Emirates and Qantas Strategic Alliance Essay
1. With reference to the academic literature and using your analysis of relevant external environmental factors, critically discuss the reasons why Qantas and Emirates identified each other as potential partners. In which areas are the expected internal benefits and synergies for both companies involved?
The partnership is expected to strengthen the two airlines in the highly contested Europe to Australia market.
Qantas has recently been struggling to compete with other airlines and has been losing money; last year losing $450 million. The partnership with Emirates, according to Analysts at Macquarie Equities, is estimated to increase annual earnings by as much as $90 million.
For Emirates, being a in a much …show more content…
Another example of Relational Risk is that Emirates and Qantas risk losing control over proprietary information, especially regarding complex transactions that requires extensive coordination and intensive information sharing. This is especially relevant to the airline industry which requires large amount of data sharing to be successful.
Qantas or Emirates may unintentionally lose control of their technological and managerial know-how through poorly conceived contractual or firm-structural arrangements. A consequence observed is that some alliances eventually lead to an unplanned transfer of ownership, a process in which one or more partners take advantage of the other partner or partners (Bleeke and Ernst, 1995).
Another relational risk specific to Qantas is that previously before the merger Emirates were not a major player in the Australian airline market but now since the merger they have established themselves as the 2nd Biggest Airline in the Australian market. This is opportunism on the part of Emirates
Performance Risk: refers to the probability that intended strategic goals of an alliance may not be achieved, even though cooperation between the partners are satisfactory. Their risk sources include environmental factors (policy, war, economic recession); market factors (competition and demand fluctuation) and internal factors (machines, logistic system). Performance risk