International Business and Strategic Alliances

This report provides an in-depth study of international business and strategic alliances. It explores the motivations behind forming strategic alliances and the benefits and challenges involved. The report also discusses different types of strategic alliances and their impact on organizations. Additionally, it covers expansion methods used by businesses to enter international markets.

SAMPLE

Executive Summary
International business refers to the organizations who are involved in providing their products
and services in the global market in order to achieve more customer base. This report has an in-
depth study of international business and contains an organization who want to get more
opportunities and overcome the challenges by improving their capacities as well as performance
in the market. There are several advantages as well as disadvantages of utilizing international
strategic alliance which has also been identified by the organization.

Table of Contents
Executive Summary.........................................................................................................................2
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
International Strategies Alliance..................................................................................................3
Literature Review............................................................................................................................4
Analysis and Discussion..................................................................................................................6
Demonstrate an understanding of the motivations behind the formation of the selected
International strategic alliance.....................................................................................................6
A critical assessment of the benefits and challenges of the international strategic alliance
selected to the partners involved..................................................................................................7
Recommendations............................................................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11
Books and Journal......................................................................................................................11

INTRODUCTION
International business refers to the process of expanding business out of geographic boundaries
of a country increase sales as well as profitability in a business (Agrawal, 2020). International
business opportunity has been adopted by the organization to increase their customer base and
trade their goods and services out of the country. When an organization decided to expand their
businesses from more than one country they will have more opportunities to be grabbed and
more than just to be faced in the business world. British airways is the large organization and is a
flag Carrier airline of United Kingdom. The main hub is at Heathrow airport near its headquarter
in British airways is considered as the second largest UK based airline on the basis of passenger
as well as fleet size. This report is going to contain the various methods which an organization
used to enter into an international market and several reasons for which the organization wants to
expand their business internationally.
MAIN BODY
International Strategies Alliance
International strategic alliance is an alliance which has been considered by an organization when
they want to expand their business internationally. This generally means to establish and enter
into a collaboration with another company so that they can achieve and accomplish their
connected objectives. Strategic alliance is the best option chosen by an organization to expand
their business and achieve success in the international market by entering into a partnership with
two or more types of organizations and operates together by pulling their products and services
with each other. This feeling of their assets to attain several goals and objectives provide them
mutual benefits and create an effective strategic alliance.
Types of strategic Alliance:
When an organization decided to enter into a strategic alliance there are several types of options
which are available to them (Bhatti and Khalid, 2021). In order to enter into a strategic alliance
and organization is required to decide which strategic option they will choose to enter into an
alliance with another company. The several types of strategic alliance are given below:
1. Joint venture: A joint venture is a concept which helps to create a different kind of

alliance in which two parent companies join together to open a new child company
according to the terms of their strategic alliance.
2. Equity strategic Alliance: This type of strategic alliance a company purchase equity
shares of another company until a certain percentage which give them a right in the
organization. Companies able to have 40% or more than equity of another company then
they automatically have an equity alliance with that organization.
3. Non-equity strategic Alliance: In non-equity strategic alliance concept two or more
companies came together to sign a contract in which they have decided the terms and
conditions to pool their services as well as capabilities together to provide effective
services to their customers.
In order to overcome several challenges in an organization there are required to form a
strategic alliance and there can be many reasons to form this strategic alliance (Brueckner and
Flores-Fillol, 2020). This strategic alliance will help the organization to enhance their current
operations and capacities in the competitive market.
Literature Review
As per the viewpoint of Göv, 2020, Strategic alliance is an effective tool which has been used
by an organization to expand their business by having a partnership with an international
organization. A strategic alliance is a strategic plan of an organization by entering into a contract
with another company operating internationally with and motive to expand the business and
attain goals and objectives. This strategic alliance are formed between two or more organization
to overcome various us uncertainty is of the business and get the opportunities available in the
market. British airlines is a large organization who have membership of global airlines alliance
and have their several lines alliances with their partner alliances. Being a large organization they
can consider several other strategic alliance in order to start their business and expand more.
British airways is the founding member of one world alliance which has been launched in 1999.
This oneworld alliance helps most important airlines to bring together for providing their
effective level of services and good connection to about 1,000 destinations all over the world. In
case of joint business agreements British airways has given their customers with more choices in
their organizations such as American airlines, Finnair and Iberia to have a good global travel
experience to their customers in easier as well as more rewarding manner (Button, 2020). The

strategic as well as partnership alliance between British airways and Qatar airways will help the
customers to travel between UK and Doha and beyond with better prices connections and
supports from the airways. This type of alliances then with several types of airways by the
British airways to facilitate travelling to their customers. All the 13 airlines who are in the
alliance of oneworld are in the strategic alliances of the British airways. Some of the alliance
members of oneworld strategic alliance are given below:
 Alaska Airlines
 British Airways
 Cathay Pacific
 Qantas
 Qatar
 S7 Airlines
 Sri Lankan
It is not the one reason which on which a strategic alliance is created but has several
reasons to create and strategic alliance has it helps an organization to get success in the market.
Foreign organization in airline industry it is difficult to operate effectively if they would not
enter into any strategic alliance. Strategic alliance with other airline companies will help an
organization to provide more destinations to their customers which will enhance their services. In
case of the strategic alliance of the company with one world alliance helps them to provide
several services to their customers in the market and reduced competition from their competitors.
For this purpose only oneworld organization is working and has established in 1999 by the
British airways having a motive to connect all the airline organization to a strategic alliance to
provide effective travel services to the customers all over the world. British airlines is a best way
to get so many opportunities for the small airlines organizations such as EasyJet who wants to
connect with British airways in order to get several opportunities in the market.
As per the view point of Brueckner, and Flores-Fillol, 2020, Formation of strategic alliance can
be because of several reasons and in order to enter into a strategic alliance it is essential for an
organization to find a best partner available in the market to enter into that alliance. British
airways found several organizations dealing in airlines to be enter into a new partnership
opportunities for the joint strategic alliance (Clempner, 2020). Taking this in the mind they have

decided to enter into an alliance with Canada airlines and American airlines to form one world
organization to make it easy to formulated global business alliance. One of the three main
reasons for which British airways wants to enter into all types of strategic alliance such as joint
venture equity and non-equity type of strategic alliance is to reduce their transaction cost with
the help of negotiations in the market. Another reason for which the organization wants to enter
into a strategic alliance is to improve their competitive position in the market and have a power
in their hands to deal with in front of other airline organizations. One more reason to enter into
strategic alliance is is to adopt an organizational culture in which they will be able to learn from
their other partners which is required and important to be implemented in the organization. These
alliances have a number of benefits to the organization but it is essential for the organization to
assess the performance of the alliances whether they are profitable for the organization or not. In
order to assess the performance of the Allianz it is required that British airways should identify
several aspects which will help to assess their performance. These aspects include flexibility in
the management of the partnership building trust between the allies manager expectations of
partner's among each other constructive conflict management continuity of related and
responsible for the communication system of form and airlines constant exchange of information
between partners and many more.
Analysis and Discussion
As per the literature review provided by several authors there are several points which are
analyzed and observe (Göv, 2020). On the basis of observations and discussions it has been
understood that international strategic alliance is very essential and every organization has a
different motive to form a selected international strategic alliance. But it is not easy to form and
strategic alliance and requires several challenges to be faced by the organization or the partners
who are involved in the strategic alliance. On the basis of evaluation and discussion the
following points can be explained.
Demonstrate an understanding of the motivations behind the formation of the selected
International strategic alliance
The organizations get motivated to form and strategic alliance when they are insured that they
will not be able to operate or expand international business alone without any partner in
international markets. In case of airline industries in which they are required to provide services

to their customers from one country to another and it is essential for airline industry to have their
business in each and every country. It is not possible for an organization in airline industry to
expand their business with outlines (Yimga, 2020). To provide better service to their customers
British airways has decided to build a strategic alliance which will help them to gain more skills
and knowledge and also some competitive advantage which other organizations are not able to
get due to the strategic alliance. With the help of strategic alliance the parties of the alliance will
be able to share their value of market share and take decisions in accordance to the partnership to
measure its impact on the organization. The main motivation to the British airways to form a
selected international strategic alliance are given below
 It assist the organization to be more skillful and knowledgeable in order to reduce their
risk and uncertainty.
 This is strategic alliance helps the organization to use several tools and assets of their
strategic partners and have more resources for their business operations.
 This is strategic alliance will also support the organization to provide more opportunities
by learning the abilities from the partners.
 It will also provide several information regarding the future actions that they are required
to be taken by increasing their knowledge and understanding about the market.
 A strategic alliance helps to provide services to their customer to in every corner of the
world and will help to provide airline services to them (Kiarashrad, Pasandideh and
Mohammadi, 2021).
A critical assessment of the benefits and challenges of the international strategic alliance selected
to the partners involved
British airways airlines Thursday focus on entering into new markets and merging with other
airlines to get competitive advantage in the market. There can be several benefits and challenges
of these international strategic alliance to the British airways which are given below:
 This partnership in strategic alliance will help the company to increase their
competitiveness in global as well as domestic market.
 It helps them to attain their advantages scale in the global market which will help them to
improve scope and speed of their business.
 It also assist the British airways to enhance their capacity so that they can have as smooth

cash flow to fight with uncertainty as.
 This strategic alliance will also provide extended market to the British airways airlines.
 It will help the British airways to improve several opportunities so that they can provide
more innovative and competitive services to their customers in the market (Nalazek,
2020).
Disadvantages of strategic Alliance
Strategic alliance has several benefits which are provided above but apart from that they also
have some disadvantages to the organization which are provided below:
 In spite of having so much benefits a strategic alliance can be proven risky to an
organization and involves a lot of cost and in case of long lines it can be lost by the
organization.
 One of the major limitation of strategic alliance occurs in the case when an organization
has adopt the lines and requires to enter into a joint venture with sum investment in it. In
case of any conflict between the partners who have joined the alliance which cannot be
able to overcome then it can give a loss to the investment of the strategic alliance.
Although it has been observed that properly conflicts are managed among their respective
partners but still there are several cases which can rise conflicts in the organization
(Parast and Golmohammadi, 2020).
 Strategic alliance requires a proper investment it can block the financials of an
organization in this alliance. But British airways is an organization who does not want to
open their operations of finance with their partners in case of strategic alliance.
 It can be risky for the organization because if the organization has entered into a strategic
alliance with another organization who does not have any access to the information
technology which is not good in the airline industry. In order to adopt technology and
knowledge in the new organization it will require more cost for the organization which
would be shared by both of them.
 The revenues of the organizations who are in strategic alliance are divided between those
parties who are of different nation. Transfer of dividing money to another country will
not support the organization to boost their economy.
Expansion methods in order to expand the business:

In order to expand business there are several expansion methods which can be adopted by an
organization and enter into an international market. This will help them to enhance their
productivity and these methods to be used by an organization to enter in the international market
are given below
Acquisition: This is one of the popular method in which an organization has acquired the
business of another company in the market in order to collect fresh capabilities and technologies
of another organization (Ren, 2020).
Joint venture: In this concept the large companies wants to enter into and contract with another
organization to share their assets for the motive of a good profitability together.
Licensing: Licensing is one of the most used international expansion method in which an
organization is provided permission by another company to provide their services to the
customer in the same price for which they are provided by them.
Franchising: This method helps the organization to use the methods of the owner of the
company for a faucet in price which has been provided by the franchise to the franchisor and
through this the franchisee will be able to provide several services the franchisor is providing
another country.
Recommendations
The above analysis helps to provide some of the recommendations to the organization that is
British airways so that they can get competitive advantage in the market (Shalbafian, 2020). This
recommendation will also help British airways to expand their business in suitable manner full
stop some of the recommendations to British airways are provided below:
 It has been recommended that if you want to increase their profitability and customer
based out of their strategies in accordance with the perception of the customers of that
particular market.
 In order to meet the requirements of marketplace should enter into some strategic alliance
which will make their products and services better for their customers.
 To expand their franchising method which will help them to reach maximum people and
expand their business globally.

 With the increased use of technology all over the world it has been recommended to the
British airways to improve their skills and knowledge regarding ammeded technologies
and adopt them in their organization. These technologies will help them to increase their
efficiency and effectiveness for their further operations. It also helps them to overcome
the challenges of the market which are related to the adaptation of these upgraded
technologies.
 The organization is recommended to identify their partners by conducting a proper
research about potential ones so that they can increase their profitability (Schmidt, 2020).
CONCLUSION
The above discussion helps to conclude that a strategic alliance is an essential part to be
executed on the global market to get competitive advantages in the market. Strategic alliance
helps an organization to expand their business in global market and get a reputation as well as
brand image in the minds of customers which will help the organization to increase their income
and achieve their goals and objectives. By considering various advantages and disadvantages of
strategic alliance the organization has identified the methods of expansion they can use in their
business for bringing new policies for their customers so that they can increase their job markets.
Among this strategies there are also various strategies which are accepted by British Airways to
overcome their challenges they face to enter into international market.

REFERENCES
Books and Journal
Agrawal, A., 2020. Sustainability of airlines in India with Covid-19: Challenges ahead and
possible way-outs. Journal of Revenue and Pricing Management, pp.1-16.
Bhatti, K.M. and Khalid, S., 2021. Rent-seeking behaviour: knowledge transfer as informal
control mechanism in high technology alliances. International Journal of Business and
Globalisation, 27(1), pp.15-31.
Brueckner, J.K. and Flores-Fillol, R., 2020. Market structure and quality determination for
complementary products: Alliances and service quality in the airline
industry. International journal of industrial organization, 68, p.102557.
Button, K., 2020. Interactions of global competition, airlines strategic alliances and air traffic
safety. In Aviation Safety (pp. 525-544). CRC Press.
Clempner, J.B., 2020. Penalizing passenger’s transfer time in computing airlines
revenue. Omega, 97, p.102099.
Göv, S.A., 2020. Strategic Alliances in Airline Business: Comparision of Skyteam, Oneworld,
Star Alliance Groups. Yönetim Bilimleri Dergisi, 18(38), pp.815-837.
Kiarashrad, M., Pasandideh, S.H.R. and Mohammadi, M., 2021. Identifying and prioritizing the
essential factors on ticket pricing strategy in a local market based on empirical study:
Iranian domestic market. Journal of revenue and pricing management, 20(1), pp.76-87.
Nalazek, I., 2020. Global strategic alliances–a must or a no-go for small airlines.
Parast, M. and Golmohammadi, D., 2020. The Impact of Firm Size and Business Strategy on
Response to Service Disruptions: Evidence From the US Domestic Airline
Industry. IEEE Transactions on Engineering Management.
Ren, J., 2020. Fare impacts of Southwest Airlines: A comparison of nonstop and connecting
flights. Journal of Air Transport Management, 84, p.101771.
Schmidt, K.C., 2020. Strategic Alliances as a form of Coopetition and its impact on the
Performance of Airlines: A Case Study analysis of Lufthansa, Finnair, and Alitalia.
Shalbafian, A.A., 2020. Thematic Network related to partner selection in strategic alliances
(study Case: Iranian medical tourism businesses). Tourism Management Studies, (50),
pp.129-155.
Yimga, J., 2020. Price and marginal cost effects of on-time performance: Evidence from the US
airline industry. Journal of Air Transport Management, 84, p.101769.