“Gone (almost) are the days of a sole-source apparel contract as the National Football League announced today that it will debut a new lineup of partners beginning in the 2012 season.” (bizoffootball.com). Coming across the news article, Nike, New Era to Replace Reebok as Suppliers for NFL Official Apparel, making the above announcement, brought to mind some of the key points surrounding strategic alliances, which we have been discussing this week.
After a long relationship with Reebok, the NFL decided to sever that relationship and form new strategic alliances with multiple companies, giving the consumer variety and the power of choice. Beginning in April, 2012, the 7 major apparel partners of the NFL will be:
-Nike; official uniform provider, all on-field apparel supplier
-New Era; produce on-field headwear for sidelines and fans
-Under Armour; official sponsor of NFL scouting combine, outfit combine participants
-GIII; fan gear manufacturer (outerwear, lifestyle collections)
-VF; fan gear manufacturer (t-shirts, fleece)
-Outerstuff; NFL Youth apparel provider
-’47 Brand; produce fan headwear
(bizoffootball.com)
The question remains: what happened between the NFL and Reebok? Why was their relationship not able to stand the test of time? Without knowing the details of the separation, one can only speculate, but according to Kanter (2010), partnerships are destined to fail if they “fail to develop their company’s collaborative advantage.” (p.96). To define further, collaborative advantage is “a well-developed ability to create and sustain fruitful collaborations”. (Kanter, p.96). Perhaps Reebok and the NFL were unsuccessful in developing the human aspect of their relationship, concentrating primarily on the financial.
In making a broad move such as this one, proper research and analysis needs to take place to determine the viability and fit of the partnerships. According to Eric Grubaman, Executive Vice President of NFL Ventures and Business Operations, “we have spent considerable time the past few years evaluating our apparel business.” Kanter (2010) states that companies should look for the following criteria when deciding on strategic partners, and certainly the NFL had plenty of time since inking the deal with Reebok to do just that:
1) Self-analysis- “relationships get off to a good start when partners know themselves and their industry, when they have assessed changing industry conditions” (p.99)
2) Chemistry- “the feelings between [chief executives] that clinch or negate a relationship transcend business to include personal and social interests.” (p.100)
3) Compatibility- “potential partners must find compatibility in legacy, philosophy and desires, because specific opportunities are often short-lived and won’t sustain a long-term relationship.” (p.101)
Grubaman also states that “the new framework will provide fans with a wider breadth of merchandise from global category leaders in the sports licensed apparel industry.” This equates to value added, giving the consumer more variety.
One of the primary objectives of forming strategic alliances is to build new business. Although Nike and New Era will replace Reebok altogether as the official uniform provider of the NFL, and providing on-field apparel and headwear, the NFL is seeking to expand their operations with their existing relationship with Under Armour. Under Armour is currently the official sponsor of the NFL Scouting Combine and outfits combine participants, but beginning in 2012, they will expand their business by offering the sale of combine apparel, as well. This is a good example of Kanter’s (2010) statement that “[a business relationship’s] value includes the potential for a stream of opportunities.” (p.98). Moreover, this evidences Kanter’s (2010) point that “side deals can quickly become significant in a sustained relationship.” (p.101).
In conclusion, we can look at real examples of strategic alliances that did not last, as we saw with the NFL and Reebok, and determine what may have gone wrong. We can also study new relationships, analyzing why the companies chose to partner, and if it makes good business sense, applying the factors that are deemed necessary for successful strategic alliances.
References
Kanter, R. (2010). "Collaborative Advantage: The Art of Alliances."Harvard Business Review. pp. 1-16
Tetreault, Joe, Nike, New Era to Replace Reebok as Suppliers for NFL Official Apparel, October 12, 2010, retrieved from, http://bizoffootball.com, (accessed February 19, 2012)
Very interesting, Dawn. It would be great to hear more about what might have prompted the termination of this alliance. For example, Gulati (1998) distinguishes between natural and untimely deaths of alliances. Did you uncover any other details about this alliance that might indicate which was the case in the termination of the NFL/Reebok relationship?
ReplyDeleteYou note how the NFL has a number of different apparel partners. Do you think this constitutes an alliance network, like Gulati talks about? Why or why not?
Dawn, I think you brought up an interesting point of view. This week I have been focusing on how to create a successful alliance and had yet to consider the flip side of why some alliances disintegrate. I think it is noteworthy that not only did Reebok not withstand their partnership, but that they were replaced by multiple other companies. I can’t help but wonder what the NFL is gaining from the severance of the partnership. I think that your speculation that they failed to maintain the company’s competitive advantage is correct. I know you cited that the NFL is concerned with giving customers more variety, but from my experience major business moves are always motivated by the financials. So, if that it is their concern then it is only due to a revenue perspective. I definitely think that there is something to be learned from Reebok’s failed attempt to maintain their relationship with the NFL. Sometimes examining what went wrong can be just as useful, so I’d also be interested in finding out what initiated this separation.
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