The penultimate component – Key Partners – deals with the network of partners that put the Business Model into operation. A partnership is when two business entities form a kind of relationship.
This relationship can be of greater freedom when each side of the alliance can form new partnerships, or of exclusivity, limited to a single partnership and no other concomitant relationship.
Partnerships are developed for a variety of reasons, from optimizing your Business Models, reducing the risk, or acquiring resources. They have become a fundamental part of the other components. Let me, therefore, show you a little more about the Key Partners.
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Although fairly common, partnerships are not simple. They involve a lot of negotiation and, above that, confidence. However, there are several motivations that encourage the development of Key Partners. In general, they can be divided into three large umbrellas:
It is virtually impossible for a company to have all the resources and be able to run alone all the activities on which its business depends. That’s why there are optimization and economy of scale partnerships: to reduce costs, through outsourcing and infrastructure sharing.
In a competitive environment that is susceptible to change, it is critical to reducing risk – and partnerships may be capable of doing so. This happens even among competitors, who can come together to create something new and/or protect themselves from the uncertainties of the market.
This was the case, for example, with the development of Blu-Ray technology when a strategic partnership between some of the world’s leading electronics and computer companies was created to share the risk of bringing such advent to the market.
Sometimes the company – especially a new business – needs resources, knowledge, and/or licenses, which require high investments of time and/or money. Therefore, it ends up forming a partnership with another organization that already has the processes, information, or structures consolidated for it.
Many new companies choose to start their operations by forming partnerships that give them access to the resources or processes they need, but which they are not yet able to own.
When evaluating the various Key Partners that your business can avail of, check each one of them based on the following key issues:
Having defined the Key Partners your business requires, then look at the following factors so that these partnerships are developed in a sustainable and beneficial manner:
The Key Partners block refers, in summary, to the network of suppliers and partners that make your business model not only viable but efficient. The reasons for choosing a partner are numerous, and some of them are essential for the success – or failure – of your business.
You can optimize the use of resources, create supply streams, and reduce risk by taking on a partner, especially if you are starting a new business or even venturing into new applications.
However, although your organization may make several successful partnerships with many other entrepreneurs and for numerous reasons, it is important to remember that not all relationships are positive for your business. Therefore, it is necessary to evaluate in advance and carefully before signing any agreements.
And, as it happens in virtually all previous seven blocks, Key Partners can change throughout a company’s life cycle and market variations. Always keep an eye on the Business Model, reviewing it and updating it whenever you need it.
TAKE ME TO THE NEXT BLOCK -> COST STRUCTURE
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Hello Daniel,
I am Charles Kilibo from Uganda (East Africa). I am involved in the coffee value chains through an agricultural cooperative union.
Thank you for your campaign to make the Business Model concept and practices accessible and an-easy to understand and apply. Your guides, templates, and articles are a great resource for me.
I have just completed reading this particular article on Key Partners, a great piece as always!
The article, however, left me wondering what is the place of Regulators, Standards Setters, and Certification bodies, without whom our business cannot operate successfully if at all.
Should they be put in the block of Key Partners or that of Key Resource?
Merry Christmas
Hello Charles! They should be in Key Partners.