Alliance analysis

Thèmes abordés

Star Alliance

Résumé du document

First, we have to define what a "strategic alliance" is. A strategic alliance is a contractual agreement among organizations to combine their efforts and resources to meet a common goal, or an agreement between two or more partners to share knowledge or resources which could be beneficial to all parties. Several events forced the creation of strategic alliances among airlines, the main ones being legislative, others due to the competition against low-cost carriers and finally ones that were just a natural strategic step of previous agreements. Which is may be the first development in the late 70s until the early 2000's, is the deregulation of the airline industry that led airline companies to set up an alliance. Airline companies were allowed to operate domestic flights in other countries and on this fact, partnerships were created in order to widen their destination networks. Bilateral agreement was another legislation that helped strategic alliances. It prevented national carriers in organizing additional services abroad. "Code-sharing" is the way that airline companies found to get around this restriction. It's enabled them to advertise the flights of other airlines as their own. This practice is still in use as it permits two airlines to set the same flight and therefore make this flight appear two or more times, increasing its chances of being chosen by a travel agency.

Extraits

[...] By improving its effectiveness and its brand awareness, Star Alliance also won market shares. Furthermore, their good position on the market and the ability to decrease cost were two good ways to both decrease the bargaining power of their suppliers and the threat of new entry in the market. To conclude, the Alliance was so well organized thanks to its centralized control and the good will of every participant that they went through the crisis which followed the 11th September 2001, by supporting each other. [...]

[...] Answers Before beginning we have to define what a “strategic alliance” is. A strategic alliance is a contractual agreement among organizations to combine their efforts and resources to meet a common goal, or an agreement between two or more partners to share knowledge or resources which could be beneficial to all parties. Several events forced the creation of strategic alliances among airlines, the main ones being legislative, others due to the competition against low-cost carriers and finally ones that were just a natural strategic step of previous agreements. [...]

[...] Alliances like Star Alliance are useful for airline companies which have to cut their costs, putting resources in common to save money or to develop their network to gain new customers. Finally, RyanAir and EasyJet could stay out of alliances because they managed their own cost efficiency though their strategy. Actually every traditional airline could be interested to join an alliance, which means get new customers at a lower cost, without sacrificed their provided service level, and rationalised their costs through agreement. Let see an example. [...]

[...] The second they have to increase their market share and stay competitive, and a key success factor to do so in the airline industry is to have a big geographic coverage; the objective was therefore to increase the number of destination, by building a strong and reliable network. The third objective was to improve the customer satisfaction, as it is also important to develop customers' loyalty. It was necessary to find a compromise to create a new brand without losing the identity of companies therefore members. Star Alliance has met its strategic objectives, which proves that the overall strategy was good decision. [...]

[...] And if an airline is in trouble, a member could take in charge the passengers. One of the methods that we can used to perform an analysis of Star Alliance is SWOT method. Strengths - A significant number of destinations - Joint operations to save money - Improved travel experience though coordination (seamless travel experience) - Frequent Flyers program. - Bilateral agreements with conventions organizers. - Lounge access in a part of the alliance network for most valued frequent flyers. - Code sharing increasing route rationalization - Economies of scale. [...]