Strategic alliance

This essay is a study on Laura Ashley's strategic alliance with BLS and pertinent issue that arise from such an alliance. Issues are discussed in several aspects at strategic and managerial level. The essay begins with an analysis on strategic and operational issues, particularly LA's existing problems such as complicated organization structure, disrupted information flow, and lack of coordination among functional departments.

It examines the role of logistics information system in reducing overall costs and delivering superior service levels in a cost-efficient manner to end customers. Through analyzing the nature of the strategic partnership of LA and BLS, which is an integrated contract logistics that incorporates both the physical service and the managerial functions under contractual terms, it argues that this partnership is designed to focus and develop the values of LA and BLS through leveraging their core competencies.

The essay offers recommendations and rationale for LA based on the recognition of its strengths and weakness. It argues that LA should maintain a long-term relationship with BLS to create more values, improve its inbound logistics management and supervise its outbound logistics systems for potential risks. Laura Ashley (LA), a global clothing and furnishings retailer based in the United Kingdom, identified a series of problems in its distribution and warehousing operation systems Read More Here.

To solve these problems, LA decided to form a strategic alliance with Business Logistics Service ("BLS"), which is created by logistics leader Federal Express. In the first section, strategic and operational issues are discussed. Then, the role of information and communication technologies is analyzed. In the third and fourth sections, the nature and scope of inter-organizational relationships and the creation of 'value' through leveraging of "core competencies' are examined respectively.

In the last section, we put forward some recommendations and rationale regarding the future directions for LA; also, we point out the potential ramifications. Firstly, LA's overcomplicated management structure was characterized by its excessive management layers and pyramidal reporting system. A series of vertical hierarchy in this system triplicated its functions and systems and blocked communications in different branches. Such structural weakness is also reflected from LA's excessive repetition in the product line.

Secondly, LA's financial problems that emerged in late eighties were highlighted by significant currency exposure, working capital intensity, excessive short-term debt, and rapid cash outflow. These problems strained the management of LA's business. Thirdly, LA's branding maintenance was weak. The brand had not grown with its traditional customer base; its local market share was less than 6% of its range; less than 5% of LA's range was common to all stores and operations worldwide.

In addition, simplicity of product could not cover wider range of customers. It is a sign of losing sight of customers' real wishes and lifestyles, as well as LA's heritage. Fourthly, LA' information systems designed to serve independent business units. Duplicate systems caused LA to spend twice the industry average on systems in 1990. It also influenced business transparency, customer service and operational efficiency. Information technology investments were also inadequate and lagged growth.