Good Example Of Essay On Huddling Together From The Economist

“Huddling together” is a situation whereby organizations form an alliance, due to the fact that managers of these organizations are afraid to cope with competition from other organizations. They therefore tend to form alliance so as to face competition as one. Take a look at the 580 airline alliance. They are an alliance of about 220 airlines and they have a big range of different arrangements that form a joint market. The important aspect of forming alliances allows bilateral combinations which enhance the marketing objective of the company. Forming alliances creates distribution of risk so that merged organizations have to solve the encountered risk as one. This is an advantage to managers who are risk aversive.
When forming an alliance there should be a distinction between those alliances that want to partake on commercial purpose and those that want to make their strategies clear. A strategic alliance occurs when partners put their resources together and establish a common objective. Most re known airlines deal with strategic forms of joints. For passengers who travel on these alliances, they benefit from frequent-flier across global network, and they incur wide range of destinations which is costly because under certain circumstances, the airline alliances may lower travelling costs.
However, the disadvantage of using alliances in airline is the process of booking online which brings confusion to the passengers and this has resulted to many airline alliances resigning and opting to work independently. From the economist point of view with regards to airline business, there is a weakness in the maturity on how they deal with the formation and operation of alliances. The airline businesses therefore should have a wide scope of experience before it is considered a consolidated organization in the formation of alliance.