Strategic Partnerships for Strategic Growth

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• Strategic Partnerships for Strategic Growth
• November 4, 2005

David Goliath - Both win
Sudhir Bhagwan
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How Companies Grow

• Internal Growth (Build)
• Mergers Acquisitions (Buy)
• Partnerships (Borrow)
• Total worldwide business through partnerships
  20 in 2000, 40 by 2010
• gt50 based on Marketing/Sales and Distribution
• 25 based on RD, Design Collaboration
  Technology licensing
• 20 based on outsourcing

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Types of Partnerships

• Sales (2 companies market complementary
  products/services)
• Solution-specific (2 companies jointly develop
  sell specific marketplace solution)
• Geography-specific (2 companies jointly
  market/co-brand product/service in specific
  geography)
• Investment (company invests in another
  agreement to jointly market product/service)
• Joint Venture (2 companies form 3rd company to
  develop /or market product/service)

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Key Deal Terms in Partnerships

• High level objective of partnership
• Responsibilities of each party
• Revenue sharing arrangement
• IP ownership license grants
• Term, and conditions for termination
• Marketing, sales, customer service
• Confidentiality

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Critical Success Factors

• Strong vision for alliance (e.g. attain 1 or 2
  market-share)
• Excellent strategic fit (complementary
  strengths/weaknesses)
• Compatible culture (trust personal
  relationships)
• Solid top-level commitment of time resources
• Strong operational planning/integration
• Knowledge of how to partner (both sides cross
  train learn)
• Know when to hold when to fold

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Large Companies make Excellent Partners- BUT

• Innovation Happens, but not here!!
• Marquis partner brings instant credibility
• Resources funding (usually) not an issue
• Stability to stay with it for long run
• - Bureaucracy, decision making and office
  politics
• - Loss of control
• - NIH

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Why Partner?

• Because companies that do outperform companies
  that dont