ere the other begins, and which are part of the strategic alliance. Under a strategic alliance agreement, companies agree to implement mutual dependencies in order to receive mutual gain. In the case of Laura Ashley and FedEx, the clothing manufacturer agreed to use FedEx's distribution system, giving up control of the process internally, and FedEx became highly dependent on a single customer. The benefit to Laura Ashley was that the company was in a position to significantly reduce its distribution costs while also significantly improving the process. FedEx gained a highly visible and profitable customer which would help it establish itself as a strong participant in this market.
Because licensing, joint ventures and strategic alliance arrangements have unique advantages and disadvantages, there is no one transactional strategy which is always most appropriate over the others. Instead, companies considering entering foreign markets must consider their own strengths and weaknesses, the reasons they are entering the foreign market, and the strengths and weaknesses of potential partners in that market. Only then can the company determine whether licensing, joint venture or strategic alliance is the best solution.
Licensing can be most appropriate when the company in question wants to sell or distribute its products abroad, but does not want to get bogged down in the administrative difficulties which often accompany exporting. Licensing transfers the marketing of goods to the licensee, although the licensor may well provide some resources in this area. Licensing also requires that the product or service being licensed have some recognized value in the destination country or there would be little value in the foreign company agreeing to be a licensee. In this way Coca-Cola can license
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