Laura Ashley and Federal Express Strategic Alliance
Before its alliance with Federal Express's Business Logistics Services Division, the global retailer displayed a number of pronounced business problems. In addition to problems such as excessive short-term debt and distribution costs, other problems entailed management and it inadequacies. The basic problem that manifests all the other inadequacies is the fact that the company's overall structure was not only inadequate, but also overcomplicated. The strategic alliance with Federal Express is designed to focus on the specific problem areas in the company, while enhancing the positive and customer-centered ideology of LA.
The most beneficial part of the unusually loose structure of the alliance is the fact that both companies have room for growth, while problems are eliminated. By letting BLS take over areas such as distribution and management structure, LA for example has the benefit of lower costs and funds to invest in other areas. Customer service, one of the company's fundamentally important ideological areas, can for example receive greater attention. Creative opportunities such as the company's mail order service also benefits from the lower costs as a result of a simpler management and distribution structure.
The benefit to BLS also lies in an enhancement of opportunities. By creating a better business structure for Laura Ashley, BLS is advertised as a globally recognized logistics service. The company then has also opened itself up for business partnerships with other global companies. The potential benefit for both companies then appear to outweigh the risk of failure. Furthermore the loose structure of the agreement reduces risk, as there is room for change, enhancement and growth based on mutual trust and benefit.
If the alliance proves successful, it is an advertisement for both companies, and also for the groundbreaking paradigm of loose-structured business agreements. It could be the beginning of a new age for strategic business worldwide.
Source
Loveman, Gary & Anthony, Robert T. "Laura Ashley and Federal Express Strategic Alliance." Boston: Harvard Business School Publishing, Oct 8, 1992. Rev. Dec 4, 1996.
