of
the partners shares the liability and financial risks of the business. Which can be off putting for
some people. This can be countered by the formation of a limited liability partnership, which
benefits from the advantages of limited liability granted to limited companies, while still taking
advantage of the flexibility of the partnership model.
 Profit Sharing – Partners share the profits equally. This can lead to inconsistency where one or
more partners aren’t putting a fair share of effort into the running or management of the
business, but still reaping the rewards.

7. Advantages of strategic
alliance
 Shared risk: The partnerships allow the involved companies to offset their market exposure.
Strategic Alliances probably work best if the companies´ portfolio complement each other, but
do not directly compete.
 Shared knowledge: Sharing skills (distribution, marketing, management), brands, market
knowledge, technical know-how and assets leads to synergistic effects, which result in pool of
resources which is more valuable than the separated single resources in the particular
company.
 Opportunities for growth: Using the partner´s distribution networks in combination with
taking advantage of a good brand image can help a company to grow faster than it would on
its own. The organic growth of a company might often not be sufficient enough to satisfy the
strategic requirements of a company, that means that a firm often cannot grow and extend
itself fast enough without expertise and support from partners
 Complexity: As complexity increases, it is more and more difficult to manage all
requirements and challenges a company has to face, so pooling of expertise and knowledge
can help to best serve customers.
 Innovation: The parties in an alliance can jointly determine their mutual desired outcomes
and craft a collaborative contract that features incentives designed to spur investments
in innovation.
 Costs: Partnerships can help to lower costs, especially in non-profit areas like research &
development.

8. Disadvantages of strategic alliance
 Sharing: In a Strategic Alliance the partners must share resources and
profits and often skills and know-how. This can be critical if business
secrets are included in this knowledge. Agreements can protect these
secrets but the partner might not be willing to stick to such an agreement.
 Creating a Competitor: The partner in a strategic alliance might become a
competitor one day, if it profited enough from the alliance and grew enough
to end the partnership and then is able to operate on its own in the same
market segment.
 Opportunity Costs: Focusing and committing is necessary to run a
Strategic Alliance successfully but might discourage from taking other
opportunities, which might be beneficial as well.
 Uneven Alliances: When the decision powers are distributed unevenly, the
weaker partner might be forced to act according to the will of the more
powerful partner(s), even if he or she is actually not willing to do so.
 Foreign confiscation: If a company is engaged in a foreign country, there
is the risk that the government of this country might try to seize this local
business so that the domestic company can have all the market on its own.

9. Examples of Partnership
 Project Golden Ray : partnership between
government of Rajasthan and mil which
aims at improving economic self-sufficiency
of tribal maize farmers by enhancing maize
yields and incomes in five districts :
Banswara, dungarpur, udaipur , pratapgadh
and sirohi.
 E- choupal: Run by ITC a private sector
entity shows how mutual corporation between
ITC , Rural entrepreneurs, state agriculture
univercities and the indian government
extensions machinery has served to boster
the farmer’s expertise and day to day
awareness of need of farmers’s .

10. Examples of Strategic Alliances
 1. Nicholas Piramal India Ltd (NPIL) entered into a 5-year in
licensing agreement with Genzyme Corp, USA, for synvisc viscose
supplementation in the Indian market.
 2. ICICI Bank and Vodafone India: A strategic alliance example
in India is of ICICI Bank, India’s largest private sector bank and
Vodafone India, one of India’s largest telecom service providers,
entered into a strategic alliance to launch a unique mobile money
transfer and payment service called ‘m-pesa’.
 3. Starbucks partnered with Barnes and Nobles bookstores in 1993
to offer in-house coffee shops, helping both retailers.
 4. Asian Paints, the largest paint-maker in India, acquired a
strategic stake in Singapore-based Berger International in 2002.
 5. Apple and IBM strategic alliance: The relationship will
leverage IBM’s big data analytics and industry sales consultants
and software developers, to assist Apple penetrate the global
corporate enterprise market.