A strategic partnership is a formal alliance
between two commercial enterprises, usually
formalized by one or more business contracts
but falls short of forming a legal partnership
or, agency, or corporate affiliate relationship.
Typically two companies form a strategic partnership
when each possesses one or more business assets
that will help the other but that it does not
wish to develop internally.
One common strategic partnership involves one
company providing engineering, manufacturing
or product development services, partnering
with a smaller, entrepreneurial firm or inventor
to create a specialized new product. Typically,
the larger firm supplies capital, and the necessary
product development, marketing, manufacturing,
and distribution capabilities, while the smaller
firm supplies specialized technical or creative
expertise.
Another common strategic partnership involves
a supplier / manufacturer partnering with a
distributor or wholesale consumer. Rather than
approach the transactions between the companies
as a simple link in the product or service supply
chain, the two companies form a closer relationship
where they mutually participate in advertising,
marketing, branding, product development, and
other business functions. As examples, an automotive
manufacturer may form strategic partnerships
with its parts suppliers, or a music distributor
with record labels.
Strategic partnerships raise questions concerning
co-inventorship and other intellectual property
ownership, technology transfer, exclusivity,
competition, hiring away of employees, rights
to business opportunities created in the course
of the partnership, splitting of profits and
expenses, duration and termination of the relationship,
and many other business issues. The relationships
are often complex as a result, and can be subject
to extensive negotiation.
