The current market-centric performance of the two airlines is determined by their internal and external environments. For instance the internal environment consists of the airline's strength/weakness and opportunity/threat framework, organizational culture, leadership style, management and organizational structures, quality, value chain and HR management, communication, operations, finances, marketing, operations and so on. On the other hand the external environment consists of political, economic, social, technological, regulatory/legal and general environmental factors along with external supply chain management, strategic competitive environment and so on.
Their product and marketing strategies are essentially aligned to the strategic competitive environment while operational strategies are basically influenced by the internal value creation methods. Product placement policy in different segments of the market of the two airlines has shown some constraints too. Marketing strategies of the two companies also have suffered reverses in the recent times despite a higher level of activity in the domestic markets. Sustained efforts to maximize the difference between costs and revenues are motivated by the invariably intensifying level of competition in both the domestic and international sectors. The proposed alliance between the two airlines on the transatlantic route will have a far reaching impact on markets and competition policy of other airlines.
Finally financial management at both the companies has to be examined against the backdrop of a deteriorating performance of market metrics including share price and sales. A turnaround requires not only a strategic policy shift away from the existing gap-filling practices but also offensive strategic reorientation in selected segments.
2.1. Historical overview
Historically BMI evolved from the Derby Aviation Limited created in 1949 and changed its name to British Midland Airways in 1964 after the acquisition of the Manchester Airport based schedule and the Mercury Airlines. A significant change took place with it joining the Star Alliance in 2000 followed by rebranding the airline with BMI. Since then its labyrinthine process of evolution was coloured by a variety of twists and turns, some positive and some negative. On the other hand United Airlines began its commercial flights way back in 1926, in the US. Its original name was Varney Airlines founded by Walter Varney in Idaho. In 1927 Boeing Airtransport bought Varney Airlines. With the decline of the Pan American World Airways, United Airlines purchased the former in 1991 along with its rights over the routes to the London Heathrow Airport. It co-founded Star Alliance in 1997 and formed a marketing partnership with Delta Airlines in 1998. Except for its