Merger, Acquisition, and International Strategies - Case Study Example

Merger, Acquisition, and International Strategies March 6, Merger, Acquisition, and International Strategies Introduction Marketing entails augmenting management strategies. The research includes merger scrutiny. The research includes marketing strategy analysis. The U.S. Airways and American Airlines Merger contributes to synergy benefits. Question 1. The merger between American Airlines and U.S. Airways was a good management strategy. The merger was long in the waiting. The head office of U.S. Airways is located in Tempe City, Arizona. On the other hand, Texas is the headquarters of American Airlines (Edgaronline 2013). American Airlines is operating a business that ferries passengers from one domestic location to another location in the United States. The company also serves the air passenger needs of customers traveling from the United States to other countries (Pride, 2006). During 2007, the company ranked second, in terms of passengers. American Airlines sold 98 million seats to customers during the same time period. In terms of revenue passenger miles, American Airlines ranked first. The company generated 138,417 million customers (Coyle, 2013). Further, the company employs the four marketing concepts in order to generate higher revenues. The company sells quality air travel services. Service is sold at popular prices. The company excellent ferries the customers from one domestic United States to another domestic location on time and in style (Pride, 2006). Furthermore, the company offers its in-flight services at reasonable prices. The reasonable prices do not necessarily equate to the lowest airline ticket prices. Reasonable prices are meant to recuperate the expenses of operating the company’s airline business. Reasonable prices allow the company to squeeze out a certain profit percentage from the daily flight schedules (Pride, 2006). Additionally, the company promotes the benefits of riding in one of the company’s huge jet planes. Promotions include offering discounts to customers to increase loyalty. Promotion increases Customer loyalty. One of the promotion activities is advertising the company’s services on the internet and other media advertising venues. Likewise, the promotion includes granting company ten percent discounts to the elderly passengers. Elderly passengers are those with ages from 65 years and above (Greenberg, 2007). U.S. Airways. U.S. Airways has its main offices in Tempe City, Arizona. The company ferries passengers from one United States location to another domestic location. The company ferries international passenger clients from domestic locations to South American destinations, European Union member states, and different parts of the Middle Eastern territories. During 2012, U.S. Airways generated $13.83 billion revenues (Marketwatch, 2012). With the merger of U.S. Airways and American Airlines, the new head office of the combined company will be the American Airlines head office. Further, the merger will result to stockholders of American Airlines owning an estimated 70 percent of the combined company. The U.S. Airways stockholders will own 30 percent of the combined company. The combined company will retain the name of American Airlines. In accounting parlance, when the name of the combined company retains the name of one of the companies, the joining of the companies into one bigger company is classified as a merger (Fleming, 2010). According to the Edgar online website, American Airlines generated passenger revenues amounting to $4,326 million during the first three months of 2007. American Airlines earned $558 million from the regional affiliate revenues during the same year. The company further generated additional $201 million cargo revenue during the same accounting year. Revenues include cash inflows from other revenue sources amounting to $317 million (Edgaronline, 2007). Further, the merger is a beneficial strategy. The strategy benefits both combining companies, American Airlines and U.S. Airways. After the merger, American Airlines will be able to reach the customers currently served by the U.S. Airways company. U.S. Airways will acquire more merger benefits. In the same manner, the new company will allow U.S. Airways to reach prospective clients currently served by American Airlines (Noplis, 2005). Question 2 Continental Airlines Continental Airlines is another company that is a profitable candidate for mergers and acquisitions. The company can enter the profitable merger formed by American Airlines and U.S. Airways. The headquarters of Continental Airlines is strategically located in Chicago, Illinois. The company ferries air passenger clients to six continental destinations. The company has its airport branches in Denver, Los Angeles, New York, Tokyo, and Washington D.C. (Continental, 2012). In terms of 2007 passenger volume, the company ranked 7th., The company sold 49,000,000 passenger tickets during the same year. In terms of revenue passenger miles, the company ranked 4th. The company generated 140 thousand million passenger miles (Coyle, 2013). Further, Continental Airlines’ innovative technology contributes a significant part to increasing company profits. The technology permits online check-ins. Customers can book their next flights by simply logging onto any computer network. Internally, the company established automated tools. Tools hasten the employees’ database management process. Information technology allows the employees to get any required information by just the click of the computer mouse. The company’s effective information technology boosts the accuracy and retrieval of customer ticketing and scheduling information. One of the benefits of the company’s customer service is the quick customer information updating process. During the Updating process, ticketing officers send emails to customers informing them of any delays and other related flight updates. Ticketing officers send apology letters for the flight delays. The company grants discounts to its high value clients. Customers will eagerly enjoy the frequent flier mile benefits (Rainer, 2008). Furthermore, the Continental Airlines company generated profits during 2012. The company produced revenues amounting to $37,152,000,000 during the year. The resulting gross profit figures amounted to $20,325,000,000 during 2012. Additionally, the company produced a net loss of $723,000,000 during 2012. During 2011, the company generated a net profit of $840,000,000 (Continental, 2012). Additionally, Continental Airlines’ joining the merger created between American Airlines and U.S. Airways will greatly benefit Continental Airlines. The merger will allow Continental Airlines to acquire the necessary customer database needed to improve Continental Airlines’ financial performance during 2013. Likewise, the same airline company will be infused with additional revenue- generating resources. The merger will allow the Continental Airline Company to gain the airline marketing expertise of American Airlines and U.S. Airways. With the infusion of both marketing knowledge and airline procedures, Continental Airlines can easily bounce back from its current financial woes (Fleming 2010). Additionally, combinations may include the combining of two or more companies into one bigger and stronger company. The giant company will retain the American Airlines business name. Continental Airlines serves the passenger needs of clients who fly from one United States city to another domestic city. Continental Airlines’ current marketing strategy includes offering bonuses to current and future customers. With the bonuses, the customers are persuaded to patronize the air travel services of Continental Airlines (Fleming, 2010). Question 3 American Airlines uses different levels and types of strategies. The company offers quality service to its current and future customers. With the quality service, word of mouth advertising augments the company’s regular advertising and promotion efforts (Pride, 2006). Further, the levels include corporate level strategies. The strategy entails combining the assets of U.S. Airways through the prescribed merger process. The same level entails assimilating the customer database into the American Airlines company’s database. The same level includes incorporating the information technology resources of U.S. Airways into the American Airways information technology (Pride, 2006). The business level strategy is one of the priorities of American Airlines. The level entails studying the market demands for the company’s airline services. Management officers determine the current services and benefits offered to the current and future customers. The same level includes incorporating new procedures to increase customer demand (Pride, 2006). Additionally, the U.S. Airways organization offers discounts and other bonuses to its loyal clients. Formerly established under the name, U.S. Air, the company owns several Airbus A-330 -200 jet plane models. Likewise, the company owns several Airbus A-350 model units. More than 32,000 employees serve the needs of the clients. The employees are continually trained to make each customer’s stay a comfortable one. With the fare discounts, more customers eagerly buy their next travel flight tickets from U.S. Airways’ jets (Lehman, 2013). Moreover, the financial information will indicate that U.S. Airways is a big airline company. In terms of passengers, U.S. Airways ranked 5th with 57,800 thousand passengers during 2007. In terms of revenue passenger miles, U.S. Airways ranked 7th with only 61 million passengers (Coyle, 2010). The in-flight service crew of the energetic U.S. Airways pampers the international air passengers with several popular amenities. Amenities include comfortable airline seats. Another favorite amenity is serving gourmet food delight. The tired passengers can comfortably doze off into dreamland as they safely ride the skies. More than 400 local and international passengers use the company’s air travel services (Noplis, 2005). To improve its current marketing and management strategy, the company must pursue the agreed merger with U.S. Airways. Mergers will increase the company’s revenues. Similarly, the company will benefit from the expertise of U.S. Airways. Benefits include working within a bigger and more profitable market segment (Pride, 2006). Question 4 American Airlines serves the domestic flight needs of its current and future customers. The company offers domestic partner benefits to the loyal customers. Customer benefits contribute to increasing customer loyalty. Loyalty means the customers prefer to ride American Airlines over other competing airline choices. Additionally, the company coordinates with other business partners. The coordinated efforts enhance customer service activities. Business partners include other airline companies. Coordination partners include engaging the services of other airline companies (Solomon, 2006). Further, American Airlines offers its customers easy online ticket booking. The customers can make reservations for their next flights by accessing the American Airlines website. While online, the current and future customers can click the date of the air travel, time of the air travel and destination of the next scheduled flights. The company’s use of the online booking system is in line with the Porters’ five forces strategy (Khosrowpour, 2003). Furthermore, company strategy increases the airline company’s image. The company implemented the SABER database system. The system increases the accuracy of the recording of all passenger booking and ticketing data. SABER means Semi-Automatic Business Environment Research. With the SABER technology the online checking of flight schedules and passenger lists saves time and energy (Rogers, 2010). The same online booking strategy reduces the time needed to buy another airline ticket (Khosrowpour, 2003). The company uses the SABER information technology to strategically sell more airplane tickets. The strategy effectively fills more airplane seats. Empty flight seats translate to lost revenues (Koontz, 2006). Conclusion Analyzing the above discussion, marketing aids in the implementation of management strategies. The mergers increase the merging companies’ information technology benefits. The marketing strategies are more beneficial when marketing strategy levels are in place. Evidently, merger contributes to countless synergy benefits. References: Coyle, J. (2010). Transportation: A Supply Chain Perspective. New York. Cengage Learning. Continental Airlines (2012), Income Statement, retrieved March 6, 2013 from < http://finance.yahoo.com/q/pr?s=UAL+Profile > Edgaronline, American Airlines, retrieved March 6, 2013 from Fleming, S. (2010). Airline Mergers. New York. Diane Press. Greenberg, P. (2007). The Complete Travel DetectiveBible, New York. Rodale Press. Khosrowpour, M. (2003). Annals of Cases in Information Technology. New York: Idea Group. Koontz, H. (2006). Essentials of Management. New York. McGraw-Hill. Lehman, W. (2013). U.S. Airways. New York. Arcade. Marketwatch, U.S. Airways income statement, retrieved March 6, 2013 from < http://www.marketwatch.com/investing/stock/lcc/financials> Noplis, J. (2005). Managerial Effectiveness. New York: AuthorHouse. Pride, W. (2006). Marketing Concepts. New York: Cengage Learning. Rainier, R. (2008). Introduction to Information Systems. New York. J. Wiley & Sons. Rogers, E. (2010). Diffusion of Innovations. New York. Simon & Schuster. Solomon, T. (2006). Domestic Partner Benefits. New York: Thompson . Read More