Strategic alliances

Strategic Alliance Pros and Cons

There are various strategic alliance pros and cons that business managers should be
well informed on before deciding to team up. A strategic alliance is an agreement
whereby two or more businesses dealing in similar or related products join to form
one company for a particular period of time. Besides, the businesses in the alliance
usually have a similar target audience too, making them compatible in almost all
levels of operations. Although the mean reason behind strategic alliances is
profitability, the businesses involved are not usually in direct competition with one
another.
In a strategic alliance, the companies or businesses involved partner in a number of
ways including, sharing of resources, expertise among others for mutual benefit.
Based on the purpose of the alliance, the partnership can be structured in different
ways. The most common types of strategic alliances include joint ventures, equity and
non-equity strategic alliances. This implies a wide range of strategic alliance pros and
cons, depending on the type of partnership and its purpose.

Strategic Alliance Pros and Cons

The following are some of the main advantages and disadvantages of a strategic
alliance.
Pros of a Strategic Alliance
When businesses come together, they can easily attain a competitive advantage over
others in the market, which operate individually. This is because, they will be able to
pull together their resources, capabilities and expertise for better results. As a result,
the alliance is likely to grow rapidly and efficiently, thus, earning the parties involved
a greater market share.
Economically, there are other ways through which businesses can also benefit from
strategic alliances. The partnership can help in the reduction of costs and risks, which
are evenly distributed across the members. Besides, an alliance is also a greater way
of increasing economies of scale owing to the expected growth in production volume,
which reduces the cost per unit.
A strategic alliance can also offer organizational benefits to a company in various
ways. Since the companies involved in the partnership share skills, expertise and even
equipment, there is an easier exchange of the same between the workers. In this way,
companies are able to enhance the quality of their products, increase production and
even expand distribution.
Strategic alliances can also benefit the involved partners politically. For instance, a
local company can decide to team up with a foreign one in order to gain entry into a
new market in cases where there are barriers to local enterprises.
Cons of a Strategic Alliance
One of the risks or disadvantages of a strategic alliance is sharing. Since the involved
parties pull their resources, skills, capabilities and knowledge, it can be challenging
when it comes to business secrets. Although there may be agreements for the
protection of trade secrets, it is not always certain that they shall be upheld by all
parties.
Another disadvantage of a strategic alliance is that in some occasions, it is not easy to
choose the right partner. This may result into lack of commitment, which can
negatively impact the overall operations of the alliance. In fact, there are several
occasions whereby partners have turned into rivals, tearing down each other.
There are other risks that are likely to be faced by parties in a strategic alliance
including, poor communication, lack of clear goals and objectives, lack of trust among
others. In fact, the seeds of failure are often sown in the alliance long before it even
begins operating. However, this does not mean that all alliances are doomed to fail,
some can thrive well and deliver greater results for the partners.

Conclusion
Considering the strategic alliance pros and cons outlined above, there are more
benefits to forming such a partnership compared to the demerits. However, it should
be noted that the success of the partnership relies on its purpose and commitment to
fulfilling that goal. It is of great importance that the businesses first draw clear and
precise objectives, and procedures to be followed in their operations. Besides, lines
should also be drawn on the obligations of each party in order to enhance efficiency
and team work for mutual benefit.

Examples
ICICI Bank, Indias largest private sector bank and Vodafone India, one of Indias largest telecom service
providers, announced a strategic alliance to launch a unique mobile money transfer and payment
service called m-pesa. m-pesa is the trademark of Vodafone. The announcement was made
by Chanda Kochhar, MD & CEO, ICICI Bank and Marten Pieters, MD & CEO, Vodafone India Ltd.

ICICI Bank and Vodafone India through its 100% subsidiary, Mobile Commerce Solutions Ltd. ( MCSL)
have finalized plans to launch mobile payment services this year, under the brand name m-pesa. This
offering will comprise: a mobile money account with ICICI Bank and a Mobile Wallet - issued by MCSL.

This innovative offering will give the customer a comprehensive service comprising:
Cash deposit and withdrawal from designated outlets
Money transfer to any mobile phone in India
Range of mobile payment services including purchase of mobile recharge,
recharge of DTH services and utility bill payments
Money transfer to any bank account in India
Payments at select shops
The partnership between ICICI Bank and Vodafone effectively leverages the strengths of Vodafones
significant distribution reach and the security of financial transactions provided to customers by ICICI
Bank. These services are made convenient using a vast network of authorized agents who will enable the
customer to deposit and withdraw cash in and from their account. By facilitating banking transactions at
such agent locations, this alliance effectively delivers the last mile access in remote areas.

The mobile payment service will be launched initially in the eastern region of the country viz. Kolkata,
West Bengal, Bihar and Jharkhand and then will be rolled out to other parts of the country in a phased
manner.

Chanda Kochhar, Managing Director& CEO, ICICI Bank said, ICICI Bank has been at the forefront of
leveraging technology in banking and has revolutionized the way Indian customers carry out their
banking transactions. We have now launched m-pesaTM, a unique and innovative offering which will
allow us to provide basic banking services to millions of customers spread across the country. This will
help us reach out to segments that currently do not have access to banking services, towards our
objective of achieving greater financial inclusion. We are very happy with this partnership with Vodafone
which will bring together the strengths of our respective brands and our complementary capabilities.

Marten Pieters, Managing Director & CEO, Vodafone India said, Vodafone is the worlds largest
and leading provider of mobile payment services. Vodafone m-pesaTMis offering millions of people basic
financial services, beyond the reach of traditional banking. After an in-depth understanding of the Indian
customer insights, we concluded that there is tremendous potential for this product in India. We are really
proud to announce the strategic partnership with ICICI Bank and launch this first-of-its-kind offering with
ICICI to provide mobile payments. This offering has been customized to serve the Indian customer in
compliance with all applicable regulatory requirements.
A strategic business alliance pairs two companies that complement each other, allowing each to promote the
other or to provide an exchange of goods or services that give each access to something it needs at a lower
cost. Strategic alliances require commitments that can backfire if they cost one party too much, dont deliver the
expected results or transfer the problems of one party to the other, so carefully consider any working
relationship with another business before you enter into one.
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Wedding Industry
Several types of businesses involved in weddings commonly form strategic alliances with one or more
businesses in the industry. Photographers agree to promote cake makers, banquet halls, chapels, caterers and
dress shops in exchange for the same promotion. A caterer might develop an exclusive relationship with an
event space, guaranteeing that each party works harder to promote the other. Some of these businesses not
only promote each other, but also pay referral fees or bundle services at discounted prices.

Tennis Industry
Local teaching professionals and coaches are influential in driving tennis racket sales, recommending specific
brands and models to their students. Many pros dont work at facilities with pro shops on site, so they develop
relationships with local retailers in exchange for in-store promotion, referral commissions or free product.
Tennis racket and clothing manufacturers sponsor tens of thousands of teaching pros across the country,
supplying them with rackets, bags, clothing, shoes and other logo items the pros use and wear, promoting the
manufacturer. The manufacturers require an exclusive-usage agreement and often tie the relationship together
with a local retailer that supplies the pro, and which the pro promotes.

Retail Industry
The more a manufacturer can help a retailer promote its product, the more the retailer will sell. Manufacturers
often provide in-store promotional support to their retailers in the form of signage, contests, discounts, rebates
and display stands. Some retailers sign an exclusive distribution agreement in exchange for better pricing,
more trade credit or increased promotional support. In cases where the retailer cant offer exclusivity, it might
arrange specific shelf space for a manufacturer.

Cause Marketing
Businesses work with charities to generate positive publicity and to turn them into marketing partners. A
business often donates product, services or money to a nonprofit in exchange for that organization promoting
the business on its website, in its mailing, at its events and on its social media sites. These alliances might
include the charity earning a percentage of sales, motivating the charity to work harder to promote the
business. The business gets to use the charitys name and logo on its packaging, marketing materials and
website, promoting the relationship.
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example

ust because two things dont seem to go together at first, doesnt mean
they arent a great pair. At first glance, some companies may seem to not
have much in common, but after a little closer look you might find some
similaritiesCustomer bases with common interests, the ability to
leverage one client pool with another, or even just a symbiotic
partnership that continues behind the scenes for years.

For most strategic alliances, the companies involved have the ability to
reach further out within a prospective customer pool. And with two sales
teams working in the channel, that means you have access to twice as
many prospects than if you were working alone. And lets not forget co-
branded marketing content.

Building your own strategic alliances? Download the Partner Success Kit
for the tools you need.

Below are five examples of strategic alliances that paid off in a huge way.

Ford and Eddie Bauer

You might remember the Ford Explorer Eddie Bauer edition. Premium
leather seats and other luxury features throughout the vehicle. Then
aside from the car itself, Eddie Bauer was producing luggage sets with
Ford branding on them. These co-branded items were great advertising
points for both companies.

The main selling point was that the vehicle filled a niche that was
previously held by foreign automakers: the luxury SUV market. When Ford
partnered with Eddie Bauer, the consumers clamoring for a finely
outfitted sports utility vehicle produced on American soil were satiated.

Spotify and Uber

Leaping forward to a very recent piece of news, Spotify and Uber have
partnered to provide stereo control to Uber customers. Not every Spotify
consumer uses Uber, nor does every Uber rider have a Spotify account.
The strategic alliance allows each company to pursue prospects from the
others existing customer base, all while continuing to promote both
products.

In both cases, it gives the company a leg up over its competition. Spotify
is offering something with the Premium package that other streaming
services do not yet have. And likewise, Uber can provide the riders with
an opportunity to listen to their own playlists as opposed to other ride-
share services that cannot match them yet.

Google and Luxottica

Luxury eyewear and cutting edge technology. While you might not think
of them working together, oddly enough the partnership is exactly what
was needed for each company to get ahead in the market.

Luxottica can provide premium quality eyewear to the luxury market, with
a justification that the technology is what is driving the price, and
maintain and increase their market share by diversifying the customer
base. Google on the other hand, can provide technology that has a touch
of luxury, and reach consumers that may be seeking eyewear that has
the premium look, regardless of the technology.

Hewlett-Packard and Disney

This alliance formed back when Mr. Hewlett, Mr. Packard, and Mr. Disney
were all still involved with their respective companies. During the creation
of Fantasia, Disney purchased some audio equipment from Hewlett-
Packard. The strategic alliance continued onwards, as Disney relied
heavily on HPs development and IT team for its own infrastructure.

In fact, at current-day Disney attractions, the Imagineering team is still

quite married to the HP systems architecture. During the design and build
phase of Disneys Mission:SPACE, HP engineers and Disney imagineers
were working side by side to create the most technologically-advanced
ride yet.

Starbucks and Barnes & Noble

Heres a matchup that has stood the test of time. Whereas many brick
and mortar bookstores have folded due to lack of customer base, the few
that have formed strategic alliances have continued to prosper. One
example would be Barnes & Noble, partnering with Starbucks.
Over the years, Starbucks has become synonymous with coffee. Like it or
hate it, you instantly recognize the name. With a Starbucks location in
most (if not all) Barnes & Noble bookstores, customers have twice the
reason to shop there. Coffee break, and browse the latest bestsellers shelf
all in one stop.

While were not claiming that this strategic alliance has kept Barnes &
Nobles doors open, it is worth pointing out that many of its major
competitors have since closed up shop. In a time when digital media sales
are constantly on the rise, purveyors of printed literature need to be
savvy to stay in business. Barnes and Noble has certainly tried to stay
ahead of the curve.

Note that in all five cases, the companies that formed these strategic
alliances did not share much in common prior to their partnership. The
one common point might be the customer base, albeit an indirect
relationship in most cases. Most likely, the marketing teams for both
corporations began by reviewing potential strategic alliances and
determining whether the partnership would be beneficial in both long and
short term.

For your own channel partnership, following this pattern may be fruitful as
well by potentially doubling your prospect pool. Working with your
channel partners to encourage co-branding, as well as educating them on
sales content, will ensure that your channel partnership is as successful
as possible.

Strategic alliances are partnerships in which two or more companies work together
to achieve objectives that are mutually beneficial. Companies may share resources,
information, capabilities and risks to achieve this. According to Producer's
eSource, a common reason for entering into a strategic alliance is to obtain the
advantage of another company's innovations without having to invest in new
research and development. While companies have used acquisition to accomplish
some of these goals in the past, forming a strategic alliance is more cost-effective.
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Starbucks
According to Rebecca Larson, assistant Professor of Business at Liberty
University, Starbucks partnered with Barnes and Nobles bookstores in 1993 to
provide in-house coffee shops, benefiting both retailers. In 1996, Starbucks
partnered with Pepsico to bottle, distribute and sell the popular coffee-based drink,
Frappacino. A Starbucks-United Airlines alliance has resulted in their coffee being
offered on flights with the Starbucks logo on the cups and a partnership with Kraft
foods has resulted in Starbucks coffee being marketed in grocery stores. In 2006,
Starbucks formed an alliance with the NAACP, the sole purpose of which was to
advance the company's and the NAACP's goals of social and economic justice.
Apple
According to "An Overview of Strategic Alliances," Apple has partnered with
Sony, Motorola, Phillips, and AT&T; in the past. Apple has also partnered more
recently with Clearwell in order to jointly develop Clearwell's E-Discovery
platform for the Apple iPad. E-Discovery is used by enterprises and legal entities
to obtain documents and information in a "legally defensible" manner, according to
a 2010 press release.
Hewlett Packard and Disney
Hewlett-Packard and Disney have a long-standing alliance, starting back in 1938,
when Disney purchased eight oscillators to use in the sound design of Fantasia
from HP founders Bill Hewlett and Dave Packard. When Disney wanted to develop
a virtual attraction called Mission: SPACE, Disney Imagineers and HP engineers
relied on HP's IT architecture, servers and workstations to create Disney's most
technologically advanced attraction.
Eli Lilly
Pharmaceutical giant Eli Lilly has been forming alliances for nearly a century,
according to its brochure, Power in Partnerships, and was the first in their industry
to establish an office devoted to alliance management. Lilly currently has over one
hundred partnerships around the world devoted to discovery, development, and
marketing. For example, Lilly partners with the Belgium-based company
Galapagos to develop treatments for osteoporosis. Lilly also partners with Canada's
BioMS medical group in a licensing and development agreement for a novel
treatment for multiple sclerosis. In Japan, Lilly is partnering with Kyowa Hakko
Kogyo Co., Ltd., to bring a targeted cancer treatment to market. Lilly will have the
exclusive license to develop and sell the product worldwide except in Japan, and
the two companies will share rights in certain Asian countries.
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Apple and IBM Alliance Bears Software

Fruit
Jonathan Vanian
Dec 16, 2015
Apple and IBMs partnership to create and sell mobile apps to
businesses reached a new milestone, the technology giants said on
Wednesday. The two companies have now built over 100 business apps,
meeting a goal they set when first partnering last year.
The announce shows that Apple and IBM are making progress with their
blockbuster alliance, which is intended to make their products more
attractive to business customers. By working together, they hope to
leverage each others expertiseApple's consumer know-how, and IBM's
deep ties to corporate IT departmentsto be stronger than going at its
alone.
Apple (AAPL, +0.28%) and IBM (IBM, -0.42%) released 48 apps in
December alone that cover sectors like the auto, chemical, petroleum,
retail, and healthcare industries. IBM said its portfolio of business apps
now target 14 industries and 65 different job roles within them.
One new iPhone app targets the energy and utilities industry by allowing
workers who inspect infrastructure for storm-related damages to quickly
share information with their colleagues and customers. Another new
iPad app for eldercare workers lets those professionals keep better tabs
of their elderly clients who live alone by letting them more easily access
patient files.
We think theres relevance there to retirement communities, said
Katharyn White, IBMs vice president of the Apple and IBM partnership.
 Only one of the newly released apps is built for the iPad Pro hybrid
laptop and tablet, but White said IBM and Apple are developing more
apps for the device that target financial planners, field maintenance
workers, and the travel industry, among others.
Apple and IBM typically team up on designing the apps, while IBM
developers write the code (written in Apples Swift programming
language). IBM handles integrating the software for customers into their
computer systems, White said. Customers pay monthly fees based on the
number of users as well as an initial fee to wire up the new software to
its internal databases and infrastructure.
The business apps were built to plug into IBM's Watson data-crunching
service to provide better data analysis and predictions. However, that
connection to Watson costs extra.
IBM did not disclose the number of customers using the new mobile
apps, but did say that Scandinavian Airlines, Vodafone Netherlands, and
Asian soft drink bottler Coca-Cola Amatil are customers.
Software sales have been a weak point for IBM in recent quarters as the
company transitions from selling software licenses to a so-called
software-as-a-service model similar to companies like Salesforce. In
IBMs last quarterly earnings, sales of software declined 10% year over
year to $5.1 billion.

Strategic Alliance of Starbucks and Tata Coffee.. :

Strategic Alliance of Starbucks and Tata Coffee.. By Anuj Singh Swati Sharma

Indian Coffee Industry:

Indian Coffee Industry The coffee industry of India is the fifth largest producer of coffee in the world, accounting for over four
percent of world coffee production, with the bulk of all production taking place in its Southern states. Avg. Coffee
consumption in India is 10 cups per day. India is the only country that grows all of its coffee under shade. Indian coffee has a
unique historic flavor.

Tata Coffee..:
Tata Coffee.. Area of business- Grows coffee on its own estates, Processes the beans, Exports green coffee,
Manufactures and exports Instant Coffee

Pillars Of Tata Coffees Business Strategy:

Pillars Of Tata Coffees Business Strategy

Competitive Advantage of Tata Coffee:

Competitive Advantage of Tata Coffee The largest integrated coffee plantation company in the world . It's uniqueness lies in
its ability to produce large quantities of estate specific, strain specific, special and premium coffee, while maintaining a strict
consistency in quality. It has a hand in every aspect of the coffee making process With the major coffee consumption
markets being Arabica-centric, this lobby has been prevailing in international markets by Tata coffee.
Starbucks:
Starbucks It is an international coffee and coffeehouse chain based in Seattle, Washington. Starbucks stresses quality
above price and other features it could emphasize. Starbucks specializes in coffee and related beverages. The company
sells coffee, Italian-style espresso beverages, cold blended beverages, as well as a selection of premium teas and coffee-
related accessories and equipment.

Competitive advantage of Starbucks:

Competitive advantage of Starbucks Strong brand image Starbucks specializes in coffee and related beverages. Starbucks
is the largest coffeehouse company in the world. They have loyal customer worldwide.

Marketing Strategy of Starbucks:

Marketing Strategy of Starbucks Starbucks started a community website, My Starbucks Idea Its rare to find a Starbucks ad
in a billboard, ad space, newspaper or poster in places. The company has went to great lengths to create a community
atmosphere among premium coffee lovers. Starbucks operates primarily through joint ventures and licensing arrangements
with consumer products business partners.

About the deal:

About the deal Starbucks is coming India with joining hand to Tata Coffee. Starbucks will explore setting up stores in the
Tata group's retail outlets and hotels, besides sourcing and roasting coffee beans at Tata Coffee's Kodagu facility. This
Agreement includes opening cafes, bean sourcing and roasting. One of the hurdles that the two companies have to sort out
is Starbucks franchisee-led business model

Objective of Tata Coffee behind this deal:

Objective of Tata Coffee behind this deal The agreement will allow Tata coffee to provide roast coffee bean to Starbucks in
India. Get opportunity to jointly invest in additional facility for export to other market. Starbucks provide new technology to
the promotion of responsible agronomy practices. A long term relationship will be formed with this MoU with Starbucks. After
this deal, Tata Coffee is become Asias biggest publicly traded coffee grower

Objective of Starbucks behind this deal:

Objective of Starbucks behind this deal Starbucks aiming to enter in Indian market through this MoU. Starbucks believe that
India can be an important source for coffee in the domestic market, thats why they enter in India. The knowledge and
understanding of the Indian market can be brought by Tata Global Beverages, because it has been in this play for a while
The Tata also have an arm in retail so theres a synergy there as well.

Marketing Strategy Analysis Of the Deal :

Marketing Strategy Analysis Of the Deal

Marketing Strategy Analysis Of the Deal:

Marketing Strategy Analysis Of the Deal
Marketing Strategy Analysis Of the Deal:
Marketing Strategy Analysis Of the Deal

Marketing Strategy Analysis Of the Deal:

Marketing Strategy Analysis Of the Deal Competitive Timing/Direction Matrix

Marketing Strategy Analysis Of the Deal:

Marketing Strategy Analysis Of the Deal Service decoupling Approach

Marketing Strategy Analysis Of the Deal:

Marketing Strategy Analysis Of the Deal Porter five force Model

Relationship Marketing..:
Relationship Marketing.. Starbucks and Tata Coffee developed a long term and intimate relation-ships. Through this deal
they developed open communication With this MOU Tata Coffee able to know the requirement and preference of Starbucks
more closely Type of Strategic Decision Making.. Formal Decision Making

PowerPoint Presentation:
Strategic Implementation of Decision..

Product Life Cycle..:

Product Life Cycle..

Branding Architecture.....:
Branding Architecture..... Sub Brand they can opt this strategy for the branding purpose, as Starbucks uses this strategy for
the branding purpose and may be it will continue it in India. Endorsed brands According to us they can also opt this strategy
because Tata coffee uses this strategy Co-Branding

SWOT:
SWOT

Conclusion..:
Conclusion.. This deal will be beneficial for both the side, because this deal has given a new phase to both the company.
As Starbucks prospect After having MoU with Tata Coffee ,Starbucks is able to enter in Indian emerging market. From Tata
Coffee prospect, after this deals they are entering in coffee retail outlet business, which is also giving a new phase to TATA
Coffee. They may be revolutionized the Indian coffee retail outlet industry.

Types of Strategic
Alliances
Definition: The Strategic Alliance is a cooperative agreement between two companies that
agree to share resources to pursue the common set of goals but remain independent after the
formation of the alliance.

The strategists Yoshino and Rangan have classified the strategic alliance based on two
dimensions: Extent of organizational interaction and conflict potential among the alliance
partners. Through this classification, the strategists try to explain two things to the alliance
partners:

The extent to which the partners must interact to have the alliance work
effectively.
Understand the potential of conflict that may arise out of being competitors
in the market.

On the basis of these, four types of strategic alliances emerge:

1. Procompetitive Alliances: The procompetitive alliance is characterized
by low interaction and low conflict. Such alliances offer the benefits of vertical
integration, i.e. a relationship between the manufacturer and its suppliers or
distributors, without the firms actually investing the resources in the manufacturing
firm or distributing the semi-finished or finished goods.

2. Noncompetitive Alliances: Such alliances are characterized by high

interaction and low conflict. The noncompetitive alliances are formed between
the companies that operate in the same industry but do not consider each other as
rivals. Their business operations do not coincide and are quite distinctive due to
which the feeling of competitiveness does not emerge. Often, the companies that
have expanded geographically within the industry adopt the noncompetitive
alliance.

3. Competitive Alliances: As the name suggests, these alliances are

characterized by high interaction and high conflict. Here, two competing firms
that perceive each other as rivals come together to form an alliance and. Therefore,
the intense interaction between the two is necessary. Such alliances could be intra-
or inter-industry. Often, the foreign companies operating in India forms a
competitive alliance with the local rival companies for specific purposes.

4. Precompetitive Alliance: The precompetitive alliance is characterized

by low interaction and high conflict. Such partnership brings two firms from
different, most often unrelated industries to work towards a specific activity, such as
new product development, new technology development, or creating awareness
among the potential customers about the use of new product or idea. The joint R&D
activities and advertising campaigns are the examples of a precompetitive alliance.

Thus, the strategic alliance types are classified on the basis of interaction and the potential of
conflict between the partners to the contract.

Read more: http://businessjargons.com/types-strategic-alliances.html#ixzz4ZIn1lXjz

Types of Strategic Alliances

in S TR ATEGIC A LLIA NC ES

Collaborative agreements between businesses can take a

number of forms and are becoming increasingly common
as businesses aim to get the upper hand over their
competitors. The main types of strategic alliances are listed
below:

Joint Ventures
A joint venture is an agreement by two or more parties to
form a single entity to undertake a certain project. Each of
the businesses has an equity stake in the individual
business and share revenues, expenses and profits.

Joint Ventures are agreements between parties or firms

for a particular purpose or venture. Their formation may be
very informal, such as a handshake and an agreement for
two firms to share a booth at a trade show. Other
arrangements can be extremely complex, such as the
consortium of major U.S. electronics firms to develop new
microchips, says Charles P. Lickson in A Legal Guide for
Small Business.

Joint ventures between small firms are very rare, primarily

because of the required commitment and costs involved.

Outsourcing
The 1980s was the decade where outsourcing really rose to
prominence, and this trend continued throughout the
1990s to today, although to a slightly lesser extent.

The early forecasts, such as the one from American

Journalist Larry Elder, have been shown to not always be
true:

Outsourcing and globalization of manufacturing allows

companies to reduce costs, benefits consumers with lower
cost goods and services, causes economic expansion that
reduces unemployment, and increases productivity and job
creation.

Affiliate Marketing
Affiliate marketing has exploded over recent years, with
the most successful online retailers using it to great effect.
The nature of the internet means that referrals can be
accurately tracked right through the order process.

Amazon was the pioneer of affiliate marketing, and now

has tens of thousands of websites promoting its products
on a performance-based basis.

Technology Licensing
This is a contractual arrangement whereby trade marks,
intellectual property and trade secrets are licensed to an
external firm. Its used mainly as a low cost way to enter
foreign markets. The main downside of licensing is the loss
of control over the technology as soon as it enters other
hands the possibility of exploitation arises.

Product Licensing
This is similar to technology licensing except that the
license provided is only to manufacture and sell a certain
product. Usually each licensee will be given an exclusive
geographic area to which they can sell to. Its a lower-risk
way of expanding the reach of your product compared to
building your manufacturing base and distribution reach.

Franchising
Franchising is an excellent way of quickly rolling out a
successful concept nationwide. Franchisees pay a set-up
fee and agree to ongoing payments so the process is
financially risk-free for the company. However, downsides
do exist, particularly with the loss of control over how
franchisees run their franchise.

R&D
Strategic alliances based around R&D tend to fall into the
joint venture category, where two or more businesses
decide to embark on a research venture through forming a
new entity.

Distributors
If you have a product one of the best ways to market it is
to recruit distributors, where each one has its own
geographical area or type of product. This ensures that
each distributors success can be easily measured against
other distributors.

Distribution Relationships
This is perhaps the most common form of alliance.
Strategic alliances are usually formed because the
businesses involved want more customers.

The result is that cross-promotion agreements are

established.

Consider the case of a bank. They send out bank

statements every month. A home insurance company may
approach the bank and offer to make an exclusive available
to their customers if they can include it along with the next
bank statement that is sent out.

Its a win-win agreement the bank gains through offering

a great deal to their customers, the insurance company
benefits through increased customer numbers, and
customers gain through receiving an exclusive offer.

REASONS

Companies decide to form strategic global business alliances for many reasons. One
of the most important reasons is to gain access to another companys knowledge or
resources. Companies can also decide to join forces to develop new products or to
enter a market that neither could enter alone. Other reasons for developing
strategic alliances include the following:

Forming economies of scale2

Enhancing competitiveness

Dividing risks

Setting new standards for technology

Entering new markets

Overcoming the competition in a market

Acquiring new skills and resources

Often, when companies co-operate on a project, they exchange skills that are not
for sale. Typically, one partner possesses technological expertise and the ability to
keep abreast of rapidly evolving technological developments. What that partner
needs from the other partner or partners is capital, large distribution systems,
marketing expertise, service networks and credibility in the marketplace. Each
partner therefore provides the other with vital resources and uses the partnership to
extend its skill set into new areas. 1. Forming economies of sale Partnerships can
generate economies of scale that will enable the participating companies to marshal
a broad set of resources and achieve the critical mass needed for international
success. Companies with complementary skills can rely on each others proven
expertise instead of spending time and resources to independently develop what
has already been achieved. 2. Enhancing competitiveness Many international
trade projects require expertise from different fields. Traditionally, companies have
tried to develop or maintain all the required skills in-house. However, as
technological and administrative complexity increases, companies are learning that
they cannot do everything by themselves. As a result, the most competitive
corporations are adopting a strategy of maintaining their core competencies only.
Gaps in the skill bases are then filled by partnering with a company that has the
missing skills. This strategy avoids the need to expend resources and run the risks
associated with developing the skills in-house. 3. Dividing global business risks
Risk sharing through partnering is most often seen in research and development
areas. Research and development costs are always increasing and the speed of
innovation means that products rapidly become outdated and the risks of investing
in developing new products are high. Sharing research and development costs and
facilities provides good value for money, while sharing expertise can speed up the
process. Partnering can be used to share risk in other areas as well. For example,
companies can share transportation and distribution systems, which saves money
and enables faster delivery of the product. Joint marketing is another way of
spreading risk and increasing returns. It is now extremely common for film
producers, book publishers, toy manufacturers and fast food outlet owners to co-
operate in parallel promotional campaigns that spread the risk involved in new
ventures, reinforce each other and maximize returns to each of the participants. -
See more at: http://www.tradeready.ca/2014/fittskills-refresher/8-reasons-forming-
strategic-global-business-alliances/#sthash.gyHnUEoo.dpuf
Original article: http://www.tradeready.ca/2014/fittskills-refresher/8-reasons-forming-
strategic-global-business-alliances/

5. Setting new standards The development of new technologies creates

entirely new market opportunities. The first company to create a new
technology might set the standards for its industry simply because it is the
first. However, several competitors might develop similar technologies at
about the same time. It is very difficult to predict whose technology will set
the standard for the industry, so trying to be the first into the market with a
new technology can be very risky. Forming alliances is one approach to
establishing standards in an industry. It also increases the chances that the
 standards a company invests in will be accepted throughout the industry.
Standards make markets, and for this reason, many high technology
companies cannot afford not to be involved in some sort of alliance,
consortium or other co-operative effort. 5. Entering new foreign markets
Strategic global business alliances are effective ways of entering new foreign
markets. Partners can provide established marketing and distribution
systems, as well as knowledge of the markets they serve, ensuring that
products get to market faster and are more likely to be purchased. Foreign
partners can advise a company on how to modify a product to meet local
regulations and market preferences. They can help with such issues as
translation of documentation, conversion from metric to imperial measures,
conversion of power requirements and compliance with packaging
regulations. Strategic alliances can also be useful when market conditions or
government policies present market entry barriers. Partnering with a local
company can help overcome these barriers. 6. Overcoming competition
Companies often co-operate in marketing or distribution to overcome
competition. A well-conceived alliance can mean a head start in a market,
possibly even preventing other competitors from entering. Forming an
alliance with an established, major company can reduce the influence of
other companies. However, companies should be careful that alliances do not
form a cartel or otherwise breach anti-competition laws in the target market.
- See more at: http://www.tradeready.ca/2014/fittskills-refresher/8-reasons-
forming-strategic-global-business-alliances/#sthash.gyHnUEoo.dpuf
Original article: http://www.tradeready.ca/2014/fittskills-refresher/8-reasons-
forming-strategic-global-business-alliances/

6.