The Marriage of Lufthansa and Swiss Airlines

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The German carrier Lufthansa and Swiss airlines have completed their merger that seek to bring benefits to their competion. Lufthansa has been known for its successful businesses with revenue of nearly 17 billion Euros in 2004, and have 50.9 million passengers from 2004 operations. The Swiss airline, on the other hand, has been struggling to go with competition but could not, so the merge was the best for it. The merge of these two airline companies will bring customers more destinations, better connections, matching frequent flyer programs and mutual lounge access, these are the resources and capabilities the companies will enable. Also Swiss airline will "bring into the Lufthansa ... 7,900 [experienced] employees and 80 aircraft, and gives Lufthansa a new hub at Zurich which will benefit its lucrative business travel services."

This marriage can be linked to Barney’s framework. In particular, the benefits that customers will enjoy from the merge (resources and capabilities) enable both companies to respond to the environmental threats and opportunities and thus making these resources and capabilities valuable. Furthermore, these resources and capabilities could also be rare because there are no any other competing firms who have done this merge, especially these two well-known airline companies that both have huge fleet and credible reputation. Thus, relating to the question of rareness. Not only that, these new benefits to customers (resources and capabilities) are also difficult to imitate at least for the short run. Competing firms might try to imitate to offer customers the benefits that are provided but will have some difficulties to do that because both companies have huge fleet of aircrafts and experienced employees who have the knowledge to operate in a competitive way. Moreover, I think that Lufthansa (the controlling company) is well-organized in order to exploit the full competitive potential from the new merge. Lufthansa is organized for its success in the airline business and its solid position that have maintained.

By this, the resources and capabilities that will be gained from the merge of both airline companies (Lufthansa and Swiss) have answered the 4 questions needed to conduct a resource based analysis of a firm’s internal strengths and weaknesses. In other words, these resources and capabilities are valuable, rare, difficult to imitate (short-run), and Lufthansa as a firm is organized to exploit full competitive advantage. Therefore, we can conclude that the merge of these two airline companies and the resources and capabilities that will enable, will have a sustained competitive advantage.