International Strategic Alliances for Business Expansion: Benefits, Challenges and Alternative Market Strategy

This report evaluates the use of international strategic alliances in international expansion and understand the motivation elements behind the formation in international alliance that are making the companies to be part of internation allinance. Further, in these benefits and challenges of Sky team strategic alliance are determined and recommendation are presented for suitable alternative market strategy that is more suitable and effective for the businesses to adopt when they need to expand in the international market.

INTERNATIONAL
BUSINESS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Literature review.........................................................................................................................3
Use of international strategic alliances to expand internationally..............................................3
Motivation factor behind the international strategic alliance......................................................6
Benefits and challenges of international strategic alliance .......................................................7
Challenges for Sky team ............................................................................................................8
Alternative market strategy ........................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11
Executive summary
In this the international business effectiveness and way to make use of this type of businesses are
determined. The Skyteam alliances is the international alliance with different member from
various places in this the use of international strategic alliances for the business when they are
expanding internationally. The motivation factors which are making the companies to move
towards international expansion with strategic alliances. The benefits for the Skyteam and
challenges when they will make use of strategic alliance to expand in the market. An
recommendation of another strategy presented to recommend the companie who want to expand
in the market.

INTRODUCTION
International business defined as the trade or business of goods, services, technologies or
any other kind of commodities across the national borders at global level (Collinson and et. al.,
2020). The international organization is basically large and also assist to provide large number of
people. With the help of such business revenue get expanded as the operational scale get wider
and in this type business are usual with dynamic environment so with this they effectively
manage the risk. Sky team is an airline alliances having more than 630 million of passengers.
This report will evaluate the use of international strategic alliances in international expansion and
understand the motivation elements behind the formation in international alliance that are
making the companies to be part of internation allinance. Further, in these benefits and
challenges of Sky team strategic alliance are determined and recommendation are presented for
suitable alternative market strategy that is more suitable and effective for the businesses to adopt
when they need to expand in the international market.
Literature review
Use of international strategic alliances to expand internationally
According to the Czinkota, Ronkainen and Gupta (2021), the companies who want to
expand their business international presence in the new market place can make use of strategic
alliances. This help the companies to access and explore the international market and improve
the competitiveness. The international alliances are the mostly successful operations as they are
helping the companies to enter in new market and make use of their partners resources
effectively. To expand internationally company uses different types of alliances as per the need
and condition of the market in which company need to expand. In this Czinkota, Ronkainen and
Gupta (2020), explained that strategic alliances should jointly offer sharing the resources and
expertise which will provide the complete knowledge of commodities and its marketing
knowledge which will help in marketing the commodity in new market. The companies can
easily gain more profit and more return when they are expanding their business with this
approach because in this business can also make use of partners company resources. The risk
factors are also low because the companies provide all the information which is necessary for
company to perform the task.

On the lateral side Meyer (2017), said that the strategic alliances is also had some weak
factor which can cause negative impact on the company. The organization who is involving in
international strategic alliances then they may have fear of their insult in-front of other local
companies and partners. They are facing issue to remain its objective on target for long time, and
they are also losing the control as in the alliances the two parties are being involve in the
controlling of the business. When the customers are not satisfied with the product or services the
alliances is providing then both the parties involved in this are in risk category.
As per the Russo and Cesarani (2017), the alliance are sub divided into different types
one from them is single local alliance in which the company who want to expand internationally
can alliance with one of the local partner. This is to accelerate the speed to enter into a new
foreign market, in this the main aim is to enter the market to gain and use the advantage its
assets, technologies as well as it co-occurrence with the local partner to take its knowledge
regarding the market which will assist in distribution. This type of alliance is more suitable for
the companies who are usually entered late in the market when the competition goes on the peek
and distribution become difficult. In this the partner can be manufacturer, reseller, distributor and
many more. The decision within the companies usually based on the position that company have
in its value chain preposition.
Whereas Drewniak (2020), argued that the single strategic alliance is also had few
weaknesses which can influence the expansion of the company. This concept may not such
effective when it comes to use of assets, its technologies and the products and also less access the
distribution. If the companies who are entered earlier and make use of this strategy then also it is
not worthy for that. This type of alliance are also promoted the employees to cross over as
whenever the companies come together they become risk for each-other. The people change their
organization when the partner in alliances are offering better than your company. The company
also may treated wrongly with the partners in agreement. There are different companies who are
making use of poach talent without any respect to any organization.
Dhaundiyal and Coughlan (2020), explain about the multiple local alliance the company
can engage with different local partners using this type of alliance to accession the particular
market. When the target is larger and where segment are more in that this alliance is more
effective. This alliance assist its companies to reach till their desired goal as it is more effective
when more companies are combine working together to reach till a common goal. When the

company make use of it then they can expand the presence in the particular market place. The
Dhaundiyal and Coughlan (2020), also explained that it is effective alliance which is helpful to
expand the customer base by develop trust. The company can enjoy the trust of the customers of
partner company when they are making use of international alliance which is help to expand the
demographic bases.
One the other side Tjemkes, Vos and Burgers (2017), when the more the one company
work together to develop a new commodity or it can be service in a particular market. So while
doing this in multiple local alliance there are chances that the company may face conflict for
knowing the control and ownership of product they have developed. When the company get
involved in international alliance then there are also bear large expense. Yet all the companies
are not willing to help others when they need it either they use to leave that company and remain
profitable. Therefore, in this alliance their must be defined rules related to expenses incurred to
each company that will help the company to remain in safe side. The multiple local alliance can
also become the cause of cultural clash because in every nation the culture is different and the
people are totally different mentality. So this can create the clash between various culture which
become more difficult to get over. The companies use to blame each other for the defaults and
the problem remain same due to this.
Klus and et. al., (2019) said that the single global alliance is alliance when the company
who are operating in global industry need to compete in the same. As compared to local alliance
the global alliance uses to boos-ten up the internationalization of firm as it covers wider area.
This alliance are also had international financial assistance for all the partners who are involved
in this. In this alliance parties are helping to stabilize the finance of the company which will
helpful in promoting finance. In this alliance the nation of the companies uses to provide permits
through which they can perform the global strategic alliance. Some companies are effectively
removed the tariffs or any charges in the new market.
The Collinson and et. al., (2020) contradict that many companies uses to experience the
issues while they are implementing things of alliances. They should make some kind of process
through which companies can communicate within the strategic alliance to make sure that this
kind of issues will not happen again. In this all have to involve in the agreement to get the
benefits and companies also be sure that this will give them benefits.

Motivation factor behind the international strategic alliance
The strategic alliance is formed to expand the companies and gain more market share in
these companies push other partner companies (Golesorkhi and et. al., 2019). The reason and the
motivation factors of international alliance uses to change there are many firms who are involved
in the international strategic alliance yet the main motivation factors to form Sky team alliance
are:
Changing industry structure: The strategic alliances usually change the structure of the industry
with different type of technologies to modify the way companies are performing their activities
in that particular sector. The sky-team has been widely influenced when the companies are able
to make use of new technologies to supply their product.
Reduce future competition: The sky-team have large number of competitors who are potential
customers and also being the future competitors. In the sky-team alliance there are different
members, so they are working together under this title, so they are not going to compete each
other the way other companies in the market are competing. The companies in this come together
to gain maximum market share, and they are also not have much competition in future that
influence the alliance functions.
Increase available resources: The main motive of every company involve in the Sky team
alliance is to come together and able to avail the resource like manufacturing process, human
resources and the distribution channels of partner companies. This will help the companies to
lower their substantial investment (Gundolf, Jaouen and Gast, 2018). There are many companies
who have expanded their business by making an agreement with its local companies which are
helping them to manufacture as well as distribute the product in the market. With the help of an
effective agreement within the Sky team companies can easily avail the resources which are
needed without investing in manufacture and distribution network.
Acquisition of new skills: The motivation of Sky team alliance is also come from the less skill
availability in the companies. They want to grow their skills by entering into strategic
international alliance in order to understand and learn the skills from their partners involved in
the same. In sky-team the companies are also motivated to come together to know the way other
partners in different region uses to perform their activities of manufacturing, distributing and
many more. The alliance is also focussing to involve more companies in developed nation who is

having more knowledge and skill so that companies can also learn from them and improve more
effectively.
Gain competitive advantage from alliances: Sky team companies are effectively knows that
alliance are being more effective which is going to help them to explore new market (Klus and
et. al., 2019). The companies are involved in Sky team to gain competitive advantages and
eliminate the competitive gap which are reducing the success to be more effective competitor in
the market.
Benefits and challenges of international strategic alliance
The Sky team offer different type of advantages to its member companies and there are
some point where it can be not effective as well:
Enter new business territories: With the help of international strategic alliance Sky team
member companies can easily enter into different business territories (Hentschel, Ketter and
Collins, 2018). When the companies are involved in Sky-team are able to provide all its services
to the partners countries effectively. With this customer are being aware about the brand and this
will help in more customer base and profit for the company. Basically the alliance is for the
airline industry company so the company involved in this are easily provided their services in the
areas of its partners company.
Build valuable intellectual capital: another advantage is that the companies involves in this are
effective develop its brand awareness and also include more effective employees within the
company. Different type of people with different culture come together in this to work for the
companies who are in alliances. The companies will operate its activities in different manner
with more creative employees which will improve the productivity and profitability (Drewniak,
2020).
Reduce risk: The companies in alliance are more effectively perform their task internationally
without any issues. They are known where they are going to expand and the market condition so
the Sky team members can easily expand in the market of each other without performing the
activities which is risky. As they pass the required information to partner company so that they
have knowledge regarding the same.

Challenges for Sky team
Lack of independence: The companies involved in the alliance have their common rules and
regulation according to that companies have to work. Sky team is also have different members
all have to work according to the policies of alliance and partial they are not independent after
being a part of international alliance.
Clash in corporate cultures: When different nation companies come together to develop an
alliance then their may cause clash among the companies who are involved in this alliance. There
are different type of people who are working together in this type of alliance and all the people
are not equally effective and capable to perform the duties.
Distribution of power: In the international alliance the companies make uses of all the resource
to manufacture its products and also distribute using the partners resources. In this the power of
the companies are also divided in them to take decision and making use of resources as per the
need (Russo and Cesarani, 2017). Companies have to provide this because alliance need to give
benefits to each other and in this individual organization can not change the rules.
Fear in marketing insulation: the companies are having various other local company's presence
in the international alliance like in Sky team there are different members who are having their
local companies involved in the international alliance so there are chances to get insulated due to
loss efficient communication and less effective allocation of resources.
Alternative market strategy
The international strategic alliance is an expansion method that is used by different
companies to expand globally so when the company need some alternative strategy to expand in
the market then they can make use of joint venture as it is more suitable and more effective way
that any company can use to expand in the market. The joint venture is a strategy to arrange the
business for two or more then two companies in which they combine and collect their resources
to work together to achieve the objective (Meyer, 2017). There are basically two types of joint
ventures:
Incorporated: In this type of venture a specific type of personality is being created which is
helpful to enter any contract and hold the property under its own name that will present to others.

Unincorporated: This uses to parties or the companies have their particular shares as per the
agreement yet in this there is not legal existence.
The main motive of joint venture is to mitigate the risk factors so that they can work
together to achieve the objective of the business. Whereas the international strategic alliance is
only focus on the profit factor so this strategy is more suitable and effective for the companies
because the risk management is more important to sustain in the market for long term. The joint
venture is form in which business are arranged to entered to complete a particular task by
combining the resources (Czinkota, Ronkainen and Gupta, 2021). The joint venture have their
specific leaders team to maintain all the task. This is independent with each other, so they can
individually take their decision and strategic alliance have to distribute the control when they are
coming together. This is more complex yet more effective and worthy for the business who want
to develop their business separately. This is effective more than strategic alliance because this
approach uses to manage the risk factor and in any kind of business activity risk is the most
important element that must be managed effectively to gain different benefits to the companies.
When the joint venture is being used by the business then there are different benefits like
the company can effectively access the new market place to expand its business and distribution
network also get expanded. This will also promote the business and increase its capacity to
perform the activities. The partners in the joint venture uses to help other to manage their risk
and other cost which is incurred to a company (Collinson and et. al., 2020). The resources of
different company are being used to complete the task and the staff are also get improved and
more effective. The technology used by the joint venture is more specific and more reliable to
perform the task.
CONCLUSION
This report conclude that the international business is the activity in which business go
beyond the limits of nation and do the activities of marketing, manufacturing and sale. For
effective expansion the businesses make use of international business to aware the people of
different region to increase the sale and manufacturing process. The Sky team is an alliance is an
effective international strategic alliances to expand in the international market. In this alliance
there are different airline companies who are being the members of this alliance who have come
together to make use of partners resources and operate in the partners company nation
effectively. Further it concludes that the available resources and acquisition of skills are being

the element who are motivating the companies to come together to form the international
strategic alliances. Moreover, it concludes about the advantages and challenges of Sky team are
presented to its members who are collectively working to make profit and higher return the
international alliance is providing them to make intellectual capital and also assist to reduce the
risk. This also have some challenges that are faced by the companies involved in the
international strategic alliance. In this the distribution of control is the main when the company is
performing its activities will alliances then partner companies are also had control over the
company decision. The joint venture is recommended in this that is more effective strategy than
the international strategic alliance in which the risk related to business is effectively managed.

REFERENCES
Books and Journals
Collinson, S. and et. al., 2020. International business. Pearson UK.
Czinkota, M.R., Ronkainen, I.A. and Gupta, S., 2021. International business. Cambridge
University Press.
Meyer, K.E., 2017. International business in an era of anti-globalization. Multinational Business
Review.
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alliance lifecycle. International Journal of Business Administration. 8(3). pp.1-9.
Drewniak, R., 2020. Strategic Alliance and Process Innovation: The Moderating Role of the
Alliance Duration and the Firm Size. Building Future Competences. Challenges and
Opportunities for Skilled Crafts and Trades in the Knowledge Economy. 2. pp.74-93.
Dhaundiyal, M. and Coughlan, J., 2020. Understanding strategic alliance life cycle: a 30 year
literature review of leading management journals.
Tjemkes, B., Vos, P. and Burgers, K., 2017. Strategic alliance management. Routledge.
Klus, M.F. and et. al., 2019. Strategic alliances between banks and fintechs for digital
innovation: Motives to collaborate and types of interaction. The Journal of Entrepreneurial
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Collinson, S. and et. al., 2020. International business. Pearson UK.
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differences in cross-border alliances. International Business Review. 28(1). pp.104-118.
Gundolf, K., Jaouen, A. and Gast, J., 2018. Motives for strategic alliances in cultural and
creative industries. Creativity and Innovation Management. 27(2). pp.148-160.
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innovation: Motives to collaborate and types of interaction. The Journal of Entrepreneurial
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Hentschel, M., Ketter, W. and Collins, J., 2018. Renewable energy cooperatives: Facilitating the
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