Customer Relationship Management

Customer relationship management (CRM) helps businesses to gain an insight into the
behavior of their customers and modify their business operations to guarantee that
customers are served in the most ideal manner. It manages the company’s relationships
and interactions with customers and potential customers. The objective is to improve
business connections through being associated with customers as it prompts the
organization's profitability improvement, reduce expenses and increment customer
loyalty. The CRM philosophy is “Put the customer first” since when your business takes
a look at each exchange through the eyes of the customer, you can't resist the urge to
convey a better customer experience, which thusly builds steadfastness to your
business. In view of the information, 86% of customers are eager to pay more for better
customer experience, that is the reason Customer Relationship Management is
exceptionally significant for a business to develop.
Case Study
Starbucks Corporation and Nestlé S.A. agreed to venture into a strategic alliance where
they have undertaken a mutually beneficial project while each of them retains their
independence. They have undertaken strategic alliance since they have certain
objectives that neither of them would have the option to accomplish all alone. Starbucks
Corporation was looking at approaches to distribute its products globally while Nestlé
S.A. was looking at expanding its presence and appeal in the US Market. The alliance
benefits for both companies were Starbucks gained a global presence and Nestlé
reached more consumers. They made a great decision in undertaking strategic alliance
as they gained economic advantage and competitive advantage, having reduced costs
and risks of distribution and joining rivals for collaboration rather than competition.
The partnership benefits for the two organizations were Starbucks increased a
worldwide nearness and Nestlé arrived at more shoppers. They settled on an
extraordinary choice in the embraced key union as they increased financial favorable
position and upper hand, having decreased expenses and dangers of conveyance and
joining adversaries for collaboration rather than rivalry.
A second category is economic advantage. You can reduce costs and risks by
distributing them across the members of the alliance. You can also obtain greater
economies of scale in an alliance, as production volume can increase, causing the cost
per unit to decline. Finally, you and your partners can take advantage of co-
specialization, where you bundle your specializations together, creating additional
value, such as when a leading computer manufacturer bundles its desktop with a
leading monitor manufacturer's monitor.

Another category includes strategic advantages. You may join with your rivals to
cooperate instead of compete. You can also create alliances to create vertical
integration where your partners are part of your supply chain. Strategic alliances may
also be useful to create a competitive advantage by the pooling of resources and skills.
This may also help with future business opportunities and the development of new
products and technologies. Strategic alliances may also be used to get access to new
technologies or to pursue joint research and development.
The case is about the strategic alliance between US-based food and beverage company Starbucks
Corporation (Starbucks) and Switzerland-based food company Nestlé S.A. (Nestlé), which gave Nestlé
the perpetual rights to sell the packaged food products of Starbucks globally. Through this association,
the two companies would work closely together on innovation and on marketing Starbucks’ products
globally.

Starbucks was looking at ways to distribute its products globally, but did not have the capabilities to
do so on its own. Developing a new distribution system was not a cost effective solution. Earlier, the
company had entered into a partnership with Kraft Heinz to market its products, but it later called off
the deal alleging that Kraft had mishandled the distribution. Nestlé was looking at expanding its
presence and appeal in the US market, where it’s Nespresso was facing competition from several
players.

The market for coffee in the US had been experiencing constant growth, and taking advantage of this,
JAB, a Germany-based company, was consolidating its position in the coffee market through
acquisitions. Nestlé was facing huge competition from JAB too. It was also looking at resonating with
younger consumers, and coffee was one of its key strategic areas. The alliance was expected to
benefit both companies, with Starbucks gaining a global presence and Nestlé reaching more
consumers.

Nestlé paid US$ 7.15 billion to obtain the rights to market and distribute Starbucks packaged coffee
and tea globally. It remained to be seen what the deal would bring for both the companies.

Understand the possible advantages of strategic alliances.

Assess the future prospects of the alliance in light of the rapidly changing external environment.

Critically analyze the key factors that would influence the success of an alliance.
The strategic partners maintain their status as independent and separate entities, share
the benefits and control over the partnership, and continue to make contributions to the
alliance until it is terminated.