Strategies Adopted by Kenya Airways Limited to Cope With Challenges of International Strategic Alliances

Abstract

In many organisations, many promising ideas fail due to lack of knowledge about the local environment including social, cultural, political, and human resource related issues. Good preparation is necessary before setting up business ventures in any region. It is further required that proper networks of relationships are established and competence in dealing with the local people, authorities and markets are further developed. Collaborations are seen as a clear step to reduce the risk of investment by foreign firms and to gradually get accepted by the foreign governments and the people. This research project regards strategic alliances or strategic networks as purposeful and binding cooperative agreements between autonomous firms, for the objective of improving competitive advantage and long-term profitable value creation for all cooperating parties (Borch, 1994). The basic strategic choices of airlines are limited to three: growth strategy, focus strategy and lowest cost strategy. According to Kleymann and Seristo (2004) growth can be sought either internally or externally. As internal growth is often slow, it is attractive for many airlines to seek growth externally through mergers, acquisitions or alliances. As there are regulatory limitations on airline mergers and acquisitions, alliances often provide a less complicated route for growth. Alliances provide more flexibility, require less capital, and may carry fewer risks than mergers and acquisitions. If an airline chooses focus as its basic strategy, there are still pressures in the competitive environment that supports the use of alliances. Whether the airline bases its strategy on different customer groups or a certain geographic area, it is nevertheless likely to benefit from some form of partnership with suitable airlines. vi The purpose of this study was to shed some light on the challenges encountered in international strategic alliances. The research study through a case study of Kenya Airways Limited (KQ) also sought to know the strategies adopted to be able to cope with the challenges. It also set out to establish the strategies adopted to cope with the challenges. The research methodology used was a case study. The study sought to have a thorough understanding of the phenomenon from the perspective of KQ. An in-depth case study was used. Data was gathered through interviews with three respondents who were involved in the formation and management of the alliances. Content analysis was used to analyse the information gathered. The study qualified the relationship between KQ and other international airlines to be a „Network‟ of 15 airlines of both loose and tightly coupled relationships within which each partner is embedded and caters for diversity in all aspects of the union. The study also established that successful management of an alliance requires a wider range of skills than is required in managing a single airline to accommodate different cultures and management styles, balance the needs of all the alliance members, and nurture the relationship itself while at the same time coping with the internal and external challenges faced.