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Strategic partnerships and alliances

Examples checked

In one minute

Working with another company under a contract to reach customers, share costs or combine skills.

The big idea: A partnership gets you part of what a merger would, such as more routes, customers or technology, without buying anything. It is cheap and quick to start, but it lasts only while both sides keep gaining from it.

Works when
When each side brings something the other lacks, gains are shared fairly, and the terms say how it ends.
Fails when
When one side gains much more, goals drift apart, or one partner learns enough to compete.
Check this number first
Extra revenue or saved cost for each side. Both must gain for the partnership to last.
In the worked example
Extra profit a year: USD 20 (USD millions a year). See it add up

What it is

A strategic partnership or alliance is an agreement between companies to work together without merging. Examples are airline codeshares (selling seats on each other's flights), technology partnerships, co-branded products and shared research. Some include a small shareholding to align interests.

  • Commercial partnership. Sell each other's products, or share customers or routes (for example airline codeshares).
  • Technology partnership. Share research, platforms or computing.
  • Equity alliance. A partnership plus a minority stake to align interests.

Why companies do it

The economic logic, most important first. A move usually rests on one or two of these.

  • Growth. Reach new customers, routes or markets through the partner's network.
  • Capital efficiency. Get access to capacity or technology without buying it.
  • Risk. Share the cost of large, uncertain projects such as research or new models.

When it creates value, and when it destroys it

Creates value when

  • Each side brings what the other lacks: routes, customers, technology, licences.
  • The gains are shared in a way both sides accept for years.
  • Decision rights and exit terms are clear from the start.

Destroys value when

  • One partner takes most of the gain and the other loses interest.
  • The partner learns your know-how and becomes a rival.
  • Decisions stall because nobody is in charge.

The numbers to check

Ask for these, in this order, before you recommend the move.

  1. Extra revenue or saved cost for each side. Both must gain for the partnership to last.
  2. Upfront cost (systems, people) and payback. Partnerships are cheap, but not free.
  3. Alternative: cost of doing it alone. Shows what the partnership saves.
  4. Exclusivity and exit terms. Decide what you can do if it goes wrong.

Worked example (illustrative)

Rounded numbers for a made-up business, shaped like real ones. Positive lines add to profit; negative lines are costs.

An airline signs a codeshare with a foreign partner. It expects to sell 200,000 extra passengers a year onto the partner's flights, keeping USD 150 per passenger. The one-off cost of linking systems is USD 10 million.

Worked example for Strategic partnerships and alliances, in USD millions a year. Illustrative figures.
LineUSD millions a year
Extra revenue: 200,000 passengers x USD 150USD 30
Commission and joint sales costsminus USD 6
Running the partnership (people, systems)minus USD 4
Extra profit a yearUSD 20

Check: the lines above add up to the total.

The numbers that decide it

Payback of the USD 10 million one-off cost
0.5 years

So what: The codeshare adds about USD 20 million a year and pays back in six months, with no aircraft bought. Flying the routes alone would need new aircraft and years of losses. The weak point is the partner: the deal lasts only while it gains as much.

Real examples

Companies that made this move, by region, with what happened and a source checked on the date shown.

How to recommend it in a case

Answer first, then the reasons with numbers, then the risk and the next step. Three sentences, said out loud.

I recommend signing the codeshare, because it adds about USD 20 million of profit a year and pays back its USD 10 million cost in six months, without buying aircraft.

We reach the partner's routes at once; flying them ourselves would need new aircraft and years of losses.

The risk is an unequal deal that the partner later walks away from; next I would model the gain on the partner's side and set exit terms.

The numbers to quote: Extra revenue and profit for each side; Upfront cost and payback; Cost of doing it alone.

The figures in the answer come from the illustrative worked example above. In a case, use the client's own numbers.

Classic interview traps

  • Only looking at your side. Ask what the partner gains, or it will not last.
  • Treating a partnership as a merger. You do not control the partner.
  • Forgetting exit terms and what happens to shared customers and data.

Where it is common

Sources

Every source was opened and the example confirmed on the date shown. Worked examples are illustrative and use no company's figures.

  1. 1.Delta News Hub, "IndiGo, Delta Air Lines, Air France-KLM and Virgin Atlantic announce partnership", 1 June 2025 (opens in a new tab)Checked
  2. 2.Microsoft, "The next chapter of the Microsoft and OpenAI partnership", 28 October 2025 (opens in a new tab)Checked
  3. 3.Renault Group, "Evolution of the accounting treatment of Renault Group's stake in Nissan", 1 July 2025 (opens in a new tab)Checked
  4. 4.Renault Group and Nissan, "Renault Group and Nissan announce the completion of their agreements", 8 November 2023 (opens in a new tab)Checked
  5. 5.GoTo Group, "GoTo and TikTok Announce Transaction Completion, Formalizing Strategic Partnership for Indonesia", 31 January 2024 (opens in a new tab)Checked

Practise it

Where this move comes up in cases

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