Global Integrated Marketing Communications Essay Example

the strategies and practices employed by the company to balance profitability with social responsibility.

In conclusion, this analysis report examines Air France-KILL as a case study to address three research questions related to global corporate strategies. It explores the concepts of core competences, dynamic capabilities, strategic alliances, mergers & acquisitions, and corporate profitability. The report aims to provide insights into how Air France-KILL has utilized these strategies to achieve and maintain competitive advantages in the worldwide airline industry while also meeting its CARS objectives.According to a study in 2005, core competencies are not specific to products and are instead integral parts of a company's strategic management. These competencies contribute significantly to the competitiveness of a range of products and services. Core competences are typically unique and not easily imitated, contribute to the benefits of end-products or services, and provide access to a wide variety of markets. They are crucial for establishing competitive advantages for companies.

As Horton suggested in 2000, core competences can be seen as a collective learning process that includes both tacit and explicit knowledge, skills, and resources. Identifying core competences involves examining and evaluating a company's radical resources, capabilities, and competencies. Critical resources refer to the inputs in the value chain, capabilities reflect a company's ability to utilize its resources effectively, and competencies represent the integration of capabilities. In essence, core competences determine a company's strategic strength.

These core competences are unique resources that affect multiple products and services, giving the firm a competitive advantage in the marketplace. This was confirmed by Monsoons et al. in 2005.The concept of dynamic capability, which emerged to address how firms maintain competitive advantage in a rapidly changing market,

refers to a company's ability to develop new products, services, and processes and respond to dynamic market environments (Collies, 1994). More recently, academics have expanded the definition of dynamic capabilities to include a company's ability to use resources effectively in order to adapt to changing business circumstances (Hellcat et al., 2007; Men, 2010). Dynamic capabilities have unique characteristics that distinguish them from regular operational capabilities. While operational capabilities focus on the company's current resource base, dynamic capabilities aim to develop and create new resources or modify existing ones (Pavlov and Saws, 2006).

Competitive advantage is essential for a company's performance. Porter (1995) defines it as the position a company occupies in the marketplace relative to its competitors. This entails achieving better business performance compared to competitors and providing genuine value to consumers.Overall, the focus of recent strategy studies has shifted towards dynamic capabilities, which are based on the idea of core competencies. These competencies are developed and adjusted to help companies maintain a competitive advantage in a highly competitive market (Twice, 2006). This shift in focus was prompted by the observation that even dominant companies with ample resources have struggled to secure their position in a changing marketplace (e.g., Radio Corporation f American, Pan American World Airways, and Sears).

However, dynamic capabilities allow companies to secure their competitive advantages by being able to adapt and develop their competencies in ways that are valuable to consumers and difficult for competitors to replicate (Barney, 1991; Porter, 2005; Johnson et al., 2005). In other words, dynamic capabilities enable companies to identify business opportunities and exploit them by either repositioning current competencies or creating new ones (Pavlov and Saws, 2006).

This section

aims to critically discuss how Air France-KILL utilizes its core competences and dynamic capabilities to secure a competitive advantage in the global airline industry. The Air France-KILL Group was formed in 2004 through the merger of Air France and KILL.

According to the Air France-KILL Annual Report of 2012, The Group has a revenue of approximately 24 billion Euros. They operate in three main businesses: passenger transportation, cargo transportation, and services in aeronautic maintenance and overhaul.
Since its establishment, the Group has implemented strategic investments to enhance their core competences and dynamic capabilities. This is done to meet the evolving demands of consumers and to compete with other European rivals in the airline industry.
One of the distinct competences of the Group is ensuring a modern and streamlined fleet. As stated in the Air France-KILL Annual Report of 2008, they consistently invest in new aircraft and operate one of the most advanced fleets in the industry. For instance, in 2008-2009, they introduced 17 new aircraft and retired 15 older ones. This strategic investment in a modern fleet provides several advantages for the company. Firstly, it offers consumers a higher level of in-flight comfort. Secondly, it leads to cost savings on fuel consumption and maintenance. Lastly, it contributes to reducing the impact on the environment by decreasing gas emissions.
Another core competence of the Group is their consistent development of a powerful and well-balanced network. According to Air France-KILL's annual report for 2010, they possess the largest route network connecting Europe to the rest of the world.

Air France-KILL offers 179 long-haul destinations, with 43 of them being exclusive to the company. This gives the Group's network a significant

advantage over its competitors. The network is organized around dual intercontinental hubs in Paris and Amsterdam. This dual hub system allows for efficient routing and optimization of the fleet. It also serves as a shock absorber during business crises, providing immediate solutions to customers when their direct flights are delayed or cancelled. The company is continuously striving to improve its products and services.

In 2011-2012, Air France-KILL upgraded its medium-haul flight services to provide a closer experience to long-haul flights, meeting the increasing needs of customers. Additionally, the company launched Mini flights with competitive prices, attracting passengers' attention. This section also discusses the meaning and effectiveness of strategic alliances and mergers and acquisitions in the global airline industry, as well as how these strategies contribute to Air France-KILL's corporate profitability.

Strategic alliances in the airline industry are collaborative arrangements between two or more air companies that involve joint operations. The purpose of these alliances is to increase competitiveness, improve business performance, and maximize profitability through low-cost leadership and product differentiation (Diagnosis, 2001). The global development of the airline industry since deregulation has led to an increase in strategic alliances as carriers aim for economic operations and economies of scale (Diagnosis, 2001). These alliances provide technical efficiencies in terms of low production costs and better service, as well as expanding geographic reach and network (Herein et al., 2000; Mom et al., 2008).

There are three types of strategic alliances based on the level of coordination: interline alliance, broad commercial alliance, and equity alliance (Diagnosis, 2001). Interline alliances involve limited coordination on select routes, while broad commercial alliances extend coordination for joint system development and marketing. Equity alliances involve

partners cooperating in all areas of joint activities. Effective strategic airline alliances have the potential to decrease costs per unit for each partner, improve their network, and enhance marketing efforts (Herein et al., 2000).

In addition, strategic alliances allow airlines to share brand image, generate fixed revenue arrangements, and gain various global benefits (Mom et al., 2008). Furthermore, these alliances help airlines meet the increasing demand for low flight fares and enhance perceived value through different programs.

Mergers and acquisitions are also effective methods for alleviating cost pressures in the airline industry. A merger occurs when two airlines come together to form a new company, rather than remaining separate entities. Mergers typically involve partners of similar sizes and highlight a combination of equals.

On the other hand, an acquisition involves one company purchasing another without the exchange of stock, resulting in a new firm (Adler and Bergmann, 2001). Despite their differences, both mergers and acquisitions aim to create synergy and increase the overall value of the merged or acquired organization beyond that of the two separate carriers (Adler, 2005).

Ultimately, mergers and acquisitions contribute to increased profitability and financial viability for airlines.

The potential benefits of mergers and acquisitions for companies include cost reduction by eliminating duplicate operations and redundant city-pair services, as well as increased revenues through expanding the airline network (Change and William, 2002). According to Button (2002), these strategies can also help companies reach more passengers, increase market share, and gain new routes domestically and internationally. However, airlines must consider operational and regulatory challenges before conducting a merger or acquisition (Adler, 2005). These challenges typically involve combining aircraft fleets and information technology systems

and processes. The Air France-KILL strategy analysis shows that strategic options such as strategic alliances and mergers have brought benefits to Air France-KILL, including cost reduction, network and market share increase, and the development of an effective multiple hub structure (Air France-KILL, 2008). For example, Air France-KILL's strategic alliance with Delta in 2010 enhanced their offerings in the North Atlantic region and resulted in a 25% market share in the leading worldwide airline market (Air France-KILL, 2010). Additionally, the Group has also benefited greatly from the Global Steam alliance.In 2011, the Stamp alliance expanded in Asia, bringing Air France-KILL three strategic partnerships with China Southern, China Eastern, and Vietnam Airlines. These partnerships made the Group the leading European firm in China and Southeast Asia (Air France-KILL, 2010). The ASS helped the Group increase its network and market share, while M brought financial variability through low-cost leadership and product differentiation.

For example, in the first year of their merger, Air Franc-KILL reported a 33% rise in pre-tax income and a 27% increase in operating income (Air France-KILL, 2005). In a broader perspective, over the last nine years, the merger enabled the Group to establish an efficient dual hub system based in Paris and Amsterdam. This dual hub system leverages the complementarity of Air France and KILL networks to connect with Europe and the rest of the world (Air France-KILL, 2012). Additionally, it allows consumers to access the network developed from either the KILL hub or Air France hub, multiplying the round-trip offer to/from 850 global destinations (Air France-KILL, 2012).

It is important to note that the M also brought several challenges and uncertainties to the Group.The text discusses

the development of Air France-KILL and how it faced difficulties with integration due to the separate operations of two major and complex activities. Prior to the merger, Air France followed French GAP accounting standards while Slum's followed Dutch GAP standards, which posed challenges in adopting new accounting standards. Furthermore, the effectiveness of strategic alliances for the Group's activities is mentioned, but the degree of control over these alliances is limited, as partners' decisions to participate or withdraw can significantly impact the Group's current business activities and financial position. The section also explores the issue of organizational purposes in relation to corporate profitability and responsibility, using Air France-KILL as a case study to discuss how the Group achieves both profitability and social responsibility objectives.The relation between corporate profitability and corporate responsibility, or corporate social responsibility (CARS), involves a company's voluntary contributions to sustainable development and its responsibility to stakeholders. CARS emphasizes actions such as environmental protection, employee well-being, and community and civil society development. Many studies have examined the connection between CARS activities and corporate profitability, but few have been able to determine the direct impact of CARS on financial performance. Long-term CARS programs can be beneficial for a company's stakeholders, but their impact on profitability can be positive or negative. The paradox of profitability and social responsibility arises when companies develop their business strategies. On one hand, firms need financial profitability to survive in a competitive marketplace. Profitability is both an outcome and a resource that companies can use to enhance their competitive advantage, improve market position, and achieve goals. On the other hand, firms also require social responsibility to build trust with stakeholders and

establish positive relationships with them.From the author's perspective, companies typically engage in various Corporate Social and Responsibility (CARS) activities that can have both social and economic outcomes for the company. According to Osseous-Scares (2012), in today's complex business world, many companies view CARS activities as a strategic program driven by stakeholder demands. The increasing number of stakeholders is particularly concerned with the social and environmental impact of corporate practices. Therefore, companies must address challenges from these individuals and incorporate social responsibility into their business to maintain a favorable reputation.

In other words, CARS is seen as an obligation for corporations to assume responsibility for the environment and their stakeholders beyond financial considerations (Crane and Matted, 2007; and Osseous-Scares, 2012). Balancing profitability and social responsibility is both a crucial solution and challenge for companies as they strive to fulfill the demands of shareholders and stakeholders. Today, there are various drivers pushing businesses towards CARS, such as government regulations that enforce social objectives within the business sector through national legislation and state codes. Consumers also play a role as drivers in promoting CARS initiatives.

Existing evidence suggests that the performance of a company's Corporate Social Responsibility (CARS) can influence the purchasing decisions of its customers (Schuler and Cording, 2001). Additionally, investors may encourage firms to prioritize CARS, as an increasing number of investors view a corporation's ethical commitment as a crucial factor when deciding whether to invest in a firm (Rollicks, 2008). Furthermore, organizations should prioritize their social performance in order to attract and retain competent employees, as fewer individuals are inclined to work for a company with a poor reputation (Turban and Cable, 2003).

In the case

analysis, Air France-KILL has focused on achieving both corporate profitability and corporate social responsibility objectives over the past nine years. The Group has successfully balanced profitability and responsibility through various company strategies aimed at enhancing value. One notable example is the Group's investment in a modern fleet. As mentioned earlier, the Group has consistently upgraded its aircraft fleet. With an average age of ten years, the Group now owns one of the youngest and most efficient fleets in the airline industry. This fleet strategy provides advantages in terms of both profitability and responsibility. Specifically, from a profitability standpoint, the modern fleet enhances passengers' in-flight experience and directly contributes to increased flight sales.

The Group successfully saves costs on fuel consumption and maintenance, while also prioritizing social and environmental responsibility. Their modern fleet reduces greenhouse gas emissions and noise pollution in airport zones, benefiting local residents. Additionally, the Group invests in innovation and product quality to ensure a balance between financial performance and responsibility to consumers. They have launched various technological innovations, such as mobile phone check-in since 2009, to improve the travel experience and increase customer loyalty. Over two-thirds of the company's consumers use their e-services for check-in. They have also implemented a new automated boarding system called Snowboarding since 2010, eliminating the need for passengers to show their identity during boarding. The Group recognizes the importance of recruiting and training highly professional and loyal employees in order to maintain high profitability in a competitive and technological environment. They offer various vocational trainings to employees within both French and Dutch companies.In recent years, the Groups implemented several measures to enhance employees' loyalty and involvement. In 2012,

the Group's management and unions increased working hours for all staff (Air France-KILL, 2012). Additionally, Air France-KILL took several actions to cater to cultural diversity by recruiting cabin crews from destination countries, offering diverse cuisine, and providing a multi-language entertainment system on flights (Air France-KILL, 2012).

Furthermore, since 2008, consumers of the Group have had access to Bluebill.Com, a social network where they can share travel tips, reviews, and opinions. This implementation not only boosted brand visibility and consumer loyalty but also generated advertising revenues for the Group (Air France-KILL, 2008).

Overall, both core competencies and dynamic capabilities play crucial roles in establishing competitive advantages for companies.The text highlights Air France-KILL' as an example of the group's core competences, including consistently investing in a modern fleet and continuously developing a powerful and balanced network. The group's dynamic capacity stems from its commitment to improving products and services through technology and innovation. Both core competencies and dynamic capabilities have increased market share, financial performance, and secured competitive advantages in the global airline industry. Both ASS and M have been strategic options for Air France-KILL, successfully reducing costs, increasing the network and market share, and enabling the formation of an effective multiple hub structure.