Emirates and Qantas Strategic Alliance Essay

3731 Words Dec 27th, 2013 15 Pages
PART A
1. With reference to the academic literature and using your analysis of relevant external environmental factors, critically discuss the reasons why Qantas and Emirates identified each other as potential partners. In which areas are the expected internal benefits and synergies for both companies involved?
(20 marks)
The partnership is expected to strengthen the two airlines in the highly contested Europe to Australia market.
Qantas has recently been struggling to compete with other airlines and has been losing money; last year losing $450 million. The partnership with Emirates, according to Analysts at Macquarie Equities, is estimated to increase annual earnings by as much as $90 million.
For Emirates, being a in a much
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Qantas and Emirates will also be setting joint prices which is a further restriction to the consumer. After looking at the Five Forces Model firms should make dealing with the competition their main priority. The other areas in the model seem to have an overall low threat so existing firms don’t have to focus on those areas as much in their business strategy. (Porter, 1999)

2. With reference to the academic literature, explain the risks specifically associated with the choice of strategic alliance as an approach to this particular partnership. Why is this NOT a merger? Justify your view.
(20 marks)
Das and Teng (1998b) divided the risk in a strategic alliance into two independent, yet equally important considerations: relational risk and performance risk, and characterized them as:
Relational Risk: is the risk of unsatisfactory inter-firm cooperation. Such as the bad relationships, or the partner does not comply with the spirit of cooperation. It is unique to strategic alliance, and it is unavoidable. The typical source of relational risk is the opportunistic behaviors, such as shirking, obtaining the partner’s sources, distorting information. It is a Firm-Firm interaction
An example of this in relation to the Qantas and Emirates merger is that they let each other down with there ground service such as catering and flight lounges, If for example you are flying on Emirates and experience poor
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