Real Madrid is definitely the favorite, and in terms of individual quality, they are much better than Dortmund. The only thing i would give Dortmund credit for is their fighting spirit and sense for goal, but against Real, it's unlikely they'll manage to do much.Of course, Xabi Alonso has recently arrived and will need some time to settle in, as well as to prepare the team for the upcoming season. So this competition is more than enough of a preparation for him ahead of the season's start.
Despite the fact that football is unpredictable, Dortmund will not prevent Real Madrid from winning because, even when they have more quality players than they have today, Real Madrid always beats them. Dortmund has a fighting mentality and even though they concede many goals, they will not give up until the final whistle. They also have a great striker who has two goals in this competition so far, so the Real Madrid defense will not underestimate Guirassy, who takes advantage of every opportunity.
I agree with you that Xabi Alonso will go a long way to get the confidence of the players using his new tactic, but this tournament is enough for both Alonso and the players to adjust to the new strategy. However, Xabi Alonso is doing a great job and I really like his coaching system. When Mbappe returned from injury, another manager would have benched Gonzalo against Juventus, but he believed in the player and started him, securing the winning goal for Real Madrid.