Strategic Alliances in Market Entry

IBM-204 (Market Entry & Distribution)

Assignment – 2

Strategic Alliances

Name Student ID

Arkin Bhatnagar 0744080

Gurvinder Singh Toor 0742180

Adityarajsinh Chudasama 0739205

Mohammed Saeed Azam 0743271

Tarang Mistry 0739162

Two Companies in Strategic Partnership

Spotify and Uber

Table of Contents:

TOC h u z Strategic Alliance Overview : PAGEREF _1i024fogzb0a h 3

Company Background Of Spotify : PAGEREF _8ussrle82zm8 h 4

Who they are? : PAGEREF _axyyuacah9cp h 4

What do they do? : PAGEREF _ixppv52tk4r6 h 4

Customers : PAGEREF _bodj8vky3x1u h 4

Proprietary technology : PAGEREF _97qp02rk70bz h 4

Geography and sector market : PAGEREF _hatrrogs14bq h 5

Company Background Of Uber : PAGEREF _1jsuai5gdm88 h 6

Who they are? : PAGEREF _66b8n5h24v1b h 6

What do they do? : PAGEREF _lhbyxgil64xq h 6

Customers : PAGEREF _3ndcvw9oz44b h 6

Proprietary technology : PAGEREF _z68xpc6y4khu h 6

Geography and sector market : PAGEREF _esvsl5qeheqw h 7

Type Of Alliance : PAGEREF _femrld2k6jk0 h 8

Strategic alliance : PAGEREF _tj4a0ue5oqnl h 8

Formation and merger : PAGEREF _q468xp8hv806 h 8

Agreement includes : PAGEREF _xxzesp6pu6z4 h 8

Reasons For Alliance : PAGEREF _vwvnboea5ibp h 10

Advantages And Disadvantages Of Strategic Alliances : PAGEREF _enchzaugkgfe h 11

Advantages: PAGEREF _yfffaa2uaabm h 11

Disadvantages: PAGEREF _lzaqtnqb7fhq h 12

References: PAGEREF _8kcc9bild3oc h 13

Strategic Alliance Overview:

Uber CEO Travis Kalanick and Spotify CEO Daniel Ek announced a partnership in November 21, 2014.

Uber users who have Spotify premium accounts will be able to listen to their Spotify playlist this will be launched in ten launch cities: New York City, Mexico City, San Francisco, Singapore, Stockholm, Sydney, Toronto, London, Los Angeles and Nashville.

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Uber users can connect their Spotify accounts when hailing an Uber, select a playlist their own or any Spotify suggested playlist and have their favorite music playing when they sit inside the uber car

How it works:

Once the user connects to the uber app with connected music, the customer sees the music bar at the bottom of the uber app screen.

User must sign up or log into an existing Pandora or Spotify Premium account.

If the customer has Spotify Premium, the music will pick up from where the customer last left off. If the uber driver is using Pandora, customer will be warned.

User chooses a song or playlist. Music will start when uber ride trip begins.

If the customer wants to skip or change a song, they can do so right from the Uber app.

Company Background of Spotify:

Who they are?:Spotify was established in 2006 by Daniel Ek and Martin Lorentzon in Sweden. Currently, the headquarter of this company is in London. This is a music streaming company which provides prompt access to songs on people’s phones, computers, and tablet. They also allow searching through the music collection of friends, artist and well-known persons.

What do they do?:Spotify makes equipment like Spotify web API which helps people to collect information from the music catalog and maintain user’s playlist and saved music. They also grant their users to share their music files to their nears and dears through different electronic mediums such as Email, Facebook, Twitter and Spotify itself.

Customers:

Spotify declared that in the entire world more than 100 million users pay for Spotify premium. This company has achieved a milestone by growing paid subscribers by 32-percent every year. They are also having around 217 million active monthly users. This company is a very close competitor of Apple music and according to the wall street journal apple had 28 and Spotify had 26 million subscribers at the beginning of April.

Proprietary technology:

One of the key elements of Spotify is the streaming protocol. The information data is compressed as much as possible and transferred in an efficient way that reduces the strain on the network while still preserving quality. Spotify relies on peer-to-peer networking. Also, it uses its own proprietary streaming protocol to achieve such a seamless experience.

Geography and sector market:

Spotify has spread in the entire world as this company has their workstation across Canada, Germany, and Belgium. Mexico, Hong Kong, Singapore, the UK, the US, Poland, Norway, France, Italy, Finland, Spain and Denmark.

Company Background of Uber:

Who they are?:Uber was founded by American entrepreneur Travis Kalanick on August 6, 1976, Los Angeles, California, U.S. Uber work is based on to provide transportation to their users to page freelance drivers of privately-owned vehicles via smartphones.

This company also provide their services in food delivery and bicycle sharing system. Uber has an operation in 785 metropolitan areas at the global level and its platforms can be used via its website and apps.

What do they do?:Uber company is the provider of ride-hailing services. They have developed apps and websites so their customers can access from any corner of the world. This company provides compact, sedan and SUV cars for riders. Uber also provides some other services as well such as freight, food delivery, Logistics services, and daily transporting services

Customers:

This company has a strong customer base and excellent capacity to generate revenues of US$11,367 Million for the fiscal year ended December 2018 an increase of 43.3% over FY 2017. The operating profit of the company was US$33 million in FY 2018 and revenues of US$3099 million for the first quarter ended March 2019, an increase of 19.9% over the previous Quarter.

Proprietary technology:

Uber is an innovative technology company with a proprietary technology application the “Uber App” that gives on-request lead generation and related services. The Uber app connects uber drivers with requests from riders requesting the Uber app. Drivers provide taxi services to riders the prices of the rides are based on vehicle type and/or the number of riders. The uber company has expanded to deliver food and packages the app is called “UberEATS”.

Geography and sector market:

Uber is very well known in the world for their best and prominent services in the world and this company works in several cities of the different countries in places like the Americas, Europe, Middle East, Africa, and Asia-pacific.

Type of Alliance:

Strategic alliance:

The alliance does not form a new firm or a company while the partners have the right to perform individually. Formation of the alliance is to develop the company with the help of another company which took both towards a good profit and a large market. In order to benefit both the company Uber and Spotify merged independently in the form of a strategic alliance by sharing their expertise, knowledge, and skills to enlarge their profit and value. Strategic alliance cooperation helps a company to enter new markets.

To form a strategic alliance a company has to go through three major steps.

– Strategy development

– Partner assessment

– Contract negotiations

Formation and merger:

To create successful alliance legal agreements are the key factor which is a must for the formation. Also making consideration for risk and reward will motivate both to make a good and continuous relationship. Final steps include

– Governance, integration, and control

– A win-win analysis is signed where both the companies are going to benefit from each other

– Organizational structure and support

Agreement includes:

– Mutual Promotion

– Term of the contract

– Coordination

– Relationship of parties

– Intellectual property

– Confidential information which includes limitations

– Non-solicitation of personnel

– Remedies

– Indemnification

– Miscellaneous provisions

Reasons for Alliance:

Reasons why these Spotify and Uber have entered their alliance:

Spotify is a music streaming app and Uber is a ride-hailing app. Both these brands come together as they share the same types of goals. Customers are given a nice option to create their own music or songs list as they are waiting for their ride and then enjoy this list if they take the ride.

Two brands come together to share the expertise, profit and provide an innovative product to the customer.

Uber and Spotify make a Strategic alliance to increase the demand, overall profit and widen the customer base.

They come together to attract more and more customers to choose their products and services.

Advantages and Disadvantages Of Strategic Alliances:

Advantages:

The main advantage that uber and Spotify strategic alliance has increased the subscriber which had a huge impact on the profitability of both the companies and encourage both the app user.

Millions of uber users are encouraged to pay for the Spotify premium.

Spotify users felt the need to upgrade to their premium services and encourage the users to use uber as they could personalize their mode of travel, unlike the city taxis services.

Not all general taxis will have an aux cord giving the opportunity to UBER drivers to increase their customers by providing the personalization or customize music which interests the customer’s choice.

UBER and Spotify expanded aggressively, which led to brand loyalty and gained popularity with other alliances like AMEX, TOYOTA, PAYPAL building a WIN-WIN situation in a business alliance.

Disadvantages:

Cultural and language barriers:

Cultural barriers in a strategic alliance can be very harmful to a business to grow. These are language, egos, different attitudes. The difference in language can result in delay and frustration among the members of the team.

Uneven Alliances:

Uneven alliances may occur if there is an unequal distribution of power within

the alliances. In this condition, the weaker one has to follow or compelled to act

as per the guidelines provided by the stronger one, even if it is actually not

willing to do so.

Lack of Trust:

This may occur if both the partners do not trust each other. This may result in

a loss in the business.

Damage to Goodwill:

This may in if one of the members of the alliance is having bad

reputation in the market they are doing their business, then this will damage

the reputation of the other company too.

Differences in Management Styles:

The difference in management occurs if both the organization may have different managerial techniques.

References:

Shontell, A. (2014, November) Uber’s big new partnership with Spotify is the first of many ways it will personalize rides for users. Retrieved July 6, 2019 from

Ormseth, H.(2016, September)Your Ride, Your Music .Retrieved July 6,2019 from

Uber Technologies Inc. (n.d.). Retrieved July 6, 2019 from

Hollar, S. (2018). Travis Kalanick information retrieved July 6, 2019 from

Spotify (n.d.). Information retrieved July 6, 2019 from

Porter, J. (2019). Spotify is first to 100 million paid subscribers. Retrieved July 6, 2019 from information for uber retrieved July 6, 2019 from

Irvine, M. (2013). Proprietary information for Spotify retrieved July 6, 2019 from