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Starbucks Strategic Alliances

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Strategic Alliance is an agreement that commits two or more companies to share their resources to develop joint new business opportunities.[1] There are four types of strategic alliances namely, long term contracts, networks, minority ownership and joint ventures. Amongst these merger and takeover happens to be the most formal strategy. A common reason for entering into a strategic alliance is to obtain the advantage of another company’s innovations and resources without having to invest in new research and development. Starbucks Corporation utilizes these alliances to expand its market reach, improve product image and to increase the company’s profitability, mainly because strategic alliances are cost effective.

Starbucks Corporation is …show more content…

2) In 1996, an alliance between Starbucks and PepsiCo led to the creation of the popular coffee-flavoured drink, Frappacino. This relationship moved Starbucks into the bottled-beverage market while PepsiCo gained an innovative product with a well-branded partner. Each company met their strategic and operational …show more content…

Tata Coffee is the biggest supplier of Arabica Coffee; so this agreement would help Tata sell its coffee and Tazo tea in the Indian markets while Starbuck will have a continuous supply of coffee from Tata.
4) Come to a realistic agreement on the time to market and corporate expectations
Starbucks decided to enter the bottled segment at the right time by joining hands with PepsiCo and introducing Frappacino. Starbuck was able to enter a different market than its usual coffee mugs and PepsiCo got a new innovation.
5) Mutual, flexible commitment on what’s appropriate to change, measure and share within each partner’s culture
The alliance with Barnes & Nobles bookstore lead to boosting the culture of drinking coffee while reading a book. Nowadays each Barnes & Nobles bookstore is having a small coffee shop selling Starbucks coffee.

Limitations:
1) Compromised Quality- There is always a doubt about the quality of Starbucks coffee considering that it has invested heavily in its diversification. To keep a consistency in its quality Starbucks develops a long term relationship with its vendors and suppliers rather than buying coffee from the lowest cost provider. A long procedure is followed to select a supplier and is treated as an employee of

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