Chapter 13 Strategic Alliances

This week we will discuss Amazon and Strategic Alliances and non-equity alliances.

A strategic alliance occurs whenever two or more independent businesses cooperate in the development, manufacture, or sale of products or services. Strategic alliances can be part into three broad categories: non-equity alliances, equity alliances, and joint ventures.

Amazon uses non-equity alliances with cooperating firms that agree to collaborate to develop, manufacture, or sell products or services, but they do not take equity positions in each other or form a business unit to manage their cooperative efforts like  FedEx, UPS, and US postal services do to deliver their packages. These alliances have allowed Amazon to use their well-established technology in the e-Commerce space to generate profit as well as their other strategic objectives.

In Amazon’s case, Amazon uses all three agreements Licensing agreements (by which one firm allows others to sell products), supply agreements (by which one firm agrees to supply others), and distribution agreements (by which one firm agrees to distribute the products of others) are examples of non-equity strategic alliances. Amazon uses external resources aligning with its value chain. Affiliate marketing partners allow the seller to connect with the buyers. The Amazon Marketplace has enabled rivals of any size to use Amazon's online platform and technical capabilities to present their millions of books to millions of consumers, right next to similar products sold by Amazon itself. Amazon’s strategic alliances and non-equity alliances is a  key factor to there success.

Barney, J (2011). Gaining and Sustaining Competitive Advantage (4th ed). Upper Saddle River,    

   NJ: Pearson.