Maximizing Business Success through Strategic Partnering

In any business, whether it's public or private, the primary objective is to optimize shareholder or stakeholder returns. This is often accomplished through profit maximization, particularly by understanding and defining your cost structure. In the book, Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant, by W. Chan Kim and Renée Mauborgne¹, three crucial levers are discussed for developing a strategic cost for your product or service to provide greater value at a lower cost. These levers include:

1. Streamlining operations and introducing cost innovation
2. Partnering
3. Changing the pricing model of the industry

When strategically implemented, these three levers can provide companies with a competitive advantage by delivering higher value at a lower cost. This discussion will focus on the strategic lever of "partnering," as it significantly influences the other mentioned levers.

Partnering as a Strategic Profit Lever

As mentioned in "Blue Ocean Strategy," many companies make the mistake of handling all production and distribution activities internally, or they overlook external options when introducing a new product or service to the market. This often leads to increased costs and can erode strategic cost, target profit margin, and target cost. Most importantly, it often eliminates the higher value, lower cost advantage.  Let’s say you are launching a new product and have established the strategic cost (where you want to be in the market) and your desired profit margin. Now you need to determine your target cost for the consumer or business. However, if your current costs prevent you from meeting the strategic cost target and desired profit margin, what should you do with your target costs? It may be time to explore external alternatives to impact these contributing factors. How can you do that? Perhaps through partnerships?

On the other hand, partnering offers a way for companies to quickly and effectively acquire necessary capabilities while reducing their cost structure. It enables a company to leverage the expertise and economies of scale of other companies. Partnering involves bridging capability gaps by making small acquisitions when it is faster and more cost-effective, and companies that partner externally gain access to necessary expertise that has already been mastered. For example, in line with our new product launch, have you considered outsourcing production to a contract manufacturer? This could allow you to leverage their additional product capabilities, network of ingredient suppliers, and packaging options that might be limited if the product was produced internally. By not doing so, you may experience delays in reaching the market, increased costs, and end up with a product intended for the competitive "me too" market.

Partnering can be done in various ways and support a variety of business functions as you strive to maximize profits. A good partner is an extension of your team, dedicated to your success above all.

Your Trusted Partner

Partnership runs deep in our ethos at BSM Partners, as reflected in our name. Our experts in the field possess a wide range of industry experience, backgrounds, and life experiences to draw from, ready to tackle any challenge your business may encounter. Our core principle is to bring our knowledge, connections, and dedication to assist your business in achieving success.

Our team consists of over 30 professionals, including PhDs, veterinarians, nutritionists, food scientists, engineers, business psychologists, regulatory experts, and consumer branding/marketing experts. With a combined 400+ years of technical expertise, BSM Partners supports the pet business needs of hundreds of global brands. Our comprehensive range of services includes research, product innovation, regulatory affairs, nutrition, veterinary care, business strategy and transformation, consumer marketing and insights, import/export, and operations and engineering. Our unparalleled expertise has positioned BSM Partners as the world's largest pet consulting and advisory firm, making us the trusted partner behind thousands of successful pet and food brands for over a decade.

What capabilities are you lacking? Where could additional expertise make a difference? Have you explored options beyond your organization? Get in touch with BSM Partners today to learn how a strategic partnership can extend your expertise without sacrificing profits.

References

1. Kim, W.C. and Mauborgne, R. 2005. Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. Boston, Mass: Harvard Business School Press.

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About the Author

Eric Rittenhouse works at BSM Partners as Business Development Manager. His areas of expertise include business development, sales and trade marketing while helping brand companies uncover and execute on opportunities to strategically dominate their niche in the consumer product space. He has completed the Blue Ocean Practical Introduction certificate by the Blue Ocean Academy and is Action Selling Master Certified by Action Selling and The Sales Board.