By GARY M. STERN, FOR INVESTOR’S BUSINESS DAILY
Posted 10/11/2013 04:16 PM ET

In the pre-Internet days, companies rarely partnered with rivals. But in the post-Internet days, striking alliances with competitors has become a trend. Increasingly, competitors have become business partners rather than foes.

MasterCard (MA), for example, joined with foreign exchange provider Travelex in August to create a multi-currency prepaid overseas credit card in a win-win tie-up for both companies. Consumers can travel overseas with a credit card available in five currencies including euros, British pounds, Australian dollars and Japanese yen.

In the past, not all retailers accepted credit cards globally and sometimes clients were charged high conversion fees. But the new cards are easily reloadable and replaceable overseas, says MasterCard.

Travelex serves as the retail outlet selling the travel cards to consumers while MasterCard is the network where the transactions for these cards flow, says Seth Eisen, a MasterCard spokesperson.

In the fast-changing markets created by the Internet and digital technology, forming alliances with competitors can increasingly boost revenue and help lure clients. However, players must sidestep certain traps to ensure these deals don’t fall apart and terminate abruptly.

Partnerships for MasterCard make good business sense because “we believe financially it can be greater than the sum of its parts,” said Michael Weitzman, group executive of products and solutions for U.S. markets at Purchase, N.Y.-based MasterCard. “MasterCard wouldn’t have the reach, and Travelex wouldn’t have the access” without the team-up, he said.

A Bigger Whole
By combining forces, it strengthens the product and benefits customers. “We have 35.9 million MasterCard locations, and they bring distribution in 23 countries around the world including major airports,” Weitzman said. Customers arrive at an airport, deposit value on their prepaid cards in specific currencies, and get the ability to buy goods and services overseas.

Weitzman says that these prepaid cards operate like traveler’s checks and yield security and peace of mind. They carry anywhere from $25 to a maximum of $8,500. The card can be reloaded, and consumers can add up to $5,000 in any 24-hour time period.

“The problem in the past with charging overseas was currency conversion fees, which can add anywhere from 1% to 3% to the cost of doing business with your U.S. credit card,” said Christopher Elliott, author of “How to Be the World’s Smartest Traveler.” Foreign exchange conversion fees still apply with the new prepaid cards, but fees are lower. Consumers, moreover, don’t have to pay reload or transaction fees, though there are ATM fees.

For MasterCard, the prepaid card strengthens the brand globally. “Our secret sauce is to authorize, clear and settle transactions between 23,000 financial institutions and 3,500 merchants,” Weitzman said.

Travelex declined to answer questions about the benefits it reaps from the partnership. But Weitzman says it extends MasterCard’s reach to more customers overseas. And the alliance enables Travelex to extend revenue on conversions and partner with a global brand like MasterCard.

MasterCard not only strengthens bonds with customers through the partnership, it also boosts revenue. It earns fees from these transactions and spikes overseas revenue.

While some experts point out how these partnerships can go awry when parties try to end them, Weitzman doesn’t see many pitfalls in these agreements. MasterCard operates in a thriving business-to-business network, and this deal is one of many, he says.

MasterCard encourages alliances with a variety of partners. “By definition, we’re not a credit card, we’re not a debit card, we’re a network and we do valued-added processing. This partnership makes travel safer for our consumers, both in the U.S. and abroad, and provides value to merchants,” Weitzman said.

Partnerships between competitors are on the rise. “If companies can expand the market for both firms rather than taking away market share, you’re looking at a win-win,” said Larraine Segil, author of “Intellligent Business Alliances.”

Transparency Helps
The Internet is spurring these partnerships with rivals. “It’s hard to keep things secret and easier to know what competitors are doing,” Segil said. Hence, business alliances make more sense.

One partnership that worked effectively from 1998 until 2011 was Kraft Foods (KRFT) and Starbucks (SBUX). In 1998, Kraft, which sells Maxwell House coffee, agreed to distribute Starbucks’ premium blend in grocery aisles.

Segil says both companies prospered from the pact. Starbucks strengthened its reputation and gained supermarket distribution from Kraft Foods.

“Kraft gained an entrepreneurial kicker for an old-fashioned brand without pizazz and access to a younger, hipper market,” Segil said.
Segil describes MasterCard’s alliance with Travelex as another win-win. If customers face hurdles using their MasterCard overseas, it can damage its reputation and erode market share. Travelex, by smoothing the way for MasterCard users, boosts its cachet by its association with a larger competitor and expands revenue as well.

MasterCard’s customers also benefit by having an easier time using their credit card overseas. For customers, “It’s a seamless transaction; no denial of service and they can charge in francs,” said Segil.

But these alliances also carry some traps. Partners need to be fully explicit about what is being agreed to, what is being shared, and whether any information must be withheld. “If there are unmet expectations, it’s a formula for failure,” Segil said.

Hence, these agreements need to include a clear exit strategy describing when and how the partnership will end.

Read Article on Southwestern Law School Site

Dean Bryant Garth said, “Ms. Segil’s unique insight  and connections to the corporate, financial, legal and government arenas will greatly enhance our efforts toward the advancement of the law school, particularly in our strategic partnerships with the Drucker Graduate School and other institutions. We are delighted that she has agreed to expand her involvement with her alma mater as a member of the Board of Trustees.”

Now Partner Emerita, Ms. Segil was formerly owner and director of Vantage Partners, a privately held consulting firm with expertise in conflict resolution and building competency in both internal and external relationship management. Vantage Partners evolved out of the Harvard Project on Negotiation and acquired her firm The Lared Group in 2003. Ms. Segil has served Global 100 and Fortune 500 companies assisting them to create and manage their critical business relationships with suppliers, alliances, joint ventures or channel partners.  She is a member of the Board of Frontier Communications (NASDAQ: FTR), and the Advisory Board of Edgecast, a Content Delivery Network Company (CDN). Earlier in her career, Ms. Segil was Chief Executive Officer of an advanced materials company providing products and services to aerospace and electronics manufacturers worldwide. She co-founded a California Thrift and Loan company as well as a series of free-standing ambulatory care clinics providing medical services, and previously practiced international corporate law.

Ms. Segil is a member of the Board of the National Association of Corporate Directors (NACD) Southern California Section and served for many years on the Board of the Los Angeles Regional Technology Alliances (LARTA) representing 35,000 Southern California early stage technology companies. She is a member of the Governing Board and Chair-Elect of the Foundation Board of The Committee of 200, a global group of women CEOs. She also serves on the Board of Governors of Cedars Sinai Medical Center, and from 2009 to 2012 served on the UNICEF/UNDP/World Bank/World Health Organization (WHO) Tropical Diseases Special Advisory Group on Alliances (SAAG) in Geneva, Switzerland.

Ms. Segil is a Senior Research Fellow at the IC2 Institute at the University of Texas, Austin; serves on the Entrepreneurs Board for the UCLA Anderson School of Management; and has taught executive education at the California Institute of Technology for more than 24 years. She serves on the Advisory Board for the Southwestern-Drucker Graduate School of Management J.D./M.B.A. concurrent degree program, and as an Adjunct Associate Professor of Law at Southwestern, teaches a special course on The Business of Strategic Alliances for J.D./M.B.A. candidates. She established two endowment funds for scholarships for women managers in strategic alliances – for students in the Southwestern-Drucker J.D./M.B.A. Program and the Pepperdine Business School Presidential Key Executive MBA Program.

Recognized by The Financial Times Knowledge Dialogue Group and The Corporate Strategy Board as a thought leader in alliances, Ms. Segil is a regular commentator for CNN and CNBC, and presents keynote addresses on domestic and global alliances, mergers, and critical customer supplier, channel, and outsourcing relationships. She is the author of numerous books, including: Intelligent Business Alliances (Random House); Fast Alliances: Power Your E-Business (John Wiley); Dynamic Leader, Adaptive Organization (John Wiley); and Partnering – The New Face of Leadership (AMACOM). Her latest book, Measuring the Value of Partnering (AMACOM), was the first on Alliance Metrics. She has also authored a novel, published by Penguin Books.

Born in South Africa, Ms. Segil immigrated to the United States in 1974. In addition to her J.D. from Southwestern, Ms. Segil received her M.B.A. from the Presidential Key Executive Program at Pepperdine University and a B.A. with Honors in Latin and Classics from the University of Witwatersrand in Johannesburg, South Africa. She is a member of the California State Bar.

Dr. Robert G. Ridley, Director of the TDR, stated, “I am confident Ms. Segil’s expertise in developing and enhancing strategic alliances and partnerships will be of immense benefit to the new advisory group. During this global economic crisis it is especially important that we not lose sight of our moral and economic obligations to those in need.” Dr. Ridley added, “I look forward to her contributions and know they will help our organization improve stewardship, empowerment and research in neglected priorities.”

Larraine Segil joined the Frontier Communications Corporation Board of Directors in March 2005. She also serves on the Entrepreneurs Board of Advisors for the UCLA Anderson School of Management and on the Board of the Committee of 200, a global network of Women CEOs.

Ms. Segil holds the position of Partner Emeritus at Vantage Partners, a business strategy consulting firm with expertise in helping companies manage critical business relationships. From 2003 to 2006, Ms. Segil was a Partner of that firm. She has been a Senior Research Fellow at the IC2 Institute at the University of Texas at Austin since 1991.

Ms. Segil has authored seven business books including Intelligent Business Alliances, Fast Alliance, Dynamic Leader, Adaptive Organization and Measuring the Value of Partnering. Business Week and The Corporate Strategy Board have recognized her as an expert in Alliances. She is a regular commentator for CNN and CNBC on alliances, mergers and acquisitions.

Previously, Ms. Segil was Chief Executive Officer of an advanced materials company providing products and services to aerospace and electronics manufacturers. She has co-founded and run companies in mortgage banking and medical services, and previously practiced international corporate law.

Click below to read this article on Reuters

What are the benefits of strategic alliances in tough times?

* Immediate impact for short term, low investment projects to leverage resources of all partners (e.g. joint R&D, distribution, and licensing)
* Expansion of your human resources without increasing overhead by using the installed base, extended workforce, or globally distributed team of another company
* Suppliers and customers leveraging your products and services: cut your costs by removing duplication of service capabilities – let your supplier take on more turnkey activities so you can
keep core competencies in house (EX.: P&G)

You’ll learn how to demonstrate to senior management how mission critical alliances are as part of your company’s long and short term strategy, for top line growth and bottom line cost cutting, as well as how alliances fit into Enterprise Risk Management (ERM), a board level issue.

Strategic Alliances covers the new trend of multi-party innovation alliances for joint R&D and go-to-market product development.

For More Information Visit http://www.irc.caltech.edu/p-105-strategic-alliances.aspx

Larraine Segil will share some of her insights on ways to discover who the real decision makers are in an organization, how to get their buy-in, tools to support internal relationship analysis and ways to align the objectives of internal cross-functional teams with what is required for alliance success.

Agenda:
Thursday, December 4th, 2008
5:30 – 6:50 Food, Refreshments and Networking
7:00 – 8:00 Introduction and Presentation
8:00 – 8:15 Open Question and Answer Period
8:15 – 8:30 Board Announcements
8:30 – 8:45 Closing Remarks

Pricing:
ASAP Members (CDN$20.00)
CORE, PMAC Members (CDN$30.00)
Non-Member (CDN$40.00)
At the Door (CDN$45.00)

Location:
Microsoft MSN Offices
222 Bay Street,
12th Floor
Toronto, ON M5J 1A1

Contact:
Contact Name: Mark Walsh
E-mail Address: toronto-events AT strategic-alliances.org
Phone Number: 905-363-8935

Click Here to Register Now

Now for the results…..Architecture for the “Deals” courtesy of Larraine Segil and Caltech:

o Championed the business development and alliance strategy within the company for inter-departmental buy-in

o Researched and screened appropriate alliance opportunities

o Used Caltech tools to analyze alliance prospect styles and life-cycles for similar interests and complementary styles

o Selected and approached alliance prospects to determine capabilities and compatibility

o Defined objectives and formulated win-win strategies in order for each alliance prospect to recognize growth and profitability as a result of the alliance

o Negotiated MOUs/Agreements addressing flexibility, promoting communications, protecting IP, addressing conflict resolution, determining accountability, and allowing Legal Counsel necessary latitude, yet maintaining a simple, succinct document with which all parties were comfortable

Three “Deals” in seven months

#1 Feb 2008 – Entered into Private Label Agreement with member of our industry previously not marketing our product category:

2 Apr 2008 – Entered into Cross-Branding Agreement with a competitor

Three more “Deals” in process

#4 Aug 2008 – Have signed Agreement and developed Business Plan to use our engine in new product to be built by Alliance Partner

#5 Aug 2008 – Have signed Agreement and developed Business Plan to use our engine in new product to be built by Alliance

#6 Aug 2009 Have secured MOU for R&D outside our industry

An OEM Supply Agreement will close Aug 2009

New ideas spring forth for yet another Alliance when I review my Strategic Alliance Course notes. There is much going on and I’m having a blast thinking of new ways to confound the competition and keep everyone on their toes! “

“Thought Leader Super Sessions”

Back by popular demand! The Thought Leader Super Sessions are the highest rated new feature of the Annual Meeting!

Featuring 20 world-class, influential speakers, six more than last year, these sessions will inspire you to think differently about your future and to prepare for the opportunities ahead. Explore the leadership benefits of trust, how to create high-performing work environments, how to spark the ultimate membership experience, and much more!

Don’t miss this outstanding line-up!

Identifying the high-value business relationships that you can leverage with low cost and high return is a critical skill all association leaders need — and one that could take you to new horizons of innovation and growth. Who are these partners? They could be your members, your board, suppliers, customers, other associations, government organizations, or individuals within your own organization who struggle with internal cross-silo relationships. Must-have capabilities for association leadership include identifying which relationships are critical, creating sustainable business mechanisms that are flexible enough to withstand constant change, and terminating connections that have run their course. This highly interactive session will enable you to learn and apply management tools for immediate application to your important business relationships.

Larraine Segil, author of six books on alliances and partnering, teaches the leading executive education program on Partnering at CALTECH. She is internationally recognized as the world thought-leader in this area by the Financial Times.