Strategic Alliance

A strategic alliance is an agreement between two or more parties to pursue a set of agreed upon
objectives needed while remaining independent organizations. This form of cooperation lies between
mergers and acquisitions and organic growth.
RenaultNissan Alliance
RenaultNissan Alliance is a strategic Franco-Japanese partnership between automobile
manufacturers Renault, based in Paris, France, and Nissan, based in Yokohama, Japan, which together
sell more than one in 10 cars worldwide. The companies, which have been strategic partners since
1999, have nearly 450,000 employees and control eight major brands: Infiniti, Renault Samsung
Motors, Dacia, Datsun, Venucia and Lada, as well as Renault and Nissan themselves. The car group
sold 8.3 million cars worldwide in 2013, behind Toyota, General Motors, and Volkswagen for total
volume. The Alliance is the world's leading plug-in electric vehicle manufacturer, with global sales of
over 200,000 units delivered by early November 2014.

The strategic partnership between Renault and Nissan is not a merger or an acquisition. The two
companies are joined together through a cross-shareholding agreement. The structure was unique in
the auto industry during the 1990s consolidation trend and later served as a model for General Motors
and PSA Peugeot Citron, PSA Peugeot Citron and Mitsubishi, as well as Volkswagen and
Suzuki,though the latter combination failed.The Alliance itself has broadened its scope substantially,
forming additional partnerships with automakers including Germany's Daimler, China's Dongfeng
Motor, and Russia's AvtoVAZ.

The goal of the Alliance is to increase economies of scale for both Renault and Nissan without forcing
one company's identity to be consumed by the other's. The Alliance achieves scale and speeds time to
market by jointly developing engines, batteries, and other key components. For instance, Nissans
market share increases in Europe's competitive light commercial vehicle segment have been partly a
result of badging various Renault van models such as the Renault Kangoo/Nissan Kubistar, Renault
Master/Nissan Interstar, Renault Trafic/Nissan Primastar. In addition, Renault builds nearly all of the
diesel engines in Nissan cars sold in Europe. Nissan uses these engines to accelerate sales throughout
Europe, where it has already become the number one Asian brand in many key markets.

Collaboration between Renault and Nissan also focuses on capital-intensive research projects such as
sustainable, zero-emission transportation and development of automobile manufacturing in emerging
markets such as Brazil, Russia, and India. The Alliance also oversees purchasing for both companies,
ensuring larger volume and thus better pricing with suppliers. Renault and Nissan have also
consolidated logistics operations under the Alliance to reduce costs. The companies claim that they
generate more than 200 million per year by sharing warehouses, containers, shipping crates,
seagoing vessels and customs-related processing. In total, the Alliance reported more than 1.5 billion
in synergies in 2010.

The Alliance develops "best practices," borrowing systems and controls from one company to
strengthen the other company where appropriate. The "Nissan Production Way" became the

cornerstone of the "Systme de Production Renault" standard used by all Renault factories. Renault
reported productivity increasing by 15 percent due to the new system.
History of the Alliance
The RenaultNissan Alliance began 27 March 1999. At the time, the auto industry was in a period of
rapid consolidation. Numerous companies merged or were acquired in high-profile deals, most
notably Daimlers acquisition of Chrysler in 1998 (which dissolved in 2007, when the companies
separated).
At the time it was created, Renault bought 36.8 percent of Nissan's outstanding stock, and Nissan
vowed to buy into Renault when it was financially able. In 2001, after the company's turnaround from
near-bankruptcy, Nissan bought a 15 percent stake in Renault, which in turn increased its stake in
Nissan to 44.4 percent.
In 2002, the Alliance created the RenaultNissan BV (RNBV), a strategic management company to
oversee areas such as corporate governance between the two companies. Based in Amsterdam, it is
owned 50/50 by Renault and Nissan and provides a neutral location for the Alliance to exchange
ideas, build strategy and help leverage the maximum synergies between the two companies.
In 2006, the Alliance began exploratory talks with General Motors regarding the possibility of
creating an industrial alliance. The talks were instigated by GM minority shareholder Kirk Kerkorian.
GM reportedly demanded payment of several billion dollars to engage in an alliance, prompting
Ghosn to call the terms "contrary to the spirit of an alliance." Discussions ended without agreement in
October 2006, when Ghosn said, "It's clear the two sides have completely different appetites for an
alliance."
Since 2010, the Alliance has undertaken a number of projects as part of a strategic cooperation deal
the German Daimler AG company.
Benefits of their Synergy
Zero-emission vehicles
Daimler Strategic Cooperation
Able to enter previously unexplored markets such as:
USA
Brazil
Russia
India
China
Korea
Morocco

Joint Venture
A joint venture (JV) is a business agreement in which the parties agree to develop, for a finite time, a
new entity and new assets by contributing equity. They exercise control over the enterprise and
consequently share revenues, expenses and assets.

Joint Venture Example: Tata Teleservices (74%) and NTT DoCoMo (26%) got merged and started an
company called Tata Docomo.
Tata DOCOMO is an Indian cellular service provider on the GSM, CDMA and platform-arising out of
the strategic joint venture between Tata Teleservices and NTT Docomo in November 2008. It is the
country's sixth largest operator in terms of subscribers (including both GSM and CDMA).

History of the JV
Tata DOCOMO is part of the Indian conglomerate Tata Group. The company received the license to
operate GSM services in nineteen telecom circles and was allotted spectrum in eighteen of these
circles and launched GSM services on 24 June 2009. It began operations first in South India and
currently operates GSM services in eighteen of twenty two telecom circles. It has licences to operate
in Delhi but has not been allocated spectrum from the Government. Docomo provides services
throughout India. Tata DOCOMO offers both prepaid and postpaid cellular phone services. It has
become very popular with its one second pulse especially in semi-urban and rural areas.
On 5 November 2010, Tata DOCOMO became the first private sector telecom company to launch 3G
services in India. Tata DOCOMO had about 42.34 million users at the end of December 2010.
Rebranding
On 20 October 2011, the Tata Group brought its brands CDMA, GSM, Walky (Fixed Wireless
Phone), Photon, INTERNET under the Tata DOCOMO name. All subscribers to these services were
migrated to the Docomo brand on 20 October 2011. The companies other brands Virgin Mobile and
T24 are not part of the rebranding and continue to retain their names.
NTT DOCOMO exit
NTT DOCOMO announced on 25 April 2014 that they are going to sell 100% of their shares in Tata
DOCOMO to Tata Teleservices and exit Indian Telecom. The reason for exit is because of huge loss
of $1.3 billion.

Tata Starbucks Ltd

Tata Starbucks Ltd is a 50:50 joint venture company, owned by Starbucks Corporation and Tata
Global Beverages, that owns and operates Starbucks outlets in India. The outlets are branded
Starbucks "A Tata Alliance". Starbucks, through an agreement with Tata Coffee, serves coffee that is
100% locally sourced and roasted.
History
India's first Starbucks outlet in Elphinstone Building, Horniman Circle, Mumbai.
In January 2011, Starbucks Corporation and Tata Coffee announced plans to begin opening Starbucks
locations in India. Despite a false start in 2007, in January 2012 Starbucks finally announced a 50:50
joint venture with Tata Global Beverages, called Tata Starbucks Ltd., which would own and operate
outlets branded "Starbucks, A Tata Alliance". Starbucks had previously attempted to enter the Indian
market in 2007. Starbucks did not cite any reason for the withdrawal.

On 19 October 2012, Starbucks opened its first store in India, measuring 4500 sq ft in Elphinstone
Building, Horniman Circle, Mumbai. Starbucks expanded its presence to Delhi on 24 January 2013 by
opening 2 outlets at Terminal III of the Indira Gandhi International Airport, and later one in
Connaught Place. Tata Global Beverages announced in 2013 that they would have 50 locations by the
end of the year, with an investment of INR4 billion (US$63 million). However, the company would
open its 50th store in India only on 8 July 2014.

The third city of India to get a Starbucks outlet was Pune, where the company opened an outlet at
Koregaon Park, on 8 September 2013. Starbucks opened a 3,000-square-foot flagship store at
Koramangala, Bangalore on 22 November 2013, making it the fourth city to have an outlet. Starbucks
opened its first store in Chennai and 50th store in India on 8 July 2014.

StarbucksenteringintotheIndianmarketwillbeintheformof50/50jointventurewiththe
TATA Global
Beverages Group. Share prices of both companies soared following theannouncement of the pact.
This is the first time Starbucks is entering themarketwithalocalpartnerandwillbecobranding their
storesandproducts with their counterpart. The Indian outlets will be called Starbucks TATA Alliance.
The partnershipwillenableanexpandedrangeofbeverageofferingsforIndianconsumers.One of these
being the Starbuckss premium tea product Tazo that will be available in Indian outletsrenamedas
TATATazoTea.
Themajoradvantageof thealliancewillbe thattheknowledgeandunderstandingof theIndianmarketcanbe
broughtbyTATAGlobalBeverages.Enteringintoastrategicpactwiththeworldslargestintegratedcoffee
plantationcompanyshouldenable Starbucks to ensure sustainable profit growth in India. Also, TATA
Tea is the teamarketleaderwith 18.4% share.Starbuckswillalsobenefit fromTATAsexperiencein the
Indianmarketregardingdifferent tastesindifferentregions; thusmakingsureitoffers themostpreferable
blendofbothteaandcoffeetocustomers.
Apartfromproductandlocalpreferencesknowledge,StarbuckswillbenefitfromTATA
Globals
infrastructure.InIndia,thereisthechallengeofbalancinghigherrentalsandprofitabilitygiventhelackof
infrastructureinIndiaalongwithinflatingrealestateprices.Starbucksisastepaheadofcompetitorsduetotheir
alliancewithTATAGlobalGroup.
TATA
hasalocalknowledgeontherealestatemarketandtheyhave
opportunitiestoleveragetheircapabilitiesinthisarea.Starbuckswillbeabletouse
TATAscurrent
infrastructuretoeffectivelygrowthebusiness.
TATAGroupwillalsobenefitfromthepact.TATAsexperienceinretailingisnotsufficient
toopenacoffee
retailshopontheirown;so,byenteringinsuchalliancetheywillgainavastamountofknowledge.Also,TATA
GlobalBeveragesproducesbottledHimalayanwaterwhichmightbeofferedinStarbucksstoresaroundthe
world.Starbucks should also consider the possible disadvantages of such joint venture. Aftergaining
enoughknowledgeinretailingindustryandknowingtheIndianmarketbetter, TATA mightdecidetocompete
withStarbucksinsteadofworkingwiththem.Inaddition, potential conflictmight occur regarding the
strategy of theallianceand howit should bemanaged.
Suchjointventuresmightalsoaccruesignificantcostsofcontrolandcoordination; andontopofthat, profitis
sharedwithapartner.