The Global Logic of Strategic Alliances

The Global
Group 12
Neha Dey (19pgpm017)
Krati Mehta (19pgpm026)
Trishna Saraf (19pgpm063)
logic of
Strategic
Raghav Luthra (19pgpm142)
alliances.
1
Amazon and Future Group: Rethinking the Alliance Strategy
Opportunity for Future Group to leverage Amazon’s investments, innovations in technologies

through secure payments, fast delivery and easy returns.
Vertical complementary strategic alliance
Amazon have an opportunity to use Future Group’s product portfolio and its understanding of
the local consumer.
Opportunity for Amazon to enter fashion market that popular among most of the e-commerce
retailers due to high margins and growing demand.
Diversifying strategic alliance
Future Group expected to enter the FMCG market, where Amazon is present.
Synergies in distribution as both companies have a well-developed and well-equipped

logistics system.
Synergetic strategic alliance
Synergies in customer acquisition and cross-promotions
Growth opportunity in the Indian retail market. Future Group helped to provide with the Indian
Cross-border strategic alliance sources that are required according to India’s foreign direct-investment policy.
2
Analysis
Issues for Amazon
PRICE MARGINS CONTRACTS DIVERSIFIC- RELATION-

● Competitors ATION SHIP
● Government Legislations
● Limited Offerings
Deciding the Online Future retail The constant
final pricing channel of Currently criticism of
was
in omni future retail expecting Amazon is foreign-
channels was already exclusive exclusive funded e-
was a working on online retail commerce
right fees
Issues for Future Group crucial issue razor thin from platform of
Future retail.
platforms by
Kishore
to ensure margins, Flipkart to
maximizatio sharing It was Biyani and
the tune of
n of profits discount rumored his
$10 million. that this deal reluctance to
and cost with So, it can
revenues amazon will can be cut margins
be assumed
● Market Share vs Contribution be leading to ended. So may make
that they should there the
● Discounts even less were getting
profits be relationship
● Exclusivity Deals a exclusive diversificatio between the
● Cannibalization rights fee n in selling two
close to that
● Achieving Targets platform companies
amount
3sour
Alternatives
4
A strategic alliance is an agreement between two or more
WHAT ARE parties to pursue a set of agreements based upon agreed
objectives and goals in order to serve the maximum of the
STRATEGIC customer base, while both remaining independent
ALLIANCES organizations
5
STRATEGIC ALLIANCES
To improve
Customer Focus Team Work &
& Delivery passion for
excellence
Respect and Trust Share Control &

ambitions
6
Behaviours that can turn alliances bitter –
1. Fear of loosing control

2. Low tolerance
3. Foot dragging
7
Glaxo: An example of perfect alliances
Objective – To reach the maximum no of consumers in Japan &

USA without sacrificing the commitment to topflight R & D.
Solution : Link up with first class partners in Japan, swap its

best drugs with them, and focus its own resources on generating
greater sales from its established network in Europe
Thus , Value creation & Delivery makes alliance possible
8
The Californiazation of need
• With globalization expecting to deliver the best of the consumer oriented value,
alliances become as essential tool to serve the customers along the maps.
• The customer cares about the quality, price, design, value and appeal it creates
and adds to the customer.
• Eg – It does not matter if a ‘British sneaker by reebok (USA) was made in
Korea.
9
Dispersion of Technology
• Technology is the key to success, and no company can build all best category
components and be the market leader.
• No one can keep all the relevant technologies in house for long, In short time
the technology becomes generally available.
• Eg – IBM Pc used the Software from Lotus Development Corporation,

Microsoft wrote the operating system on a Intel core processor.
• Naturally, to build effectively IBM outsourced and with a birds eye view
managed the over all work.
10
Importance of Fixed Costs.
• After creating the maximum market potential that an organization could create
by barriers to competive product and used every bit of proprietary expertise
• To compete in the global arena, you have to incur and somehow have to find
the way to defray – immense fixed costs.
• Your core potential to keep upgrading must be incurred in the best of the
capacity.
• Fixed Costs must be incurred – R&D, Promotional cost (If using a pull
strategy)
11
Dangers of Equity
• Organisations should always try hard and early at forging alliances. These are
the least risky, fastest and most profitable way to go global.
• The ‘Cascade model of expansion” no longer works.
• Companies have to be in all the markets simultaneously, globalization and

market capitalization doesn’t wait for the right time.
• Invest and create funds to expand your wing, the lure the stockholders for
dividends.
12
The logic of entente
• Shift of focus from ROI (Return on investment) to ROS (Return on sales)
• Managers will now concern themselves with the ongoing business benefits of
the alliance, and not wait for healthy return on investment.
• Equity investments always have an overtone of one company trying to control

other.
• Though it is not a marriage between companies, but it’s a loose, evolving kind
of relationship; with guidelines and expectations.
13
Thank you
14

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The Global

Opportunity for Future Group to leverage Amazon’s investments, innovations in technologies

Synergies in distribution as both companies have a well-developed and well-equipped

PRICE MARGINS CONTRACTS DIVERSIFIC- RELATION-

Respect and Trust Share Control &

1. Fear of loosing control

Objective – To reach the maximum no of consumers in Japan &

Solution : Link up with first class partners in Japan, swap its

• Eg – IBM Pc used the Software from Lotus Development Corporation,

• The ‘Cascade model of expansion” no longer works.

• Companies have to be in all the markets simultaneously, globalization and

• Shift of focus from ROI (Return on investment) to ROS (Return on sales)

• Equity investments always have an overtone of one company trying to control

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