Pros & Cons of the strategic alliance - LA BC - ISC

Of this Alliance. Pros and cons of this alliance setup.

So first general alliance, what is attributed. And then for each individual company in case there is extra

Information exchange
Profit increase
Experience
Win-win business strategy for LA and BLS
If LA agreed to pick up the capital costs of an improvment project, the benefits, for the most part, would be split by the two parties
Contract lenght (10 years)
- Min 10 years contract allows for stability
- No need for constant renegotiation
- Promotes trust
Cost structure - LA pays direct cost + fee
- Simplicity

How much “trust” they’re putting on trust.
Loose structure of the alliance
Contract doesn't have specific values, only formulas --> things can change a lot over time
Both have opened themselves to future legal issues
- What if top management changes
Cost structure - LA pays direct cost + fee
- Promotes inefficiencies
Lack of specific direction

Information
Access to new market: A strategic alliance could provide LA with access to new markets, particularly in regions where it lacks a strong presence.
Reduced cost(fix cost become variable cost & marginal cost decreased)
Focus more resources on core business
Is it reducing their capital? Authoritative distribution to BLS?
BLS takes weight off LA
Capital savings
Improved costumer service level
Lower cost distribution
Avoided LA to rewrite their whole system from scratch on their own
Simpler distribution sheme
LA distribution employees can work in a company that specializes in wha they do
LA distribution employees have access to better training
Resupply shops in under 48h
Access to new systems in compressed time frame
New ways of doing business
Improved performance
Positive momentum from the alliance helped gain investors confidence

Will be affected by the BLS&FEDEX strike & their service quality
Lack of supply chain control and reliance on outsourcing parties
Uncertainty about costs(delivery cost will effect by many aspects & if someday have a cheaper way to deliver the long-term alliance will prevent to reduce cost)
BLS could say bye bye we are good.
Loss of control: Entering a strategic alliance inherently involves relinquishing some degree of control over decision making
- Selling the whole distribution department to BLS
No penalties if BLS misses service --> low accountability
Total failure if BLS dies

Enter to European market
Enter clothing business
Utilise existing international loading capacity
Establish themselves as a global business
Learning about close connection with company
Define its business in an area with tremendous future growth potential
They could show that FedEx-BLS was the only company capable of providing a tailored global solution
Leverage the idea of global partenr to other costumers
Pilot project and understand results