The synergy or lack thereof of the proposed corporate exercise
A merger between MAS and AirAsia could lead to very many solutions to the problem that has existed between the two airlines. For a very long time now, the two airlines have been big rivals in this industry. Having it in mind that MAS is more affiliated to the government, it means that it enjoys much from the government Luthans, Doh & Hodgetts, 2012. There have always been moments of serious competition between the two airlines that had made them become business enemies. The proposal for a merger would create a better environment for the two organizations because of the heated competition between them.
AirAsia has had been in operation for close to ten years, but it had done quite substantial work in the industry. Despite all the challenges that the Airline has had, it has managed to surpass MAS that enjoys very many privileges from the government. AirAsia has by this time outdone MAS to become the leading carrier in the entire Malaysia Luthans, Doh & Hodgetts, 2012. With the deal of merger, it opens the opportunities to AirAsia that had always operated under very strict conditions of retracted routes together with several other law requirements. For a long time, the two airlines had majored in lawsuits over one another complaining about the environment in which they were working Isabelle, 2011.
At the time they proposal to merge, they have used quite a good sum of money to solve small issues that existed between them. It was noted especially that Air Asia got entangled with several regulatory restrictions that limited it to the market that it had already secured. In order to have reached a point where it surpassed the MAS, the airline had used a good amount of its resources to ensure its position in the market Grimm, 2006. It is very true that AirAsia had a greater possibility of progressing were it not for the regulations that contained it at some point. At the time of the merger, AirAsia was very optimistic of making new better movements than it lacked before, sharing a close relationship with an organization that is government supported was a big step towards it. Out of the merge, MAS could also be able to revive its flag carrier that was at that time collapsing Inkpen & Ramaswamy, 2005.
The merger could also result into a better relationship with other airlines like Qantas, Jetstar including the two that were coming together. It is out of the merger that the consolidations of the greatest order were realized. It is out of the merger still that the bank reports having seen a 40% of synergy gains from a better environment that would create Grimm, 2006. The other potential area that would provide synergy was in the collective ordering of aircrafts that could minimize the individual costs. No one can undermine the benefits that could result out of such mergers since all the organizations stood a chance to benefit irrespectively.
Despite all the positives that could come with the merger, there could still be problems that would emerge from the merger. The two organizations could not be able totally agree to the operations of one another. Restrictions would first start from the workers of AirAsia from their freedom in all they did to a point that they would join with MAS. In other words, the two organizations had different cultures that would not perfectly merge. The merger could then have brought about such strong issues in the process of the merger Doole & Lowe, 2001. Right from the previous competition, in their merger still, there could grow dispute over the conflicting interest from members of the different organization.
The social and ethical implications of the proposed corporate exercise
The employees of the two organizations could still have to sell the seats to take care of the fuel and other compensations. The merger could do way with a competition from the two organizations; the absence of competition could then lead to the mergers taking advantage of the customers. With the presence of the strong competition, the customers would be treated so well so that they could get customers. It would as well lead to increased charges since the airlines will be at a position of maximizing their profits. As a result, customers could be vulnerable to hike tickets Chakravarty & Chua, 2012. Delays could still exist as the airlines could not be aggressive to meet the customers’ needs. The two airlines from their very first times, no one would think of a merger, and many were not convinced that the two airlines would not possibly come together.
Reference List
CHAKRAVARTY, V., & CHUA, S. G. (2012). Asian Mergers and Acquisitions Riding the Wave. Hoboken, John Wiley & Sons. http://public.eblib.com/EBLPublic/PublicView.do?ptiID=822097.
DOOLE, I., & LOWE, R. (2001). International marketing strategy: analysis, development and implementation. London [u.a.], Thomson Learning.
GRIMM, C. M. (2006). Strategy as action: competitive dynamics and competitive advantage. Oxford [u.a.], Oxford Univ. Press.
INKPEN, A., & RAMASWAMY, K. (2005). Global Strategy Creating and Sustaining Advantage across Borders. New York, Oxford University Press. http://dx.doi.org/10.1093/acprof:oso/9780195167207.001.0001.
ISABELLE FRANCIS, (2011). MAS-Air Asia Merger: Potential RM Ib Synergy.The Edge Your Window to MALAYSIA-Print. Retrieved on 3rd June 2014; From http://www.theedgemalaysia.com/highlights/190989-mas-airasia-merger-potential-rm1b-synergy.html
LUTHANS, F., DOH, J. P., & HODGETTS, R. M. (2012). International management: culture, strategy, and behavior. New York, McGraw-Hill.
