International Strategic Alliance in Aviation Sector - Oneworld

This report focuses on the strategic alliance in the aviation sector, specifically the Oneworld alliance. It includes a literature review of the use of international strategic alliance for expansion in foreign markets, motivations behind the formation of the Oneworld alliance, benefits and challenges of the alliance, and alternative marketing strategies to enter the market. The report highlights the benefits of strategic alliances such as easy market entry, risk sharing, knowledge and expertise sharing, and competitive advantage. The challenges include choosing the right partner, mutual benefit of the alliance, and reassessment of the alliance. The alternative marketing strategies discussed are exporting, licensing and franchising, and partnership and alliances.

INTERNATIONAL
BUSINESS

Table of Contents
EXECUTIVE SUMMARY...................................................................................................................3
INTRODUCTION.................................................................................................................................4
LITERATURE REVIEW......................................................................................................................4
Provide a literature review of the use of international strategic alliance for the expansion in foreign
market................................................................................................................................................4
Highlight the motivations behind the formation of the International Strategic Alliance of Oneworld.
...........................................................................................................................................................5
ANALYSIS AND DISCUSSION.........................................................................................................6
Analyze the benefits and challenges of the International Strategic Alliance in aspect of Oneworld.. 6
Suggest the various alternative marketing strategies that can be used to enter the market.................8
CONCLUSION.....................................................................................................................................9
REFERENCES....................................................................................................................................10

EXECUTIVE SUMMARY
International Business consists of various business activities that take place across the
international borders such as promotion of transferring of goods, services, raw materials,
innovation, human capital, technologies etc. The business across borders can be expanded
with the help of various strategies and strategic alliance is one such alternatives. Strategic
alliances can be referred to a mutual arrangement between two or more organizations that
join hands for a common project in order to earn more profits. It involves pooling of
resources in order to establish a separate legal entity. The organizations form an alliance with
an aim of expansion into new markets or introducing a new product line. These alliances help
in developing an edge over the competitors in the industry. The report focuses upon the
strategic alliance in the aviation sector. The strategic alliance that is being covered in the
report is the Oneworld alliance that was founded in the year 1990 by the British Airways,
Qantas, American Airways and Cathay Pacific. The report focuses upon the Literature review
of strategic alliance which includes use of strategic alliances to expand in the foreign market
along with the motivations the led to the establishment of the Oneworld alliance. The report
also consists of various challenges and benefits of the strategic alliance.

INTRODUCTION
International Business consists of various business activities that take place across the
international borders such as promotion of transferring of goods, services, raw materials,
innovation, human capital, technologies etc. The international business occurs in various
forms in the organization such as movement of goods from one country to another which is
also known as import and export of goods. The contracts or the legal agreements that
facilitate the foreign organizations to use the products and services with the medium of
leasing, licensing and franchising are also a part of international business. The setup of sales,
marketing, distribution, research and development across international borders is also a
component of International Business (Collinson and et.al., 2020 ).
Strategic alliances can be referred to a mutual arrangement between two or more
organizations that join hands for a common project in order to earn more profits. It involves
pooling of resources in order to establish a separate legal entity. The organizations form an
alliance with an aim of expansion into new markets or introducing a new product line. These
alliances help in developing an edge over the competitors in the industry. The organizations
that work towards alliance have a common goal to achieve. The study revolves around the
strategic alliance in the aviation sector of Oneworld. The alliance was formed in 1999 and
was founded by British Airways, American Airlines, Cathay Pacific and Qantas (de
Vasconcellos, Garrido and Parente, 2019).
LITERATURE REVIEW
Provide a literature review of the use of international strategic alliance for the expansion in
foreign market.
The organizations that aim to widen their presence and image in the international
markets need to take help of the various strategic alliances to have a global reach in the
market. The strategic alliances do not just widen the market growth but it also acts as a means
to enhance strength and competitive condition of the organization as the resources of the
partners are leveraged by the foreign partners. The process of internationalization comes with
various challenges such as differences in customer requirements, culture, language etc. Other
challenges that come in the way of internationalization are limited resources and limited
knowledge of the market, the existing competition in the local market, the big multinational
corporates and the race of market opportunities. These challenges give rise to the strategic
alliances that form easiness to diversify through internationalization in the foreign markets
(Chi and et.al., 2019 ).
Strategic alliances can be referred as voluntary arrangements among two or more
organizations that join hands to work towards the common goals but on the other hand they
are independent as well. These alliances involve exchanging, developing, sharing of various
technology products and services. These alliances are critical to the organizations in various
ways that are discussed below-

 The organic growth separately is insufficient for accomplishing the organizational
goals that are required in order to achieve the targets of growth and return.
 Speed plays a crucial role in the market and is considered essential. These alliances
have a huge role in improving it.
 The global world is getting complex day by day and moreover no organization has
excelled all the skills and components to satisfy the customers in all possible ways.
 These alliances are very much competent of covering the expenses that arose during
the research and development.
 The alliances allow the easy access to the various global markets through the products
and services of the organizations (Ghauri, Strange and Cooke, 2021).
Benefits of using strategic alliance-
 Easy entries in the markets- The strategic alliances facilitate easier access to the new
markets. The advancement in the technology through the means of
telecommunication, logistics and supply chain along with Information Technology
have allowed the organizations to expand their market successfully. The entry into
foreign market helps to get benefit from the concepts like opportunity and marketing
and distribution and economies of scale. An indigenous organization can find it
difficult to enter the foreign market but by collaborating with the foreign organization
it can enter and expand with ease and also saves a lot of cost.
 Risk sharing- The strategic alliance allow the organizations to reduce the risk upon
the organization as the risk gets divided among the organizations who form under the
alliances. The strategic alliance allows the organization to decrease the risk to the
lowest level for the organization. This factor plays a crucial role in the situation where
the organization experiences a lot of instability.
 Knowledge and expertise sharing- The strategic alliances allow the organizations to
get into an alliance where each organization act as complementary to another. The
concept of strategic alliance allows the organizations to share the knowledge and
skills with each other. The concept allows the organization to learn and grab
knowledge about the market situation with the experiences of the other. The
knowledge can be applied not just to projects in alliance but through the career or life
of the organization to deal with various circumstances (Hannibal and Knight, 2018).
 Competitive advantage and synergy- The strategic alliance allows the organizations to
earn the competitive advantages and the synergy in the industry. The alliance helps in
decreasing the risk whereas the alliance helps to achieve strength to the organizations
and also the competition becomes more efficient. The alliance changes the picture of
the organization as it would have been without the alliance or if the organization had
made attempts to enter in the market solely.

Highlight the motivations behind the formation of the International Strategic Alliance of
Oneworld.
The airline alliances allow the airlines to expand their customer network in various
countries across the world. There are various causes and motivations that may lead to the
strategic alliances of the organizations. The various motivations that could be analyzed
behind the alliance of Oneworld are discussed below-
 Convenience in the international booking- The alliance of the airlines provides
efficiency and ease in booking the flights for the international destinations. If they
provide the customers with a connecting flight then those flights mentioned on the
itinerary will be belonging to the same alliance only. This helps in providing with
more flexibility to the customers which help them have a customer satisfaction as this
facilitates the customers to book flights from the same website instead of surfing
various websites and fulfilling all the obligations. This leads to decreasing the flight
time as well as reduced price of the tickets. These at various times provide facility of
same terminal departure where the customer had the arrival (Hooper and Holtbrügge,
2020).
 Recognizing flyer status- The alliance helps in recognizing the frequent flying status
of the client. If the customers have their privileges and rewards with any of the
airlines that is a part of the alliance then those benefits can be used for flying with the
other airlines too who are a part of the alliance. These alliances help in advancing of
the flyer status of the customers. This way the customers are given priority upon the
waiting list or at the situation of standby.
 In order to provide easy access to earning and redeeming miles- These alliances are
basically formed with a motive to provide easy access to the customers while giving
more opportunities to the airlines as compared to the ones they would have had during
the individual operations. Same way these alliances aim to provide easy access to the
customers for claiming their miles of earning and redeeming. This will help them in
having customer loyalty and build a wider base of customers throughout the various
countries around the world.
 In order to provide easy access to the lounges- The customers are accessible to the
facilities of various lounges on the basis of their fare tickets or class of fare. If the
client is travelling through the airlines that belong to a specific alliance then it will
allow the customer a free access to the lounge of the alliance as well. The customer
has the access to contemporary furniture along with the meals being provided. This
helps the alliance and the airlines have a competitive advantage (Kahiya, 2020).
ANALYSIS AND DISCUSSION
Analyze the benefits and challenges of the International Strategic Alliance in aspect of
Oneworld.
The strategic alliance in terms of airlines sector just like every other sector has various
positive as well as a negative impact upon the organizations associated with it. The benefits

and challenges upon the airlines that are a part of Oneworld are explained below (Welch and
Piekkari, 2017).
The benefits of the international strategic alliance upon the various airlines associated with
Oneworld are discussed below-
 Facilitates easier access in global markets- The strategic alliance of Oneworld
facilitates easier access to the new markets for the airlines under the alliance. The
advancement in the technology through the means of telecommunication, logistics
and supply chain along with Information Technology have allowed the airlines to
expand their market successfully. The entry into foreign market helps to get benefit
from the concepts like opportunity and marketing and distribution and economies of
scale. An indigenous airline can find it difficult to enter the foreign market but by
collaborating with the foreign airline it can enter and expand with ease and also saves
a lot of cost (Kurt and Kurt, 2020).
 Competitive advantage- The strategic alliance of Oneworld allows the subsidiary
airlines to earn the competitive advantages and the synergy in the industry. The
alliance helps in decreasing the risk whereas the alliance helps to achieve strength to
the airlines and also the competition becomes more efficient. The alliance changes the
picture of the airline as it would have been without the alliance or if the airline had
made attempts to enter in the market solely.
 Risk sharing- The strategic alliance allow the airlines to reduce the risk upon the
specific airline as the risk gets divided among the airlines that are a part of the
alliance. The strategic alliance allows the airline to decrease the risk to the lowest
level for the airline. This factor plays a crucial role in the situation where the airline
experiences a lot of instability (McWilliam and et.al., 2020).
The various challenges of the international strategic alliance upon the various airlines
associated with Oneworld are discussed below-
 Opting for the right partner- The challenge of choosing the right partner always keeps
on hindering with the management forces of the various airlines. The alliance needs to
assess the airlines before they become a part of the aviation alliance. As the airlines
which do not comply with the required skills and expertise can be harmful for the
reputation of the alliance. The alliance needs to be formed very precisely and wisely.
 Mutual benefit of the alliance- The biggest challenge among the airlines that are a part
of the alliance is that if they are being benefitted mutually in the alliance. The alliance
must bring equal benefits to all the airlines and it is very important to maintain the
trust upon the alliance. When the trust upon the alliance builds up, the next challenges
is to sustain the bond of mutual benefit in long term as well.
 Reassessment of the alliance- The aviation business just like every other business
faces fluctuations and changes in the management of the alliance as per the
requirement of the situation. It is important to be flexible in order to comply with the
needs of the situation. The airlines need to understand that it is very important to

amend the agreement at the right time. Though it is a hectic task but it needs to be
done on a regular basis to avoid the situation of distress among the airlines at alliance
(Nielsen and Raswant, 2018).
Suggest the various alternative marketing strategies that can be used to enter the market.
There are various alternatives that can be utilized by the organizations to enter in a
new foreign market. The various alternatives are explained below-
 Exporting- Exporting can be considered as the easiest way that can be used to enter in
the international or foreign markets. This is one of the most popular ways to enter in
the international market. The exports can take place in form of selling of product in
the foreign markets or providing services in the international markets for which the
source lies in the domestic market only. The benefit of this alternative is that it saves
the cost of the organization of setting up of operations in the new market. The selling
and marketing processes are however very significant to increase the sales in the
foreign market by increasing the demand. The marketing of the products and services
in the foreign markets is done under various legal agreements. It is important for the
organizations to consider various labeling, packaging, distribution and pricing before
they enter a new market. Though the transportation cost can be extremely high and
have a negative drawback upon the organizational profits.
 Licensing and franchising- The term licensing in aspect of entering in a new market is
termed as a permission to use the property of the organization in a foreign country.
The assets in terms of licensing are termed as intangible assets which comprise of
patents and goodwill. Licensing requires a small amount of investment but gives high
return on investments in future. Franchising can be termed similar to licensing but
franchising has strict rules in term of operations of business as well which need to be
strictly followed (Perchard and et.al., 2017).
 Partnership and alliances- Partnership or alliance can be used in order to enter in a
new market. The partner of the organization must be chosen wisely. The partnership
organization must have a reputation and a well-established brand name in the market.
Strategic alliances can be referred to a mutual arrangement between two or more
organizations that join hands for a common project in order to earn more profits. It
involves pooling of resources in order to establish a separate legal entity. The
organizations form an alliance with an aim of expansion into new markets or
introducing a new product line. These alliances help in developing an edge over the
competitors in the industry. The organizations that work towards alliance have a
common goal to achieve. The alliances can be beneficial for the small entrepreneurial
organization who cannot comply with the needful investments. The alliance is helpful
in the situations where the organization is required to have partnership with a
domestic firm in order to enter the market. The strategic alliance anyhow has a lack of
control over the business in alliance (Shams and et.al., 2021).
 Acquisitions- Acquisition is referred to the act of gaining control over another
organization by the means of purchasing various shares and stocks. The acquisition in
private organizations can also be done by issuing or conveying a price for which the

organization can be sold. In the scenario of today’s global world, the organizations
have shifted to the international acquisitions and the trend has become quite popular.
The acquisitions help with a quick and better access to an established market which is
not possible otherwise. In order to plan an acquisition, the organizations must research
about the various obligations that are laid by the government of the country. The
acquisition mode of entry can be quite expensive and have a huge interest rate upon
the credit due to currency value fluctuation (Wettstein and et.al., 2019).
 Green field Venture- The green field venture is also termed as the concept of
establishment or setting up of a whole new and solely owner organization as a
subsidiary. The green field venture as a mode of entry can be considered as very
expensive and complex. The green field venture anyhow provides a full or the
maximum amount of control over the organization. The owner is the sole authority to
conquer the returns. Anyhow the risk associated is very high when establishing a
venture in a new country. The organization needs to conduct a good research in the
market to acquire knowledge and expertise in the market related to the venture and its
expected returns.
From all the mode of entries into a foreign market, it is very difficult to choose a specific
mode to enter a new market as it totally depends upon the industry and the market structure in
the country. The mode of entry can be decided according to various advantages and
disadvantages of every mode of entry (Sharma and et.al., 2020).
CONCLUSION
It can be concluded from the study that International Business plays a huge role in the
economies of the world. The international business occurs in various forms in the
organization such as movement of goods from one country to another which is also known as
import and export of goods. The report revolves around the strategic alliance in the airline or
the aviation sector. The alliance being considered in the study is Oneworld. The alliance was
established in the year 1999. The alliance was established by British Airways, Qantas,
American Airlines and Cathay Pacific. The headquarters of the alliance is established in New
York. The report focuses upon the literature review of the benefits of various international
strategic alliances in the foreign market with an aim of expansion. The report highlights upon
the motivations that led to formation of Oneworld alliance in the aviation sector. The report
also showcases various benefits and drawbacks of the international strategic alliance of
Oneworld in the aviation industry to the organizations that form the alliance. The report
outlines various recommendations in order to highlight various market alternatives that can
be adopted by the organizations to expand their business or enter into a new market other
than the alternative of strategic alliances.

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