"Flops and Flourishes of High-Tech Alliances", Dave Raphael, Marcar Management Institute of America, Inc. October 8, 1996 AA + BA = Oh Oh? says The Economist. Many alliances such as the proposed American Airlines - British Airways alliance are controversial. Raphael discussed and rated the following alliances using a green "flourish" as doing better than average, a red "flop"" worse than the average high-tech alliance, and a yellow "warning" as an alliance in trouble. British Airways and American Airlines Hard factors = WARNING Soft factors = FLOP British Airways and USAir Hard factors = FLOP Soft factors = WARNING Netscape and America Online Hard factors = FLOP Soft factors = WARNING Disney and Mattel Hard factors = FLOURISH Soft factors = WARNING Fuji Photo and Xerox Hard factors = WARNING Soft factors = FLOURISH Coca Cola and McDonalds Hard factors = FLOURISH Soft factors = FLOURISH Raphael discussed two alliance models. One is a "converging alliance" that creates more value than "pure play alliances." He gave the example of the SABRE converging alliance that is estimated at $31 billion, per a forthcoming IPO. This valuation is about 4 times the market value for its parent, American Airlines. Another alliance model is adapted from "Inside the Tornado" discussed by C. Monroe in his book of that title. Raphael says that Netscape used TCI and Kleiner Perkins in the early market phase of the technology adaptation curve. He said that Netscape is partnering with America Online during the tornado phase. Netscape is likely to find new partners as the market matures and new products appear in the early market cycle of growth. Raphael said the customer alliance was the most effective. It has less conflict and more benefit for both partners than most other types. The rationale for high-tech alliances depends on where they are in the growth cycle. For example, in the start-up phase, there is a need for high-tech and financial partners. In the growth phase, firms need partners that can meet pragmatic customer needs. In the maturity phase, they need partners that excel in distribution and aggressive marketing.