Strategic Alliances and Market Entry Strategies for British Airways

This report provides a comprehensive analysis of British Airways' international business operations. It begins with an executive summary and introduction, followed by a literature review exploring the use of international strategic alliances in foreign market expansion, focusing on how British Airways leverages alliances with companies like American Airlines, Iberia, and Finnair to enter new markets, reduce risks, and strengthen strategic objectives. The report then examines the motivations behind these alliances, such as developing economies of scale, enhancing competitiveness, entering new markets, and reducing financial risks. It discusses the benefits, including achieving goals and expanding customer bases, as well as challenges, such as choosing the right partners and upholding trust. The report also evaluates suitable alternative market entry strategies, including licensing, franchising, joint ventures, and direct investment, recommending joint ventures as a primary strategy. The analysis and discussion section synthesizes the findings, and the report concludes with a summary of key takeaways and a list of references.

International Business
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EXECUTIVE SUMMARY
International business refers to business operations that take place across national boundaries.
International business refers to the buying and sale of goods, services, and commodities across
national boundaries. In relation to this, public- and privately-owned organisations own and
operate these exchange modes. International business also refers to internationalisation process
of multinational organisations. In this sense, multinational enterprises encompass a wide variety
of business practises involving consumer products in order to qualify as an international
company.
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Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
Literature review..............................................................................................................................4
Use of international strategic alliance in foreign market expansion......................................4
Motivation behind the formation of selected International strategic alliance........................5
Benefits and challenges of international strategic alliances...................................................6
Suitable alternative market entry strategies to enter into the foreign market.........................7
Analysis and discussion...................................................................................................................8
CONCLUSION..............................................................................................................................11
References......................................................................................................................................12
Books and Journals...............................................................................................................12
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INTRODUCTION
International trade encompasses the exchange of products, services, money, and information
across national, global, and transnational boundaries. Globalization refers to the cross-border
exchange of production resources between two or more countries, and is referred to as
international business. In this context, economic resource transactions include capital skills,
international physical goods and services development, and so on (Gaur and Kumar, 2018). To
carry forward this report, British Airways is considered which is the flag carrier airline company
in UK, headquarter in London, England. In regard of this, the British airways tends to make
alliances with many organisations like accommodation, hotel and other transportation in order to
make their probable entry in the market which is helpful for them in order to achieve competitive
advantage in the market. It is also considered as the second largest carrier company situated in
UK and also the first passenger airline to have generated $1 billion on the single air route in a
year. Further, the report leads to cover points regarding the international expansion and strategic
alliances within the foreign market expansion by discussing about the market entry strategies and
concerning benefits and challenges.
Literature review
Use of international strategic alliance in foreign market expansion
According to the viewpoint of D’Alimonte, (2019), International strategic alliance means to
create a joint venture with two or more companies by sharing the resources and risks and
working towards the accomplishment of same objectives (Geisendorf and Pietrulla, 2018).
Development of business alliances helps the companies to gain competitive advantage and boost
the strategy of the business. British Airways have also set the alliance with many other airline
companies which includes the American Airlines, Iberia and Finnair. Use of international
strategic alliance has helped the British Airways to expand the business internationally and reach
to the global markets (Bürer and et. al., 2019). The importance and use of international strategic
alliance have been explained below in context with British Airways-
Access to new markets- When the company come up with another company and forms the
alliance it makes them easy to enter into the new market by using the resources of that country
which is already in the market. British Airways (TRAN and NGUYEN, 2020) have also formed
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the alliances with different companies so that they can penetrate in the new market and expand
their business. Examples are – China, Qatar, Japan and many more.
 Reduce risk- Forming the strategic alliances with the other companies the risk and
challenges which the company might face in the beginning are also distributed. As the
companies share the resources and also the profits with this, they have to face all the
challenges together which helps in reduction in risks (Akamah, Hope and Thomas, 2018).
British Airways if faces the losses or any other company failure then the risk to face such
difficulties is distributed to the other company.
 Strengthen the strategic objectives- Company when come up and forms the joint
venture with the strongest company in this they are allowed to share the resources. This
helps the company to achieve the dual success and also gain the competitive advantage in
the market. British Airways have come up with the strong companies who have created
good image in the market and this helps in the creation of goodwill of the British Airways
which helped in strengthening the objectives of the company.
Motivation behind the formation of selected International strategic alliance
According to the viewpoint of Kenton, (2021), The major motive of the companies to
form the strategic alliances is to develop the capabilities and gain the market share (Rehman and
Anwar, 2019). Also coming up in alliance with that company which has already acquired the
market in the other country makes it easy for the company to build the image in the foreign
market. The motive of the formation of International alliance of the British Airways have been
explained below-
 Developing economies of scale- Because of scarcity of resources it becomes extremely
difficult to acquire them and spend time on them. Also, when the company comes up in
partnership with the other company, in that case they can use the broad set of resources
and can be used in their own company (Manolopoulos, Chatzopoulou and Kottaridi,
2018). British Airways main aim was to come up in partnership with the big companies
of the country so that they can develop their image and would be able to share all the
resources.
 Enhancing competitiveness- In the beginning when the companies enter the new market
basically makes it a very timely procedure in creating the image and the goodwill in the
market (Crisóstomo, de Freitas Brandão and López-Iturriaga, 2020). Many big
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companies have identified that the competitiveness can be increased only when they
come up with other big companies. British Airways have formed its image in the market
by coming up in partnership with other companies of different country.
 Entering new foreign markets- It is not a simple process to enter in new market and that
too in new country as the companies have to conduct the research and have to abide with
the rules and regulations before starting the business. British Airways have formed the
alliances with the Japan Airlines, Qatar Airways, SriLankan Airlines and many more
which helped them to enter in the new market and gain the success in the market
(Oehmichen, 2018).
 Reduction in financial risk- Airways requires the huge investment and which
sometimes becomes difficult for the company to organise it by themselves. British
Airways formation with the other big airlines companies helps in reduction in financial
risk and if any losses are faced by the company, it can be distributed by the other
company also.
Benefits and challenges of international strategic alliances
The benefits and challenges in context with British Airways have been discussed below-
Benefits-
Helpful in the achievement of goals- Companies working in alliance with the other companies
helps in the achievement of goals of the company at the faster rate. Working alone makes it
difficult and also the time is spending for achieving the goals (Gouvea, Kapelianis and Montoya,
2018). When the resources of two or more companies are shared together the goals of the
company are achieved faster.
 Expands the customer base- Woking in the same country is not going to increase the
customer base but it can be increased with the expansion of business in the international
markets. British Airways has expanded its business in different countries which helped
them to increase their customer base (Arte and Larimo, 2019). But this has not done
individually by the company but because of coming with other big companies and getting
benefitted from their brand image as well.
Challenges-
 Choosing the right partner- In the beginning of formation of the strategic alliance it is
difficult and requires a good research to select the company which will work greatly with
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the company(Tripathi, Bagga and Aggarwal, 2020). Choosing partner requires that
whether they would be able to help in the business growth or they will share the resources
properly without making any difficulty of the company. British Airways have formed the
alliances with that company whom they can make the cooperation and can work with
harmony.
Upholding trust and honesty- When the two companies come together and form the alliances,
they agree for all the risks and challenges and focuses on building the growth and image of the
companies (Wei, Ang and Liou, 2020). Developing trust becomes challenging task and specially
for entering in the new market. British Airways have formed the alliances with that companies
whom they think could be able to work properly and with trust.
Suitable alternative market entry strategies to enter into the foreign market
According to the viewpoint of There are several ways through which a British Airways can enter
into the foreign market and lead to the success of their rapid expansion and growth(Lin and
Chen, 2018). Right selection of the entry strategy will assist the company to achieve its mission
and objectives. There several alternatives available to British Airways through which it can
manage to operate in foreign market. Licensing and Franchising: One of the significant options for the entry into the foreign
market by British Airways to form a licensing agreement where the licensor, British
Airway, grant the right to the licensee (a foreign firm) to use the aircrafts, services, brand
name, patents, knowledge and expertise to operate into a foreign market (Tereso and et.
al., 2019). This is the best option to enter into the foreign market as it offers an
inexpensive way to enter and operate into foreign market. This the least profitable
method to enter into a market and involves a risk with the strategy as it may ruin the
image of the company if the licensee does not meet the desired standards and
expectations of the customer. Joint ventures: Joint venture is a partnership agreement between the British Airways and
the foreign firm where both the parties infuse money into business, share profits and
losses; shares ownership and control the business venture. Joint ventures require a huge
commitment for both the parties as the contract is risky and less flexible. This is
considered to be a best option as the foreign market company shares its expertise,
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knowledge and experience, market insights, competitor analysis, business connections
and huge potential customer base (Fontinha and et. al., 2018). Direct investment: Unlike above mentioned option these strategies allow British Airways
to set up a full fledge business operation in entirely new market segment. Establishing the
new facilities into foreign market is regarded as “greenfield” investment where company
enjoys complete autonomy with regards to ownership and over operational activities
(Thomas and et. al., 2020).
From the above suggested options, it is highly recommended for the British Airway to opt for
a Joint Venture which will not only help the company to increase its sales revenue but also help
to establish strong position into foreign market. This is because the joint venture helps the
company to access new markets in which it has not expanded its business and also develop
different distribution networks. In joint venture the expense and the losses of the businesses are
shared and also the British Airways will get the information regarding the activities of the other
business which helps them in gaining profits and incomes. They can work together to beat the
competition in the market and achieve competitive advantage in the market.
Analysis and discussion
From the above conducted literature review of the British Airways with regards to the
international strategic alliance in foreign market expansion, motivation behind the formation of
selected international alliance, benefits and challenges faced by the company and best suitable
option to enter into the foreign market, a detailed discussion and analysis is as follows:
Use of international alliance in foreign market expansion
After attaining an economy of scale in a local market each and every business aspire to grow and
expand its business operations beyond the geo-graphical boundaries, to expand its business
companies like British Airways use strategic alliance (Kurmanov, Aliev and Suleimenova,
2019). Strategic alliance not only help the company to enter into the foreign market but also gain
competitive edge over others to through leveraging the resources and skills of their partner firm.
Strategic alliance helps the companies to get a deep insight of the market knowledge, access to
the customer base, expanding their sales revenue, understanding the dynamic of the local market,
understanding the needs of then global customer and what factors influence the customer to opt
for their service (Piva, Tani and Vivarelli, 2018).
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Strategic alliance results beneficial for the company in several ways. First of all, entering
into a foreign market assist the companies to have a access to the untapped and uncaptured
market share that help them in expanding the customer base and generate revenue thorough
multiple customer segments(Aaldering, Leker and Song, 2018). Another significant advantage
for the companies through strategic alliance is company may avoid the risk of failure which may
be encountered through investing directly into the new market. Strategic not only shares its huge
established and loyal customer base but also shares the knowledge and experience of their
working with the local market which assist is strategic decision making (Curcija, Breakey and
Driml, 2019).
However, strategic alliance also comes up with the several negative factors which may
disturb the business operations of British Airways in both the markets local and international,
resulting is losing local business and loss of customer base. Strategic alliance may distract the
company from their local business operations as the prime source of revenue for the British
Airways is through United Kingdom, which is its local market. Another disadvantage is that with
the foreign firm’s limited resources, poor marketing knowledge, differences in the legal system
of different geographical boundaries, culture and language barriers may affect their foreign
operations and damage the brand image of British Airways (Yi, Teng and Meng, 2018).
Motivation behind the strategic alliance for British Airways
One of the significant factors leading British Airways to opt for a strategic alliance to
enter into the foreign market is due to its over dependence on the business of the local market,
United Kingdom. British Airways have been dealing with several challenges due to the
emergence of Brexit and pandemic due to which there is significant decline in the sales revenue
of the British Airways. Due to the economic stability of several regions and availability of
resources at reasonable price have obliged the British Airways to opt for a strategic alliance
(Jabbour, de Sousa Jabbour and Sarkis, 2019). Another motivational factor for British Airways is
to expand its business operations into the foreign market as the company already gained the
maturity stage in the business life cycle, and to prevent its business operations to go into a
declining stage. British Airways is tapping into a new market(Kasemsap, 2018). Some foreign
countries are inviting foreign direct investment into their country to improve the economies of
scales of their nation.
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Being a leading company and oldest flag carrier, British is well known for its innovation
and technology advancement (Diamantopoulos, Arslanagic-Kalajdzic and Moschik, 2020).
British Airways is aspiring to beat the competition and operate into the foreign market through
their exceptional quality of services. Being operate in different market will help the British
Airways to diversify the risk as low economies of scale in one nation or inflation rate in a
particular company will contribute towards mitigating the risk of low profitability and poor
performance in the global market (Tereso and et. al., 2019). British Airways holds a many year
of experience in the aviation industry that result in performing well and delivering exceptional
quality of services, making it a most preferable airline brand over others.
Benefits and challenges of international strategic alliances
Global strategic alliances are developed when an organisation wishes to expand their business
into the new Geographic market. Alliances are formed among to you and more corporations for
the specific period of time(Mathews, 2018). The objective of sharing the ownership in the new
formed of venture is to enhance the profitability and achieve competitive advantage. Strategic
business alliances have grown effectively with the objective of increasing the brand awareness
and capital of both the parties without expanding expert time and experiencing prominent
financial impact (Tratnik, Urh and Jereb, 2019).
In regard of British Airways, the prominent benefits include that with the strategic
alliances company can achieve their suitable goals and objectives quite rapidly. Moreover, the
expansion in another country company can expand their business at the international level it is
helpful for them to expand their customer base and develop relations with maximum number of
people (Hartsfield, Johansen and Knight, 2017). Along with these strategic alliances lead to offer
supplementary benefits to British Airways because it is important for the success of business and
also focusing over the core competencies. Through strategic alliances company gets an
opportunity to grow their market size and also increase awareness regarding the brand that help
them in constant growth and brand awareness.
For this, it also includes prominent challenges like at the time of making strategic
alliances it is quite difficult for British Airways to conduct healthy market research in order to
analyse the market trends that can put major impact over the growth and success of company. In
case of British Airways, they can develop alliances with the other organisations with proper
harmony and effective cooperation (Sharma and et. al., 2017). Along with this, making alliance
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with the wrong partner leads to damage brand image of company and also decrease the growth of
business. Despite from this, every business experience constant changes and flux regarding the
growth but they need to make sure that the business alliances continuous for the mutual benefits
of both the parties.
Suitable alternative market entry strategies to enter into the foreign market
Market entry strategies are considered as the planned manner of delivering products and services
to the new target market (Rowley, Oh and Jang, 2019). In this, the effective export and import of
services describe the establishment management and creation of the contracts within the foreign
country (Choquette, 2019). Most of the organisations can successfully operate their business
without expanding into new market whereas some organisations can achieve increased sales and
brand awareness only by entering into the new market (Hsieh and et. al., 2019). Developing the
market entry strategy undertake effective analysis of potential competitors and customers.
In regard of this, there are various strategies which can be used by British Airways in order to
take entry into the new market that include licensing and franchising which is the most useful
options to take entry in new market. In this the foreign market provide the reliable way to enter
in the new market and operate the business in order to achieve growth and stability in the
business environment (Xu, Zeng and Chen, 2018). Meanwhile, it is considered as the least
profitable method in order to take entry in the market as it includes risk with the strategy that can
damage the brand image of company.
Besides from this, British Airways can also consider joint venture which is the partnership
agreement among the British Airways and the foreign market in terms of sharing profit and
losses ownership and control of business venture. It is considered as the best option to take entry
in the foreign market because due to this companies share their experience market vision
competitor analysis connections in order to increase their customer base (Yang and Meyer,
2019). Away with this, British Airways can also consider exporting because it is the default form
of market entry in order to share their Logistics and Wholesale products at the international
market. Therefore, working with the right partner can make and break the business decisions and
for this the terms of trades and local deputation becomes important regarding the business
practices that put major impact on the handling and supporting the products (Díaz and Escribano,
2020).
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This is because the joint venture allows the corporation to enter new markets where it previously
had no presence and to create new distribution networks. In a joint venture, the firms' expenses
and losses are shared, and British Airways will receive knowledge on the other business's
actions, which will aid them in generating profits and revenues. They can collaborate to
outperform the competition and get a competitive advantage in the market.
CONCLUSION
By considering the above discussion, it can be concluded that foreign business refers to the
exchange of goods and services from one country to another on a global scale. In this regard, the
company must develop a proper plan for launching their product into the market, as well as
determine whether or not their product is unique enough to achieve growth and success in the
international market. In terms of this, organisations must follow a proper market entry strategy
by reviewing each and every aspect of the strategy and weighing the benefits and drawbacks of
the strategy to expand their business. In this context, a market entry strategy is critical for
achieving growth and profitability, as well as gaining a competitive edge in a fast-paced business
setting. In this regard, the prospective organisation must examine the external environment using
a well-known framework and take into account the competitive forces of market.
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