...FOM Fachhochschule für Oekonomie & Management Frankfurt University of Applied Sciences Master of Business Administration First Semester Module: Economics Assignment Two: Economics of Alliance Airlines Prof. Dr. Andreas Löhr Author: Boris Olarte Arque Student id: 252547 Frankfurt am Main, 16th July 2010 Table of Contents List of Abbreviations III List of Figures IV 1 Introduction 1 2 Capital Investment 2 2.1. The Airline Market 4 2.2 High Cash Flow 9 3 Liberalization 10 4 Conclusion 11 List of references 14 Internet Sources 14 Further Literature 14 Appendix 15 List of Abbreviations ASM: Available Seat Mile OAG: Official Airline Guide IATA International Air Transportation Association ICAO International Civil Aviation Organization List of Figures Figure 1: Demand Curve….………....…..................................................................3 Figure 2: Supply Curve……………………….………….........................................4 Figure 3: One World airline members ……………………......................................5 Figure 4: SkyTeam airline members ……………………........................................6 Figure 5: Star Alliance Statistics…………………………………………….……..7 Figure 6: Market Share of the Alliances…................................................................8 1 Introduction The airline industry is classified in the third economic sector the same as services because that is what is about. Airlines perform...
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...Airline Global Alliances May 11, 2015 Table of Contents Abstract 3 Introduction of Strategic Alliances in Airline Industry 4 Evaluation of Alliances in Airline Industry 4 Purposes of Alliance between Airlines 5 Disadvantage of Alliance between Airlines 6 Major Airline Alliances in the World 6 Alliances help Airlines to Achieve Comparative Advantage 7 Sky Team Alliance 8 Airline Alliances Enhance the CSR 9 Conclusion 10 References 12 Abstract Now a days the term global alliance is widely used in every business, but its presence is more significant in airline industry. The strategic alliances in airline industry are global in nature. The past deregulation impacted on strategic alliances positively, industry is freer to set routes and cooperation’s, due to oil price hike the cooperation of airline firms was unavoidable. The alliances help generating traffic between an airline and other parties that are partner. The European alliances were threatened by US alliances; in such scenarios United Airlines and British Airlines came in contract to avoid threats from US airlines. The benefits of strategies alliances are to gain foothold in any country like many airlines did in Europe, while at the same time is to establish global presence. Strategic alliance and mergers of firms acts as marketing technique in airline industry. Many of the European airlines bought stakes from the...
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...Global Airline Alliance . Airline business is a billion dollar business and employs hundreds of thousands around the globe . Passenger demand has also been increased lately after the economic turmoil showing positive signs for a comeback. As operational costs is the biggest slice in the budget pie , there has never been a more important time for airline carriers to explore the benefits of joining a global airline alliance such as Sky Team , Star Alliance or One World.(Bamberger , Carlton and Neumann, 2001) basically gave a breakthrough study on how alliances was formed. The foundation of an alliance started only on a code share basis and a share of marketing exercises. They focused more on the American market as opposed to other markets around the world as American carriers was the anchors of what we know now as a global airline alliance. Studies was done based on data from the mid 90's and gives us an idea on how and why it was formed. Their study focused more on the domestic market rather then international and it can't be proven on the global market. This research is essential for the topic as this gives us a brief of history on what was the foundation of a global airline alliance. They also emphasized only on the operators point of view which can perceived as opinion based information. No survey was done on population or sample to determine the benefits on the alliance from a consumer point of view to give an overview on the benefits of forming an alliance .In terms of air...
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...ALLIANCE BOOTS PLC: INTRODUCTIION: Alliance Boots is a leading international pharmacy-led health and beauty group serving a wide range of products and services to customers over 100 years in the UK. We are trying to identify how the Boots works internally and externally to reach its goal. We are also trying to find out how the Boots motivates its employees to be productive. We will also discuss its organizational structure and design to communicate each other function of the organization. We will discuss its appraisal system and organizational record keeping. We will also find out about its brand image to the stakeholder. Customers are at the heart of their business and they are devoted to providing extraordinary customers and patients care by offering innovative products ‘Only at Boots’ with exceptional values. People are their strength and tell us that Boots is a excellent place to work. They always aim to be the employers of choice by attracting and retaining the most talented and passionate people. BACK GROUND OF THE COMPANY: Boots had established its roots in the mid-19th century by John Boot, an agricultural worker, at Nottingham, in the UK. He opened a small herbalist store on Goose Gate in 1849. After John’s death in 1860, his widow, Mary, continued trading, with the help of her young son, Jesse, who became a full partner when he was 21. The store continued to thrive. In 1877, Jesse took sole control of the Boots. In 1920, he sold Boots to the United Drug...
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...CHAPTER 9. STRATEGIC ALLIANCES 1. One reason why firms might want to pursue a strategic alliance strategy is to exploit economics of scale. Exploiting economies of scale should reduce a firm’ costs. Does this mean that a firm pursuing an alliance strategy to exploit economies of scale is actually pursuing a cost leadership strategy? Why or why not? Yes, firm pursuing an alliance strategy to exploit economies of scale is actually pursuing a cost leadership strategy , according to the transactions Cost Theory, firms enter into strategic alliance in order to reduce their production and management cost. It is shown clearly that the movement collaboration between firms in industry is because there is a need to complement their short comings and weakness and to reinforce the competitive advantage of the collaborating companies and to promote in order to maintain a competitive market. They also need to reduce cost though the cooperation in different tasks and projects, to solve technical or financial shortcomings to be able to conduct the main task or project and to ensure large access to the market, export or enter in a new sector on which large investments are required. HAL dari internet 2. Consider the joint venture between GM and Toyota. General Motors have been interested in learning how to profitably manufacture high-quality small cars from its alliance with Toyota. Toyota has been interested in gaining access to GM’s U.S. distribution network and in reducing the political...
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...C O U N S E L L I N G P A P E R * T H E R A P E U T I C A L L I A N C E - Research Paper by KANTHAROUP Term. Establishing an efficient relationship between client and counsellor is one of the key aspect in counselling. Every therapeutic session starts with the process of building up a therapeutic alliance. Bob Shebib defines the therapeutic alliance as a time limited period of consultation between a counsellor and one or more clients for assisting the client in achieving a defined goal (Shebib, 2014). However, to achieve successful results, a partnership that primarily focuses on the clients’ needs and goals is required. The therapist must be eager to help the clients with care and compassion while the patient also need to perceive and understand their own mental state. Interactions between both sides should be done with trust and respect to ensure the safest environment possible for the client. As therapeutic alliance is the heart in counselling processes, it is significant to acknowledge some of the key components that leads to a successful therapeutic session. This paper will demonstrate how a successful relationship is constructed. It will first explore the emotional and affective component highlighting the bonding of both therapists and client. Agreement on goals between both sides be examined in a detailed method. To finalize the paper, numerous principles will be shown to illustrate the ways therapists should cope if a therapeutic rupture interferes. ...
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...1. A strategic alliance is not only confined by raw materials and components but it also deal with technology and management approach. For example, company “A” manufactures a product in Bangladesh and desire to sell their products in the United States. And company “B” has worldwide distribution channel and want to expand the same product that the company “A” made. That means companies “A” and “B” establish together a strategic alliance to expand their production. Strategic alliance known as two and more companies join the work force, resources, and core competences to achieve a common objective. Firms set up a common insight, collaboration among the firms such as complementary technologies, risk sharing, cost reduction, and market development through a strategic alliance to produce better outcomes. 2. As stated by this article only 50% is the rate of success of joint ventures. Moreover, authors mentioned that “according to a recent study by McKinsey & Company, which found that only half of all joint ventures yield returns to each partner above the cost of capital.” The explanation of collapse of alliance is mention as follow. First, the most significant explanation is that the alliance manager are “traditionally organized and managed.” Diverse business structure and culture trigger alteration in manager approach among the company leader. Second, if the operational performance benchmarks turn out to be outdated that will have an effect on top manager’s resolution. For instance...
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...The HP-Cisco Alliance In early 1997, the first HP-Cisco alliance was first formed. HP was Cisco’s first publicly announced strategic alliance partner. The agreement between the two companies focused on technology collaboration, product integration, professional services, and customer support. The first contract lasted until February of 2002, when both HP and Cisco decided to further formalize and expand their alliance by signing a new contract. Shortly afterwards in March of 2002, HP merged with Compaq Computer, Inc. This temporarily slowed alliance activities between HP and Cisco. The “new HP” needed a few months to reorganize with the addition of Compaq. A few months later, in August of 2002, the alliance activities began to move forward once again. The alliance was a win-win for both HP and Cisco. Both companies were widely respected global technology companies. At the time, Bill Russell and Jim Heal of HP and Steven Steinhilber and Mike Thomas of Cisco Systems were at the forefront of the management teams responsible for forging a stronger, more formal alliance between the two companies. The original mission of the alliance formed in 1997 was to provide co-marketing enterprise networking solutions to HP and Cisco’s join customers. Through this alliance, HP and Cisco developed and sold four joint solutions – IP telephony, service and network management, mobility/wireless, and Utility Data Center. All four of these ventures were successful. Revenues generated...
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...for forging strategic alliance Despite the inherent risks, it is often necessary for firms, because of their lack of necessary resources, to forge strategic alliances with other firms for acquiring complementary skills. Before establishing a formal relationship with other enterprises, an enterprise must realize its motivations and priorities. four motivations with different orientations: 1. Strategy-oriented. Enterprises forge alliance for strategic objectives such as maximizing the profit and possible cooperation. Tactic practices are increasing the market share, stepping up the pace of employee exchange, shortening the time for technological development and new products to enter market, and preventing vicious competition from competitors. 2. Cost-oriented. Another motivation behind forging an alliance is to reduce cost. To share the cost for developing a technology and avoid duplicating investment, to reduce the cost for searching the necessary information, to reduce the risk of R&D, and to cooperate with governmental organizations for tax policy are the common considerations for this motivation. 3. Resource-oriented. The availability of critical resources is the third motivation for establishing an alliance. To exchange the critical equipment and technologies with the alliance partner for reducing the risk of R&D, and to make use of the marketing channels of the partner will bring benefits to the participants of the alliance. 4. Learning-oriented...
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...Learning in Strategic Alliances Strategic alliances that bring organizations together promise unique opportunities for partners. The reality is often otherwise. Successful strategic alliances manage the partnership, not just the agreement, for collaborative advantage. Above all, they also pay attention to learning priorities in alliance evolution. The resource-based view of the firm that gained currency in the mid-1980s considered that the competitive advantage of an organization rests on the application of the strategic resources1 at its disposal. These days, orthodoxy recognizes the merits of the dynamic, knowledge-based capabilities2 underpinning the positions organizations occupy in a sector or market. Strategic alliances—meaning cooperative agreements between two or more organizations—are a means to enhance strategic resources: self-sufficiency is becoming increasingly difficult in a complex, uncertain, and discontinuous external environment that calls for focus and flexibility in equal measure. Everywhere, organizations are discovering that they cannot “go” it alone and must now often turn to others to survive.3 Preamble 1 2 3 The resources that the theory deemed of strategic importance were valuable, rare, inimitable, and nonsubstitutable (leading to charges of tautology). Importantly, the list of what constitutes a resource was expanded in the 1990s with the refinement that the encompassing construct previously called resources should be segregated into...
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...Strategic Alliance Abstract Organizations are facing exciting and dynamic challenges in the 21st century. In the globalized business, companies require strategic thinking and only by evolving good corporate strategies can they become strategically competitive. A sustained or sustainable competitive advantage occurs when firm implements a value – creating strategy of which other companies are unable to duplicate the benefits or find it too costly to initiate. Corporate strategy includes the commitments, decisions and actions required for a firm to achieve strategic competitiveness and earn above average returns. The goals of corporate strategy are challenging not only for large firms like Microsoft but also for small local computer retail outlets or even dry cleaners. I hope to offer a concise description of strategic alliances as well as a picture of who is participating in them and why. The states of affairs that encouraged this “rising era of collaboration” will be reviewed and the necessary steps in formulating alliances. Examples of companies that are or were involved in strategic alliances will be discussed, others of which were thriving and the others of which they were not. This paper is not intended to serve as a comprehensive study of strategic alliances. Introduction Corporate alliances, which are now called “strategic”, are in fact not new. Westinghouse Electric and Mitsubishi were allied for seventy years. The alliance between Ford and Mazda dates...
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...Joint venture is a strategic alliance in which two or more cooperating companies (the ‘parents’) create a legally independent company in which they invest and from which they share any profits created. Joint ventures allow companies to establish long-term relationships and transfer tacit knowledge. Many joint ventures have 50–50 ownership and control; however, there is no need for an equal partnership. More important that the partners specify certain aspects of the alliance that are most interested in, and the issue of the respective ownership becomes less critical. Equity alliance is an alliance in which one or more partners assume a greater ownership interest in either the alliance or another partner. Is an alliance in which one or more partners assume a greater ownership interest in either the alliance or another partner? Equity investments increase the stake for companies involved in the alliance. Because one partner has invested in the equity of another as part of the alliance, this company is not likely to cheat on the joint-venture partner. If it does, then its equity in the joint venture partner loses value. Equity arrangements are very common among Japanese companies. These cross holdings (the network is called a keiretsu) reduce the chances for one company to cheat the other for short-term gains. By investing in a separate equity, both companies — parents (or alliance partners) — have a financial interest in the joint venture. If one cheats the other, the joint...
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...Managing Alliances Paper MBA 517 AU: Strategic Plan/Policy November 24, 2014 Mark Pepper 1) Define a Strategic Alliance. A Strategic Alliance is when two or more independent companies come to terms of agreement on what the other company can gain by converging there assets. The converging of these parties within the agreed terms based on service level agreements, form a business strategic alliance. Service Level Agreements (SLAs) and a given set of objectives define the terms of the alliance from each party. The author states that the terms are typically based on operation performance metrics to measure the terms of the success of the strategic alliance. 2) What percent of corporate Alliances are successful measured by the Cost of Capital. What are the reasons for such results? The intention and meaning behind a Strategic Alliance is for both companies to be more successful as partners in a joint venture more then they would have separately. The author of the article states that corporate alliances are a 50/50 chance of success and goes on through some reasons behind the lack of success for one or both parties. Much of the failure of one party or another is due to the traditional organization and management. The operational performance metrics, from the Service Level Agreements that form the terms in which the alliances are joined, are dated in nature because of the focus on meeting the metrics versus looking the overall strategy and vision. The lack...
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...What are some of the challenges associated with managing alliances? How do host governments affect these? One of the biggest challenges in managing alliances is the cultural dimension. Differences in culture can cause huge issues in alliances, and also in working with foreign partners. Cultural differences can cause misinterpretation, lack of valuable communication and also confusion in the partnership. Differences in the cultural dimension have plagued alliances for years, and should be looked at carefully before a MNC ventures into one. One partner may have high uncertainty avoidance while another may have low uncertainty avoidance. This definitely impacts the way management deals with certain situations, and can become a tug-of-war. Host governments have a substantial role in how and when alliances are formed and also terminated. Many host governments require alliance, and can even affect dissolution of the alliance by making it difficult for the partner to sell their share. They can also block repatriation of the foreign partner’s investments in the alliance. This is why it is so important for MNC’s to do extensive research, and understand the risk level before joining into an alliance. Cultural differences can be a huge deal breaker. Like you said, it can cause misinterpretation. Misinterpretation can change situations quickly and make other countries think differently of the company. It can simply be a logo or slogan than is interpreted differently in the host country...
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...Interfirm alliances in the small business: The role of social networks BarNir, Anat; Smith, Ken A. Journal of Small Business Management40.3 (Jul 2002): 219-232. Abstract (summary) In light of the increasing importance of strategic alliances in shaping competition, this study explored whether the social network of small firm executives can be leveraged to facilitate the establishment of interfirm alliances. Analyses are based on a mail survey of 149 small manufacturing firms in the northeast US. Results indicate that the social networks of senior executives account for 11%-22% of the variance in the degree to which firms engage in alliances, depending on the type of alliance. Results also show that the number of interfirm alliances is positively related to several networking properties (propensity to network, strength of ties, and network prestige). Findings are discussed in the context of network theory, social embeddedness, and the overall implications for management researchers and practitioners. Full text In light of the increasing importance of strategic alliances in shaping competition, this study explored whether the social network of small firm executives can be leveraged to facilitate the establishment of interfirm alliances. Analyses are based on a mail survey of 149 small manufacturing firms in the northeast United States. Results indicate that the social networks of senior executives account for 11-22 percent of the variance in the degree to which firms engage in alliances...
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