1. What are the benefits associated with the alliance between British Airways and USAir? Why would each be motivated to pursue this alliance?

By forming an alliance with the USAir, British Airways will be able to get access to the US communities. This would have been difficult if the airways had tried to access it individually because of the regulations or the cost of accessing this market. USAir, on the other hand, will have the benefit of financial assistance that improves its economic position and thus giving it the ability to compete in the industry effectively. Both the airlines will also benefit from the improvement of the revenue that will be collected due to their coordinated schedules.

2. What is the suggested form and structure of the alliance between British Airways and USAir? Will this structure benefit both parties?

This alliance will give the British Airways equity of 19.9% in the USAir shares, and this would allow the airline to access the American market. The USAir, on the other hand, will receive a $300 million to salvage its deteriorating economy.

3. How can the alliance between British Airways and USAir be used as a strategy vehicle? Classify the nature of the partnership

British Airways got into the coalition as a strategy in its plan of becoming a dominant player in the consolidation of the global market. The dynamics and costs of operating the airline were increasingly becoming expensive, and thus the airline had no other choice than to join hands with the USAir.

4. Discuss some of the challenges faced in the British Airways and USAir alliance? What factors are putting the alliance’s success at risk?

The two companies were faced with the daunting task of planning how the two firms would take advantage of the opportunities that arose from the alliance. It was difficult to find a way of sorting this issue in a manner that would satisfy both parties.

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