While I was in Super Target, I noticed there was a Starbucks inside. So I started wondering to myself, why is there a Starbucks INSIDE of Target? Well, both of these companies are utilizing strategic partnerships to increase the profit margins for their businesses. Both companies are getting to utilize economies of scale with a huge building but they are splitting the rent and therefore reducing their rent expense. Additionally, they're going to get a combined marketing such that if someone walks into Target, Starbucks might benefit from the foot traffic or vice versa if someone walks into Starbucks, Taget might benefit as well. This allows them to reduce the marketing expense for both of their businesses. Since both of these activities are decreases expenses, they are consequently increasing the profit margin for both of their businesses.
So, how can you in your business increase your profit margins by utilizing strategic partnerships? What's your version of the Target and Starbucks strategic partnership?
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