Strategic Alliances in the Airlines Industry: A Comparative Analysis
Added on 2023-04-22
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MANAGEMENT
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Abstract
Companies in different industries are facing many types of challenges in which competition
along with decreasing stability of the global market are the major once. In this report, the
strategic alliances made by the companies and their preference to choose it over merger and
acquisition have been discussed. It highlights the fact that global airlines companies are
entering into the alliance with each to become a larger force that can gain competitive
advantage over the rivals. Such strategic alliances help the companies to share each other
resources so as to improve their performance and fight with the economic challenges faced by
the company in different parts of the world. This report also identifies and produces the
analyses over why the companies are looking for the cross-border mergers especially in the
recent times. All the major drivers for this kind of mergers have been explained with
examples.
Abstract
Companies in different industries are facing many types of challenges in which competition
along with decreasing stability of the global market are the major once. In this report, the
strategic alliances made by the companies and their preference to choose it over merger and
acquisition have been discussed. It highlights the fact that global airlines companies are
entering into the alliance with each to become a larger force that can gain competitive
advantage over the rivals. Such strategic alliances help the companies to share each other
resources so as to improve their performance and fight with the economic challenges faced by
the company in different parts of the world. This report also identifies and produces the
analyses over why the companies are looking for the cross-border mergers especially in the
recent times. All the major drivers for this kind of mergers have been explained with
examples.
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Content
s
Introduction...........................................................................................................................................2
Reasons why international airlines choose to enter into alliance...........................................................2
Main drivers that pushes firms into cross-border mergers.....................................................................4
CONCLUSION.....................................................................................................................................7
REFERENCES......................................................................................................................................8
Content
s
Introduction...........................................................................................................................................2
Reasons why international airlines choose to enter into alliance...........................................................2
Main drivers that pushes firms into cross-border mergers.....................................................................4
CONCLUSION.....................................................................................................................................7
REFERENCES......................................................................................................................................8
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Introduction
Airlines Industry in the last few years especially in the last decade after the period of
recession in the world has faced many kinds of challenges. They are taking various strategic
measures so as to improve the conditions of their business. Going into alliances has been
highly preferred by the company over any other kinds of alliances such as merger or
acquisition (Kleymann and Seristö, 2017). Changing international regulations and global
environmental issues are considered to be the major reasons for this type of strategic
decision. Such alliances support each other especially in terms of technology transfer and
other process related issues. This is helpful for improving each other’s performance
especially in terms of growth and profit margins. This report analyses the reasons why
international airlines choose to enter into alliances to meet the challenges they are facing. It
also evaluates the main drivers that push the airlines companies in the cross-border mergers.
Reasons why international airlines choose to enter into alliance
Airlines companies operate at the global level and the number of companies that are entering
into the global airlines market is huge. In search of new opportunities companies need to find
a more stable market. Since the numbers of tourists both at international level and domestic
levels are increasing at higher speed, it becomes essential for the organisations to become a
more competitive force that could have an edge over the rivals (Merkert and Morrell, 2012).
With the restricted amount of resources and increasing challenges related to sustainability,
expansion becomes a greater challenge. In such an environment making a cooperative
relationship with other firms could make them a bigger competitive force. Among the
different forms of cooperative alliances, airlines industry mostly chooses strategic alliance
over the others. Strategic alliance is an agreement among the two firms that aims to sell
products of each other to consumers. In order to co-develop a technology, product or
process, companies generally do such type of alliances. Strategic alliances are either largely
informal or are legally bonded (Lawton, 2017).
Merger and acquisition is highly successful in other industries but it is not suitable in the
Airlines industry. This is because by acquiring a company can only add to the resources and
Introduction
Airlines Industry in the last few years especially in the last decade after the period of
recession in the world has faced many kinds of challenges. They are taking various strategic
measures so as to improve the conditions of their business. Going into alliances has been
highly preferred by the company over any other kinds of alliances such as merger or
acquisition (Kleymann and Seristö, 2017). Changing international regulations and global
environmental issues are considered to be the major reasons for this type of strategic
decision. Such alliances support each other especially in terms of technology transfer and
other process related issues. This is helpful for improving each other’s performance
especially in terms of growth and profit margins. This report analyses the reasons why
international airlines choose to enter into alliances to meet the challenges they are facing. It
also evaluates the main drivers that push the airlines companies in the cross-border mergers.
Reasons why international airlines choose to enter into alliance
Airlines companies operate at the global level and the number of companies that are entering
into the global airlines market is huge. In search of new opportunities companies need to find
a more stable market. Since the numbers of tourists both at international level and domestic
levels are increasing at higher speed, it becomes essential for the organisations to become a
more competitive force that could have an edge over the rivals (Merkert and Morrell, 2012).
With the restricted amount of resources and increasing challenges related to sustainability,
expansion becomes a greater challenge. In such an environment making a cooperative
relationship with other firms could make them a bigger competitive force. Among the
different forms of cooperative alliances, airlines industry mostly chooses strategic alliance
over the others. Strategic alliance is an agreement among the two firms that aims to sell
products of each other to consumers. In order to co-develop a technology, product or
process, companies generally do such type of alliances. Strategic alliances are either largely
informal or are legally bonded (Lawton, 2017).
Merger and acquisition is highly successful in other industries but it is not suitable in the
Airlines industry. This is because by acquiring a company can only add to the resources and
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