Strategic Alliance in Foreign Market Expansion: SkyTeam Report

This report provides a comprehensive analysis of international strategic alliances, with a specific focus on the SkyTeam airline alliance. The introduction defines international business and strategic alliances, setting the stage for an in-depth examination. The main body critically reviews literature on international strategic alliances in foreign market expansion, exploring motivations behind the formation of SkyTeam, a major airline alliance. It assesses the benefits and challenges faced by SkyTeam and its partners, considering factors like cost reduction, market reach, and competition. Furthermore, the report proposes a suitable alternative market entry strategy for SkyTeam, emphasizing customer loyalty programs. The analysis and discussion section delves into the strategic importance of alliances in the airline industry and the impact of globalization. The report concludes by summarizing key findings and insights into the effectiveness of strategic alliances in achieving business goals, offering a clear understanding of market dynamics and business strategies.

Individual academic
report

Table of Contents
Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Demonstrate a critical review of the literature related to the use of international strategic
alliances in foreign market expansion.........................................................................................1
Demonstrate an understanding of the motivations behind the formation of the selected
International strategic alliance....................................................................................................2
A critical assessment of the benefits and challenges of the international strategic alliance
selected to the partners involved.................................................................................................3
Propose a suitable alternative market entry strategy in your recommendations.........................4
Analysis and discussion:.............................................................................................................4
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
International business refers to the trade of goods, services, capital, technology and
knowledge for the better scale of the business transactions across the borders. It involves cross
borders transactions, between the two or more business about the goods and services they offer
in the international market. International businesses expose the market growth and provide new
market segment to the people who wants to expand their businesses in the national and
international market. This report includes information about strategic alliance; it is an agreement
between the two businesses that agrees to share resources to undertake specific benefits from the
project. This allows two businesses to work together for the common goal or objective of the
business. This helps business to make strategy that helps their business to achieve the specific
common target of the organizations so that effective growth can be achieve in most appropriate
manner. Below report is based on SkyTeam Airline alliance, it is one of the three major airline
alliance. It was founded in June 2000, Sky team was the three alliance that formed the first two
alliance was star alliance, and oneworld. The annual passenger count of airline is 630 million and
it is second largest of three major airlines. This includes information about international strategic
alliance and its importance in the business. Also importance of formulation of selected strategic
alliance, various benefits and challenges of international strategic alliance and analysis and
discussion about the literature review.
MAIN BODY
Demonstrate a critical review of the literature related to the use of international strategic
alliances in foreign market expansion.
As per the view point of Dan Li, 2020. International strategic alliance can be understand as a
agreement between two firms headquartered in different destinations. Partnership firs are legally
independent after their formation as an alliance. This provide them insight about the future
partnership they have to done in order to maximise the profit rate and customer segment.
International strategic alliance has been focused on the bilateral alliance. The study says that
international strategic alliance is formed between the two strategic alliance in which one
company is from local nation and other is form international market. it is based on the
involvement of the equity investment in the strategic alliance and that can provide the business
the equal level of investment equity. In international strategic alliance there are both equity based
1

alliance and non-equity based alliance. Non equity based alliance also knows as the contract
based alliance. Equity based alliance generally knows as the international joint venture. Strategic
alliance in the international market provides the insight about the level of profitability and
growth of the business firm that increase the level of business’s strategic development in the
market. the intention of the strategic alliances is to become as corporative as possible. This
provide the development of the business strategy that helps to gain better profit and development
of both national and international market base. International strategic alliance is the strategy that
provides insight about the level of effective business growth and proficiency in the marketplace.
international strategic alliance ensure that they make effective strategic development so that
better growth and development of effective customer base can be provide. There are two aspects
of the international strategic alliance; one is motivation and partner selection and second is
ownership structure. The motivation behind the development of strategic development of
international alliance and second is to form the international market base that provide insight
about the effective strategic development to gain better objectives and growth of the business.
They works for the local market as well as international market base so that effective growth to
the business can be gained.
Demonstrate an understanding of the motivations behind the formation of the selected
International strategic alliance.
As per the view point of Tom Boon, 2020. Airlines is one of the most growing as a part of
passenger aviation industry. There are currently three big payers in the industry, these are
oneworld, star alliance, and sky team. they make huge impact on the mind set of their customers
and helps to increase the level of growth that could impact market development. in this alliance
is an agreement that provide airline pool resources, also it gives greater ability to work against
the competitors in the airlines industry. While the codeshare agreement of the airlines is works
outsides the airlines. The significant benefits of the airline to works in most appropriate manner
and increases in the share of the airlines in the international and local market. this gives the
rewards to its customers also by providing them the effective services they want in the airline
industry. Star airlines was the first airline from the big three airlines to be established. It was
founded in 1997 in Germany. Star airline says that its members includes world’s most significant
airlines and smaller relational airlines. It provides the easy connection to its connections to
2

almost every destination across the globe. Each airline involve its own style of formation and
cultural identity. At the same time each airline share common identity and brand image in the
industry. The next airline alliance in the joint venture scene was oneworld, this accusation was
established in 1999 and located in New York. As of the 2017 the airlines carrying 572.8 million
passengers. The connection of both the airlines provides the insight about the growth the airlines
can gain in the market for the effective growth and development of the resources. The
membership of the airlines stay strong with the high level of revenue generation and growth of
the strategic alliance in the market. the last group of three big alliance is SkyTeam, it one of the
youngest in the strategic alliance. It was established in June 2000, the group has 19 members.
The business carry out most of the passengers per annum. The airline transport 730 billion
people per year. Thus, the strategic alliance of three biggest group increase the level of base in he
market they gain. Also it helps to analyse the market possibilities that business undertake to gain
better customer base.
A critical assessment of the benefits and challenges of the international strategic alliance selected
to the partners involved.
As per the view point of Justin Hayward. 2020. The airline alliance is an agreement
between the two of more firms to works in strategic alliance to help the business with the
competitive advantages in the airlines industry. There are three major airline group that insist
their business in the strategic formation for the development off actual group and strategic
alliance of the group. They make alliance that helps their business in the revenue sharing and
offering in the national and international market. there are various benefits of airline alliance is
explained below:
Lower cost airlines membership: the three major alliance make huge difference in the
formation of the low cost airline that does not joint. They offer the value business market and
growth to the customer segment that provide benefits to the business growth and enhancement of
goals and objectives in most effective manner. they offer the basic connection to the guarantee
between the airlines to gain better profit and maximisation to the growth in the international and
national market. the airline make major changes in the generation and growth of the effective
customer base in the market so that effective growth and fulfilment of the objectives can be
gained in most appropriate manner. this helps to explain the benefits of the airlines strategic
3

generation that develop actual growth in thee market and provide betterment to the services they
offer to the passengers.
Challenges or draw backs of airline alliance:
As per the view point of Rytis 2020. There are various challenges that airline alliance face
in order to develop the strategic alliance in the international and national market. the operational
cost of the airline goes down due to the strategic decision making ticket price also goes down in
order to gain better assessment to the future challenges of the airlines industry. Also this
increase the level of competition that business face in the airlines industry and this could impact
the growth and level of profitable business that could be achieve in most appropriate manner.
Propose a suitable alternative market entry strategy in your recommendations.
The business of airline industry is based on their growth of domestic and international
market. also this helps to develop better market presentation of the airline. The strategic alliance
helps the business to gain better growth and development of actual market base. From the above
discussion it can be recommended to the SkyTeam airline that for the strategic development in
the market the effective market strategy can help the business in the better assessment of the
customer group and business groups. Increase in the loyalty programs for the passengers can
helps their business to enhance the level of customer segment in the national and international
market. Providing loyalty programs to the passengers can assist its business to gain better
customer base and brand image in the airlines industry. It will helps the airlines to encourage the
customers and increase the level of effective business in the domestic and international market
place. For the better development of market growth in the airline industry the gain of customer
loyalty can also helps the business. They can also provide low cost serves to attract the new
customer segment in the market also this can help the business to develop better market growth
and assessment of objectives of the business and effective market growth in the market. new
offers can also encourage the customers to attract the target market segment so that effective
development of needs and wants of the business can be achieve in most effective manner.
Analysis and discussion:
From the above information it can be understand that there are various effective group of the
business in airline industry that focuses on the strategic development and alliance to make better
growth in the market and enhancement of the customer base in most effective manner. the
customer base of the national and international business can enhance the level of business and
4

thee customer segment in national and international market. strategic alliance helps the business
to perform in the most effective manner so that development of market growth can be achieved
in most significant manner. the Sky team alliance is perform in most effective way and increase
the route to the profitability in the business. They can offer their members more flights with
more destinations so that their profitability can be increased and effective development of future
growth can be gained in most effective way. for the effective formation of the group and
development of needs and want can be achieved by the business in most effective manner.
globalization of the market customers and effective market growth that can be gained by the
proper development of effective marketplace and growth of the customer base. The Sky team
provide its passengers to travels in the effective manner with he services they offer to them. the
sky team can focus on the development of the loyalty programs that can help their business in the
development and growth in the industry. Their main strength is their market is based on
worldwide business that provide them better growth and development of goals and objectives in
most effective manner. economic development of the nation can help its business to gain better
insight about the national and international market. strategic alliance can assist the better market
presentation of the brand image and growth of the Sky team. they also focus on the development
of effective ineffective customer base to again better objectives and growth in the marketplace.
Strategic development in the nation and its growth in the airline industry can impact the
profitably and growth of the strategic decision making process. also there are huge impact on the
airlines of unfavourable situation in the industry. There are various external factors of the
business that could impact its growth and development in the national and international business
market. alliance impact the external factors of the business to increase the rate of economic
development and growth of the national development of the economy. There are huge source of
information that can be collected by the huge impact of the business and its growth in the
national development. Sky team should make proper strategic development of the nation to gain
better objectives and growth of the business in the market. they should meet the requirement of
the customers from the different marketplace. local competition against the global economic
development can increase the level of effective business growth of the national economy. There
are various opportunity for the three major alliance of the business that could help the business to
gain better objectives and growth in the national and international market place. Competition
against the large multinational business could also impact the level of customer base that
5

business perform in the market. for the effective development of the customer base there are
various networking issues the business can solve in order to perform the business in most
effective manner. there are also huge competition in the airline industry that could impact the
level of growth and profitability if the business in the market. Sky team, oneworld, and star
airlines should make positive outcomes from the business they perform in most effective manner
so that the proper growth to the development of the nation can be gained. Below are the various
strategic outcomes that Sky team perform in the industry.
Joint venture: they perform the role of joint ventures in the international market that helps
their business to gain better objectives and growth in the international market. from the strategic
formation of three major airlines it helps their business to develop effective market performance
and growth of the business in the marketplace. joint venture perform all the decision making in
their business by the use of effective source of information and development of actual customer
base in the marketplace. the equity of the business works in the same formation so that
development of actual growth can be gained in most effective manner. three major alliance can
increase their market growth by the use of the capital to decrease the level of market competition
and growth of the business in most effective manner. the effective development of the resources
can be done when the business focuses on the development of strategy that assist their market
growth and development of goals and aims of the airlines.
Equity strategic alliance: this helps the airlines business to perform in most effective
manner with the use of effective sources of the equity of the business that helps to increase the
level of effective customer base in the marketplace. in this company purchase certain equity in
the form of the effective development of the resources that can be maximise with the use of
effective sources of information and growth in the marketplace. company purchase the equity of
other company and that helps to increase in the equity of the one company. Sky team can follow
this to increase the level of effective business development an improvement in the customer
segment of the business. In order to perform in the appropriate manner business should consider
the growth and development of the effective customer base that can gain better opportunity and
growth of the business in effective manner. there are more equity alliance can be develop in the
Sky team to gain better opportunities in the future and development of actual customer base and
growth of the national development.
6

Thus from the above information it can be understand that there are various types of the
strategic alliance that company could make in order to perform the task and objectives in
effective manner. Strategic alliance can help the business of Sky team to develop the market base
that can helps its business to gain better objectives and growth in national and international
market. airline industry is can provide better development to the business of Sky team by the use
of effective source of information and development of effective growth. this can help the
business to gain better objectives and growth of the business in the market. for the effective
development of the resources business can gain better objectives and growth in the domestic and
international market.
7

CONCLUSION
From the above discussion it can be summarise that international business operation could
provide many opportunities to the business industry in the market. Globalization of the business
in the airlines can provide better opportunity for its business to gain improved growth and
development in the national and international business. Also it provides significant growth of the
operational development of the nation so that effective growth can be gained. Strategic alliance
of the business can increase the level of business growth and development of effective customer
base in the market. also the growth and development of the customer base can be gained by the
business to perform various task and operation in the international market. There are many
challenges that business face while establishing strategic alliance with the business and
companies. This could also increase the number of competition and assist the business to develop
the marketplace that assist the growth of business in the national and international market. also
strategic alliance can helps the business to perform the task and objectives in the appropriate
manner so that proper development of the growth can be achieved by the businesses in most
effective manner.
8

REFERENCES
Books and Journals
Benito, G.R., Petersen, B. and Welch, L.S., 2019. The global value chain and internalization
theory. Journal of International Business Studies, 50(8), pp.1414-1423.
Elo, M. and Riddle, L. eds., 2019. Diaspora business. BRILL.
Gray, D.E., 2019. Doing research in the business world. Sage.
Hong, P., Schoenherr, T., Hult, G.T.M., Zinn, W. and Goldsby, T.J., 2019. Cross-functional
Management and Base-of-Pyramid Issues in Logistics and Supply Chain
Management. Journal of Business Logistics, 40(2), pp.76-81.
Jonnard, C.M., 2020. International business and trade: theory, practice, and policy. CRC Press.
Paul, J. and Criado, A.R., 2020. The art of writing literature review: What do we know and what
do we need to know?. International Business Review, 29(4), p.101717.
Shynkaruk, L., Ivanchenkova, L., Kychko, І., Kartashova, O., Melnyk, Y. and Ovcharenko, T.,
2020. Managing the Economy’s Investment Attractiveness of the State as a
Component of International Business Development. International Journal of
Management, 11(5).
Szymanski, M., Wolfe, R.A., Danis, W., Lee, F. and Uy, M.A., 2020. Sport and international
management: Exploring research synergy. Thunderbird International Business
Review. Lee, Y.Y., Falahat, M. and Sia, B.K., 2019. Impact of Digitalization on the
Speed of Internationalization. International Business Research, 12(4), pp.1-11.
Online
< https://www.oxfordbibliographies.com/view/document/obo-9780199846740/obo-
9780199846740-0063.xml >
< https://simpleflying.com/the-3-major-airline-alliances-star-alliance-oneworld-and-skyteam-
why-are-they-good/ >
< https://simpleflying.com/airline-alliances-what-are-they-what-are-the-benefits/ >
< https://www.aerotime.aero/23173-airline-alliance-benefits >
9