European dairy firms face intensified competition and continuously new challenges raised by
a more dynamic business environment. Many important market players affect the dairy
business environment; retailers are subject to structural changes as they are internationalizing
and consolidating, food service is a fast growing sector, consumer demand is shifting and
changes in the agricultural policy will influence future strategies. To be able to handle all
business environmental issues simultaneously firms can benefit from co-operating with
others. The top 15 dairies in Europe have initiated more than 200 strategic alliances over the
last four years. In this thesis six types of strategic alliances are accounted for; mergers,
acquisitions, joint ventures, shares, licensing agreements and general/unspecified co-operating
agreements. These types differ in terms of financial and resource integration.
The aim of this study is to assess possible choices of alliance formation in the European dairy
industry with special reference to Arla Foods and a few of its main competitors. Firms embark
into alliances with the aim of supplementing each other’s set of resources. To examine these
firms’ possibilities in the strategic alliance activities the resource-based theory is applied. Arla
Foods, Friesland Coberco, Campina (cooperatives) and Danone (IOF), are subject to this
study. The three cooperatives have internal disparities when it comes to organizational and
financial structure, and apparently, this has implications for their respective choices of
strategic alliances.
Motives, strategic fit and resources held by firms are important variables when examining the
phenomenon of strategic alliances, and differences can be distinguished between firms
regarding these factors. Different motives evoke strategic alliances, like international
expansion, further penetration on markets where the firms are already present and to
strengthen product portfolios. Different motives advocate different types of alliances, so
depending on a firm’s strategy different types of alliances are more or less appropriate. Other
reasons why a firm chooses a certain type of alliance is its ability to take risks and its ability
to raise necessary financial means. Strategic fit between two allying firms are of substantial
importance if the level of resource or financial integration is high as in the cases of mergers
and acquisitions. What kind of resources a firm holds is elementary in these matters.
Attractive resources send signals to potential partners. Looking at the resources contributed in
different alliances formed by the firms in this study it is obvious that financial resources are
the far most important.
Arla Foods has taken a leading role in the strategic alliance activities in the dairy industry,
forming many alliances utilizing the whole range of alliance types. Arla Foods diverge from
Friesland Coberco and Campina to the extent that it has no allocated capital (owned
individually by the members). Friesland Coberco and Campina both have cooperative forms
that allow them to raise financial means either from members, in Campina’s case, or from
external investors, in Friesland Coberco’s case, which makes them able to form allianc...
