International Strategic Alliance in the Airline Industry

This report explores the concept of international strategic alliances in the airline industry, focusing on British Airways. It discusses the motivations behind forming these alliances, the types of alliances, and the benefits and challenges involved. The report also highlights the importance of strategic alliances for British Airways to expand their business internationally and provide better services to their customers.

INTERNATIONAL
BUSINESS

EXECUTIVE SUMMARY
International strategic alliance is a type of international business through which an organization
enters into their business in international markets across geographical borders. Strategic alliance
help the company to provide several benefits and also provide opportunity to expand their
business and several opportunity in order to get competitive advantages in order to become
successful and effective in the marketplace

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
International Strategies Alliance..................................................................................................3
Literature Review............................................................................................................................4
Analysis and Discussion..................................................................................................................4
Demonstrate an understanding of the motivations behind the formation of the selected
International strategic alliance.....................................................................................................5
A critical assessment of the benefits and challenges of the international strategic alliance
selected to the partners involved..................................................................................................5
Recommendations............................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10
Books and Journal......................................................................................................................10

INTRODUCTION
When an organization decided to expand their business out of the geographical borders of
their country in order to increase their customer base and profitability is generally known as
international business (Bowker, 2020). International business provides several opportunity to the
customers so that they can increase their trade outside the country. In airline business it is
essential for an organization to expand their business in international market as an airline is
required to provide destinations of various countries to their customers. For the purpose of this
report British airways is going to be considered which is a large multinational airlines
organization having their headquarters in United Kingdom. British airways is considered as a
second largest United Kingdom based airlines as compare on the basis of their fleet size as well
as passengers. This report helps to identify the meaning of international strategic alliance and the
various tribes which can help an organization to enter into and strategic alliance. This report also
has a proper literature review on the meaning of strategic alliance and its need to the British
airways to expand their business internationally. It requires a proper motivation to form and
international strategic alliance with several challenges with the selected partners involved in the
strategic alliance.
MAIN BODY
International Strategies Alliance
International strategic alliance can be defined as a coordinated as well as cooperative
arrangement between firms and headquarters of several countries. Alliances are the business
relationships in which two or more companies worked together in order to attain a shared goal
and objective while remaining separate and independent in their operations. In order to achieve
success by entering into a partnership strategic alliance can be a best option chosen by an
organization. In case of British airways the company in order to expand their business all over
the world has entered into alliance with several other firms so that they can provide effective
services to their customers (Calma, and Suder, 2020). It has been assume that a strategic alliance
helps an organization to use the assets of their alliance company in order to attain their goals and
objectives by providing them mutual benefits to each other.
Types of strategic Alliance:

In order to enter into a strategic alliance it is essential for an organization to identify the various
options which are available in the market. When British airways decided to enter into a strategic
alliance with another organization they have three options which are available with them. These
three types of strategic alliance options are explained below
Joint venture: The concept of strategic alliance helps British airways to associate a different
kind of alliance in which to parent companies join hands together to form a new child company
with the help of an alliance.
Equity strategic Alliance: Equity strategic alliance is airlines when an organization purchase the
certain amount of equity shares of another organization in order to undertake them. Sometimes
the company unknowingly purchase 40% of more than equity of another company which gave
them an automatic equity alliance of that company.
Non-equity strategic Alliance: In case of non-equity strategic alliance this strategic alliance can
be formed with the help of a contract signed by two or more companies in order to pool their
assets together with the decided terms and conditions in order to provide effective services to
their customers (Gholipour, and Foroughi, 2020).
The above three types of strategic alliance provides an option to the organizations to enter
into an effective alliance. It is not easy to use form and strategic alliance as there are several
types of challenge faced by an organization. Several challenges are faced by an airline industry
in order to perform several destinations are decided enter into a strategic alliance. There is not
only one reason but can be several reasons to enter into and strategic alliance by the company
and it is not essential that alliance is a strategic alliance. Entering into and strategic alliance helps
an organization to enhance their abilities and current operations to gain competitive advantage in
the market.
Literature Review
As per the view point of (Luo, 2020), The most effective tool utilized by organization in
order to expand their business over the geographical borders is a strategic alliance. In case of
strategic alliance and organization came into a partnership with another international
organization with the plan to expand their business internationally with the help of another
organization to achieve their goals and objectives. When an organization faces several kind of

situations of uncertainty they have decided went into a strategic alliance in order to get the
opportunities which are available in international market for Star apart from this there can be
several reasons to enter into a strategic alliance for an organization. British airways is in airline
multinational company who have developed themselves with the help of several strategic
alliances made with international organizations. British airways also started one world
organization which helps British airways to establish alliance with 13 members of one world
organization. One world organization has been formed by British airlines Canada airlines and
American airlines with the motor to helps most of the airline organization in providing effective
services to their customers. One world alliance helps the organization to establish a good
connection between approximately thousand destinations all over the world. Being a member
company of one world alliance British airways has also set up their alliance with 13 new airlines
organizations all over the world. This is the reason that their join agreement allowed British
airways to give their customers choices about the airlines they want to travel from such as
Finnair, Iberia American and many more airlines available in the market who are famous to
provide excellent global travel experience to the customers. Taking an example of a strategic
alliance which helps the customer to get effective travel experience with British airways is the
alliance of British airways and Qatar airways (Luo, 2020). The alliance between British airways
and Qatar airways help their customer to travel between Doha and UK with better prices
supports and connection provided in their airlines as they are famous for their support from the
airways. Example of alliance helps to identify the use of best alliances in international airlines
organization which helps to facilitate travelling to their customers. Apart from this alliance
British airways has a big alliances with other organizations also which are set up in such a
manner that they can provide support to their business. Being a founder member of one world
alliance the British airways has their alliance with 13 airlines organization some of among them
are given below:
 Alaska Airlines
 British Airways
 Cathay Pacific
 Qantas
 Qatar
 S7 Airlines

 Sri Lankan
There are so many destinations all over the world where a customer wants to travel and it is
impossible for one organization to provide the services towards all those destination in airline
industry. If an organization provides less destinations to their customers then they will have a
risk to lose their loyal customers which can result in a loss to an organization. So in order to
retain their customers with them and a line organization wants to enter into a strategic alliance
with another their line organization so that they can offer the destinations which are provided by
them as well as their strategic alliance partner to their customers. Providing more destinations by
one organization will help them to grab opportunities from the market for their effective travel
services. Being a large organization British airways also provide opportunities to smaller
organization to connect with them who wants to so that they can also get the opportunities
available on the market.
As per the view point of (Ratten, 2020), Strategic alliance can be formed for several
reasons and it is not necessary that an organization form and strategic and alliance for one reason
only. British airways also found so many reasons to enter into a new partnership as a strategic
alliance with other airline organizations. They are required to decide whether the strategic
alliance will be profitable for them or not and from which organization they should have a proper
airlines so that they can provide effective services to their customers. There are three main
reasons because of which British airways always wants to enter into any strategic alliances like
equity alliance non-equity alliance and joint venture type of strategic alliance. One of among
reason is to reduce their transaction cost so that they can get product at low cost with the help of
their negotiation in the market. Another reason among the three reasons of British airways is that
the British airways wants to enhance their competitive position in the market as entering into a
strategic alliance provide a power in their hands to deal with other airline organizations. Last
reason for which British airways wants to enter into a strategic alliance is to identify and know
the culture of famous airlines organization so that they can learn from their partners and adopt
them in their organization for their success. All the three reasons are enough for British airways
to enter into a strategic alliance and get some profit as well as competitive position over the
market. After enter into a strategic alliance it is the duty for the organization to check the aspects
which are used to assess their performance with the help of a strategic alliance (Ratten, 2020).
These aspects involve the trust between the allies’ management of the partnership in the alliance

and expectations of partners among each other. Apart from this the conflict management
continuity among the all the partners of the strategic alliance also matters a lot for an effective
performance of a strategic alliance. Both or more partners of a strategic alliance to ensure that
they have a proper communication system in their allies so that they can be able to exchange
their information with each other.
Analysis and Discussion
The above literature review helps to provide several mindsets and points of various authors on
the meaning of the term international strategic alliance (Peterson, Arregle, and Martin, 2020).
British airways also uses several types of international strategic alliance in order to achieve
success in their organization. It is essential to analyze the point of view of different authors to
form a conclusion from the report. This analysis is required to be discussed which will further
help to draw an effective conclusion. On the basis of the study of the above literature review it
has been analyzed that
Demonstrate an understanding of the motivations behind the formation of the selected
International strategic alliance
The selected international strategic alliance it has been analyzed that the main motivation factor
for the organization is to provide best services to their customers by pulling the assets of two or
more organizations together (Vandenberg, 2020). An airline industry is required to have their
branches in several countries so that they can land there how to make the travel experience of
their customers better with the company. This requires a proper strategic alliance to expand their
business outside the geographical borders and provide different types of best destination travel to
their customers. This is strategic alliance of British airways with other parties help them to make
capable of sharing their value of market share and take effective decisions for their organization
in such a manner that the impact of the partnership can be measured in the organization. This
requires a main motive and main motives of British airways to form the selected international
strategic alliance are:
 A strategic alliance helps an organization to be able to use various assets and tools of
their partners and provide good resources to them for their effective operations.
 A provide assistance to their partner's to became more knowledgeable for reducing the
risk and uncertainty of the market.

 An effective strategic alliance helps British airways to provide services there customers
no matter where they want to travel and build as well as maintain good customer
relationship with them (Schmitthoff, 2020).
 The strategic alliance provide opportunities to the partner organization for increased their
learning abilities.
A critical assessment of the benefits and challenges of the international strategic alliance selected
to the partners involved
As international strategic alliance effective partnerships to British airways airlines which help
them to gain competitive advantage over the market. Apart from this there are several other
benefits and challenges which are faced by British airways for entering into the international
strategic alliance that are provided below
 Strategic alliance health the British airways to improve their capabilities in such a manner
that a can have proper cash flow in their organization to fight with several types of
uncertainties.
 The partnership with large organization of British airways help them increase their
competitive settings and the global market and make them leaders of their domestic
market.
 Strategic alliance helps British airways to provide them several opportunities in the
market so that they can offer innovative services to their customers.
 The most important benefit of the strategic alliance to British airways is that they provide
an extended market to them.
 Having a strategic alliance with a large company helps British airways to improve their
speed and scope of business in the market (Šilenskytė, and Smale, 2020).
Disadvantages of strategic Alliance
With all the benefits of a strategic alliance provided above there are also some disadvantages
which are discussed below:
 Strategic alliance can be proven risk to an organization because of the cost involve in
the strategic alliance is especially in airline industry.

 Major drawback of strategic alliance can be the case in which an organization wants
to enter into a joint venture and invested their amount of money in this joint venture.
The partners which are associated with this joint venture has any type of conflict
between each other which results in breaking of the alliance in between and results to
give a loss of investment to the organization enter into the strategic alliance. In many
cases the conflict Management process is used between the partners but there can be a
case which can arise conflicts between them.
 Then investment involved in the strategic alliance can block the financial assets of the
organization. In this case organization like British airways does not open their finance
operations with their strategic alliance partners.
 Strategic alliance as give access to the information technology to another party
involved in the alliance and require the other organization to adapt the new
technologies and knowledge in order to compete and compare with the organization
in the alliance requires a cost of installation of information technology. This can be
risky for the organization to co-operate and adapt changes in their company.
 Dividing of revenues of organization of different countries can result and dividing of
money to different countries which will not support the organization to increase their
economy (Takino, 2020).
Expansion methods in order to expand the business:
To expand business and international market there are several methods which can be used
by different organizations. This method helps the organization to enter into international market
and enhance their customer base and productivity. The expansion method used by a British
airways to enter into international market are given below:
Acquisition: In this method of expansion an organization acquire the business of another
company in the market which helps them to collect pressure skills and technologies of another
organization used in other parts of the world.
Joint venture: In case of joint venture type of expansion method large companies wants to enter
into contract with another company so that they can share their assets with a motive to increase
their customer base and profitability together.

Licensing: Another most useful method for expand business internationally is to provide
permission to another company regarding selling of products and services to the customers at the
same price as they are providing for their customers in their operating country.
Franchising: In this type of international expansion method the owner of the company give
permission to another company for a provided fees to use their name and method of providing
products and services to their customers and able to do business with their name in another
country. This franchising helps an organization in international market to enhance their name in
the minds of foreign customers (TORSELLO, and WINKLER, 2020).
Recommendations
With the help of above analysis there are several recommendation that can be made to British
airways so that they can gain profitability and competitive advantage in the market. This
recommendation will the British airways to understand the value of strategic alliance and expand
their business in appropriate way. The recommendations that are made to British airways are:
 It has been recommended that in order to to run a business according to the perspective of
the customer and organization is required to enter into and strategic alliance with an
appropriate company.
 Strategic alliance helps the organization to provide better products and services to their
customers and made the requirement of the market and gain competitive advantage.
 If an organization wants to reach maximum customers all over the world they can use
franchising method.
 With the increase trend of technical usage it has been recommended to British airways
that they should improve their skills and knowledge regarding the technology and adopt
them in their organization which will help them to increase their effectiveness and
efficiency in their operations. The use of proper technology also help them to fight with
the challenges in the market related to these upgraded technologies.
 Another recommendation with two British airways is analyze their alliances before with
the help of a proper research in order to increase their maximum profitability (van
Witteloostuijn, Eden, and Chang, 2020).

CONCLUSION
The above discussion helps to identify that is strategic alliance is very crucial to be
executed in the global market so that an organization can be able to get competitive advantage.
This strategic alliance helps a company to grow their business in international markets by
establishing a brand image in the mind of their customers and getting a global reputation by
increasing their incomes which will help the organization to attain their objectives and goals.
Various advantages and disadvantages of a strategic alliance helps the British airways to
potentially know the methods of expansion taken used in order to bring new policies for their
customers. This will help their organization to bring several innovative policies for their
customers and increased their job markets. The selected strategic alliance helps an organization
to motivate them towards several strategic alliance and provide several strategies to be accepted
by British airways for this international strategic alliance for stock it will also help them to
overcome several challenges which they can face in order to enter international market.

REFERENCES
Books and Journal
Bowker, L., 2020. Machine translation literacy instruction for international business students and
business English instructors. Journal of Business & Finance Librarianship, 25(1-2),
pp.25-43.
Calma, A. and Suder, G., 2020. Mapping international business and international business policy
research: Intellectual structure and research trends. International Business Review, 29(3),
p.101691.
Gholipour, H.F. and Foroughi, B., 2020. Business sentiment and international business travels: a
cross-country analysis. Journal of Travel Research, 59(6), pp.1061-1072.
Luo, Y., 2020. Adaptive learning in international business. Journal of International Business
Studies, pp.1-21.
Peterson, M.F., Arregle, J.L. and Martin, X., 2020. Multilevel models in international business
research. In Research Methods in International Business (pp. 417-432). Palgrave
Macmillan, Cham.
Ratten, V., 2020. Coronavirus and international business: An entrepreneurial ecosystem
perspective. Thunderbird International Business Review, 62(5), pp.629-634.
Schmitthoff, C.M., 2020. International business law: a new law merchant. In Current Law and
Social Problems, II (pp. 129-153). University of Toronto Press.
Šilenskytė, A. and Smale, A., 2020. Multilevel theorizing in international business: the case of
research on strategy implementation in MNCs. critical perspectives on international
business.
Takino, M., 2020. Power in international business communication and linguistic competence:
Analyzing the experiences of nonnative business people who use English as a business
lingua franca (BELF). International Journal of Business Communication, 57(4), pp.517-
544.
TORSELLO, M. and WINKLER, M.M., 2020. Coronavirus-infected international business
transactions: a preliminary diagnosis. European Journal of Risk Regulation, 11(2),
pp.396-401.
van Witteloostuijn, A., Eden, L. and Chang, S.J., 2020. Common method variance in
international business research: Further reflections. In Research methods in international
business (pp. 409-413). Palgrave Macmillan, Cham.
Vandenberg, R.J., 2020. Multilevel models in international business research: A commentary.
In Research methods in international business (pp. 433-438). Palgrave Macmillan, Cham.