A little over two weeks ago, fast food giant Burger King made a bold move by publicly reaching out to popular competitor McDonald’s, for a one-time strategic partnership. The former proposed a temporary truce with McDonald’s in the form of a one day special offer to customers, in honor of Peace Day on September 21. The proposal was the suggestion of a McWhopper, a blend of the two fast food giants’ best-selling burgers, Big Mac and Whopper. It would be sold for one day at a select location, with all proceeds going to charity.
After much media attention, McDonald’s politely declined the offer via a Facebook message from the company’s CEO Steve Easterbrook; a move that some, like Forbes contributor Will Burns, felt was a bit short-sighted. While Easterbrook did not permanently close the door on the idea of possibly working with Burger King on a future project, some felt the tone of his message was a bit dismissive and passive aggressive. And while McDonald’s may not yet be ready to forge a strategic partnership with one of their biggest competitors, whether short or long-term, strategic partnerships actually can be a very beneficial and positive step for organizations.
So what exactly is a strategic partnership? Essentially it is simply an alliance of sorts between two or more organizations that successfully benefits both. And the reality is they have existed for a long time, particularly between for-profit and non-profit organizations. In many of these partnerships, the for-profit organization gains goodwill and a positive public perception for helping to do good, while the non-profit gains funding for its cause.
It is natural for most companies to gravitate to other companies and brands that are not directly competing with them in a similar market, which is understandable. This is especially reasonable when a partnership involves two companies that can provide something the other is lacking and vice versa. For example, the strategic partnership of Starbucks and Barnes & Noble – two separate markets (coffee and books respectively) but two products that many individuals consume hand in hand. And so the partnership benefits both while not impeding on the other’s market.
But what about two for-profit and competing organizations like Burger King and McDonald’s? What can be gained from creating a short or long-term strategic partnership? Well if done right, the answer to that is a lot actually, especially when the goal is towards something positive. Some of the benefits of strategic partnerships include:
- Positive Press and Public Perception – Using the example of Burger King and McDonald’s, if they were actually able to come together and collaborate on a project that served some common good, the press and publicity around it would be significant and likely very positive. It would also lessen some of the public’s natural cynicism to see two competitors willing to put aside their differences and the fact that they compete in the same market, to work toward a common goal that seeks to help others. The good press and positive public response would be a win for both companies.
- Shared Risk – Another benefit of two competitors collaborating is that there is a shared risk. If for whatever reason the joint effort fails, there is less risk and loss to one company as they are not shouldering the entire burden alone.
- Gain New Capabilities – A collaboration of any kind always opens up the possibility of learning from another company and essentially learning from each other. Even being in the same industry and market, just working with different teams from another company, throwing out ideas and collaborating on strategy, etc. can help give insight into new and different ways of doing things and provide a fresh perspective.
- New Customers – Even if both companies are in the same market, there are always going to be some customers more loyal to one brand over another. A strategic partnership might create an opportunity to reach and gain some of those loyalists of the opposite brand. And while yes some may only stay for a brief time, a few might be convinced enough to stick around more permanently. And that’s always a good thing. New customers may also be gained from people intrigued by the idea of these two competing firms joining forces and being curious enough to check out the organizations’ products. And hopefully they like what they get enough to also stick around.
- Increase Revenue – And with new customers, naturally comes increased revenue and profits, which is always a very good thing.