Laura Ashley Over the Last

Laura Ashley

Over the last several years, globalization has been having a profound impact upon the world of business. Part of the reason for this, is because of: the technological innovations and the increasing amounts of trade, have meant that a host of companies have streamlined their operations. As a result, many different corporations have begun to engage in variety of mergers and acquisitions, to improve their competitive advantages. A good example of this can be seen with the total number of mergers between 1990 and 1997. as, this number increased from: 11,300 in 1990 to 24,600 in 1997. (Scholte, 2000, pg. 127) This is significant, because it is showing how a number of companies (from a wide variety of industries) have been taking this kind of focus. In the case of Laura Ashley and Fed Ex, they engaged in a strategic alliance to: address the underlying weaknesses in both organizations. To fully understand the overall reasons for the partnership requires: examining the issues surrounding both companies and the advantages that this offered. Once this occurs, it will provide the greatest insights as to why a strategic alliance was chosen by these corporations.

The Issues Surrounding both Organizations

In 1992, a strategic alliance was announced between Laura Ashley and Fed Ex. At the time, Laura Ashley was dealing with profits margins that remained flat, despite sharp increases in sales from: 1986 to 1990. This was problematic, because it meant that the company was having a number of internal issues that would: affect productivity and their earnings. What happened was: Laura Ashley had grown too quickly and opened a wide variety of stores throughout Europe as well as North America. This reduced management's ability to: control their supply chain and their distributions system. At which point, no matter what kind of efforts were taken to increase profits, the underlying impact on the company was minimal. This forced managers to seek out some kind of organization that is a leader in global supply chain management / distribution systems. (Dornier, 1998, pp. 196 -- 205) ("The Laura Ashley Story," n.d.)

In the case of Fed Ex, they started a new division in 1987 called Business Logistic Services (BLS). They were a new entity that allowed larger companies to: outsource their global supply chain management needs. The problem was: that not as many businesses were reaching out to the BLS division (as the company had hoped). The reason why is because, most were not convinced about the shifts that were occurring in the economy. As many, were taking a wait and see approach, before making any kind of adjustments to their underlying business models. This was challenging, because it meant that Fed Ex was having trouble increasing sales to the new segment. At which point, executives became concerned that larger corporations were: not realizing the significant value that they could bring to their supply chain. (Dornier, 1998, pp. 196 -- 205) ("About Fed Ex," 1996)

The Advantages that the Strategic Partnership Offered

The strategic partnership offered a number of different benefits for Laura Ashley. The most notable include: it improved their supply chain management / distribution system and it reduced inefficiencies. The way that this improved the supply chain management / distribution system is that it outsourced these operations to Fed Ex. This helped Laura Ashley to address: various shortfalls and redundancies in their supply chain. Once this took place, it meant that the inefficiencies were reduced dramatically. As the new alliance, allowed executives to: have greater control over costs and what products are going to the various stores. This improved management's ability to adjust to shifts in: the economy or consumer tastes. What this is showing, is that Laura Ashley wanted to form this alliance with Fed Ex out of necessity. This is because they could immediately address a problem that has been affecting the company for several years. At which point, the overall profit margins can: increase and the underlying costs can begin to decrease. (Dornier, 1998, pp. 196 -- 205) ("The Laura Ashley Story," n.d.)

The advantages of merger for Fed Ex are: it allowed the company to market the BLS division to the retail sector. This helped executives to show a variety of organizations, how they could assist them in adapting to: the changes that are taking place in the economy. As they can serve as a one stop shop for: outsourcing all of the different logistical needs that a company may have. This is important, because it allowed Fed Ex to be able to make a shift from: being a global package delivery service. To an organization, that is vital part of a business' operations by: helping them to intelligently address their global supply chain issues. The partnership with Laura Ashley is one step that the company was taking to achieve this objective. as, the success of the strategy served as blue print in: determining how the different entities will adapt to the shifts that are taking place in the economy. (Dornier, 1998, pp. 196 -- 205) ("About Fed Ex," 1996)