Under what circumstance is it a good idea for a firm to cooperate with other firms?

Also Answers: How do firms benefit from business-level and corporate-level cooperative strategies?

Now a days, it has become a trend between airlines to become business associate and work together for a better performance and collaboration. Many airlines prefer their non-competitors. Taking this idea into consideration a case of split between the Qatar and American airlines has been discussed, which presented a perfect example to make our point in consideration. In recent past they were allies working together but then American Airlines have some issues with their partnership so they decided to part ways. It has been observed that after the dismantling of partnership between these companies they still made appearances as one to make their customers satisfied and not lose their valued customers. An example of this was observed shortly after the end of partnership ended, British Airlines and other partner of American Airlines faced some technical issue due to which customers and flight companies face problems, at that time of need Qatar Airways showed up and saved the day by taking their customers to their destination. Which displayed the importance of partnership in flying industry.

Star alliance a company which name comes to mind when we discuss such situation. Most of their passengers are from other airlines with which they are collaborating as they were facing less profit on doing their business alone. Porter forces analysis also present some results such as sharing companies face less competition with a constant supplier force with fluctuation in buyers force. The cooperation between companies has made difficult for new companies to rise as they present threat to new comers their collaboration made them less vulnerable to loss.