Last Updated on December 6, 2022 by Selina Parker
The best business relationships are those that not only help each other grow but also add value to the partnership. In order for a strategic partnership to work, strategic partners must share some common interests and goals.
However, two companies form strategic alliances with different needs and values and do not fully understand what they need from one another in a business relationship.
This article will explore some of the common pitfalls that can arise when entering into a joint venture and how you can avoid them to ensure business success.
13 COMMON REASONS WHY STRATEGIC PARTNERSHIPS FAIL
1. NOT KNOWING YOUR PARTNER’S BUSINESS MODEL
The most common reason for business partnerships to fail is when the two companies do not share a common understanding of how each company makes money. It is important to understand your partner’s business model, and what their core strengths and weaknesses are so you can provide more value.
If you cannot explain how your partner makes money, then you will have a difficult time creating a successful partnership. You need to understand how the joint ventures will help your partner grow their business so you can both have a competitive edge.
2. LACK OF COMMUNICATION AND TRANSPARENCY
Communication is the key to a successful strategic partnership. When entering into an agreement with someone who does not share a similar way of working as you do, it can be difficult to understand where they are coming from.
In order for a partnership to succeed, both companies need to be open and honest with each other about their goals, needs, and expectations.
3. LACK OF TRUST BETWEEN PARTNERS
Trust and communication go hand in hand. If you lack communication, you will also lack trust. A partnership is only as strong as the trust between the two companies involved.
If there are any doubts about your partner’s motives, it can be difficult to move forward with the alliance. You cannot expand fully and gain access to new markets because of the limiting beliefs created by the lack of trust.
4. CONFLICTING GOALS AND OBJECTIVES AMONG PARTNERS
Both you and your partner must share the same goals and objectives if you want a successful partnership. If there is no common ground, then it will be difficult to find any success together in the long run.
It’s important that both companies have realistic expectations of what they expect from each other while ensuring that their business interests are being represented fairly.
Take note that when your company’s goals and objectives are the same, it will benefit from creating high-value content through a joint value proposition directed at your target market.
5. NOT HAVING A CLEAR VISION
Even before you start the process of finding a strategic partner, you should have some idea as to what your company’s goal is and what your overall vision for the future looks like.
Once you find a company that has the same vision as you, it’s time to start the negotiation process. However, some companies are not able to define their vision clearly, which can lead partners astray without knowing if they are on the right path together or not.
6. INADEQUATE PLANNING FOR POTENTIAL CONFLICTS
Conflicts are expected to arise in any business partnership, but if there is no plan in place to mitigate these conflicts, they can quickly turn into a full-blown disaster.
Both companies need to have a clear understanding of how disagreements will be resolved and what the consequences are for not abiding by the agreement. Having a written contract is one way to make sure everyone is on the same page.
7. INABILITY TO COMPROMISE ON KEY ISSUES
When doing partnering strategies, you must have the ability to compromise on key issues. In a perfect world, both parties would see eye-to-eye, and all of the terms in their agreement would remain intact.
These issues should be resolved since they can lead to a breakdown in communication. If there is no compromise, then it will be difficult for the two parties involved to move forward with their strategic partnership.
8. LACK OF COMMITMENT ON BOTH SIDES
There should be a full commitment between the two companies involved in a strategic partnership. Without both parties fully committing to the agreement, it will become difficult for them to accomplish their goals and objectives successfully.
If you can’t commit 100% of your resources to make this project work, then it’s probably not going to go very far.
9. ASSUMING THAT THE PARTNERSHIP WILL BE A ONE-WAY STREET
It is definitely not, and it should not be taken as such. A strategic partnership is supposed to work both ways so that everyone involved can benefit from the arrangement.
If you are only thinking about how much money your company will make, then there might be some issues that arise later on.
10. LACK OF FLEXIBILITY AND ADAPTABILITY
Unprecedented things are bound to arise that are outside of the realm of what was expected. If your company is not flexible enough to adapt itself, then you might run into some issues down the road.
You need to have the willingness to change and adjust along with an open mind which can lead both parties involved in this strategic partnership toward success.
11. UNCLEAR ROLES AND RESPONSIBILITIES
You might have problems with the decision making and it could impact the entire alliance. It is important to be able to adapt quickly to changes to maintain progress.
Both companies involved in a strategic partnership need to have a clear understanding of their roles and responsibilities. This will help avoid any confusion or miscommunication down the line. If one company tries to step on the other’s toes, then the alliance will be doomed from the start.
12. UNCLEAR EXIT POLICIES AND PROCEDURES
If there are no clear exit policies or procedures in place when a company decides to pull out of an agreement, it can lead to some serious legal problems that could have been easily prevented if they had just laid everything out beforehand. If this happens, then the other company will have a chance to seek legal action.
13. LACK OF RESPECT FOR THE INDIVIDUALITY
Even if you are in a partnership, you still need to respect each other’s individuality. Each company should be treated as its own entity and should be respected for the work that they do. This will help foster a good relationship between both partners.
Strategic partnerships fail because of these reasons. Beware of these pitfalls to make sure that your company doesn’t get caught up in them.
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