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British Airways - KLM

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on 11 February 2016

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Transcript of British Airways - KLM

I. PRESENTATION
- Opportunities for efficiencies


- Compete with the Americans,
always first
II. THE MERGER
The British Airways and KLM merger
B.The process
SOLUTIONS
III. DILEMMAS
C. External issues
III. DILEMMAS
A. Human issues

- British more formal than Dutch
- Dutch : straightforward mentality

- British : well-mannered way of doing business
- language misunderstandings
III.DILEMMAS

B. organizational issues
- British : vertical hierarchy.
- Meetings : management instrument in UK
- Different notions of time
- no open skies agreement
- needed US approval
- find the right structure
- no agreement on budgetary cuts
- The British humour
ELEMENTS FOR A SUCCESSFUL MERGER
Human collaboration
Financial and strategic considerations
Price and availability
Dominate target selection
Overriding soft issues
Overcome cross-boarder differences
British Airways
Strategic management
BA's Corporate culture
KLM's Corporate Culture
KLM
SWOT Analysis

- Friendly relationships
- Reward packages
- Learning culture


Strengths
Weaknesses
Opportunities
Threats
Strategic management

- Direct communication
- Decision making process shared
with employees
- Egalitarian culture
Why it worked
explicit vision, ambition and strategy

process is truly run as a joint process

strategic plan

focus on synergies much more than on organizational structures

Integration




- 2009-2011: merger with Iberia = Airlines group
CASE STUDY

A SUCCESSFUL MERGER
- World's oldest airline (1920)





Poor performing staff pension scheme
Higher pay rates left over
Smaller pay packets
Declining working conditions
-> BA’s management-staff relations are
toxic
Main objectives
- Europe's most powerful airline
- World's largest carrier behind United Airlines and American Airlines
Objectives for KLM
- Cost savings
- Better choice of destination
- Possible integration at London's Heathrow and Amsterdam's Schiphol airports
- Cope with the increase of competition
- Cope with the increase of fuel prices
- Cope with competition from budget airlines
Objectives for British Airways

- Greater access to Asia and to the West
coast of the United States
- Major European hub
- Cope with competition
-> Corporate structure flatter than
other airlines

PRE-MERGER REVIEW
Phase 2
SEARCH AND SCREEN TARGET
Phase 3
INVESTIGATE AND VALUE THE TARGET
Phase 4
NEGOTIATION
Phase 5
PHASES OF A MERGER
Phase 1
Inspired form the English culture :
Inspired from the Dutch culture :
- Euros or pound ?
- Making decision process
- 1971-1974: British Airlines founded
-1987: privatized
- 1998: co foundation of Oneworld
- Today, one of the world's leading global airlines
POST MERGER INTEGRATION
- Strong brand image
- International operations
- Skilled staff
- High profitability
- Sustainable growth possibilities
- Difficulties to agree on a structure
- Different corporate cultures
- Cost of management
- US government's requirements
- Possible most powerful european airline
- Expand to new markets
- Opportunity of major cost savings

- Competition from low cost airlines
- Higher taxes
- Decrease in BA's share price
- Participated in over 100 alliances
- 2003: Merger with Air France (world's largest airline) & Joined Sky Team
- 1986: Formed an alliance with America's northwest
- By 1980: One of the greatest airlines
Efficiently run
Operates in socially minded environment
Corruption and conflict are unacceptable
BUT illegal price fixing cartels
Dutch employees don’t respond well to being told what to do
Turnover
: 11 421 billion dollars

Employees
: 40 000

Headquarters
: Waterside, Harmondsworth, ENGLAND

Subsidiaries
:
BA CityFlyer
OpenSkies
BA Limited
BA World Cargo

Destinations
: 400
Turnover
: 9 688 billion euros

Employees
: 32 505

Headquarters
: Amstelveen, Netherlands

Subsidiaries
:
KLM CityHoper
Martinair
Transavia

Destinations
: 136
- Koninklijke Luchtvaart Maatschappij
Full transcript