Advantages And Disadvantages Of Alliances

Antitrust laws are intended to protect, promote competition and to push industry profits towards competitive floor in order to resist market dominance. Porter’s five forces model reflects that an industry has absolute market power if threat of entrants and substitutes are low along with weak bargaining power among suppliers and buyers, and if industry is not competitive.

The Airline industry is a large and constantly growing industry. It facilitates economic growth, international investment and world trade and is therefore central to other industries as well for globalisation. There are various forces which lead to globalisation in airline industry. Key drivers of change are forces likely to affect the structure of an industry; sector or market. (1).

competitors be able to compete in the market or not. Thus, if two market leaders conclude a contract, risk that other competitors will fail to get profit and develop is very high.

Air Canada has been in the business of air transport for an extended period of time. Due to the experience and the exposure of the carrier in the field, it has made a commendable progress through many strategies as well as customer proximity. One of the approaches taken by the airline involves the identification as well as an implementation of cost reduction initiatives in a bid to increase revenue from its operations (Air Canada, 2016). It is also attempting to connect with the existing carriers across the world to connect the current customers to the international world. This approach has been adopted to increase its competitive advantage over other existing airlines.

The airline industry has been a major factor in the globalization of the world economy. It connects the sellers and the buyers as well as transports goods across countries. It also breaks the time and distance barriers. In the past, air travel was considered a luxury but it is now a common necessity.

Strategic alliance is an agreement between two or more organizations to cooperate in a detailed business activity, so that each get benefited from the strengths of one an other, and gains competitive advantage. The formation of strategic alliances has been seen as a comeback to globalization and increasing doubt and difficulty in the business environment. Strategic alliances occupy the sharing of knowledge and expertise between partners as well as the reduction of risk and costs in areas such as relationships with suppliers and the development of new products and technologies. strategic alliance is sometimes equated with a joint venture, but an alliance may involve competitors, and generally has a shorter life span. Strategic partnership is a closely related concept. This article analyzes definition of strategic alliance, its benefits, types, process of formation, and provides a few cases studies of strategic alliances. This paper tries to synthesize the scope and role of marketing functions in the determination of effectiveness of strategic alliances. Several propositions from a marketing perspective about the analysis of alliance process are formulated. On the basis of the propositions, a framework is developed for future research

Cooperation within alliances poses several challenges to managers: the size of the alliance, the need to intensify cooperation and the harmonization and standardization of common processes, and the search for synergies to reduce costs. However, in times of crisis, alliances do not necessarily prevent stiff competition between the partners. At present, five alliances – One World, Star, Wings, Sky Team and Qualiflyer stand out as the core groupings around which other airlines with strong regional networks will come together to form worldwide networks and can be described as global alliances. But they remain fragile creations subject to competing attractions and economic forces. Over the years, several companies have switched from one alliance to another. Austrian Airlines, for example, moved from the Qualiflyer to the Star alliance. Air France has recently floated the idea of creating a Mediterranean alliance with Alitalia and Iberia. To make this three-way deal possible, Iberia would have to leave the OneWorld alliance.

• Provide background on the global industry • Present a regional analysis • Discuss current and future evolvement of the industry (trends) • Discuss challenges and strategies impacting the industry • Discuss the new breed of airlines • Discuss why airlines fail and how to achieve success

When two or more organizations create a formal agreement to work together for a specific purpose, they form an alliance. Alliances offer organizations competitiveness in new business industries and shared responsibility in experience and cost.

American airline industry is steadily growing at an extremely strong rate. This growth comes with a number economic and social advantage. This contributes a great deal to the international inventory. The US airline industry is a major economic aspect in both the outcome on other related industries like tourism and manufacturing of aircraft and its own terms of operation. The airline industry is receiving massive media attention unlike other industries through participating and making of government policies. As Hoffman and Bateson (2011) show the major competitors include Southwest Airlines, Delta Airline, and United Airline.

efficiently than if either firm attempted to do so on its own. The role of strategic alliances in shaping the

“Strategic alliances thus combine the advantages of flexible, long-term collaboration at a reasonable and foreseeable risk level while promising long-term benefits for both partners” (Albers, Koch, & Ruff, 2005). Agreements made between airline companies and airports have multiple names; strategic alliances, agreements, airport collaboration contracts. Airports and airlines in other countries outside the United States have different agreements on financial responsibilities for the airport terminals. In the United States, airports are considered landlords and help with the coordination of services (Albers, Koch, & Ruff, 2005). The United States has the “airlines build their own terminals and facilities” (Albers, Koch, & Ruff,

The global aviation business is showing extensive growth with foreign flag carriers in Asia-Pasific and the Middle East transporting more passengers to or/and from

In less than twenty years, the global industry has gone through tremendous change. Several airlines had gone out of business that had been on top of the industry for years. One of the remarkable changes had been airline alliances. The case focuses on the airline industry and how airlines are forming alliances and joint ventures. It then introduces the partner firms Air France KLM , and Delta . Air France KLM had over 25 collaborative agreements with other carriers and was a founding member of Skyteam, one of the leading airline groups. Air France KLM and Delta Airlines formed revenue

In the past few years, the commercial air carriers have formed strategic alliances with each other which were not possible before this due to the previous regulations.