Types of Strategic Alliances

You should know it by now!! Alliances now account for 18% of the revenue of the America’s biggest company. Today, there is a trend to core competence and let outsider helps in the weak areas. One of the best reasons to build a strategic alliance is to allow your business to concentrate on what it knows rather than what it doesn’t.

Strategic Alliance for marketing Strategic Alliance for Cross Promotion One company promotes another company at the same time when they are doing their own advertisement. Examples: United Airlines provides peanuts with America Online (AOL) diskette to people who use their service

Strategic Alliance for Co-Branding Usually alliances of trusted names created to develop marketing power. Example: McDonald’s co-branded with Disney Community-based Alliances Professionals and small businesses can promote new development by doing community-based alliances. It can share marketing costs by positioning themselves with a public activity and share the expenses as well as the rewards. Example: Economic Forum which was created by John Grace. His alliance consists of a local CPA firm, a bank, a law firm, a newspaper, and etc.

Alliances with Your Competition To apply this strategy, it might be because of desperation. Examples: Denver Alliance 1000 was formed by Marriotte City Center (600 rooms) and the Hyatt Hotels (500 rooms) to improve their services and share costs

Alliances with Competitions to Open New Markets Create benefits to both you and your competitors Example: SCIB Bank and AIA have form alliances to operate a project called “SCIB Platinum Bancassurance”. This project offers two types of life insurances. SCIB Platinum Life Single Premium and SCIB Platinum Savings 21/7

Strategic Alliances for Buying Parity Buying parity goes by names such as buying cooperatives or buying groups Example: America Dental Cooperative (ADC) which was formed by the North American dental supply distributors. It can create powers for brands who are in the alliance when you use “strength-in-numbers” strategy

Alliances with Competitors to Build an Industry Build an industry in a specific geographical location to serve a number of competitors Examples: The Recreation Vehicle Industry Association and Recreation Vehicle Dealers Association launched a program called “Go RVing” to increase public awareness of RV to 22% from 9%

Strategic Alliance to Beat Competition Share particular expertise of companies to beat competition. Examples: Coca-Cola developed an alliance with Nestle to beat competition with Pepsi. Coke has expertise in bottling, personnel, law. While nestle experts in marketing, technical research, and finance.

Strategic Alliances for Product Development Collaborate to develop advance technology in which either party has limitations to do it on their own. Examples: Fiat and BMW have cooperated to develop the third generation of Mini Cooper. Also, they have make alliances in developing a family of gasoline and diesel engines.

Strategic Alliances for Distribution Companies Joint distribution channels together in order to maximize marketing value to all partners. Examples: Coca-Cola vs. Nestle. Coke has an efficient distribution channels while Nestle offers indirect competitive products with Coke. So both of them could benefit from one another.

Strategic Alliances with Your Suppliers Most suppliers don’t want to do alliance with their customers because they are afraid of being taken over by its customers. Examples: Sear; firm that’s famous of taking over its suppliers, offers orders to suppliers at an increasing pace requiring additional capital investment. when the suppliers were deep in debt, Sear slow down or stop ordering. Using this financial trouble, Sear then buy controlling shares of the suppliers.

The Successful Case The Fuji Factor - Among the major suppliers to the industry, Fuji was by far the most advanced in building quality relationships with its dealers. The key elements to Fuji’s success are as follows: A limited number of dealers Manufacture the highest quality products 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- dealers could easily reach out to the president of Fuji Trust

Alliances on the Internet This type of alliance have changed many industries in the ways of doing business Example: Sanook and eBay have alliance with each other to operate a co-branded site called “Sanook! Subsidiary”. The Thai language site is expected to be launch in approximately five to seven months.

Conclusion To conclude with this presentation there are many types of strategic alliances that we can choose to apply and make it fit to the business we are planning to do. There are still many different types of Strategic Alliances other than just what we have mentioned.