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Global Corporate Strategy - Essay Example

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Introduction Core competencies and dynamic capabilities of organizations are considered as essential strategic advantages which firms develop over the period of time.( Zahra, & Nielsen, 2002). A core competency of the firm is relatively difficult for competitors to imitate and also results into overall benefit for the consumers besides being reused by the organization.( Gibbons-Wood,& Lange,2000 ) Similarly, dynamic capabilities of the organization allow it to use, integrate and reconfigure its external as well as internal competencies to deal with the external challenges.( Chien,& Tsai,2012) Air France and KLM were two giants in the airline industry however, over the period of time, as the i…
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Global Corporate Strategy
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Download file to see previous pages This was despite the fact that industry trends clearly suggested for formation of strategic alliances rather than entering into any merger. The merger became successful because both the firms were critically able to utilize their core competencies and dynamic capabilities besides achieving the synergies. There have been many factors which created the overall synergies for the new firm to develop itself into a leading global firm in airline industry. This paper will discuss as to how the new firm Air France-KLM was able to use its core competencies and dynamic capabilities to achieve the success it achieved after 2004 merger. Core Competencies Core Competencies of a firm are specific set of skills which an organization executes in order deliver more value for its customers. (Shaabani, Ahmadi, & Yazdani, 2012). One of the core competencies of the new firm was the creation of a larger network which came into existence after the merger. Both Air France and KLM were operating largest and busiest routes in Europe and as a result of the merger, the new firm had an access to a large network and resultantly achieved an advantage which was relatively difficult to replicate by the competitors in the market. KLM was the oldest airline in the world and it provided it necessary time to perfect its learning curve in an industry which changed over the period of time. Such long history provides a firm time to acquire the knowledge and learning required to operate in airline industry. Same was the case Air France as it was also able to develop its core competencies and learning curve over the period of time. It is also important to understand that the new firm has also one of the best maintenance and engineering department delivering allied services apart from passengers and cargo. The set of skills possessed by the engineering department of the firm created the further advantage for the new firm to actually utilize its strengths and become more dominating into a new market.( Vassolo & Anand,2008) Dynamic capabilities of the firm are determined by the ability of the firm as to how it can integrate its various competencies together to achieve the desired results. (Zheng, Zhang, & Du,, 2011).Dynamic capabilities of the firm are different from its functional competencies and therefore require that a firm become able to integrate wide range of competencies in a cohesive framework to achieve the strategic objectives. (Leonard-Barton, 1992. ). The new firm was able to able to integrate its external capabilities by utilizing its formal as well as informal strategic alliances which actually helped to remain one of the competitive players in the transnational airline market also. (Galunic & Rodan,1998). The firm was clearly able to use its links with the American and other global leaders in order to successfully challenge the new firms which started to follow the same merger strategy after the success of Air France and KLM. It is critical to understand that the firm has been able to develop and protect these core ...Download file to see next pagesRead More
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