Question

Many airlines have global cooperative alliances. Explore two of these major alliances on the Internet, the OneWorld Alliance, which includes American Airlines and British Airways, and the Star Alliance, which includes Lufthansa and United Airlines.

1. How do these alliances share competitive resources?

2. Review the four competitive risks associated with using cooperative strategies starting on page 271. How does each alliance avoid these risks?

Answer 1

Firms may have many motivations to form strategic alliances, and most of these reasons   

          are based on the logic that each partner can bring complementary strengths to the table,

          resulting in a competitive advantage for the participants collectively. Partners in a strategic

          alliance can benefit from many aspects of a cooperative relationship: access to unfamiliar

          or untapped markets, risk sharing, economies of scale, shared technology, and decreased

          cost. Joint ventures and strategic alliances force companies to share revenues and profits, but they

             also share the risk of loss and failure. Thus, the popularity of the cooperative strategies increases as

             projected risk increases, because joint ventures allow firms to take on projects that are otherwise

             too risky or too costly.