Joint ventures involve partnering between companies where all sides add value.
How It Works: Management seeks out a company that could use its service or product to enhance their business. My client, who ran a web site development company, looked for companies who developed computer databases and who needed a partner company to develop the interface and content for the databases. She approached companies whose skills complimented, not competed with, her company's.
Preparation Expectations: Joint venture partners want to know that their partners are knowledgeable and dependable. They want examples of work that the company has done previously, and contact names for those. Give them a thorough written and verbal presentation describing what the company can do and how management sees the partner benefiting through this relationship.
One of the firms my web site development client partnered with was a computer hardware company. This hardware company supplied my client with both hardware and software. My client developed a web site that provided a critical outlet for the hardware company's products. Both parties realized that working together would enhance their chances for acquiring and retaining clients.
Advantages: Being able to leverage each partner's capabilities without having to buy or create that capability. Joint venture partners can open up doors to new opportunities and, in some cases may lead to a partner's offer to become a strategic investor. Microsoft is famous for doing this, as they have demonstrated by buying stakes in such companies as Apple Computer and Comcast, one of the largest cable television operators in the world.
Disadvantages: Management has to be wary of companies who are more excited about putting a partnership together than actually making them work. Management also has to be aware of potential partners who real intention might be to learn someone else's business so they can move into that market. Therefore, management should never share their product development process or service methodology. This is difficult to do with international corporate partners.
Partnerships are easier to put together than sharing information. The reason is that marketing people love to develop partnerships in the hope that those partnerships will produce business or keep a competitor away from a potentially good source of sales leads. Research and development people are concerned with guarding company secrets and worry that a partner will take what they learn from the partnership and compete against the company.
How To Keep Them Happy: Management only needs to do three things to keep partners happy: Do quality works, stay ahead of the learning curve and bring them new business.