Laura Ashley and Federal Express

1

• Laura Ashley and Federal Express
• Strategic Alliance

Team 1 Charlotte Chen Jessica Crane Dave
Christensen Emilio Fabico Beau Herman Shane Hunt
2
Background

• Laura Ashley (LA)
• 18 months of warehouse inventory
• Availability at 80 (Stock out 20)
• Outdated systems
• Extended lead times
• Multiple distribution contractors
• Delivery problems

3
Product Flows
4
Background

• FedEx
• Renowned for logistics expertise
• Systems
• Tracking
• Information
• Inventory management
• Desire to develop Pan-European business
• Transportation network / infrastructure
• European warehouse space

5
Strategic Alliance??

• Replace outdated LA systems with FedEx
• FedEx to manage all aspects of LA distribution
• FedEx gains entry into Europe and clothing
  business
• Develop / Promote new FedEx business model

YES !!!
6
Areas for Concern

• Length of Contract
• Financial Arrangement
• Leadership
• Contract Firmness

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Length of Contract

• Minimum of 10 years
• Pros
• Stability
• Eliminate the need for constant renegotiation
• Promotes trust
• Cons
• Too aggressive for a new business relationship
• Limited options

8
Length of Contract

• Alternatives
• 2 year trial agreement
• 5 year with a 5 year option
• Recommendation
• 5 year with a 5 year option

9
Financial Arrangement

• Cost plus
• LA pays
• Direct costs in managing logistics
• Freight
• Management fee (percentage of cost)

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Financial Arrangement

• Pro
• Simplicity
• Con
• Promotes inefficiency
• Recommendation
• Performance-based management fee

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Leadership

• Stability
• Success of alliance is heavily dependent upon
  leadership stability.
• Pros
• Maxmins level of determination
• Flexibilty
• Cons
• Any change may lead to challenges

12
Leadership

• Recommendation
• Succession plan - Implement a contract
  stipulation that accounts for the possibility of
  a change in leadership.

13
Contract Firmness

• Loose Contract
• Agree to agree philosophy
• Outcomes not clearly defined
• No penalties for failure to perform
• No incentives for performance

14
Contract Firmness

• Pros
• Flexibility
• Adaptability
• Encourages win-win atmosphere
• Empowerment
• Cons
• Lack of specific direction
• Lack of contingency plan
• No consistency in event of leadership change

15
Contract Firmness

• Recommendation
• Implement more structured contract
• Focus on length of contract, financial agreement,
  leadership issues
• Implement written incentives and penalty programs
• Provide contingency plan

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Conclusion

• Good fit for strategic alliance
• Implement recommendations
• A partnership is a marriage. No matter how
  positive, cooperative, and helpful the partners
  are at the start, it is essential that they see
  their relationship in the cold light of the
  practicalities. They have to look at it as if it
  doesnt work and walk through the consequences.

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• Questions???