International Strategic Alliance in Business

This report discusses the concept of international strategic alliance in business and its impact on competitiveness and market expansion. It explores the benefits and challenges of forming an international strategic alliance and provides recommendations for successful implementation. The case study of British Airways and its alliance with Oneworld is used to illustrate the practical application of international strategic alliances in the airline industry.

INTERNATIONAL
BUSINESS

EXECUTIVE SUMMARY
The report defines the understanding of international business and the concept of
international business is based on the fundamental that when an organisation operate ad trade
their goods and service across different borders and nations, the activities of the company are
carried into international business environment. International business environment creates an
opportunity for business to enhance their competitiveness by reducing the risk and uncertainties
that can be done through joining with different companies. Such alliance enables business to
improve their performance that can be helpful for generating higher revenues, facing challenges
effectively and managing organisational success. The report defines different approaches and
strategies of business in order to meet targets and objectives. The study also lists the several
benefits of forming an international strategic alliance. A critical examination of the worldwide
strategic challenges that are linked to the partners that are involved. The research will cover a
few recommendations for the company to implement more appealing methods in order to
achieve more success and prospects.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
TASK...............................................................................................................................................4
LITERATURE REVIEW................................................................................................................4
Define the use of international strategic alliance in foreign market expansion...........................4
ANALYSIS AND DISUSSION......................................................................................................7
Analyze the motivation behind the formation of international strategic alliance........................7
Define the benefits and challenges of international strategic alliance selected to the partners
involved.......................................................................................................................................8
Recommendations......................................................................................................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
International business is the trade of goods, services, technology, knowledge and capital
around national borders or at global level. The international business requires transactions of
business activities which involves cross border transactions and activities. International business
can be done through various mediums, which are related to exporting, licensing, franchising,
joint venture and Foreign direct investments (FDI). International trade refers to the exchange of
products, services, or resources between two or more countries beyond national borders. An
international strategic alliance is a partnership between a company and its parent company that
operates in various nations (Buckley, Enderwick and Cross, eds, 2018). Airline alliance is a
mutual agreement between group of airline companies to cooperate and manage all business
activities with the motive of earning maximum profits. British Airways is an airline operating in
UK and is one of the second largest airline after Easy Jet. The parent company of British
Airways is International Airlines Group. The headquarter of the company is in London, UK.
British Airways offers airline services over 160 destinations which involves 8 domestic flights
and 24 flights in US. British Airways has an international strategic alliance with Oneworld which
is an airline alliance. The report defines the literature related to use and practice of international
strategic alliance through which a business can operate in global market and industry. The report
is based on identification of various motivation factors for formation of international strategic
alliance and determine the benefits and challenges of international strategic alliance which are
faced by partners while operating in international markets.
TASK
LITERATURE REVIEW
Define the use of international strategic alliance in foreign market expansion
International strategic alliance- International strategic alliance is a collaborative
arrangement between organisation and parent companies operating in different countries.
International strategic alliance can engage in one activity or a combination of activities which
can be categorized under different classifications, such as- licensing, franchising, management
services, manufacturing, marketing, supply chain and others (Collinson and et.al, 2020). An

alliance is a living testimony to a type of collaboration that takes place in the economic space
over a specific time frame, with the aim of meeting the organization's goals.
Types of international strategic alliance- Strategic alliance is mainly classified under
three categories which involves- joint venture, equity strategic alliance and non-equity strategic
alliance. Such approaches help business in formulating value by improving their present
operations that can help in modifying in in current competitive business environment. There are
a variety of approaches available for a company for entering a new market (Di Giovanni,
Levchenko and Mejean, 2016). By classifying and understanding the types of alliances, it helps
the business to form strategy for entering in international markets. The different types of
international alliance are- single local alliance, multiple local alliance, single global alliance and
multiple global alliance. The types of international strategic alliance are described below:
MULTIPLE LOCAL ALLIANCE
To get access to certain markets, a firm might
form alliances with several local partners.
When the target market is vast and divided
into several groups, this option is appropriate.
An industry formed up of industrial verticals
is a good example of where a new entrant
may form many distinct partnerships without
risking contradicting interests.
MULTIPLE GLOBAL ALLIANCE
Companies that need to expand their
worldwide footprint quickly seek out
numerous worldwide partnerships to get
access to new markets. Firm aspires to
broaden its worldwide reach through multi-
country alliances. Businesses can gain faster
access to numerous international markets by
forming multiple global alliances (Di
Giovanni, Levchenko and Mejean, 2017).
Furthermore, having many worldwide allies
reduces the firm's risk in the process, while
also providing the benefit of obtaining
expertise and relationships particular to other
markets. These partnerships are common in
high-tech start-ups that need to go to market
quickly and have a worldwide presence.
SINGLE LOCAL ALLIANCE
A local alliance is appropriate for a late entry
SINGLE GLOBAL ALLIANCE
To remain competitive in a global sector, a

trying to break into an established market
with fierce competition and challenging
distribution (Eicher, ed, 2016). A domestic
partner might be a manufacturer, a distributor,
a reseller, or a retailer, depending on where
the company wants to place itself in the
industry value chain.
company may need to form a worldwide
alliance. Because it spans a large geographical
region and helps the partners to strengthen
each other's key skills, a global one might
hasten the firm's internationalization. The
goal of a single global alliance is for the two
partner companies to combine their resources
and skills and go to market together on a
global scale.
Use of international strategic alliance- Star Alliance, Sky Team, and Oneworld are
three worldwide airline strategic alliances that facilitate links and relationships between firms in
order to collect and stand simpler. The first airline alliance, Star Alliance, was formed on May
14, 1997. When Air Canada and Lufthansa for Thai Airways got together to grow their
commercial and wealth cooperation, De Star Alliance provided in Habitat continent to the
business. The Sky Team Alliance is a relatively young organisation that was formed in 2000 and
is the second biggest by number of airline members (Forsgren, Holm and Johanson, 2015). The
Oneworld alliance, which includes 13 of the world's biggest airlines and roughly 30 affiliates,
includes British Airways. The company give services and value to consumers and carriers that
the member airlines could not provide on their own. In 1998, American Airlines or British
Airways, Cathay Pacific, and Qantas created the second strategic alliance, Oneworld. Several
members are included in this alliance, which represents a considerable increase in the alliance's
capacity. Alaska Airlines, British Airways, Cathay Pacific, Qantas, Qatar, S7 Airlines, and
Srilankan are among the Oneworld members.
British Airways is a founding partner of the Oneworld alliance and one of the most well-
known airlines in the world. British Airways and American Airlines formed a strategic
partnership in 1993 to provide the two airlines better access to North American and European
markets, respectively. The Group has a variety of monopolistic practices joint ventures that allow
the parties to collaborate on network, pricing, code sharing, and reciprocal frequent flyer
rewards, among other things. The Atlantic joint venture with American Airlines and Finnair, the

Siberian joint venture with Japan Airlines and Finnair, the Qatar Airways joint venture, and the
China Southern joint venture are among them. Strategic partnerships may help companies
expand their worldwide footprint and get access to new markets. International collaborations not
only help businesses get access to worldwide markets, but they also help them improve their
competitiveness by using the capabilities of their partners, which allowed British Airways to
expand their market presence.
Because of the possible economic effect and various issues such as migrating work force
and changes in laws and regulations that are established by the new authority, every aviation
industry is affected by Brexit. The British Airways Alliance focused on improving traveler
connections throughout the low-cost network which can help business to enhance their market
presence and cover large market area (Geppert, Becker-Ritterspach and Mudambi, 2016). British
Airways aims to improve their competitiveness so that they can achieve more success. British
Airways formed a strategic agreement with the goal of entering a new market and reducing
market rivalry. This also helps the airline split its risk elements to achieve economies of scale.
The international strategic alliance of British Airways with Oneworld offered opportunity to
business to operate in global market through which they can interact with huge number of
customers, divide the risk and uncertainties which will be faced by the company and it will be a
helpful approach for British Airlines to diversify their target market and enhance their presence
in the international markets. International strategic alliance offered an opportunity for British
Airways to enhance the competitiveness of the business through which the company can increase
their revenues and maximize the profitability of business by diving the global risk which can
create an adverse impact on the operations of the organisation.
ANALYSIS AND DISUSSION
Analyze the motivation behind the formation of international strategic alliance
Motivation for forming a strategic alliance in order to join the international market; it
helps the company in increasing production, sharing skills and information, and gaining
competitive advantages (Knudsen and Moon, 2017). Expansion of resources, diversity of
resources, imitation of resources, and specialization of resources are the four primary motivators
for developing strategic alliances for the business.

There is numerous motivation factor for British Airways to create a strategic alliance,
including the opportunity to grow market share, boost competitive advantages, and build
economies of scale. It also helps the organisation in gaining additional access to supplementary
resources, as strategic alliance is a cooperation agreement of companies from several countries.
British Airways used strategic alliance to increase company performance, and in order to begin
an international alliance, British Airways took certain procedures, the most important of which
was selecting a relevant and acceptable relationship for their firm (Kolk, 2015). The primary goal
of British Airways' joint venture is to promote the companies in different nations. Furthermore,
British Airways will discuss their common values and market share in order to make choices,
and then the operation done as part of the partnership in order to assess the impact of their
company. There were several factors which worked as motivation for British Airways to focus
on international strategic alliance, some of these factors includes-
 British Airways can receive access to resources or information from collaborating
companies that it would not otherwise have.
 Access to innovative managerial and technological expertise, financial resources, and
opportunity to learn about overseas markets are among British Airways' motivations.
 Another motive of British Airways is to obtain economies of scale through horizontal
partnerships and/or input supply security.
 The motivator for British Airways is the opportunity to share the risks and expenses
associated with international expansion into new and/or uncertain geographic areas.
 With the help of strategic alliance, British Airways focused to maintain their competitive
position among competitor companies, understand the dynamic business environment and
have wide industry and market coverage.
Define the benefits and challenges of international strategic alliance selected to the partners
involved
International strategic alliance- International strategic alliance is formed by merger of
two or more companies from different domestic backgrounds come together to achieve
organisational objectives (Kolk, Rivera-Santos and Rufín, 2018). International strategic alliance
in the airline industry is highly regulated and can be determined through bilateral government
agreements.

Benefits of international strategic alliance
British Airways focused on facing the oligopoly market to attracting more opportunities
for business success which can be done through international strategic alliance of business. There
are several benefits of international strategic alliance which has been an advantage for British
Airways, some of the advantages are listed below:
 While British Airways was operating through strategic alliance, it helped the company in
improving their competitiveness in the domestic as well as global market in which the
business was operating.
 International strategic alliance helped British Airways to target opportunities at global
level which led to opportunities through which the company enhanced the scope and
speed of operations performed by business (McWilliam and et.al, 2020).
 International strategic alliance was a medium to improve the proficiency of business in
relation to perform activities quickly and enhance their cash flow which will be a helpful
source of avoiding and facing uncertainties.
 International strategic alliance was a medium for British Airways to operate globally
through which they can widen their target market and generate higher revenues and
business profitability.
 The international strategic alliance was an opportunity for British Airways to make their
business innovative and competitive which was helpful for facing high competitive
business scenario.
 Through strategic alliance, it was an opportunity for British Airways to strengthen and
expand their market presence by offering seamless services to their customers.
 British Airways international strategic alliance enables it to promote more locations and
reach more people without having to conduct operations (Meyer, 2017). Member airlines
can provide flights to much more locations than they could on their own by pooling their
networks.
 International strategic alliance supported British Airways to diversify their business,
expand market development, gain competitive advantage in relation to cost and improve
the cash flow of business.

Challenges of international strategic alliance
The effects of strategic alliances on service quality, economic performance, and fares are
evaluated. Market concentration has a number of consequences, including effective
monopolization of nonstop services between alliance partnership centers and a modest reduction
in concentration in markets where the alliance partners provide connecting services (Nambisan,
Zahra and Luo, 2019). Overall, the findings indicate that alliance influence is redistributive.
Some of the challenges faced by British Airways due to international strategic alliance are listed
underneath:
 The strategic Alliance's primary drawbacks come when British Airways is forced to get
into a joint venture that requires investment. When an adequate set of contracts and
distinct transfer prices are in place for any type of plan from a partner in order to form a
joint Alliance, the majority of disputes are avoided, and the majority of joint ventures
manage to prevent conflict action among partners.
 Another challenge for British Airways is profit sharing, because when the company's
revenue is split, it travels to multiple countries, each of which cannot sustain the
company's economic growth.
 It's also possible that it's difficult for their competitors, because many business lack
access to information technology or any type of business plan with their partners. More
skills and expertise are required to embrace more technology, which might result in
higher costs for the company.
 Another challenge faced due to this strategic alliance is financial blockage, as there are
multiple companies connected, and British Airways does not wish to share their financial
operations with their partner (Nielsen and Raswant, 2018).
 Choosing the incorrect partner may be costly for British Airways, if the company
is unable to contribute to company's growth and provide a level of commitment, honesty,
and integrity to the relationship.
 An alliance can't be built on if there isn't some level of trust and honesty. Before a
partnership is formed, it is critical for British Airways and other parties seeking an
alliance to establish their expectations clearly and precisely.

Recommendations
From analyzing the above quoted information, several strategies can be formed which
can help British Airways to enhance the operations of business and enhance the competitiveness
of the business. The strategies which will be helpful for enhancing the business position and
perform all functions effectively. Some of the recommendations for British Airways are listed
underneath:
 If British Airways wants to enhance their profitability and efficiency, they must use a
variety of strategies based on their customers' perceptions of the market (Schworm and
et.al, 2017).
 It is also suggested that British Airways must employ certain successful strategic
alliances in order to grow their client base and satisfy the needs of the marketplace,
allowing them to modify their approach.
 It is also necessary for the British Airways to use franchising as a technique of business
growth so that it may grow and improve by reaching out to the global market.
 It is also suggested that British Airways can enhance their skills and expertise in order to
adopt updated technologies that will help them to raise their efficiency and effectiveness
and overcome the problems that they are facing (Van Witteloostuijn, 2015).
 It is also advised that British Airways must identify its prospective and effective partners,
as well as do research on those partners, in order to set profit goals and enhance business
profitability.
CONCLUSION
According to the report, it can be summarized that international business is an approach
of performing business activities all around the globe or across national borders. The strategic
alliance helps a business to effectively implement the strategy in order to succeed in global
market and gain competitive advantage. It is one of the approach which helps a business in
operating in global markets and offers an opportunity to improve the economy and meet
organisational goals through which business can gain competitive advantage. Strategic alliance is
one of the medium through which a business can collaborate with other companies and operate
their managerial activities in different countries with the objective of earning maximum profits
and increase he profitability of business. There are several approaches which offer a business an

opportunity through which business expansion can be made, some of the mediums involves
export business, franchising and foreign direct investments. International strategic alliance offers
benefits which can be an advantage for business that can enhance profitability and business
position in the industry. International strategic alliance also creates challenges for business which
creates a difficulty for busies while operating in international markets. There are various
strategies which can be helpful for business can be helpful enhancing business performance.

REFERENCES
Books and journals
Buckley, P. J., Enderwick, P. and Cross, A. R. eds., 2018. International business. Oxford
University Press.
Collinson, S and et.al., 2020. International business. Pearson UK.
Di Giovanni, J., Levchenko, A. A. and Mejean, I., 2016. The micro origins of international
business cycle comovement (No. w21885). National Bureau of Economic Research.
Di Giovanni, J., Levchenko, A. A. and Mejean, I., 2017. Large firms and international business
cycle comovement. American Economic Review. 107(5). pp.598-602.
Eicher, S. ed., 2016. Corruption in international business: The challenge of cultural and legal
diversity. CRC Press.
Forsgren, M., Holm, U. and Johanson, J., 2015. Knowledge, Networks and Power—The Uppsala
School of International Business. In Knowledge, networks and power (pp. 3-38). Palgrave
Macmillan, London.
Geppert, M., Becker-Ritterspach, F. and Mudambi, R., 2016. Politics and power in multinational
companies: Integrating the international business and organization studies
perspectives. Organization Studies. 37(9). pp.1209-1225.
Knudsen, J. S. and Moon, J., 2017. Visible hands: Government regulation and international
business responsibility. Cambridge University Press.
Kolk, A., 2015. The role of international business in clean technology transfer and
development. Climate Policy. 15(1). pp.170-176.
Kolk, A., Rivera-Santos, M. and Rufín, C., 2018. Multinationals, international business, and
poverty: A cross-disciplinary research overview and conceptual framework. Journal of
International Business Policy. 1(1). pp.92-115.
McWilliam, S. E and et.al., 2020. Global value chain governance: Intersections with
international business. Journal of World Business. 55(4). p.101067.
Meyer, K. E., 2017. International business in an era of anti-globalization. Multinational Business
Review.
Nambisan, S., Zahra, S. A. and Luo, Y., 2019. Global platforms and ecosystems: Implications for
international business theories. Journal of International Business Studies. 50(9). pp.1464-
1486.
Nielsen, B. B. and Raswant, A., 2018. The selection, use, and reporting of control variables in
international business research: A review and recommendations. Journal of World
Business. 53(6). pp.958-968.
Schworm, S. K and et.al., 2017. The impact of international business education on career success
—Evidence from Europe. European Management Journal. 35(4). pp.493-504.
Van Witteloostuijn, A., 2015. Toward experimental international business: Unraveling
fundamental causal linkages. Cross Cultural Management.