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Strategic alliances - Term Paper Example

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With the liberalization of the air industry in the 1990s and early 2000, partnership between airline companies became popular and alliances developed from simple partnerships to intricate strategic alliances meant to find a way over strict regulatory practices by governments and therefore adapt to the needs of their clients by spreading their airline networks (Blackets, 1999). The terrorist attacks of the Twin Tower buildings in United States of America changed the aspects of alliances by Aviation companies. Airline companies were forced to configure their partnerships in line with external factors that affect their operations. This thesis aims to examine the external factors that force airlines to enter into alliances with other airline companies and how this issues impact on their aims. This thesis brings into account how changes in the external settings have contributed to the re-orientation of the airline business. This paper gives a theoretical background of the meaning of strategic alliances. The reason is to make a difference between alliances and corporations. Basing on this, the concept of alliances and their objectives is analyzed. The paper talks about the growth of the airline industry, therefore, studying its historical and current developments and thereafter showing the industries characteristics. The paper illustrates development of strategic alliances in the airline industry giving a difference between marketing and alliance, as well as alliance building. The paper examines the environment in which the aviation industry operated in the period of 1990s and thereafter gives out the reasons as to why they build alliances and the last part summarizes the findings of this paper giving a conclusion on whether strategic alliance is beneficial to the airliner industry or not. Companies have a choice on many options in the event they want to initiate a corporate strategy and one of the options is forming alliances. In order to understand the concepts of strategic alliances, meaning has to be made on inter-firm cooperation’s and thereafter distinguish it from strategic alliancing. Cooperation is defined as working together for the purposes of achieving a common good. When business organizations are involved, it is referred to as Inter-Firm cooperation. When the activities of the firms in relation to other firms offering similar services or inter-related services are written under a formal contract with an official way of conducting business, therefore it can be said that the mentioned organizations have an alliance. Therefore, an alliance can be defined as a process in which business organizations form a close relationship based on mutual understanding and respect of the other firm with the intention of achieving a common aim which individually (Tyjemaks, 2012), it could be difficult to achieve. In alliance building, firms become interdependent because of their desire of achieving a common specific goal. Strategic alliancing limits the operations of the company because of the need to operate, however, its legal structure remains. Unlike mergers, where companies forsake their legal and economic autonomy in favor of the parent company, in strategic alliancing, its only economic operations which are affected. According to the above arguments, for ...Show more
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Summary

Name: Professor: In a composite and uncertain business environment, many organizations have learnt to form partnerships in order to safeguard their markets and improve on their efficiency. In view of this, in recent times, from 1980s, many organizations have formed alliances as the cooperate strategy to increase profitability and efficiency in their production of services…
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