Upload
bjoern-debooserie
View
488
Download
1
Embed Size (px)
DESCRIPTION
Strategic alliances 2
Citation preview
STRATEGIC ALLIANCESIB: Chapter 14
Bjorn Debooserie, Brittney Craig, and Zijie Wu
INTRODUCTION
Today: Airlines are struggling Strategies:
Mergers & Acquisitions Delta & Northwest
Continental & United Airlines
Strategic Alliances
M&A VERSUS NON-EQUITY ALLIANCES Terminology:
M&A: Combining two already existing companies Acquisition
Mergers
Non-Equity alliances
M&A VERSUS NON-EQUITY ALLIANCES M&A Advantages
No startup costs Ability to avoid foreign government restrictions Lower cost per unit Less competition Easier to finance Maximize competitive advantages Share operating costs Acquiring new technological developments
M&A VERSUS NON-EQUITY ALLIANCES M&A Disadvantages
Acquisitions – more expensive for acquiring company Legal Expenses Intangible costs (i.e. land or intellectual property) Takeover cost could be very expensive Potential devaluation of equity
M&A VERSUS NON-EQUITY ALLIANCES Non-Equity Alliances Advantages
More flexible Complement each other’s advantages Reduce costs Share investment and risk
Non-Equity Alliances Disadvantages Can’t avoid government regulations Instability Complexity in management
SOUTHWEST AIRLINES
Niche player without extensive international connections
Short haul traffic Low fares Domestic products and services
Better customer service Point-to-point traveling at higher frequencies Fuel efficient aircrafts
Leads to competitive advantages!
LIMIT VOTING SHARES (25%)
Voting shares: give shareholders say so in how airlines operate.
Too many voting shares could lead to expansion in domestic markets.
Law limits foreign airlines to overtake a domestic market.
DOMINATION GLOBAL AIR SERVICEConsequences Oligopoly Advantages
Lower prices for customers Bigger profits for airlines ( more innovation)
Oligopoly Disadvantages Little to no growth Too hard to regulate by the government Higher prices for customers Disappearing point-to-point traveling at higher frequencies
GOVERNMENT INTERVENTION
Deregulation Low prices Better services
Regulation Less competitiveness Limit to matters of safety Financial stability for the airlines Higher fares (more consistent)
CODE-SHARED ROUTES
Airline Benefits Coordinated pricing and programs JAL & AA promote themselves together
Boosting productivity and efficiency
Increasing opportunities for sales and publicity
Sell JAL’s premium economy product – More competitive First Class benefits Expected investment and operational efficiencies gained from co-
locations Increase exposure and sales opportunities Enhancing customer service
CODE-SHARED ROUTES
Customer Benefits Better choice of flight times and connection opportunities Wider choice of fares Increased mileage promotions opportunities Enhanced customer experience
Content sharing on the airlines’ websites
Online booking capability
Check-in at either airline
More aligned operational policies and procedures
Facility co-locations
More coordinated pricing and programs
Sharing best practices and cultural insights – Better customer service
QUESTIONS?Thank you for listening!