Strategic partnerships in Saudi Arabia 2023

Strategic partnerships in Saudi Arabia 2023 The Kingdom of Saudi Arabia is experiencing an era of significant transformations and developments in various fields.

Among the tools and strategies that enhance the process of progress and development in the Kingdom, strategic partnerships are at the top of the list.

With the promotion of the Kingdom’s ambitious Vision 2030, strategic partnerships have become an essential tool for achieving economic transformation and sustainable development.

Our staff of experienced financial specialists, accountants and legal experts explained the most important points related to economic partnerships in the Kingdom,

and we at CFOONLINE are ready to provide free accounting services and consultations and facilitate your obtaining the partnership that suits your work and facilitate all transactions in Saudi Arabia.

What is the concept of partnership?

It is a formal agreement between two or more parties based on the collection of funds, skills and resources of these parties at rates agreed upon in advance, to operate and manage companies and institutions,

and to share profits and losses .It is managed by:

1. All partners.
2. Some of them.
3. One of them on behalf of the rest of the partners.

The agreement specifies the terms and conditions regulating that partnership, the nature and duration of work, the duties and obligations of the partners,

the capital contributed by each partner and the method of managing the business.

What are the basic types of partnerships?

In terms of shape:

1. Alliance Partnerships: Formation of an interdependent relationship between two organizations, based on cooperation and partnership rather than competition, so that each organization maintains its independence in terms of goals and special interests.
2. Merger Partnerships: Partnerships for the union and merging of a specific institution with another institution, or the birth of a new institution that combines the two.
3. Integration Partnerships: Integration means reducing the differences between two or more parties, with the aim of distributing roles among them, and not conflicting in goals and programs.

By type:

1. Strategic Partnerships: Partnerships established between one institution and another to achieve a strategic goal with long-term plans and activities linked to future goals.
2. Operational Partnerships: Partnerships established between one institution and another aimed at activating joint operations aimed at providing public services to citizens or special services to specific parties.
3. Resource partnerships: A partnership between one institution and another with the aim of managing or benefiting from human, financial, technical and informational resources and assets to ensure the best use of resources and increase and quality of productivity.

In terms of contracting:

1. General Partnerships: In which each partner is equal in the burden of work, responsibility, profits and losses.
2. Limited partnerships: in which one partner bears the responsibility of managing the partnership, while the rest of the partners have very limited liability.
3. Project Partnerships Joint Venture: Short-term partnerships implemented with the aim of completing a specific project or work within a specific period of time.

Partnership motives

We can divide the motives of partnerships into two important things:

1. Financial motives: There is an increasing need for institutions to organize partnerships that contribute to financing their programs and projects, either through direct or indirect financing and support.
2. Supportive (logistical) motives: Institutions sometimes need to conclude operational partnerships that contribute to improving the quality of their work and developing their infrastructure and system, whether technical, human or information resources.

What are the goals of partnerships?

We have collected the most important goals of partnerships in this article, Strategic partnerships in Saudi Arabia 2023, which are:

1. Achieving fruitful cooperation between the parties to the partnership.
2. Exchanging experiences and integrating efforts.
3. Improving work methods and raising productivity.
4. Control of potential risks.
5. Enhancing economic growth in the country.
6. Participation in taking risks.
7. Improve the image of partners.
8. Providing new job opportunities.
9. Participation in planning and measurement.

After knowing the objectives of partnerships, we must identify the pillars of partnership.

What are the pillars of partnership?

The four pillars of the partnership are as follows:

• Partners
• Action Plan
• Specific goals
• written agreement

In this article, we must learn about the strategic partnerships in Saudi Arabia 2023 about the principles of partnership as well, because it is an important point that must be known before making a partnership.

What are the principles of partnership?

The four principles of partnership are as follows:

• Commitment to rights and responsibilities
• Respect for general values and principles
• Cooperation and integration
• Transparency and accountability

What do we mean by the concept of Strategic partnerships in Saudi Arabia 2023?

They are contractual partnerships based on long-term plans.

It secures the achievement of specific future goals, and it is the method used between institutions in cooperation to implement projects and provide and intensify efforts

and competencies, in addition to the necessary means and capabilities to help start the implementation of the agreed project, while bearing all the burdens and risks that result from this partnership equally among the partners.

Objectives of strategic partnerships

1. Lack of risks that could be better managed by a specialized partner.
2. Achieving sustainable development using partnerships with successful partners.
3. Raising the rates of growth and spread of the institution.
4. Executing projects on time and on budget.
5. Introducing innovations in project designs, operation and maintenance.

Features of strategic partnerships

1. Linked to the axes of the organization’s strategic plan.
2. Contribute to the sustainability of the organization.
3. Broad frameworks and achieve a specific set of goals.
4. governed by obligations.
5. permanent or medium term.

Characteristics of the strategic partnership

1. Establishing relationships and entering new markets.
2. Contribute directly to achieving the axes of the corporate strategy.
3. The strategic partnership is multifaceted.
4. Corporate business growth.
5. Assistance in raising human energies.
6. Encouraging project innovation.
7. Increase customer confidence in the company’s brand.

Levels of strategic partnership

• Strategic partnerships between the private and government sectors.
• Strategic partnerships between countries.
• Strategic partnerships between companies and institutions.
• Strategic partnerships between government agencies.

Types of strategic partnerships

Strategic marketing partnerships

They are partnerships concluded by a production or industrial company contracting with a company specialized in marketing.

Where the marketing company promotes the other company’s products in the market with its mechanisms to understand the nature of the market in a professional manner.

Strategic supply chain partnerships

This partnership is used in the process of manufacturing products that are created in successive stages or from separate miniature parts;

Where the institution contracts with specialized companies working on the manufacture of those parts or stages.

Strategic integration partnerships

It is one of the most common partnerships in the fields of digital products and electronic applications, as it is based on the sharing of two institutions with part of their services to achieve maximum benefit.

Strategic technology partnerships

Under which one of the institutions concludes an agreement with technology and information technology companies based on improving the continuous operational performance of the institution.

Strategic financial partnerships

partnerships specializing in financial matters; Where it is beneficial for organizations to outsource accounting, who can monitor revenues and expenses more accurately and clearly.

Requirements for a successful strategic partnership

• A successful partnership needs requirements and conditions to ensure the achievement of its desired goals, which are:

1. The existence of a common and realistic vision of the partnership based on the strengths and weaknesses of the partners.
2. Continuity in partnership policies.
3. Availability of strong government support that encourages this activity.
4. Analysis of the feasibility of the project before contracting.
5. An analysis of the expected risks of the partnership.
6. The establishment of the partnership on a well-constructed and competitive contractual process.
7. Formation of a detailed contract.
8. Existence of effective and professional control over the strategic partner’s work style.
9. Availability of appropriate advisory support.

Principles of successful strategic partnership

Commitment and undertaking to implement decisions.

Continuity in updating the partnership management methodology.

Transparency and coordination between partners.

In the following paragraphs of our article, Strategic Partnerships in Saudi Arabia 2023,

we will explain to you the stages of building strategic partnerships, as they include the stage before, during, and after the partnership.

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Stages of building strategic partnerships

Pre-partnership stages:

• Planning:

1. Conducting an integrated study for the project to be evaluated.
2. Determine the initial objectives of the partnership to be established.
3. Identify and analyze potential risks.
4. Setting the criteria on which the target partners are selected.

• Research and information gathering:

1. Studying the reality of the targeted organizations and reviewing their policies.
2. Examine the work programs of these organizations and their available capabilities.

• Communication with partners:

It is done through two methods:

1. Old call for potential partners.
2. Responding to external requests submitted by potential partners.
3. Presenting the partnership program and clarifying all information and details related to it.

• Analysis of submitted offers:

Based on the criteria that were set in the planning and feasibility study stage.

• Selection of potential partners:

And holding negotiating meetings to choose the final partner.

• Drafting of the contract and it must include the following:

1. About the parties to the contract and their addresses.
2. Determine the person who will sign the contract, and his job position within the organization.
3. Determine the objectives of the partnership.
4. Determine the obligations of each party.
5. Define goals and potential outcomes.
6. Identify potential risks and how to address them.
7. Determine the method and mechanism of partnership work.
8. Determine the coordinators for each party.
9. Determine the duration of the partnership with its establishment.
10. The mechanism for terminating the partnership must be clearly stated in the contract.

• Build the framework to define:

Partnership management method and work mechanism.

• Simplified ceremony arrangement during partnership signing

stage during the partnership:

• Formation of a work team:

It is made up of members from the constituent institutions of the partnership.

• Start and launch announcement

Partnership according to what is decided in the work plan.

• Implementation subsidiary:

Partnership according to the schedule, and the obligations written in the agreement.

• Submit a periodic report (weekly or monthly)

During which:

1. Measuring and evaluating the performance of the partnership and verifying the extent to which its objectives have been achieved.
2. Finding out the difficulties and problems facing the partnership during its implementation and addressing them
3. Updating the action plan through improvement and development during the implementation phase of the partnership.

Post-partnership stage:

• Scale setting:

1. The extent of the satisfaction of those concerned and documenting their opinions and suggestions Submitting a letter of thanks and appreciation.
2. To the supporting partner, and a final report on the partnership is attached

It includes the following:

Results:

The partnership implemented through its achieved objectives

target reading:

established at the planning stage

Determine the most important:

Obstacles and difficulties encountered in achieving the goals

Recommendations:

administration and its suggestions

Amendment to the partnership contract

Some partnership contracts need to be amended after their approval, according to the extent to which the agreed objectives are achieved.

The amendment takes place after reviewing the current partnership contract and negotiating with the partner on the goals or services that are required to be changed or added to the partnership contract.

Cancellation of the partnership contract

• Conditions for canceling the partnership contract between the parties:

1. The ineffectiveness of the partnership and the great difficulty in activating it.
2. Changing the objectives of the partnership by the partners in a way that does not serve the agreed objectives.
3. A wide change in the organizational structure of the partners, which affects the management and status of the concluded partnership.
4. Low quality of services provided through partners.
5. Issuing or amending government legislation and laws in contradiction with previously concluded partnership agreements.
6. Increasing the percentage of risks arising from the partnership.
7. A partner’s breach of the terms of the partnership contracts, resulting in damage to the other partners.

Strategic Partnerships Management Mechanism

1. To ensure the effectiveness of the strategic partner in achieving the objectives of the contract.
2. Ensure that the quality of the resources exchanged between the partners conforms to the required specifications.
3. Preparing a quarterly, semi-annual and annual report on the performance of the strategic partner.
4. Measuring the strategic partner’s satisfaction periodically.

Strategic Partners Appreciation Mechanism

• Resource partner:

It is evaluated based on the quality of the resources and their conformity with the specifications agreed upon with the institution.

• Operations partner:

It is evaluated based on the quality of common services provided with the institution.

• Strategic partner:

It is evaluated based on the percentage of achieving the strategic objectives with the institution.

The most important terms and frequently asked questions related to our article

• What is Strategy Analysis?

It is an analysis that validates the strategy, examines its applicability, and uncovers hidden problems.

• What is Strategic Analysis?

Analyzes the nature of the market and its competitive forms to find ways to achieve a permanent and unique advantage for the organization.

• What is meant by strategic partner?

It is a partner with whom it is agreed on long-term participation in material resources and orientations in order to achieve common and specific goals.

• What is the definition of a managing partner?

He is the partner responsible for the company’s overall practices, management and day-to-day operations, and therefore is considered the CEO of the company and is the highest official position within the partnership.

• What does General Partner mean?

He is the partner who has the authority to act on behalf of other partners and bears responsibility for the work and obligations of the company, as he has unlimited liability.

• Who is an Active Partner?

He is a partner who has a share of the capital and takes an active role in the management and conduct of business for the company.

• What is meant by a silent partner?

He is the partner with limited liability. His participation and responsibilities are limited to contributing to the capital only in exchange for a share of the profits or losses,

without participating in the daily or administrative operations of the company.

• Definition of General Partnership?

A joint ownership partnership includes two or more parties that share in equal proportions in all assets, profits, and financial and legal liabilities.

• What is Limited Liability Partnerships?

A limited liability partnership is a partnership that combines the characteristics of a company and a partnership, where the partnership is managed by all the partners with limited liability for each of them.

• What is a Limited Partnership Unit?

It represents one unit of ownership in a general limited partnership.

• What are Partnership Capital Accounts?

Is to determine the property rights in the accounting records of the partnership in terms of the initial and subsequent contributions by the partners,

in addition to the profits and losses allocated in accordance with the provisions of the partnership agreement.

We have come to the end of our wonderful article Strategic partnerships in Saudi Arabia 2023,

where we talked about all points related to the partnership and the strategic partner and

the most important types of partnerships, principles and stages beautifully and with brief ideas and in an interesting manner.

You can inquire about everything related to companies by contacting our office CFOONLINE, the authorized financial office Certified in Saudi Arabia,

you will get advice and services that enable you to succeed in your business.

The most important sources:

ar.wikipedia.org