Page 249 - Foundations of Marketing

216 Part 3 | Customer Behavior and E-Marketing

Airline Strategic Alliance
American Airlines, British
Airlines, and Iberia formed an
alliance in serving transatlantic
routes called One World.

Harry Page/Bloomberg via Getty Images

foreign markets. They may be the result of a trade-off between a firm’s desire for completely
unambiguous control of an enterprise and its quest for additional resources.
Strategic alliances are partnerships formed to create a competitive advantage on a world-
wide basis. They are very similar to joint ventures, but while joint ventures are defined in
scope, strategic alliances are typically represented by an agreement to work together (which
can ultimately mean more involvement than a joint venture). In an international strategic alli-
ance, the firms in the alliance may have been traditional rivals competing for the same market.
They may also be competing in certain markets while working together in other markets where
it is beneficial for both parties. One such collaboration is the Sky Team Alliance—involving
KLM, Aeromexico, Air France, Alitalia, Czech Airlines, Delta, Korean Air, Kenya Airways,
Aeroflot, AirEuropa, Vietnam Airlines, China Airlines, MEA, Saudia, Tarom Romanian Air
Transport, China Eastern, AerolineasArgentinas, XiamenAir, and China Southern—which is
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designed to improve customer service among the firms. Whereas joint ventures are formed
to create a new identity, partners in strategic alliances often retain their distinct identities, with
each partner bringing a core competency to the union.

Direct Ownership
Once a company makes a long-term commitment to marketing in a foreign country that has
a promising market as well as a suitable political and economic environment, direct owner-
ship of a foreign subsidiary or division is a possibility. Most foreign investment covers only
manufacturing equipment or personnel because the expenses of developing a separate foreign
distribution system can be tremendous. The opening of retail stores in Europe, Canada, or
strategic alliance A partner-
ship that is formed to create Mexico can require a staggering financial investment in facilities, research, and management.
a competitive advantage on a The term multinational enterprise , sometimes called multinational corporation , refers
worldwide basis to a firm that has operations or subsidiaries in many countries. Often, the parent company
is based in one country and carries on production, management, and marketing activities in
direct ownership A situation
in which a company owns other countries. The firm’s subsidiaries may be autonomous so they can respond to the needs
subsidiaries or other facilities of individual international markets, or they may be part of a global network that is led by the
overseas headquarters’ operations.
multinational enterprise At the same time, a wholly owned foreign subsidiary may be allowed to operate inde-
A firm that has operations or pendently of the parent company to give its management more freedom to adjust to the
subsidiaries in many countries local environment. Cooperative arrangements are developed to assist in marketing efforts,

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