Gaining Competitive Advantage Through Strategic Partnerships in the Supply Chain

Seminar paper from the year 2006 in the subject Business economics - General, grade: 1,4, European Business School - International University Schloß Reichartshausen Oestrich-Winkel, language: English, abstract: 1. INTRODUCTION 1.1 NATURE OF THE PROBLEM AND OBJECTIVE Due to the impact of globalization on our economy and the growing dynamic of markets, competition between companies has changed over the last decades. Shorter product life cycles, the pressure on prices, or the high costs of research and development for better products have made it difficult for today's companies to prevail against their competitors in the contest for profits. But also the challenge to meet the high levels of customers' quality and service demand has weakened a company's ability to differentiate itself from its competitors. Especially small and medium-sized enterprises have to face this problem when competing against bigger companies. Thus, these facts contribute to the implication of finding new and alternative ways of gaining a strategic and competitive advantage. One measure of doing so is to establish so called strategic partnerships, by leaving the stage of company-versus-company competition. By this means, the partners use synergy effects and bundle their strengths to aim for growth and profit enhancement. Such strategic partnerships have become very popular over the last years. This form of collaboration is used in particular by large multinational firms to develop new products and services, and to enter new markets. Even though strategic partnerships are strongly increasing in number, approximately 50- 60% of them fail in achieving their original goals. Therefore, it is important to analyze what strategic partnerships are, how they work and whether they are more suitable for some areas than for others. The goal of this seminar paper is to discuss to which extent strategic partnerships can help companies to gain a strategic advantage in the supply chain. I will thereby focus on two points: Firstly, which are the areas most applicable for strategic alliances? And secondly, what are the decisive parameters a company has to take into account when building a strategic partnership?