1. AVM 407
Name & ID: ALAZ ALEV – S002447
Name of my tutor: YİLBER
KARADAĞ
AVM 407
Do Strategic Alliances Enhance Members’
Performance? – Asymmetric Perspective
16.05.16

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In the year of 1992, airlines which are the most scheduled in the world made losses with
more than all net profits and those airlines were under pressure to offer global service, involve
in new market, being flexible to economic environment and changing customer needs. Hence,
during this period they have been forming alliances with other airline companies to foster the
process of getting bigger. For example, a large number of airline companies have established
one of the four global airline alliances which are Wings, Star Alliance, Oneworld and Sky Team.
This strategic alliance which is a relationship between two or more parties occurs when
companies based on a foundation of common goals and entered to strategic passion. Also,
strategic alliance has advantages through partners and may ensure producing capacity, financial
development, network and product. In additionally, alliance includes technology transfer which
can provide access to knowledge. The aim of alliance is to be greater rather than to be
individual in the sector. Hence, in this report we will analyze the strategic alliance through
asymmetric perspective and understand effects on other members to decide if it is helpful for
enhancing or not. Asymmetric alliances mean that the agreements between large, well
established organizations and small, growing organizations according to disparately size. There
are some categories through research which approach asymmetric perspective for alliance such
as; airline size, alliance type and partner reputation. After this analyzes we can decide the
answer of the question which is “Do strategic alliances enhance member’s performance?”
Firstly, airline size is one of the approaches which are important for asymmetric
perspective in order to understand the enhancement through companies. In general, larger
airlines more likely to be satisfied with the alliance due to increase in traffic amounting which is
5%. Small airlines have also increase in traffic but the time is up to two years which is longer
than the time for large airlines. The increase for small airlines’ traffic is 15% because base of
traffic is smaller than larger companies. Another thing that related with airline size could be
alliance experience which is important for enhancement. Alliance experience has significant
impact on financial gains for both larger and smaller organizations. Larger firms have more
public information due to availability than smaller firms. Hence, investors know more about
larger and well established airlines’ strategy and they supply information about the larger
airlines’ experience in accessing intangible resources and decrease in the organization’s risk

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profit which can be discount rate. On the other hand, in smaller airlines they supply information
accessibility through tangible resources and social capital which provide extra cash flow. Shortly,
airline size effect the enhancement in different degree for airline according to alliance and both
type of airlines have positive impact due to increase in traffic and the financial gain from
alliance experience.
Secondly, alliance type is another approach for asymmetric perspective in order to
evaluate enhancement for airline companies and it divided as scale vs. link. Smaller firms
promote resources to upstream activities which can be R&D and larger firms promote resources
to downstream activities which can be manufacturing, marketing and distribution. Link alliances
are less stable than the scale alliances and as a result more asymmetric outcomes occur for the
partners. According to research the estimation for the balance of power could shift toward the
larger firm in link alliances because failure to gain in downstream could be harmful for smaller
firms in long term. In contrast, scale alliance could also shift the balance toward smaller firm
because both partners agree to compound R&D from resources. Alliances are more designated
to the smaller organizations than larger organizations when smaller one is in bargaining position
better. Therefore, smaller airlines could benefit more when it provides bigger resources.
Shortly, despite the different type of alliance which are link and scale both larger and smaller
airlines have enhancement. Larger airlines gain from link alliances more financially however
smaller firms gain more financially from scale alliances. Furthermore, smaller firms could gain
more due to downstream activities which is R&D and both partners compromise to pool
resources.
Finally, partner reputation is the last approach which has effect to enhance the
member’s performance according to alliance. Smaller firms have few entertainer and their key
constituents such as customer, supplier, collaborators and investors are available to value their
record. Larger organizations which are reputed enable smaller ones to get benefit with
partnering. For example, larger firms mostly draw the attention of the key components to the
new venture and the smaller firm with an alliance. Another thing is the fact that larger firm
which is reputed has selected smaller firm or less known organization over alternative firms

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enable valuable revenue for the smaller firm. In addition to this, alliance with a reputed
organization enables access to valuable skills and resources that the smaller firm lacks which can
be market capital. Hence, as long as smaller firms make alliance with reputed larger firms they
can enhance the member’s performance. Shortly, smaller airline organizations have greater
financial gain when its larger partner firm has a higher reputation and increase the
enhancement of partnership.
In conclusion, there are 3 main factors that help us to decide whether alliances are
enhancing member’s performance or not with consideration of asymmetric perspective. These
factors are airline size, alliance type and partner reputation according to research. Both smaller
and larger firms enhance from alliance but in different degree. For example, in the size of airline
part – larger airlines increase their traffic in less time and have more benefit from the
experience. However, smaller airlines increase their traffic up to two years with the help of
alliance and also get benefit from the experience. In alliance type part – small airlines seem to
be more beneficial due to downstream such as R&D. Finally, alliance with reputed airline
enhances revenue for smaller airlines.
Words: 974

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RESOURCES:
Asymmetric new product development alliances: Win – Win or Win – Lose partnership? KARTIK
KALAIGNANAM, VENKATESH SHANKAR, RAJAN VARADARAJAN
file:///C:/Users/Administrator/Downloads/8.2.%20Asymmetric%20New%20Product%20Development%2
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A Questionnaire Survey on the Impact of Alliances on Airline Operations J. DR KOSTAS IATROU
file:///C:/Users/Administrator/Downloads/10_COKGUZEL.pdf
The impact of membership in competing alliance constellations: Evidence on the operational
performance of global airlines. SERGIO G. LAZARRINI
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Strategic Alliances in the World Airline Industry MARION M. BENNETT
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