Question

4. Since Airtran merge with southwest regard toinfor mation stratergies What are the main challenges of the organization in terms of competitive advantage after the merger? Apply the resource-based view (RBV) framework for your analysis.? please provide a solid answer

Answer 1

Resource based view: Firm’s resources are the main ingredients in the recipe of the success. Resources (tangible and intangible) create sustainable competitive advantage for the firm. Valuable firm resources are those that are scarce, inimitable and non-substitutable. Acquisitions are the external growth strategies for the firms that do not have the resources or do not want to strengthen the resources. Another reason that a firm proceed for the acquisition to accumulate the resources for growth. The difference in these two approaches is the perspective. In first approach the firm needs to strengthen current strategic position, and in second approach the motive is to retain the competitive position in future.

Case of Southwest acquisition of AirTran:

Challenge of Southwest: AS Southwest airlines is known for its operational excellence and strategy for the cost leadership. After acquiring AirTran the challenge for Southwest was to maintain the cost leadership in the airlines industry. AirTran used to sell tickets through different agencies, while Southwest had the selling on website and via telephone. The major challenge was to maintain the southwest philosophy of customer satisfaction with low cost.

Challenges overcome: Southwest has operational excellence due to one type of aircraft, Boeing 737. At the same time AirTran used Boeing 717. To mitigate that risk of training and increment in cost, southwest leased out the Boeing 717 carrier to Delta. After the acquisition Southwest had added 21 new cities to its network, from that 7 were international. In a nutshell, Southwest overcame the challenges and maintained its cost leadership against other airlines, without compromising the service quality.

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