Using BARNEY book "Gaining and sustaining competitive advange":
1)What are the different strategic alliance of Swissair (equity alliance ; Non equity alliance ; Joint venture): explain your position Describe how Swissair gains competitive advantage.
2) According to Barny's book nswer to the following question: "What Swissair gain from its partners by forming the Qualiflyer alliance?" using the model p370:
DOes the alliance allow Swissair to: (illustrate all answer)
-Exploit economies of scale
- learn from competitors
-manage risk and cost share
-facilitate tacit collusion
-low cost entry into new markets
- low cost entry into new industry and new industry segments
-low cost entry from industry and ind. segments?
- manage uncertainty
? Qualiflyer alliance is not a joint venture because a joint venture is usually a commercial project of a limited duration for a specific accomplishment. In case of Qualiflyer there is a host of objectives and there is no pre specified time after which the agreement will dissolve. Secondly, this is not an equity alliance because even though in case of Austrian Air there has been mutual purchase of equity, Swissair has unilaterally purchased equity in seven out of ten alliance partners. Purchasing of equity has not been a mandatory part of the agreement and at least two of the alliance partners have expressed resentment over the purchase of equity by Swissair. This means that the alliance is a non-equity alliance even though Swissair has purchased some equity in other partners.
? Barney's model that potential of firm to generate competitive advantage depends on the resource to be valuable, rare, imperfectly imitable and non-substitutable.
? The resources that have been acquired by Swissair are valuable because it allows it to operate from new hubs, allows itself to focus on the premium segment ( first class), allow the different companies to use the same airplanes, invest mainly in Airbus fleets so that they can be interchangeably be used and even encouraged partners to use Flight lease planes.
? The resource used by Swissair is rare because the alliance provides special advantages that others do not possess, for example Swissair and Qualiflyer got hubs like Zurich, Brussels, Vienna, Nice, Istanbul and Lisbon. The unique advantage of these hubs was they were big enough to ensure connections to virtually anywhere, but small enough to offer greatly reduced transit times compared to Heathrow or Roissy. The alliance brought Swissair access to Orly, Portugal and multiple routes into Central and East Asia.
? Thirdly, continuing with Barney's 1991 model, the resources were imperfectly imitable because of historical condition, causally ambiguous and socially ...
The strategic alliances of Swissair, the competitive advantages that this alliance brings the company and the dynamics of strategic alliance in the airlines industry.
Swissair finds itself at a competitive disadvantage: it is not a member of a global alliance. To illustrate this look at the following example. Profit margins are quite different for airlines in alliances when compared with airlines, which are not. Let's assume for a moment that the average profits in the airline industry are 15% and that 50% of air travel is performed by airlines in alliances (it is in fact 53% as the case states, but this way it will be easier for you to calculate). Question: given that the global alliances claim 80% of the profits, what do the profit margins in either category (alliance and non-alliance airlines) have to be in order to realize an average profit margin of 15%?
What is the structure of the airline industry (Five forces model)?
What different strategic alliances is Swissair involved in?
Should Swissair form its own (global) alliance? What does Swissair gain from its partners by forming the Qualiflyer alliance?
What are the trade-offs between control, commitment, and trust among partners in global airline alliances? How dominant will Swissair be in the Qualiflyer alliance?
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