Great Business Ideas: Partnering

Great Small Business Ideas to Start: Partnering

With commercial partnerships, firms can pool resources and achieve complex goals that might otherwise have been out of their individual reach.

The idea

By organizing a corporate partnership it is possible to use your competitor’s resources—such as transport networks, physical structures, raw materials, knowledge, and customer reputation—to realize the full potential of an ambitious idea that would otherwise rely on your acquiring an unfeasibly large number of new resources.

Such deals can be negotiated either by giving partners a share of profits, or by arranging a mutual relationship where they are allowed to use your resources in return.

Oneworld Alliance—a partnership between ten major airlines (British Airways, Cathay Pacific , Finnair, Iberia, LAN, Qantas, Japan Airlines, Malév, Royal Jordanian, and American Airlines)— utilizes corporate partnerships to offer a service they could not provide separately. The service is an inclusive, low-cost round- the-world fare where customers pay a one-off fee to travel to a wide range of global destinations. Because customers can travel on any airline within the Oneworld Alliance, the scheme offers the customer the opportunity to travel to over 600 destinations in 135 countries. This highly successful service provides a helpful method of complying with the restrictive rules in the aviation industry governing ownership of airlines, in a way that benefits customers.

In practice

  • Avoid any unethical or illegal business practices that can be associated with corporate partnerships, such as price fixing.
  • Assess, in depth, the specific terms and implications of the partnership agreement. Will your partner get more out of it than you, and is it worth your while?
  • Be wary of forming partnerships in situations that will allow your rival to benefit at your expense, gaining the resources to out-compete you in other areas of the industry.
  • Structure and plan the partnership process carefully— negotiation, communication, and integration are vital, especially in the initial stages of an alliance.
  • Be ready to expand the alliance to a range of other companies when desirable to do so.
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