What are the types of partnership???
What is market exchange???
what is a strategic partnership???
Market Exchange and Partnerships
A market exchange is defined as a relationship where each party is only concerned with their own welfare.
A partnership, conversely, is based on creating a mutually beneficial affiliation for both of the organizations. Market exchanges and partnerships both generate commercially oriented connections, which classifies the two relationships as external.
A market exchange is a type of relationship between a buyer and seller in which each party is only concerned about that particular party’s benefit. There are two types of market exchange:
• Solo Exchange
• Functional Relationship
A solo exchange is a transaction that occurs between the buyer and seller where each pursues’ their own individual self-interest.
For example, suppose you are traveling to visit relatives in a nearby town on a warm and sunny Saturday morning. As you pass a small store that is having a sale you see a wooden bench, much like one your grandmother had, with a USD 25 selling price. At this point you might pay the USD 25 for the bench, haggle for a lower price, or walk away from the transaction. You decide to make the seller an offer of USD 10 for the bench. After minimal negotiations the bargain price of USD 15 is agreed upon.
This transaction is an example of a solo exchange. The two parties are not interested in or concerned about the well-being of the other party.
A functional relationship is a long-term market exchange characterized by loyalty.
This type of relationship portrays the buyer purchasing a product out of routine or pattern. In a functional relationship, previous purchases will often influence later purchases. Typically, the buyer will continue to purchase from their selected seller as long as the price and the product stay relatively consistent to the original transaction.
Buyers often illustrate this loyalty for several reasons. One reason a buyer remains loyal is simply convenience. It is easier for the buyer to avoid the arduous task of searching and negotiating for a product every time a recurring purchase needs to be made, especially when they are likely to come to the same conclusion and buy again from the previous supplier.
A partnership is two parties concerned about the welfare of each other in developing a win-win relationship. There are two types of partnerships:
• a relational partnership
• a strategic partnership
A relational partnership is a partnership that develops on the premise of a close, personal relationship built on trust.
With this type of partnership there is an open line of communication, and the parties work together in order to overcome any potential problems. Both sides of the partnership are trying to make money, but the more important factor is developing a long-term, working relationship that will continue to generate money over time.
When relational partnerships are successful, it is often not necessary to have more than minimal negotiations about price. In addition, minor details will not be allowed to derail or end the relationships because the goal is to establish an ongoing mutually beneficial exchange.
A strategic partnership is a long-term business relationship in which the partner organizations make significant investments to improve the profitability of both parties.
Strategic partnerships are created to uncover and exploit joint opportunities while minimizing joint weaknesses. Both parties will contribute financially, and consequently take significant risks in order to provide the partnership with a strategic advantage.
This type of partnership is founded on the basis that both members are dependent on each other. The partners will have the same goals, as well as agree on the best course of action to achieve those goals. In order to achieve the target objective, partnerships must be based on an open-door policy; the partnership cannot be successful if information is kept confidential or there is a lack of willingness to accept risk equally.
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