International Business: Strategic Alliances for Market Expansion

This document provides an overview of international business practices, focusing on strategic alliances for market expansion. It discusses the motivation behind forming alliances, decision-making criteria for selecting suitable alliances, evaluation of strategic alliances for market expansion, and methods of international market entry and development. The document also includes a case study on Star Alliance, the largest airline alliance in the world.

International business

TABLE OF CONTENTS
Contents
INTRODUCTION...........................................................................................................................2
Literature review..............................................................................................................................2
Understanding of motivation behind the formation of strategic alliances...................................2
Analyse the decision making criteria that determines suitability of international strategic
alliances.......................................................................................................................................3
Evaluation of international strategic alliances for market expansion..........................................4
Appropriate methods of international market entry and development........................................4
Benefits and challenges to use international strategic alliances in foreign market entry............4
Analysis and discussion...................................................................................................................5
Criteria that is selected by the Star for partner selection process................................................5
Analyse the decision making criteria that determines suitability of international strategic
alliances with Star........................................................................................................................6
Evaluation of international strategic alliances for market expansion of Star..............................7
Appropriate methods of international market entry and development of Star with strategic
allience.........................................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

Executive Summary
International business is done to expand and grow in market to sustain in the competitive
market all around the globe. Different factors motivate to company to enter with strategic
alliances to enter in international market, different criteria like market positioning, innovation
etc. was analyzed to select partner in strategic alliance, the patterns like innovation etc analyzed
for effective decision making criteria for the use of international strategic alliances and for the
expansion of business market size, demand and other strategic alliances are analyzed. To enter in
global market there are various modes and for airlines industry strategic alliances is best suited.
Strategic alliances benefits to the companies and also faces challenges to enter in global market.
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INTRODUCTION
International business refers to the business that operations and trades of goods, services,
technologies across the globe to earn more profits from different countries around the world. The
transactions of goods or services across the national boundaries to earn and increase the market
share of the company. With the international business it gives an opportunity to companies to
contribute in global economy and beyond to earn in terms of money. International business can
be termed for exchange of goods and services from one country to another across the globe for
further production of company (Concept, Meaning and Definition of International Business,
2021). Star Alliance is largest airline alliance in the world that is founded in 1997. It is one of the
largest alliances with three alliances. Its headquarters are in Frankfurt am Main and Germany. In
this report discussed about international business practices and analysed about how they shaped
with economic theories, financial, socio- cultural and political forces, also analysed about key
elements international environment that have impact on activities of international business,
analyse about market selection techniques, methods to enter in international market and analyse
about main method of risk and concepts and theoretical frameworks to workplace environment.
Literature review
Understanding of motivation behind the formation of strategic alliances.
According to Park, and et.al. (2019), strategic alliances is a mutual agreement between two
or more companies decided to share the resources, capabilities process to meet the specific
mutually project that benefit to both companies. With the strategic alliances allows company to
achieve organic growth more easily and quickly than the company acted alone. This sharing
partnership allows sharing of resources of both companies and be more effective with
complimentary resources and get benefit from overall alliances. This alliance leads to motivate
the companies to work together and have growth in international market as well and expand their
business together.
As per the view of O'Dwyer, and Gilmore, (2018), strategic alliances are formulated by
companies with mutual agreement by getting motivated from the UK market that in UK the
political condition is stable where business can be done easily and effectively as there is no threat
of political instability. Other factors that motivate for international strategic alliances are its
economic condition that in the market its economic condition is to be suitable that business
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cannot face issue and have suffered from problems on regular basis. Financial condition of
international market is good, where market is in recession and people have ability and have good
purchasing power so that companies can together make good profit in the market and have
growth with efficient use of resources and capabilities.
Mohebimanesh, and et.al., (2019) elaborates that, the main factor that motivate companies
for international strategic alliances is socio culture where society and its culture have influences
on airlines where society demanded to an effective airlines that gives best services and have
great impact on society. The customers of strategic alliance airlines are society of the country
and their cultures that motivate companies to be more effective with the alliances and gave best
services that create value to them and help to gain market share and build the reputation in
international market with alliances. The factors motivated to companies for international
strategic alliances with the use of complimentary resources of each other and be competitive
advantage in the market. By analyze market factors that are positive and have good market
condition that help companies to enter in international business and motivate them to form
strategic alliance for international business. Political factor, economic condition, socio- cultural,
financial capacity is some of the factors that motivate to the companies for formulating
international strategic alliances.
Analyse the decision making criteria that determines suitability of international strategic
alliances
Larimo, and Rumpunen, (2018) inferred that, the suitability of international strategic
alliances in airlines with the effective decision making is to be done so that effective company is
selected for strategic alliances so that in international business both companies together serve
best services to passengers with their airlines. In the recent time where there is lot of
international trade barriers and to be effective in this condition and serve the best services to
passenger and provide other services more effectively can help to be more effective strategic
alliance company in international market.
As per the view of Carriger, (2017), the criteria for decision making that is suitable for
strategic alliances are to be its innovation the company’s innovation pattern is to be analyzed so
that the effective working pattern with innovation is created with strategic alliances in airlines
and provide best services to customers and be competitive in the international market and
maintain the position in international market by providing best services.
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Evaluation of international strategic alliances for market expansion.
According to Shen, Puig, and Paul, (2017), to expand in international market with the
strategic alliances, the selection of market is to be done for expansion, so that the effective
market is to be selected for the expansion in international market that have best suitability of
airline services and have demand where the company can also have growth in selected market
and build place in competitive market and have demand. This criteria is to be analysed so that
with the partnership of two firms both will work effectively and share the market growth
effectively by providing best and innovative services to the customers. With the selection of best
market for international expansion with strategic alliance, so that continues growth and
development of both companies are to be sustain in competitive market with their innovation
technique and combining both resources. Proper selection of market and the demand in market
helps companies to gain competitive advantage in international market as well.
Appropriate methods of international market entry and development.
As per Khamseh, Jolly, and Morel, (2017), there are various modes of entry to enter in
international market. This helps the company to easily enter in international market. The
different modes to enter in international market are: exporting, it is an easiest way to enter in
international business and many of the firm use this mode of entry to expand their business. The
products and sales are exported in the foreign countries. Licensing and franchising, it is a special
mode of entry where owner of company gives an authority to local people of country to run their
business in the name of their company in return to some percent of the sales. It is also another
method to enter into international market. Other market to enter is strategic alliances and
partnership where the mutual agreement is done between two companies to share their resources
and competencies for certain period of time to achieve common purpose. Acquisition is another
way to enter in international market in which firm gains control on another firms stock by
purchasing them, exchange the stock etc. All this modes help company to enter in international
market for expansion and growth.
Benefits and challenges to use international strategic alliances in foreign market entry.
As per the view of Park, and et.al., (2019), to enter in international market strategic alliance
is more effective way as it helps the two small or un matured company to enter in foreign market
to expand their business and be competitive by providing an effective services. Enter in foreign
market is risky and this risk can be divided between two companies with strategic alliances and
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help to sustain in long run by dividing the risk and associated in foreign market. Innovative skills
and knowledge is used by two companies lead to enter in the foreign market effectively, the
more innovation is done by combining skills and knowledge of both companies.
Gao, and et.al., (2017) states that, enter in global market with the use of international
strategic alliances, companies has to face the challenges that affect to their growth and expansion
in global market. The strategies to perform the work of both company is different and this will
affect to the strategic alliance to perform effectively to enter in global market. The goals and
assumptions of the companies are to be different and this is a big challenge to work effectively
together in international strategic alliance and enter in global market. The unexpected changes in
environment create a big challenge to the strategic alliances company to easily enter in global
market. These changes are not be known and to work effectively and enter in global market
easily it’s a big challenge to companies to overcome from the unexpected changes.
(Carriger, 2017) elaborates that, strategic alliances gives benefit to enter in global market
easily and efficiently as the resources and capabilities of two companies can work together and
make the innovative services and products that help to enter in global market easily. Productivity
of both companies are improves with strategic alliances as alone company can’t perform with
that effectiveness and not easy for single company to enter in global market.
Analysis and discussion
Criteria that is selected by the Star for partner selection process.
To select the company for strategic alliance, Star choose some of criteria so that both the
companies are to be more effective and together serve the best services to the customers and
enter in international market more effectively. The different aspects and criteria analyzed by
company to choose their partner in strategic alliance are-
Position in market
The position of in the market is to be analyzed for the selection of partner, from this
criteria company understand the position and company’s demand in airline by consumer and its
market share. If the partnership company is not effective and not have good position in market
than international strategic alliance avoided with that company (Gao, and et.al., 2017). Good
position in market will help strategic alliances to be more effective if one company in this
alliance will create bead impact in mind of consumers and alliance can’t be get more effective.
Regular activities
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Day to Day activities of company is analyzed so that it can be understood that the goals
and objectives of both the companies are to matched. If goals and objectives of both companies
are not similar than the partnership with each other is not effective and can’t perform the work
together with strategic alliance. Regular activities are to be monitored so that help to understand
the company’s way of working and help to be more effective with strategic alliances.
Potentiality and compatibility
Company potentiality and compatibility is check to understand its effectiveness in market
and how it serves to its customers. With the strategic alliance can understand the way of its
working so that help to be more effective in international business of airlines. The potential of
company can target by analyzing strategic value of the company and its competitive positions,
acceleration of market and its brand awareness.
Analyse the decision making criteria that determines suitability of international strategic
alliances with Star.
The effective decision making criteria are selected that suits the international strategic
alliance with the company and gain position in international market. In recent time because of
covid many companies faces lose and decline in their financial capabilities and lots to trade
barriers occur where company are not allowed to trade. The effective company is to be choose
that have suitable resources and capabilities that effectively work in international market and
have capabilities to provide best services when facing barriers and issues. Innovation in services
and practices so that working together can be effective. Next criteria for decision making that
suits international strategic alliances in airlines are innovation (Volodin, and Podkovyrov, 2018).
An innovation criterion is analyzed of company in their services and how it is more effective to
enter in international market with strategic alliances.
The pattern of international trade is to be decided with strategic alliances to be effective
with criteria of its potentiality and financial capabilities (Grigoreva, 2018). The company’s
financial capabilities are analysed that help in international business how effectively company
provides best services to the customers with strategic alliances of airlines and their resources that
are to be effective that helps to be competitive in the international market of airlines where there
is demand of airlines in different countries for travelling and other trades. This criteria with the
effective decision making helps to choose right company for strategic alliance to enter in
international market for business and growth and to be more competitive in the international
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market with the effective use of both company’s resources, capabilities and potentiality. The
companies to be more innovative and have suitability to enter in international market during the
time of covid where there is lot of issues is to be faced and be competitive and growth in
competitive international market.
Evaluation of international strategic alliances for market expansion of Star.
The expansion strategies used with international strategic alliances are-
Market analysis
The selected markets for international business of airlines with the mutual agreement
between companies for strategic alliances are to be analyses. With the market analyse Star
strategic alliance can understand the market properly and can decisions according to market
analysis. From this company can understand the conditions of market and help them in
understanding of services that are demand by customers of airlines in particular market. The
demand of services of airlines is analysed and according to this the market for expansion is
analysed so that Star strategic alliance can’t get enter in wrong market for international
expansion of their business with strategic alliances.
Market size
The size of market of airlines is to be analyzed for expansion of business in international
market. Market size is analysed by understanding competitors in the market and their position
and size in international market (Blackburne, and Buckley, 2019). With this companies can
understand the competition in market and make the strategies more competitive by analysing
competitor’s strategies. Broader the size of market competition is also more that helps in
analysing size of market and has more competition. Market size is to be analysed that helps the
Start strategic alliance to understand the market and sustain in long run in the particular selected
market for expansion.
Suitability
For the expansion of business in international market, suitability of market with the
services of airlines with strategic alliance is determined. To expand the business the services of
airlines are to suit in the market so that Star strategic alliance can grow in international market
effectively and efficiently. The market condition and demand of airlines suited to company’s
services so that Star strategic alliance can expand their business effectively in the international
market and have grown effectively.
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Appropriate methods of international market entry and development of Star with strategic
allience.
To enter in international market of airlines for Star strategic alliance is best mode
to enter. As with the agreement between two companies both will mutually agreed and have
contract to work together with the effective use of their resources so that company can enter in
global market easily with competitive services given to consumers in international market
(Tjemkes, Vos, and Burgers, 2017). To expand business internationally strategic alliance is best
option as two companies work together with the use of their effective resources that help the
companies to enter in market easily and effectively. From strategic alliance it ensures that the
competitive parity in routing and also in other factors like on time departures and customer
services are innovative and makes companies different in competition. From strategic alliances it
gives companies an opportunity to work with different company and understand their way of
working and uses their resources and be competitive in the global market and satisfy customers
effectively. This helps the company to build their network areas more effectively and grow in
business more efficiently by working together.
To enter in international market it is a big risk for the company and with the strategic
alliances the risk is also divided so that both companies can take risk equally to enter in
international market. Strategic alliances helps both companies to set the high standards by using
effective skills and knowledge together to expand their business in global market and this new
standards help the companies to be competitive in global market and have sustain in international
market in long run. Strategic alliances help to enter in foreign market easily and effectively and
be competitive in market.
CONCLUSION
From this report inferred that international business is to be done for growth an expansion in
different countries all around the globe. The transaction of goods, services, capitals, technologies
are done in international business. The company like Stars alliances airlines, alliance with three
companies to enter in global market. Airlines strategic alliances to expand in international market
different factors like political condition, economic value; socio- culture etc. motivates company
for strategic alliances. Different criteria re set by the company to choose partner for strategic
alliance for entering into global market. The patterns for effective decision are set that suits to
use company in international strategic alliances. To expand the business in global market
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strategic alliances factors are to set like suitability, market size etc. There are various modes to
enter in global market and strategic alliance is best suited for airlines industry to enter in
international market. There are lots of benefits of strategic alliances as well as challenge to enter
in foreign market.
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REFERENCES
Journals and books
Blackburne, G.D. and Buckley, P.J., 2019. The international business incubator as a foreign
market entry mode. Long Range Planning. 52(1). pp.32-50.
Carriger, M., 2017. Does size matter? The impact of the size of downsizing on financial health
and market valuation. Journal of strategy and management.
Gao, H., and et.al., 2017. The impact of partner similarity on alliance management capability,
stability and performance. International Journal of Physical Distribution & Logistics
Management.
Grigoreva, T., 2018. Market expansion: case Aventouro.
Khamseh, H.M., Jolly, D. and Morel, L., 2017. The effect of learning approaches on the
utilization of external knowledge in strategic alliances. Industrial Marketing
Management. 63. pp.92-104.
Larimo, J. and Rumpunen, S., 2018. Partner selection in international joint ventures.
In Contemporary Euromarketing: Entry and Operational Decision Making (pp. 119-
137). Routledge.
Mohebimanesh, O., and et.al., 2019. Identifying and Explaining Key Enabling Factors to
Implement a Successful Strategic Alliance. Journal of Business Management. 11(4).
pp.944-964.
O'Dwyer, M. and Gilmore, A., 2018. Value and alliance capability and the formation of strategic
alliances in SMEs: The impact of customer orientation and resource
optimisation. Journal of Business Research. 87. pp.58-68.
Park, J., and et.al., 2019. Alliance with EPR effect: Combined strategies to improve the EPR
effect in the tumor microenvironment. Theranostics. 9(26). p.8073.
Shen, Z., Puig, F. and Paul, J., 2017. Foreign market entry mode research: A review and research
agenda. The International Trade Journal. 31(5). pp.429-456.
Tjemkes, B., Vos, P. and Burgers, K., 2017. Strategic alliance management. Routledge.
Volodin, Y.V. and Podkovyrov, P.A., 2018. International Market Expansion. Strategic decisions
and risk management.
Online references
Concept, Meaning and Definition of International Business, 2021. [Online]. Available through <
https://www.brainkart.com/article/Concept,-Meaning-and-Definition-of-International-
Business_34995/>. [Accessed on 17,June 2021].
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