British Airways: Analyzing International Strategic Alliances Report

This report examines British Airways' use of international strategic alliances for foreign market expansion. It begins with an executive summary, introduction, and a literature review exploring the concept of strategic alliances, their benefits, and their role in global market expansion. The report then focuses on British Airways, founded in 1974, and its strategic partnerships, particularly its founding role in the One World airline alliance. The analysis and discussion section delves into the motivations behind British Airways' international strategic alliances, considering the product life cycle and the company's objectives of enhanced profitability and market sustainability. It assesses the benefits, such as shared resources and risk reduction, and discusses alternative market entry strategies. The report concludes by summarizing the key findings and offering insights into the strategic importance of international alliances for the aviation industry. It emphasizes how these alliances allow companies to navigate complex market conditions, foster collaborative arrangements, and achieve long-term objectives by leveraging complementary assets and skills.

BUSINESS STUDIES

Table of Contents
EXECUTIVE SUMMARY.........................................................................................................................3
INTRODUCTION.......................................................................................................................................3
LITERATURE REVIEW............................................................................................................................4
ANALYSIS AND DISCUSSION...............................................................................................................7
CONCLUSION.........................................................................................................................................10
REFERENCES..........................................................................................................................................12

EXECUTIVE SUMMARY
International business defines as a trade of goods and services, technology, capital,
knowledge etc. across national borders in global and transactional scale. This type of businesses
includes cross border transactions of offerings between two or more than two countries.
International strategic alliance refers to a collaborative arrangement between companies that
headquartered in several nations. In this partnering business is legally independent after the
development of alliance relationship. This report is based on British Airways that is a leading
aviation company in the in London, UK founded on 1974. By taken this firm this report, review
the use of international strategic alliances in foreign market expansion. Further it reflects
motivation behind formation of British Airways as an international strategic alliance. Therefore
this also assesses benefits and challenges of international strategic alliance for the partners who
involved within the international strategic alliance. This report helps in enhancing knowledge
regarding the alternative market entry methods so that more profitable results are attained on
time.
INTRODUCTION
Strategic alliance is also known as strategic partnership that represents an agreement
between two firms or more than two parties to follow the set of targets needed while remaining
independent organisation. It is a type of collaboration and cooperation that aims for synergy in
which every involving partner faith for the best and think alliance is highly efficient as compare
to individual efforts (Welch and Piekkari, 2017) . Strategic alliance includes the transfer of
technology by shared expenses and shared risk and it also develops an outsource relationship
where involving partners work for attaining long term objectives that is based on cooperatively
desired outcomes. To complete this business management report on international strategic
alliance British Airways is to be undertaken. It is a founding partner of one world airline alliance
along with Qantas and Canadian Airlines. In 1974 British Airways is to be founded that a net
income of £1,952 million. This company was privatized in February 1987 as a part of huge
privatization plan by conservative government. This report involves the literature review of use
of international strategic alliance in foreign market expansion along with motivation behind
British Airways as international strategic appliance. Further it explains benefits and challenges of

international strategic alliance to partners with the recommended several alternative market entry
strategies. After literature review analysis and discussion on explained frameworks are is used to
provide an interpretation of results.
LITERATURE REVIEW
Critical review to the use of international strategic alliances in foreign market expansion
According to the viewpoint of “Gomes, Carneiro and Dib, (2018)” international strategic
alliance defines as an accumulation of and different companies whose headquarters are belong to
different countries. Strategic alliance is a type of partnership in which companies dependence is
based on the formation of strategic alliance and their relationship with relative enduring business
enterprises. Therefore organisation who needs to widen their operation on global level to access
the new markets adopts the use of strategic alliance. International partnership is not only
beneficial for accessing global markets but also develops the competitiveness by leveraging
partner’s resources prominently. International strategic alliance support organizations to expand
their business in different countries to attain the goals and objectives. It is an essential concept
where mainly two or more than two companies are operate together in order to attain targets and
get high level of benefits. The cost of international strategic alliance is usually pooled among
businesses involved and represents the least expensive manner for all concerned form of
partnership. These types of strategic alliance are highly flexible in nature than an acquisition
with the degree of high level of controlled enjoyed by each and every party. In context of
international strategic alliance they generate the several global enterprises cooperative
arrangements. In present business environment there is a situation created where number of
businesses need to operate their business on global level using strategic alliance that formulates
an effective cooperation among companies that are independent. International strategic alliance
is a type of theoretical aspect that involves several transactions that minimize for short term
cooperation’s (Tung and Stahl, 2018). International strategic alliance is defined as a concerted
procedure between companies headquartered in various nations in the globe. In this strategic
alliance partners firms are officially seen as an independent after developing alliance and alliance
type relationship. The use of international strategic alliance is bifurcated into three dimensions.
In this first is collaboration in which licensing, franchising, supply, research and development,
marketing management service, manufacturing etc. secondly it is done with the number of

partners involved as it can be of bilateral and multilateral nature as international strategic alliance
is highly based on bilateral alliances (Pongelli, Caroli and Cucculelli, 2016). Third way of
international strategic alliance is based on nationalities involved that is based on home-home,
home-third nation alliance. The use of international strategic alliance is done between the foreign
company and a native country. Another manner of involvement under foreign expansion using
strategic alliance is a type of non-equity and equity based alliances in which equity based
belongs to a type of international joint ventures, non-equity based alliance is a type of contract
based alliance. All these type of strategic alliance is a type of wide nature and it is quite tough to
collect all the information within this literature on the use of International strategic alliance in
foreign market expansion that offers positive outcome on the organizational performance of
home country and foreign country. It represents the several use of international strategic alliance
in the expansion of foreign market that is shown below:
 International strategic alliance helps the companies to provide an instant access of global
market or offers an effective speed to enter into a new market. It helps in expanding the
foreign market and helps businesses to gain profitable results.
 This helps in increasing sales by expanding the expansion of international market and
provides more trendy opportunities to strong the market position where organisation has
its foothold. In this international strategic alliance helps foreign market to gain more
knowledge and skills so that overall increments are to be done by maximizing
profitability. International strategic alliance is a type of platform that provides to the
businesses for building their image in the marketplace that develops the foreign market
expansion in easiest and attractive manner (Barmeyer, Mayrhofer and Würfl, 2019).
As per the perspective of “Pattnaik, Singh and Gaur, (2020)” International strategic alliance is a
type of valuable instruments for businesses that helps organizations to enter into new markets. In
terms of Aviation Company strategic alliance is best as it helps in providing a platform for facing
global competition and cover wider areas to enhance every country core capabilities. This
provides a 50% of rate of success in the foreign market expansion. For this companies who want
to develop the success in foreign market focus on following best practices that involves:

 Alliance strategy formulation- In this firm needs to understand the overarching
expansion strategy that evaluates the new market so that right model of international
strategic alliance is developed.
 Execution- After deciding the type of international strategic alliance it is essential to
focus on executing the alliance involves by selecting the correct and suitable alliance
partner and negotiating the useful aspects of the international strategic alliance.
 Management- Managing alliance needs the development of governance of strategic
partnership along with performance metrics who are working for managing partnership.
International strategic alliance offers organisation several types of benefits that involve
access to markets, sharing of risk and expenses, synergetic effects, competitive advantage in
global marketplace. Hence it represents the expansion of foreign market due to which nation
economy and GDP is also being developed. In case of British Airways wants to done the alliance
with One world in order to developed their business operations in international level. One world
is a leading airline alliance founded on 1 February 1999. It states the purpose of first choice
airline alliance for the world frequent international travellers. This alliance airline is working
with the slogan of Travel Bright. It is the second largest major airline alliance. In this British
Airways is to be connected with easy Jet to gain and attain more opportunities. In terms of
international strategic alliance that develops a leader structure where strategic alliance is highly
useful to make connections that develops best leading strategies. In context of British Airways,
British government manages the two nationalized airline corporations that is British Overseas
Airways Corporation and British European Airways along with two regional airlines such as
Northeast Airlines and Cambrian Airways. It is a founding member of One world Airline
alliance as it is a best alliance after Sky Team and Star Alliance. Therefore, forming an
international strategic alliance need to focus on analyzing the political and market condition. It is
essential to organize the task in prominent manner (Buckley and Casson, 2021). Within this
Aviation industry also focus on analyzing changes that are useful to amendment in organisation.
It elaborates various frameworks that help in performing the task in coordinated manner.
International strategic alliance is a crucial term for the company’s stakeholders because it
provides globalization actions and methods. This helps business to attain the operations in
affordable manner and also develops the living standard of the people who focus on doing the

strategic alliance. Due to international strategic alliance people can easily travel from one place
to another and helps in expanding the foreign market.
ANALYSIS AND DISCUSSION
Understanding of motivations behind the formation of selected international strategic alliance
Motivation for formation of strategic alliance is to undertake the changes through several
years. It helps the companies to enhance their productivity and develops skills and knowledge in
order to gain the competitive advantage. There are several types of motivation behind the
formation of international strategic alliance by the British Airways that helps in expanding the
resources and profitability to gain competitive advantage. In terms of today’s business
environment there is a norm of developing the nature of doing strategic alliance and partnership
between companies so that overall business objective is to be attained in a short period of time
due to this high competitive advantage is to be attained successfully. It is very essential to focus
on analyzing and discussing the several ways that motivates company to do a strategic alliance
within the international market (Shams and et. al., 2021). In context of British Airways there are
several reasons of international strategic alliance and it demonstrated by using the three ways of
product life cycle such as slow cycle, standard cycle, and fast cycle. These factors of product life
cycle represent regular innovation and helps in developing new services and products for
customers and clients within the industry. For every type of businesses product life cycle is
differ. For instance- to done businesses in pharmaceutical industry slow cycle is needed while
working on software industry fast product life cycle is included. In terms of Aviation Company
they are fall under the slow cycle of product life cycle. The main motive of British Airways to
form the international strategic alliance is to be developed high profitable results and sustain in
global market for a longer time period. In this operating a business using strategic alliance helps
in developing the collaborative arrangement of organisation in various countries. Company like
British Airways applied the use of strategic alliance in order to gain more success and to done
this they need to follow several steps to get the appropriate results. It helps in share mutual
market share to take decisions in order to measure the impact of business organisation (Sinha and
Chowdhury, 2021).

 It helps British Airways to developed more skills and understanding to reduce the risk
related to cost and uncertainty.
 In terms of British Airways the main motive to form international strategic alliance is to
allow organisation to gain complementary assets to the related and involving partners for
enhancing the resources.
 This helps organisation to understand the responsibilities and roles to take an appropriate
actions within the future.
 It also support organisation by offering numerous types of opportunities so that new
things are learned from the partners including different countries.
 Reduce future competition in the market is the main motive of forming strategic alliance
by British Airways and also helps in attaining the local market expertise due to this they
gain high profitable results within the marketplace.
Critical assessment of benefits and challenges of international strategic alliance to the
partners included
In case of strategic alliance, Rick Wilson of USAir and British Airways is form a
strategic alliance. British Airways is an airline company that highly focuses on merging as a
strategic alliance to enter into the new market (LeClair and et. al., 2021). It also helps in gaining
the competitive advantage. Due to this the organisation wants to beat the oligopoly enterprise to
gain more success and growth. This analysis discussed the benefits and challenges of
international strategic alliance that was faced by the USAir and British Airways while focusing
on competitive advantage. Several pros and cons are presented below:
Benefits of international strategic alliance
 Gain new client base by adding competitive skills- It is one of the major benefit of
international strategic alliance that is enjoyed by British Airways and their involving
partners. By doing alliance with partners company develops their reputation that creates a
total package to the clients (Iyer, 2021). It also helps British Airways to gain the
competitive skills without possessing the burden of recruiting, caring for staff members
because two or more than two companies are doing business operations combined form.

 Build a valuable intellectual capital- It is another benefit that is enjoyed by company in
doing strategic alliance. This helps in providing a magical profit by gaining competitive
advantage within marketplace.
 Reduce risk- British Airways focuses on doing an alliance to other country airline
company such as USAir so that it reduce the risk of low sustainability but develops the
trust of several stakeholders. It also develops the ability of gaining complimentary skills
in terms of delivering high quality products and services to customers so that high
profitable results is to be enjoyed by firm in their long term survival within international
competitive market.
 Develops new resources and improves present resources- Strategic alliance helps
British Airways in offering the new resources along with refining current resources by
providing proper training and mentoring sessions without hiring experienced consultant
or trainers (Chappell and Schermerhorn, 2021). Hence, this represent as a benefit of
Aviation Company within foreign market survival.
Challenges to the international strategic alliance
In context of involving strategic alliance, companies face some built-in challenges.
Therefore it shows the primary drawback that is the party who manages all the business
operations internally not relies on other partners who involve with the company by doing
international strategic alliance.
Due to international strategic alliance British Airways face the challenge related to clash
of corporate culture along with lack of independence. For instance- By doing the alliance with
USAir and British Airways Company face the issue of culture clashing. Because in British
Airways they follow British culture and USAir follow American culture and both working
culture is different. In this management of company need to face issues that creates opportunities
to the rival form to gain the advantage of using profits.
Strategic alliance is reflecting a major risk and challenges that involves parties that are
economical equal (Dima, Tudorache and Tudorache, 2021). This risk highly includes the loss of
operational control and privacy of exclusive data and information and technology.

Sharing the profit is another challenge that was faced by company who adopts the use of
British Airways in which revenue of companies are dividing as per contracts that goes to the
separate different nation that does not support the organisation due to this economy is facing
issues.
Recommend several alternative market entry strategies
From the above explanations there are several types of alternatives to enter into the
foreign market which is useful for business to gain competitive advantage and enhance the value
of resources along with sustainability. Several alternative market entry strategies are to be
discussed below:
 Joint ventures- Joint venture is a type of particular form of partnership that mainly based
on the creation of third independently managed company. It defines the process of 1+1=3
that means to companies are working collaborate within the particular market and
develops a third company as a new entity. In this types of alliance risk and profits are to
be shared equally.
 Franchising- It is another alternative strategy to enter into the market. It is basically a
type of North American process that helps in rapid expansion of company to gain
profitable results in the several part of world. This type of strategy is highly suitable for
that business model that is easily transferred to other business market (Zucchella, 2021).
Therefore, in this method organisation would shape the organisation where owner of the
company carried various types of ways to offer same services to the franchises.
 Licensing- This represent when an organisation gives the authority to another company
in foreign nation in order to gain profitable results by offering services and products on
same price which are provided by native company. It is a type of sophisticated
arrangement where company transfers their right to use of offerings to next firm.
CONCLUSION
From the above report it is to be concluded that strategic alliance is a significant concept
within international business because it helps firms to attain their objectives in a collaborate
nature. In this companies implement their strategy within global market to gain more competitive
advantage within the marketplace. This is a type of essential framework that is adopted by

business enterprise in order to develop nation economy to attain goals and objectives in
proficient manner. This report helps in gaining knowledge regarding the use of international
strategic alliance in foreign market expansion. This helps in enhancing the firm visibility in
global market. Further it discusses and analyzes motivation behind the foundation of
international strategic alliance within the global market so that understanding related to
international business is to be developed. Further it critical analyze key challenges and benefits
of international strategic alliance to the involved partners along with showing several alternative
recommendations to enter into the marketplace so that high profitable goals are attained on time.
The recommendations involves the use of joint venture, acquisition, franchising etc. all these
helps in enter into the international business and attain the goals in mutual understanding of the
corporate partners in different countries.

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