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Mechanics and tactics of a merger
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The strategic merge between Delta Airlines and Northwest due to the fact that they tried to merge too quickly with no backup plan. The merge also failed due to the fact that they did not do significant research to see how well their companies would work together. This includes how the companies work separately and then how they would work together. Delta Airlines is an international corporation that offers many flights around the world as well as the continental U.S. They have a large corporate hub in Atlanta, Georgia. The integration of the two flight carriers was complete in about two years. At the time the merge between Delta and Northwest made them the largest carrier in the world at the time of the merge. “Delta’s merger with Northwest …show more content…
This merge was a failure at first due to the lack of planning and the small details not thought through. The employees were not on the same page and were not trained or given new contracts before the merge was complete. This created multiple different ways of doing things and loyal customers who were used to Delta’s unique and gracious hosting style may have had a rocky experience after the merge. They did not receive contracts from the merged company until months after the merge was complete and training was not quickly implemented for employees from the flight crew, airport staff or even customer service. The contracts were still assigned for only certain aircraft. This means that employees could not work on both Delta and Northwest aircraft. Having unusable contracts means you are paying for pilots who cannot fly. Errors such as this cause not only stress on the employees and clients but as well as the financial structure of the company. This created a complicated scheduling system and put a limit on who could host certain flights and trips. This then worked up the supply chain and the rest of the airline business as it all must work together smoothly to work completely and successfully. This shows how fast the merge was completed and the lack of planning. There was also no backup plan once these issues arose and once they arose there was no time to …show more content…
We saw this last year when their IT systems collapsed and shut down flights around the continental U.S. These issues overtime add up and can either make a break a company especially due to customer loyalty. Long time Delta customers may have embraced the idea of the merge due to a larger market share and more destinations to fly through their favorite carrier however they probably did not expect the fallouts that were seen with pilots, attendants and even gate
In the year of 2005, the companies eventually found a way to make it easier for the companies to combine without having any major issues or problems. Unfortunately, around the year of 20010 the merging com...
A merger is a partial or total combination of two separate business firms and forming of a new one. There are predominantly two kinds of mergers: partial and complete. Partial merger usually involves the combination of joint ventures and inter-corporate stock purchases. Complete mergers are results in blending of identities and the creation of a single succeeding firm. (Hicks, 2012, p 491). Mergers in the healthcare sector, particularly horizontal hospital mergers wherein two or more hospitals merge into a single corporation, are increasing both in frequency and importance. (Gaughan, 2002). This paper is an attempt to study the impact of the merger of two competing healthcare organization and will also attempt to propose appropriate clinical and managerial interventions.
Delta Air Lines operates in a competitive industry. Amongst its competitors, its two largest were American Airlines and United. To survive in the industry it was necessary to employ and maintain technologically efficient and cutting edge systems. However, Delta systems of operations were mainly paper based; they still used pneumatic tubes to move information and they made little use of the internet. As a result, the company lacked a competitive edge. The technology it had was based on various departments independently purchasing the technology they needed and hiring their own IT staff. In 1996, Delta was still known for its expensive airfares, poor service, limited leg room on flights and use of out-dated inefficient processing systems.
Many elements of Delta Airlines are described in detail, within this paper. There is a breakdown of the external and internal factors, using external and internal analysis. Porter’s Five forces are used to create the external analysis, and the key factors for Delta are power of buyers, and rivalry. Delta’s competitive advantages are identified as customer service, sustainability, brand image, strong strategic alliances, and corporate travel. Delta’s main issues are the low expansion in international markets, continuous changing of incentive program, and glitches within technology. Delta should expand more into the Chinese and African markets in order to gain market share within the airline industry.
“Northwest Airlines is engaged principally in the commercial transportation of passengers and cargo.” (5) NWA is a complete full service air transportation carrier that is the forth-largest air carrier in the world that services over 750 destinations located in 120 different countries on 6 continents. They operate 2,600 flights daily around the world and operate more than 200 nonstop between the United States and Asia each week. Headquarters is based in Minneapolis/St. Paul. The main connecting hubs are located at Detroit, Minneapolis, Memphis, and Tokyo. Northwest employs 50,600 employees nationwide as of Dec. 31, 1998. (6) NWA also has 1269 Stockholders as of Feb. 26, 1999. (6) Northwest continues to improve cargo shipping by proudly dedicating 12 Boeing 747 aircraft and easily becoming one of the largest cargo airlines in the world. (4) Cargo is very profitable for Northwest because “Northwest has predicted cargo revenue will top the 900 million mark in 2000”. (3) The enormous fleet of aircraft contains 400 airplanes. (1) Northwest has subsidiaries wholly owned (Unless otherwise indicated by NWA) by Northwest Aircraft, Northwest Aerospace Training corps, MLT Inc, Express Airlines, and Express Airlines I. (6)
Merging two companies does not exchange any cash between each other. Merging is usually done in free of cost; this is a likely reason for the high revenue made by the AT Kearney despites challenges faced to them.
Firstly, the need for achievement is met by understanding that people strive to master difficult situations, endeavors or challenges. This idea works on both an organizational level, as well as an individual level. From an organizational level, it is well known that a merger of this magnitude had never been attempted. With that brings a great challenge to succeed, and lets the leadership work in new and innovative ways to make such a merger successful. McClelland’s theory states, in regards to need for achievement, that people strive “To excel one’s self…to rival and surpass others… to increase self-regard by the successful exercise of talent” (Kreitner & Kinicki, 2010, p. 215). By this definition, the merger would motivate leadership to excel in the face of a challenge, and to increase their professional self-regard in their success in doing so. On an individual level, you are asking the performers and employees to recognize both economic and social climates, and to come together in action to save both their careers, as well as their passion in life. Such a merger would only embolden self-worth and perceived achievement, because they would be part of a much larger organization more adverse to risk and future change, and they would easily be able to look at other similar organizations and realize they were part of an organization who accomplished something never before attempted.
I can however say that, it is due to these setbacks that US Airways encountered that made it strong and able to close a big deal with the American. Going through bankruptcy and terrorist attacks simultaneously almost made the company fall but due to the consistent and critical decision making of its management, the company still operates. Before the merge with the American, US Airlines had several Chief Executive Officers who some made some wins and some fell it out of agreements with its lenders. This however, was how the company was able to become creative and merge with another big firm to create an even bigger company.
This was a sad day for everyone in both the immediate and extended “Delta family,” a day perhaps as sad in its own way as the death of Mr. Woolman almost 40 years before. The sadness mixes with fear by employees and retirees, their families, stockholders, customers, vendors, taxpayers, governments and all others among the tens of thousands impacted by the bankruptcy. Leadership decisions by Delta’s Board and CEO’s over a long period of years laid the foundation for Delta to be in a position where the factors would have a large enough impact to result in bankruptcy. By promoting Ron Allen to CEO, primarily because he had moved up the chairs in the company through Beeb’s efforts, the Board showed their lack of awareness of the need for a strategist to deal with the fundamental changes taking place in the airline industry. Then the Board brought in Leo Mullin and gave him free rein for 6 ½ years to turn a cash rich company into one in such poor shape financially that his successor had to turn to expensive sources of money to keep the company
On April 9, 2017, United Airlines faced an incident that quickly escalated into a public relations crisis. This was furthered intensified by a clumsy response to the incident that resulted in damage to credibility and reputation of the airline. Throughout the incident, there were several opportunities missed and mistakes made that contributed to the negative impact and reaction from the public. According to “Business Insider” (April 10, 2017), and “The New York Times” (April 10, 2017), United Express Flight 3411 had boarded all its passengers when gate agents were approached by a flight crew requiring transport. As the flight was fully booked, the gate agents attempted to solicit four volunteers to leave the plane in return for re-booking
The main threats to the industry over the next five years are the rise in price of oil, legislation, the TSA, and labor costs. Each of these threats effect the scheduled air transportation industry not only endangers Delta Airlines but the entire industry. As the price of labor increases for ground operations and pilots this creates a burden on the industry by causing them to spend more to satisfy their labor requirements. The price of fuel increasing leads to the price of fuel to increase, which not only affects a single airline but every airline. With each time that the crude oil price rises the prices associated with the costs of refining the jet fuel as well as transporting it. These costs are distributed to each airline as they use this resource to transport passengers. As new politicians are elected to Congress and new administrators take charge of the FAA new regulations regarding this industry. These regulations affect everything from mergers to the airspace that the airlines operate in as well as what hubs and airports each airline operates out of. These factors are not issues that the industry faces, the TSA, the Transportation Security Administration, creates an unnecessary burden for the passengers attempting to travel from one location to another. The TSA inspections required before a passenger is allowed to board their respective flights allows time for each passenger to become frustrated with the amount of time they have to allot for inspection as well as the invasion of their privacy.
Since its first grand opening in 1971, Southwest Airlines has shown steady growth, and now carries more passengers than any other low-cost carrier in the world (Wharton, 2010). To expand the business operations, Southwest Airlines took over AirTran in 2010 as a strategy to gain more market share for the Southeast region and international flights. However, the acquisition of AirTran brought upcoming challenges both internally and externally for Southwest Airlines. In this case analysis, the objectives are to focus on the change process post the merger with AirTran, and to evaluate alternatives to address the impacts of the merger. II.
When analyzing Delta, you do not have to search very far before quite possibly one its strongest attribute rears its head. Based on calendar 2000 data, Delta is the largest U.S. airline in terms of aircraft departures and passengers enplaned, and third largest as measured by operating revenues and revenue passenger miles flown. Delta is the leading U.S. airline in the transatlantic, offering the most daily flight departures, serving the largest number of nonstop markets and carrying more passengers than any other U.S. airline. Delta Air Lines transports more passengers worldwide than any other airline. Through a vast worldwide route system Delta has flown over 117 million passengers, more than any other airline in the world. Delta mainline, domestic and international service, Delta Express, Delta Shuttle, Delta Connection®, Delta Sky Team and Worldwide Partners operate 6,400 flights each day to over 450 cities in 98 countries.
Conflict seems inevitable when trying to merge two companies. Conflict is described as the “Process which begins when one party perceives that the other has frustrated or is about to frustrate, some concern of his” (Kumar, 2009). Synergon’s CEO uses a “take no prisoners” approach and would fire most of the management team within 12 months of taking over a company using an approach they call neutron bombing. In cases where both companies are successful, like in the case of Synergon Capital and Beauchamp, you add even more conflict. The managers of Beauchamp are used to operating in a positive way that has produced profits for the company and you add Nick Cunningham a manager of Synergon who is used to restructure management in newly acquired poorly run companies; something has to give to make it successful.
The Delta Airlines (DA) has a long history of successes and failures over years. One of U.S. major airline carriers, in addition to United Airlines and Southwest Airlines, DA has strategized for different market events and based on company's resources and capabilities built over years. Like U.S. major airlines, DA has faced growing competition in home and international markets, particularly from airlines as Qatar Airways, Etihad and Emirates (Annual Report 2015).