In the ever-evolving landscape of digital innovation and global connectivity, bringing your products and services outside your local boundaries, maybe even expanding your business internationally is a critical step towards sustainable growth and impact creation. This journey into new markets is an exploration into unknown territories. The compass guiding this exploration? Strategic partnerships, especially those grounded in a shared purpose.
The transformative power of collaborative ventures becomes most evident when crossing international borders. These partnerships serve as bridges, linking your business to unfamiliar cultures, regulatory landscapes, and market dynamics. In this context, strategic partnerships are indispensable for businesses aspiring to increase their revenue while making a global impact.
Key Considerations for Establishing International Partnerships
Shared Vision, Values, and Purpose: The cornerstone of any strategic partnership is a shared vision, values, and most importantly, purpose. A common purpose transcends industry limitations, focusing on creating a broader impact and achieving collective goals. This alignment in purpose fosters innovative approaches in market expansion, steering clear of the saturated paths of traditional competition. It also sparks the creation of purpose-driven ecosystems and emphasizes the creation of new, unexplored market opportunities over competing in existing spaces.
Local Cultural Understanding: Every market has its own cultural idiosyncrasies. Collaborating with local partners can provide invaluable insights into consumer behavior and preferences, ensuring your product or service is appropriately tailored.
Regulatory Compliance: Different countries have different laws and regulations. A strategic partner with local knowledge can help navigate these complexities, mitigating risks and ensuring compliance.
Market Knowledge: Understanding the local market trends, challenges, and opportunities is crucial. A partner with deep market knowledge can offer strategic advice and competitive intelligence.
Distribution and Logistics: Setting up a supply chain in a new country can be challenging. Partners with established networks can simplify this process, ensuring efficient distribution and logistics.
Local Network Access: Having the right connections, from suppliers to government officials, can be a significant advantage. A well-connected partner can open doors that might otherwise remain closed.
Leveraging Purpose-Driven Local Communities: Engaging with local communities that share your purpose can be a powerful tactic. These communities offer unique insights, support, and networking opportunities that can significantly enhance market understanding and acceptance. Purpose-driven communities are often deeply rooted in local culture and values, providing a solid foundation for establishing trust and authenticity in a new market.
Flexibility and Adaptability: The ability to adapt to changing market conditions is crucial. Select partners who are versatile and can evolve alongside the market.
From revenue generation to impact! Stats & Trend of Strategic Partnerships
Revenue Generation: Partnerships have been shown to surpass paid search as a growth channel. While the average business generates about 18% of its revenue from paid search, those with high-maturity partnership programs can generate as much as 28% of their revenue through these partnerships.
Major Company Successes: Large corporations have demonstrated the value of partnerships in their revenue streams. For instance, 95% of Microsoft's revenue is generated through its partners. Shopify's partner ecosystem brought in over $6.9 billion in 2019, and channel partners accounted for approximately 40% of Zoom's business in Japan in 2020. Additionally, Atlassian’s ecosystem includes over 700 channel partners, contributing to a third of its business.
CEO Perspective and Strategic Intent: A PwC CEO survey revealed that over 80% of US CEOs are actively seeking or planning to seek strategic partnerships. This high interest underscores the recognized importance of alliances in contemporary business strategy.
Ecosystems: By 2025, it's predicted that nearly a third of total global sales will come from ecosystems, which could potentially unlock $100 trillion of value for businesses and society over the next decade. Additionally, emerging digital ecosystems might account for more than $60 trillion in revenues by 2025, representing over 30% of the global market.
Acquisition of New Customers and Innovation: About 57% of companies use strategic partnerships to acquire new customers, and 44% use these alliances to gain innovative ideas. This indicates that partnerships are not just about expanding customer bases but also about fostering innovation.
SAP's 5 & 5 by '25 Impactful Initiative: SAP launched an initiative to direct 5% of its addressable procurement spend to social enterprises and diverse businesses by 2025. This is expected to channel up to $60 million annually to these organizations, promoting economic equity, social change, and environmental sustainability.
Unilever's TRANSFORM Initiative: Since its inception, TRANSFORM has supported 56 projects in 13 countries. This initiative focuses on various areas like women’s health, water, sanitation, hygiene, energy, environment, and rural livelihoods, demonstrating Unilever’s commitment to addressing global challenges through partnerships.
IKEA and Social Enterprises: IKEA collaborates with social enterprises, providing training, mentorship, and support in various domains like product design and business management. This partnership has resulted in the creation of over 30,000 jobs across six countries, showcasing the employment generation potential of such collaborations.
Johnson & Johnson Impact Ventures: This venture supports 47 health impact entrepreneurs, focusing on vulnerable and underserved communities. Their efforts have reached over 13,000 health workers and 1.7 million people with innovative health solutions, demonstrating the health and social impact of these partnerships.
Microsoft's Engagement with Social Innovators: Microsoft is partnering with social innovators to apply artificial intelligence for social change. These collaborations are focused on addressing global issues like the water crisis and climate change through technological innovation.
Medtronic LABS' Healthcare Initiatives: Medtronic LABS' programs in several countries have reached over 1 million patients, improved outcomes for over 50,000 patients, and trained over 30,000 health workers, addressing non-communicable diseases and promoting better healthcare models in emerging markets.
VF and Better Work Regenerative partnership : As a Global Partner with Better Work, VF has engaged in enhanced training and assessments on critical issues like child labor, discrimination, forced labor, freedom of association, and occupational health and safety in its supply chain. This initiative is aimed at improving the lives of one million people by 2025.
Are you ready to find your strategic partner and impact new markets?
Venturing into international markets with your business is a multifaceted and intricate journey, often laden with hidden challenges. Common pitfalls in global expansion include a lack of thorough market understanding, underestimation of cultural variances, neglect of local legal norms, inadequate adaptation of business models, and precipitous scaling. Strategic partnerships are the answer to many of these challenges.
But that's not all! While it is crucial to know WHAT actions to take and HOW to execute them, it becomes paramount to discern the opportune moment (WHEN) for global expansion tailored to your project or company's unique trajectory, vision and purpose. Now this is one of the most common problems we recognized working with scale-up companies.
If you are wondering if this is the right time for your project, startup or business to look at different markets and if you are seeking global impact, we are now working on a "Ready for Global Impact Assessment". This tool will help your team to evaluate your preparedness for international growth, spotlighting both your strengths and potential areas for high-impact development.
What do you think? Share, comment below and let us know. You can also schedule a call with us to learn more! We can help you to strategically position your business for global success and positive impact.