Benefits and Challenges of International Strategic Alliance in the Airline Industry

Individual Academic Report

EXECUTIVE SUMMARY
The report has been discussed the concept of strategic alliance by taking the Star Alliance
international strategic alliance with its 27 other airline members. The report has been stated that
the international strategic alliance uses and motive for the business expansion. This report has
been concluded that in the airline industry it is believed and trend that improvement of brand is
most important factor. And it is possible only when each airline in Star Alliance engage in
partnership with each in order to position itself from the competitors and use it for the passenger
retention. In this report critical analysis of the international strategic alliance has been done by
quoting benefits enjoyed by star alliance and challenges posed in the way of partners involved in
the star alliance had been done. This report has evaluated how international strategic alliance is
beneficial for airline businesses in order to enter into international market by way of such a
collaborative scheme which provides for wider network and increased profitability through
serving traffic at international level. At last, the report has been ended by recommending an
alternative strategy to enter into international market which is none other than Joint venture.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
LITERATURE REVIEW................................................................................................................4
Critical demonstration of use of international strategic alliance in foreign market expansion...4
Motivation for strategic alliance in the international market place.............................................6
ANALYSIS & DISCUSSION.........................................................................................................7
Critical assessment of benefits and challenges of the international strategic alliance to the
partners........................................................................................................................................7
Recommendations......................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES................................................................................................................................1

INTRODUCTION
Strategic alliance is basically an arrangement between two or more companies where they
are ready to share each other resources in order to achieve common business goals and
objectives. This alliance occurs only when benefit from the alliance is better than from the
individual efforts of the companies. The present report will be based on the Star alliance
multilateral strategic alliance which involve 27 airline members such as United Airlines,
Lufthansa, Air Canada, Thai Airways, SAS and Varig etc. This report will demonstrate the use
of the strategic alliance in the foreign market expansion by using the support of literature review.
In the same context, the report will also discuss the motivations behind the formations of the
selected strategic alliance. Further the report will analyse the benefit and challenges available to
each of the partner of the Star Alliance strategic alliance. Basically, the airline industry uses this
strategy of expansion to increase their market share, customer base and sustainable success.
That’s why at last the report will also state the suitable market entry strategy to the companies in
order to further expansion.
LITERATURE REVIEW
Critical demonstration of use of international strategic alliance in foreign market expansion
Basically, the companies that wants to increase their international presence uses the
strategic alliance to access the new markets. This is an international partnership which not only
allow the companies to access global market but also useful for creating the competitive
advantage in the local market by leveraging the partner’s resources. According to the views of
Toylan, Semerciöz and Hassan (2020), there are generally four type of international strategic
alliance which includes single local alliance, multiple local alliance, single global and multiple
global alliance. The international strategic alliance of the Star Alliance with its many local and
international members is a multiple global alliance. The author state that the multiple global
alliance is a way with the help of which the companies can accelerate their presence in more than
one country with the aim of growth by multiple partners rather than only one. The Star alliance
company and its different members are able to gain the knowledge of foreign markets with the
low risk in process. Such an alliance mainly forms to either develop a product or using each
other resources. There are mainly two reasons that is basically the most important reason why the
companies use this strategy and that is foreign market entrance and other is division of risk. The