Professional Documents
Culture Documents
Chapter 2
Cross promotion Alliances are one of the more common types of alliances Companies promoting each other with the use of discounts, coupons, specials, shared advertising space or in-store promotions Exceptionally efficient in reducing costs of advertising Ex: Business Class flights offering a free AOL disk with peanuts
Co-branding strategy involves two companies putting their name on a common product At the very least, co-branding offers twice the exposure and market impact opposed to traditional single brand advertising Ex: Mattel and McDonalds offering toys that produce McDonalds hamburgers and Fries
Serving National customers is often too costly or too difficult for a firm to handle by themselves To create an alliance to serve national customers, companies share information, sales accounts and materials with the other members. This also allows for a more consistent customer satisfaction that otherwise wouldnt be available Trust is a very important factor for an alliance to succeed, especially when the scope of the alliance is national/global Ex: Awnet: Canvas Awnings drawing together with several other fabricators to meet the needs of clients all over the U.S. by dividing the country into 5 regions, which allows them to service the national need for awnings
Focuses on a specific industry in a certain geographical area. These businesses are general within very close proximity to one another and can satisfy all the needs of their customers in one phone call or visit. Ex: The Minnesota Connection: Services the Direct Marketing Industry, alliance involving Telemarketing, Plastic, Printing, Envelope, Lettershop, and Listing Services.
5. Community-based Alliances
Involves working together with other companies to create some community benefit that essentially differentiates your organization from your competitors in the eyes of your customers. Community-Based Alliances are typically a form of advertising, although they allow different companies to come together for the benefit of the community, and the resulting networking and friendships are a priceless benefit for the companies involved. Ex: Investors Advantage Corporation holding an Economic Forum in Westlake Village, California. By providing high-profile speakers and representatives from many companies, the forum benefits the citizens and customers and also provides the companies involved with exceptional advertising and name recognition as well as the ability to attract new customers in attendance.
Competition is NOT bad. Competition breeds success. This concept is exactly as it sounds, you work with your competitors in search of mutual benefits. This approach is beneficial in economic/industry downturns or when costs of machinery or resources are extremely high. It is possible to reduce costs by sharing space, advertising or commercial space with competition. Ex: American, Delta and United Airlines sharing a storefront ticket office to reduce rental fees and attract more customers.
Often times foreign or new markets have some characteristic that makes them unserviceable for an organization. Examples are markets that are too large, too far away, too different, undeveloped, and so on. Forming alliances with competitors is a viable solution is many cases when these issues are at large. By working together with the competition, organizations are able to increase output, lower costs of distribution and provide advertising and marketing that make the penetration of the market much easier that it would be if they were to go at it alone. Ex: La Tapatia Tortilleria and El Aguillea Tortillas formed a strategic alliance to open the new market of California to fresh tortillas. Neither of the companies had the production ability to service the market alone, but together they were able to capture a huge market and become very successful.
Such as buying cooperatives or buying groups Buying as a group can make similarity of prices
Ex. In American Dental Cooperative (ADC), the ADC members came together in an alliance for buying parity to as they called level the playing field. As buying in group, they can get prices similar to that of the two giants in their industries.
Lower product costs Lower operating costs Industry information Education and training Networking Pricing guidelines Competitive information Advertising support Catalogs Credit information Reduced-price services
The two main competitors make an agreement alliance to stop another main competitor from its new strategy or entering into the industry.
Ex. GTE and Pacific Bell, the two California telephone companies, entered into an alliance agreement, and they successfully blocked Metropolitan Fiber Systems (MFS) from developing a fiber optics dual communication system for the University because it will undercut price to local phone companies.
When some products or ideas have to be developed using more advance technology and hard to do by own.
Ex. Chrysler and Westinghouse collaborated to develop an advanced electric motor and power controller that would boost acceleration and operating rage between charges in Chrysler electric vehicles.
Often times, the contemporary understanding of concepts is either outdated or flawed, and in worse cases, completely mistaken Often times the research and development for newer or more appropriate concepts is costly and difficult
Ex. GM and the federal government of the U.S.A are combining forces to complete extensive research on electric car technology
15. Strategic Alliances Between Private Business and State-Owned Foreign Business
Risky but can be profitable Ex. Honeywell and Sinopec Honeywell can double the sales to Sinopecs 38 enterprises. Honeywell anticipates a minimum of $75 million in new sales over the five years
Coca Cola and Nestle - Both parties get benefits, Coke has good distribution channel, and Nestle has products that do not directly compete with existing products. Non-Exclusive Agreement - Ex. Steelcase, the worlds largest manufacturer of the office furniture and office environments, distributes its products through a dealer network. Dealers can sell other products of other manufacturers to complete their own product line and serve their customers better. Exclusive Agreement - Ex. State Farm Insurance Companies alliance with their agents is called the Marketing Partnership. It gives its agents everything they need to conduct business, and it also sell them other items to make improvements.
American companies shrink the number of suppliers, they are putting more energy into the remaining relationships, and are even willing to pay a premium on the theory that getting things right initially is cheaper in the long run. Examples
Look for partners who wanted to partner with you -- Spend your time building those relationship with your suppliers that will help you to serve your market and improve your bottom line
Ask your supplier What can I do for you? -- We can help to come up with strategies for the endusers to buy better from the manufacturers in a way that served the manufacturers
It is a model that more manufacturers should embrace and more purchasers should demand of their suppliers The key elements to Fujis success are as follows: - A limited number of dealers offering their products to their market - Manufactured products of the highest quality with zero defects as the norm - Build tight relationships with a limited dealer network - Seek constructive feedback from dealers and act upon the ideas shared - Consistency of leadership - Accessibility - Trust