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Business partner is a term used to denote a commercial entity with which another commercial entity has some form of alliance. This relationship may be a highly contractual, exclusive bond in which both entities commit not to ally with third parties. Alternatively, it may be a very loose arrangement designed largely to impress customers and competitors with the size of the network the business partners belong to.

The meaning of the term is quite different from that implied in partnership, and it is because of the potential for confusion between the two that widespread use of 'business partner' has been discouraged at times in the past.

A business partner can be:

  1. A supplier,
  2. A customer,
  3. A channel intermediary (such as an agent or reseller), or
  4. A vendor of complementary offerings (for example, one party sells the hardware, while the other sells the software)

This is a wider definition than a business alliance.

Contents

Exclusive partnerships tend to disintegrate

Dell, which previously had an exclusive arrangement with Intel for the supply of processors, announced in 2006 that it would also source some processors (for desktops and servers) from AMD.[1] Dell will likely see higher unit costs from Intel, for ordering lower quantities, but over the long term it should benefit from price competition between AMD and Intel. And over the short term, AMD presumably made Dell a very attractive offer in order to win the business. Intel's failure to retain all of Dell's business led to Intel announcing 10,500 job cuts in September 2006.[2]

Partnership harmony is rarely total

One example of a business partnership is the "Agility Alliance" originated by Electronic Data Systems.[3] Members of this IT-focussed alliance include Microsoft, Oracle Corporation, Sun Microsystems and SAP. This highlights two problems with multi-party partnerships:

  • Two of the companies may be partners with a third member of the partnership, but highly aggressive towards each other. (Oracle and SAP compete against each other in the ERP market.)
  • One party may be partner to a second party when targeting one market, but competitive against that same company when targeting another market. (Microsoft may be happy to work with Sun when Sun is offering its servers, but far less happy when Sun is proposing OpenOffice.org, in contention with Microsoft Office.)

References

  1. ^ Vance, Ashlee "Dell hooks up with AMD, The Register, 18 May 2006. Accessed 4 April 2007.
  2. ^ Savvas, Antony "Intel Job Cuts Loom", Computer Weekly, 28 April 2006. Accessed 4 April 2007.
  3. ^ Agility Alliance at EDS Accessed 4 April 2007.

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