Corporate strategy Essay Example | Topics and Well Written Essays - 750 words - 1

Corporate strategy - Essay Example This analysis assumes that the pending merger of BA and Iberia occurs pursuant to a November 2010 vote by Iberia shareholders. Combining the U.K.’s and Spain’s largest airlines is expected to build two major strengths. Combined, the two firms carry more than 61 million passengers (Airwise, 2010), which will rank the new firm among the world’s ten largest airlines, and provide greater customer visibility, economies in operating costs, and greater purchasing power/lower capital costs for aircraft and other equipment. BA and Iberia combine two major airport â€Å"hubs†, the customer (passengers and cargo) transit locations that facilitate direct customer access and operating economies. BA’s hub at London Heathrow ranks number two in world passenger traffic and number 16 in cargo tonnage, and Iberia’s hub at Madrid airport ranks number eleven in passenger traffic. Each firm also operates secondary airports of Gatwick and Barcelona that rank 31st and 42nd, respectively, in world passenger traffic. (Airports Council International, 2010) Moreover, one key projection is that the UK and Spain will be among the top four international markets for passenger traffic in 2014. (International Air Transport Association, 2010) A third BA strength is its membership in, and leadership of, oneworld ®, a global alliance of 11 world airlines founded in 1999. Within the consolidating worldwide airline industry, oneworld was named â€Å"Worlds Best Airline Alliance† (oneworld, 2010). BA’s strategic weaknesses include those common to other airlines, including dependence on, and difficult relationships with, employee unions; sustained lack of profitability; and damaged brand names due to union and operational difficulties. But BA’s major unique competitive weakness is that it is primarily a long haul, hub-centric carrier. As described by The Economist in May of this year, â€Å"the low-cost airlines Ryanair and easyJet are snapping at [BA’s]