1. MANAGING STRATEGIC ALLIANCES
AND CHANNEL PARTNERS
ANDREWS ADUGUDAA AKOLAA
February 2012

2. PRESENTATION OVERVIEW
 WHAT ARE STRATEGIC ALLIANCES AND
PARTNERSHIPS
 WHY ALLIANCES HAVE BECOME THE
NORM
 TYPES OF ALLAINCES
 WHAT BENEFITS DOES ALLIANCES
OFFER?
 SELECTING THE RIGHT ALLIANCE
PARNERS
 MANAGING ALLIANCES FOR SUCCESS
 STRATEGIC ALLIANCES, THE STARBUCKS

3. WHAT ARE STRATEGIC
ALLIANCES?
 Strategic alliances are voluntary
independent relationships,
collaborations and partnerships of firms
to develop and enhance business
operations for competitive advantage
(Gulati 1998)
 According to (Enrst 2004), By the turn
of this century, most large companies
had 20% of their assets and 30% of
their research funds tied in alliances of
one form or the other.

4. What are Alliances?
 Another research conducted by Partner
Alliances indicate that most CEOs(80%)
of fortune 1000 companies believe that
by 2008, 26% of their business
revenues will come from strategic
alliances.

5. So why are alliances becoming the
norm?
 Source of competiveness and firm
growth paths strategy
 Efficiency in management
 Innovation driver
 Knowledge pool for industry
 Valuable resource availability
 Market entry and penetration
mechanism

6. TYPE OF ALLIANCES
 THERE ARE TWO BASIC FORMS OF
ALLIANCES
1.HORIZONTAL INDUSTRY LEVEL
ALLIANCES
2. VERTICAL FIRM LEVEL INDUSTRY
ALLIANCES

7. HORIZONTAL INDUSTRY
ALLIANCES
 This refers to the collaborations and
network alliances between competitive
firms within a specific industry to
maximize the use of resources for
efficiency and to cooperate for
competitive advantage.
 Examples are the alliances in the airline
industry. Skyteam Alliance, The Star
alliance and one world that enable them
to operate globally in a coordinated
manner.

8. Vertical Firm Level Alliances
 The vertical firm level alliances are
partnerships, agreements,
collaborations signed with other value
system partners to deliver a service or
product competitively.
 They could be upstream, down stream
or horizontal alliances of strategic value
to the firm.(Rothaermel & Deeds 2006)
 They include;
Distribution agency, franchising, licensing,

9. WHAT BENEFITS DOES INDUSTRY
LEVEL ALLIANCES OFFER
 Collectivism in action
 Increasing economic and market power
 Increased balance of power to negotiate
 Operational resource sharing
 Reduced operational cost
 Organizational learning and knowledge
sharing
 Access to critical resources and
capability

10. WHAT BENEFITS DOES FIRM
LEVEL ALLIANCES OFFER
 Opportunity to enter new markets faster
and cheaper.
 Shared risk in business development
 Loyalty in operations
 Representation at low cost
 Provide timely relevant industry
information requirements for decisions.
 Provide key services that competitors
may not have access.

11. MANAGING ALLIANCES FOR
SUCCESS
 Many alliances have fail to meet
expectations and disintegrated within
shorts spans.
 According to research,30%-70% of
alliances do not deliver the benefits that
they purport to offer.
 Alliance termination rates exceed 50%.
 However empirical evidence indicate
that well managed alliances be it firm
level or industry level has created
competitive advantage for players

12. Managing Alliances for success
Shah & Swaminathan (2008) indicates 3
KEY success factors
1. Partner complementarity
2. Partner commitment
3. Partner compatibility or fit

13. Managing Alliances for success
The successful management of Alliances
must begin with the process leading to
the formation.
Schreiner, Kale & Corsten (2009) identify 3
phases
The formation, the design and post
formation phases
1. The selection of alliance partners must be
based on a robust criteria that matches
both parties.
2. There must be outcome commonality of

14. Managing Alliances for success
3. The agreement and statement of
articles that establishes the alliance
must be clear, concise and spell out
the responsibilities of each partner.
4. Each firm must build its capacity to
manage alliances.
5. Each partner must view the alliance
with a positive sense of importance

15. SELECTING THE RIGHT ALLIANCE
PARTNERS
INDUSTRY LEVEL ALLIANCES
 Size
 Facilities
 Resources
 Status
 Local identity
 Capabilities and competence

16. Selecting Alliance Partners
VERTICAL FIRM LEVEL ALLIANCES
 Distribution network
 Size
 Financial resources
 Sales force strength
 Image
 Logistics

17. Key success factors in Alliances
• Partner complementarity
Formation • Partner commitment
phase • Partner compatibility and
fit
• Contractual
Design & agreements
governance • Relationship
governance structures
• Use and type of coordination
Post mechanism
formation • Development of trust and
relational capital
• Conflict resolution mechanism

18. The Starbucks coffee experience
 These were firm level strategic alliances
developed to explore new products and
channel space for competitive
advantage across industry and markets.
 They worked successfully for Starbucks

19. STARBUCK EXPERIENCE-
Background
 Company founded in 1971, Seatle USA
 Designed an innovative way to sell
canned roasted coffee beans in a
specialty store.
 Company was taken over by Haward
Schultz in 1987 and introduced the
Italian style coffee bars ‘espresso coffee’
and currently operate over 9000 stores
in over 28 countries.

20. Starbuck experience-The
success!
 Starbuck net earnings was 391.7 million
in 2004 with a turnover of about
5.3billion. compared to 181.2 million net
earnings in 2001

21. Graph of net earnings
Starbucks Net Earnings 1992-2004
391.7
400
350
300 268.3
251
250
$M
200 181.2
150
101.6 94.5
100
57.4 68.6
42.1
50 26.1
4.5 8.3 10.2
0
year

22. International expansion
 September 1995 First Starbucks retail
store opened within an existing and newly
opened state-of-the-art Star Markets.
 October 1995 Signed an agreement with
SAZABY Inc., a Japanese retailer and
restaurateur, to form a joint-venture
partnership to develop Starbucks retail
stores in Japan. The joint venture was
called
Starbucks Coffee Japan, Ltd. The first store
opened in Tokyo in the summer of 1996
and marked Starbucks’ first retail

23. The star buck experience
 October 1995 A long-term joint venture
with Dreyer’s Grand Ice Cream was
formed to market a premium line of
coffee ice creams. Nationwide
distribution to leading grocery stores
occurred in the spring of 1996.
 November 1995 Formed a strategic
alliance with United Airlines to become
the exclusive coffee supplier on every
United flight.

24. The starbuck experience
 January 1996 The North American
Coffee Partnership was formed between
Pepsi-Cola and Starbucks New Venture
Company, a wholly-owned subsidiary of
Starbucks. The partnership announced
its plan to market a bottled version of
Starbucks’ Frappuccino beverage.

25. The starbucks experience
 February 1996 Formed an agreement
with Aramark Corp. to put licensed
operations at various locations marked
by Aramark. The first licensed location
opened in the end of 1996.
 September 1996 Introduced Double
Black Stout a new dark roasted malt
beer with the aromatic and flavorful
addition of coffee with the Redhook Ale
Brewery.

26. The starbucks experience
 October 1996 Formed an agreement
with U.S. Office Products Company, a
nationwide office products supplier to
corporate, commercial, and industrial
customers. The alliance will allow
Starbucks to distribute its fresh-roasted
coffee and related products to the
workplace through U.S. Office Products’
extensive North American channels.

27. The star buck experience
 1998 Formed a joint venture with Intel
Corporation. The venture will help push
Starbucks into the market of cybercafes.
 1998 Formed an alliance with eight
companies to enable the gift of over
320,000 new books for children through
the All Books for Children Holiday Book
Buy.

28. The star buck experience
 1998 Formed a joint venture with Mack
Johnson’s Johnson Development
Corporation to develop Starbucks
locations in underserved, inner-city
urban neighborhoods.
 1998 Formed long-term licensing
agreement with Kraft Foods to
accelerate growth of the Starbucks
brand into the grocery channel across
the United States.

29. The star buck experience
 1999 Acquired Portland, Oregon’s Tazo
Tea company and ‘‘Hear Music.’’
Formed alliance with Conservation
International for environmental friendly
coffee-growing procedures.

30. The Starbucks experience
 2001 Introduced Starbucks card.
 2004 Introduced in-store CD
burning, formed licensing agreement to
distribute Tazo Tea in U.S. grocery

31. The future of Starbucks
 To open 800 stores across the globe
2012
 To open 1500 Starbuck shops in
mainland China by 2015

32. Conclusion
 Although failure rates are said to be high
between 30%-70%, Alliances can be key
strategic tools if;
1. They are well cut out and engineered
with the right focus
2. If the step approach is adopted to
ensure clarity
3. If partners are committed to the
outcomes
4. If the governance structure is spelt out

33. Conclusion
 If the partners benefits mutually form the
alliance
 If resource and organizational
knowledge is spread across the partners
 If there Equity and fairness in the
processes involved in setting up the
alliance.

34. References
 Ernst, D. (2004). Envisioning collaboration. In J. Bamford,B. Gomes-Casseres, & M.
Robinson (Eds.), Mastering alliance strategies. San Francisco: Jossey-Bass.
 Gulati, R. (1998). Alliances and networks. Strategic Management Journal, 19(4), 293–317.
 Schreiner, M., Kale, P., & Corsten, D. (2009). What really is alliance management capability
and how does it impact alliance outcomes and success? Strategic Management Journal.
 Rothaermela, F.T, Deeds D.L.(2006). Journal of Business journal vol. 21
 Shah, R., & Swaminathan, V. (2008). Factors influencing partner selection in strategic
alliances: The moderating role of alliance context. Strategic Management Journal,29(5), 471–
494.