International Strategic Alliances in the Aviation Industry

This report discusses the concept of international strategic alliances in the aviation industry, focusing on British Airways. It explores the motivations behind forming strategic alliances, the benefits and challenges faced by British Airways, and alternative market entry strategies. The report also highlights the importance of alliances in expanding business operations and providing enhanced services to customers.

INTERNATIONAL
BUSINESS

TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION...........................................................................................................................4
LITERATURE REVIEW................................................................................................................4
ANALYSIS AND DISCUSSION...................................................................................................7
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1

EXECUTIVE SUMMARY
Strategic alliance is a kind of arrangement among two or more institutions that have decided to
share their rootage in order to achieve specific and mutual benefit of any project. In this strategy,
the partnered firms are able to work towards the achievement of a common goal.
British airways are a carrier airline company based in United Kingdom. This airline is the second
largest airline carrier company in the world. In this report various international strategic alliances
in order to enter into the foreign market had been discussed along with the understanding of the
motivations behind this formation of joint venture that had been selected by British Airways as
its alliance strategy. Apart from this, the study also described the benefits and challenges that had
been faced by British Airways while involving various partners along with suitable alternative
strategy options that would be able to get advantages after avoiding certain drawbacks.

INTRODUCTION
Internal national business described as the trade of goods and services, resources,
equipments or information across the national boundaries. It includes cross border transactions of
products and services among two or more countries. International business helps organizations in
order to enhanced their revenue generation, decreases the amount of competition, able to better
handle risk through proper management, benefit their firm with the involvement of currency
exchange services and many others (Varelas, S., and et.al., 2019). International business consists
of import and export of products as well as services with the help of licensing facility in order to
send or receive goods and services from other countries or even export to different countries. It
involves various countries rules and regulations in order to legalise the business activities or
complete the whole procedure in highly ethical manner (Williams, 2017).
This report is about the international strategic alliances done by British Airways in foreign
market expansion along with the understanding of the motivation behind the formation of
selected strategic alliance. This study will also highlight the concept of benefits and challenges
faced by them along with recommendations for alternative market entry strategy.
LITERATURE REVIEW
As per the view of Zhang, (2018) alliances is very old and traditional concept as its usage
always been a part of the social and political structure. Usage of alliances is a strategic business
tool because it helps the firms to sustain or even retain their image within the market space.
International strategic alliances are typically described as collective arrangement between
organizations that are headquartered in assorted countries. Domestic partner firms remain
lawfully self-directed after the formulation of confederation and the association affiliation is
comparatively imperishable. World-wide strategical confederation can be classified along
aggregate conceptions. First dimension is founded upon the types of actions of cooperation;
planetary plan of action connection can be divided into concession, permit, demand problem
solving and evolution, industry, management services, merchandising and some another. An
organization can engage in either of the activity or in combination of strategies. Second
dimension is founded on the amount of partners concerned as the worldwide plan of action
alliances can be multilateral or bilateral. Third dimension is based upon the nationalities that are
involved as it defined as the collective arrangement between firms out of one is headquartered in

some other state of confederation, therefore an planetary plan of action coalition is categorised as
location and home, interior location and host or home and third territorial division fusion. Fourth
based on the involvement of assets finance, global strategic coalition divided into non-equity
based and interest based bonds.
Somsen and et.al., (2019) states that companies decides to form international strategic
alliances for so many reasons, out of which one of the most important reason is to attain access
to another company’s knowledge or resources. Some of the reasons for the development of
strategic alliances include
Formation of economic of scale which enables the participating firms to organize a broad set of
resources and achieve the essential group required for international success, enhancement of
competitiveness which shows that technological and administrative complexity enhances; the
firms are also learning that they are unable to do anything by themselves and thus most
competitive firms adopts such strategies of maintaining their core competencies, dividing risks
is the most often seen activity in order to mitigate or share risk of production and developing
new products, setting of new and innovative standards for technology as formation of new
alliances is an approach to establish standards in an industry, entering into the new market
which is an effective way of entering into new foreign markets and the last is to overcome the
competition in the market for which companies often cooperate in marketing and distribution
in order to overcome competition (Babić, Tatalović and Bajić, 2017).
According to the Hartmann, (2019) the flourishing worldwide merchandising is
becoming the standard at this time and such business concern are influences the growth of the
firms finished with connections with worldwide domestic partners in which both the firms are
blend and advantage the competitive advantages. The firms do this activity with the help of
licensing agreements facility or cross share holder deals. Rather than wasting the time and taking
risks of activities as well as large amount of medium of exchange for profit this contending
benefits in enterprise concern. They are entering into the international market with the help of
finding an appropriate way which is already in operation that similar market in some other
administrative district. So, they get into the market in which they desire to enter as the main
explanation behind this is to parcel information, abilities, talents and expertness to defeat the
situation of monopoly within the market place in which business persists.

In the view of Ginieis, Hernández-Lara and Sánchez-Rebull, (2020) traditional industries
or firms try their maximum to do their business activities on their own and independently as they
believes that partnership shrinks the profits margin of the firm. Sometimes it has been analysed
that high entry barriers discourage individual companies and under such circumstances
companies build strategic alliances and networks in order to level the hurdle. The industry
possible get-up-and-go the organizations on mutually exclusive merchandise to set up plan of
action confederation and schemes to materialise the commercial prospective of new and
innovative products. It has been analysed that important connections and network functions
within conventional regulative and legitimate structure. In few territorial division, government
compulsory provide restrictions on whole closely-held auxiliary. In such scenario, worldwide
business organizations have solely on option which is to make an confederation with a localized
unshakable in order to come in the new market. When any organization tries to move
independently or on their personal, they look many pressures and criticism from analysts,
investors as well as the media. In such situations, firms prefer to collaborate with other firms in
order to increase or protect its brand image in the competitive market space. The organizations
select the point of reference industry in which they want to enter and do their business
operations. After selecting the correct market they come up in front with a strategic plan which
will be most suitable for them to enter into international market. Companies utilises all
communicator of both the firms to exploit existent communicator and explore new and
innovative possibility. The major anxiety for this utilization is to enhance the fruitfulness and
skilfulness using the current engaged superior and possession considering principles.
As per Kusumawardhani and Matauseja, (2020) it has been evaluated that to flourish and
cultivate business as a franchisee there are certain ways to find out creative new and innovative
ways to enlarge and evolve into new marketplace. Plan of action enterprise alliances kinship
have mature immensely touristed and suffice as a substance for some affairs to enhance their
trade name cognizance along with resources, without increasing additional time or experiencing
important fiscal effect. Before choosing any firm in order to start their business activities with
the partnership firm, company should serve similar services from their own system and into
similar market. After the identification of business with which it can able to build mutual
advantageous business organization, it will be ready to abolish a kinship with the representatives
and builds strong alliances. With the help of strategic business alliances, company is able to get

certain benefits which includes company will able to access new and supplementary services
because with the help of alliance, firms are able to provide new services to their customers
without losing focus on its capabilities and specialised services. Next is it provides various
opportunities to range into new securities industry as ingress into important alliances
mechanically enhance awareness of a brand among new market and they are more easily able to
reach towards new market. It also helps to increase brand awareness as with the help of
partnership with the firm who are already providing their services into the market space also
provides various benefits to the firm in order to popularize their own services as well in order to
approach more consumers to provide brand awareness as if the brand awareness is not growing,
the business also unable to grow. It also benefits in order to access to new customer base as it
helps to provide various important opportunities to the firms.
On the other hand Abidi and et.al., (2019) share their views in the contrast that there are
certain challenges as well that has been faced by the firms with strategic alliances such as if the
firms are unable to choose the right partner for doing partnership then it damages the existing
business activities as well in the market space. Because partnership requires huge amount of
faithfulness, righteousness and state through which both the firms are able to attain advantage.
Believes is one of the sizeable state of affairs of entrance a strategical confederation is guarantee
that the commercial enterprise care is active for providing profits to both enterprises that are
participating. Without honesty and trust, human relationship has no fundament to habitus on as it
is crucial for both affairs to create as it also generates lot of challenges for the firms. It is also
important to understand the timings at which the reassessment of the partnership needs to be re-
alliance as it is highly important to ensure that alliance is able to mutually benefit both the
parties.
Park and Kim, (2021) described in their study that apart from strategic international
alliance, there are various other alternative market entry strategies such as joint venture which
are utilised to establish a group of firms which creates a separate legal entity in the international
market place. Another alternative is cooperative arrangements which has been illustrate as it is a
type of written understanding that has been establish with one or more foreign governments or
international partners that describes the willingness to do participate in business activities with
fulfilment of trust and reliability factors.

ANALYSIS AND DISCUSSION
In international aviation, new forms of cooperation between firms have emerged in current
years, with strategic airline alliances encompassing cooperation on international scale in several
instances. British Airways was a beginning member of the one world alliance which was
launched in 1999 various other airlines firms (Sergeev, 2019). The one world alliance brings 13
of the world’s leading airlines together in order to provide highest level of services along with
smoothest connections to more than thousands of destinations across the world (O’Connell and
Connolly, 2017). From initial stages of check in to other functions of the airlines, all the
members of the alienated airlines work together to make their customers flying experiences as
good and pleasurable as possible. British airways also operates in joint ventures business
agreement which help the British airways to give more choices to their consumers as they are
operating in different sectors and varieties of airline services through which they are able to
approach almost all around the world’s destinations and thus provide services to various clients
all over the world (Lee and Bach, 2017). British airways teamed up with various other airlines to
make their customers international travel experience easier and appropriate as well as more
rewarding. British airways offers great deals in fares, smoother connections, use it from any
airline website, integrated customer support and extensive network facilities to their clients. They
offers more of the flight choices to their guests to utilise services according to their own
preferences, choices, better connections, and at better prices. In order to expand their business in
global markets of Doha and beyond that, British airlines have teamed up with Qatar airlines to
make the experience of travel more memorable for their consumers. With the help of each other
or jointly they are able to provide services to their clients with providing great prices (Heiets,
Spivakovskyy and Spivakovska, 2019). Using of British airways and Qatar airlines websites for
bookings if flights also able to provide online boarding pass facilities to their customers along
with online check-in facility. With the help of strategic alliances and joint ventures the British
Airways is able to enter into the new market space and able to provide various innovative
services to their customers due to which they highly recognised by different customers all over
the world.
The major motivation for British airlines behind the joint venture and strategic alliance
arrangement is the plan of action to foreclose introduction of competitors. These strategies helps
to block entry through pre emptive patenting along with overcoming regulatory constraints

which shares that symmetrical concords has constricted the exemption of single regular
transportation and has affected business relation in the planetary air conveyance commercial
enterprise (Wever, 2017). Facing these restrictions while entering into new market creates
situation for airlines to choose effective strategies in which British airways chooses alliance and
joint venture strategy to enter into new market and offer their customers new and modified
services. Such strategic alliances and joint venture benefits the customers in two major ways i.e.
through criterion personalty and finished with tie-in outcome. Scale of measurement effects are
accompanying to the filler of the system which contains proportion of direct flights (King, 2017).
Other scale is the link effect which is related to the service connectivity which includes comfort
for travellers in making relations where numerous social unit are concerned. Such alliance
enables the partners to enhance the efficiency and help in reduction of disbursal by edging down
the rigid reimbursements and prepares superfluous operations. With the help of alliance
strategies, British airways are more appropriately able to fulfil the requirements and demands of
particular routes highly demanded by the passengers. It also provides employment to various
people and staff at various offices and airports which also benefited the society at large.
Moreover, due to planetary existence and skilfulness of activities among partners members are
able to boost their sales revenue by huge amount which is highly considerable. It also provides
cost reduction through joint purchasing (Matikiti, Mpinganjira and Roberts-Lombard, 2019).
Alliances also allow British airways to enhance their abilities to workout activity cognition and
cut down the steady of subject matter. Transportation which antecedently contend to path can
concur to collaborate and thus acquire agonistic vantage ended their current state. Another key
understanding for the airway group action is the significance of cost-cutting measure from the
compactness of traveller flows. Although the efficiency of scale of measurement in trading
operations seems to be comparatively more limited as there are very unsubtle schemes to be
obtained from producing intense flows of passengers which boosts seat consumption and enable
the usage of well-built and inferior unit cost aircraft (Andreea and Anca, 2018).
In context of British Airways, there are various benefits along with challenges have been
faced by the firm with their particular joint ventures. Strategic alliances have been seen as a
fundamental change into the business environment of greatly liberalised and globalizing airline
market (Halpern, 2018). They arises for the intention of the flights in order to cut costs, gain
easier access to foreign market, improve technical efficiency and gather the expansion from

networks. It has been evaluated that ample number of countries made outstanding amendments in
liberalising planetary air conveyance rules and regulations, and participating into complete
market position (Forsyth, 2017). During that time, airline industry goes into major
transformation and saw drastic alliances and merger among various companies in order to
strengthen their brand image and presence into the market environment which is characterised by
strong competition. With the inclusion of strategic alliance and joint ventures, British airways
get various benefits such as with the help of these strategies, they are able to share their
determinate reimbursements and informant, elaborate their dispersion passage, able to broaden
business and governmental contact base, vantage more of knowledge of global impost and
society, deepen brand icon into the universe market space (O’Connell and Connolly, 2017).
However, on the other hand in spite of major advantages, there are certain disadvantages as well
due to which the strategy were criticised on various points such as alliances unable to respect
anti-monopoly pattern as they can effect in the situation of some companionship from the
marketplace and misdemeanour of fair social event regulation, confederation could lead towards
the unwellness of some institutions that have to compete as low cost firms (Gayle and Xie, 2018)
due to their relation on many key components and their combative securities industry
representation, connection increases which makes the business concern of firms become more
complex in nature, it also weaken the administration engagement, fear of market detachment due
to local partners, less businesslike connection among them, poor assets allotment, difficult to
keep verifiable on reference point and loss of powerfulness over company choice, operational
costs and worker have been faced by British airways (Abate, Christidis and Purwanto, 2020).
Alliances also unable to British airways which were the leading relative to welfare themselves
from the little partners take down operating cost. A major factor that affects the airline was the
labour cost which can be different between neighbouring countries. Some of the littler airline
business with let down remuneration rates highlighted this expenditure assets by having debased
administration and elevated expending (D.L., 2018).
Thus by seeing the above disadvantages, it has been recommended to the British airways to
follow other strategies as well in order to avoid such kinds of risks such as contractual agreement
which includes transferring of technologies, human skills and processes in order to run the
business in effective manner (Forsyth, 2017). Their advantage is that company will easily able to
enter into international and new market because of proper and effective knowledge about the

type of services required by passengers in advance (Merkert and Alexander, 2018). Another
strategy that may be taken by British airways is the Consortia which is also a type of joint
venture and utilised to reduce different risks that are involved in joint venture as it utilises
different financial and managerial resources and established among large number of participants
along with operates in a country which is related to any participant of consortia (Kılkış, 2017).
CONCLUSION
From the above report it has been concluded that plan of action connexion is one of the
most enforced strategy in the worldwide competitor marketplace . And thus it is most commonly
utilised strategy by the airlines companies which have an outcome in the securities industry to
boost up the system of a nation. It assistance in the creation of geographical bonding among
countries in which they are able to share competitive rewards and takes out brand-new and
innovative policies and products for the customers and enhanced the task activity in this
existence. Although along with various advantages the strategy also shares many disadvantages
as well. Thus this phenomenon is evident for some airlines companies at certain point of time
otherwise there are other alternatives also available that can be utilised by British airways in
order to avoid such disadvantages. Such services enable the airline to provide various benefits to
the passengers through reduced costs and through their effective services along with
enhancement of their own profit margins.

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