1 Introduction of Air France – KLM 4

1. Governance in Air France – KLM 4 1.2 Turnover and competitive position 5 1.3 Air France – KLM mission and vision 5 1.4 Risk and challenges 6

2 External diagnoses 6

2.1 The industry life cycle 6 2.2 PESTEL (external environment) 8 2.3 Porters 5 forces + 1 (Air France - KLM) 9 2.4 Opportunities, Threats and Key Success Factors 11

3 Internal Diagnoses 12

3.1 Air France, resources and competences 12 3.1.1 Core competences 13 3.1.2 Cost efficiency 14 3.2 Value chain and processes 16 3.3 Strengths and weaknesses 18

4 Strengths/weaknesses and Opportunities/threats (SWOT)
So that, the mission of Air France – KLM is to provide its customers a high-quality service adaptable to their changing needs.

The overall vision for Air France – KLM is to become the world’s biggest and leading airline company. Through the merger with KLM they already positioned themselves in a good a position, so the next step must be to compete with the big American based players such as Southwest Airlines and American Airlines.

1.4 Risk and challenges
Despite Air France – KLM’s good position on the European market they are still facing serious risks and challenges in the future. A continuously risk is terror attacks, which shocked the whole airline business after 9/11 back in 2001. Passengers where simply afraid to fly and the business only survived because the respective governments helped them out with financial help. One of the key challenges is also to get out of the financial crisis without too much suffering. As Air France also points out in their outlook for the financial year in 2010, there are a lot of uncertainties about the forecast for 2010, even though some indicators points toward more stabilization. A huge challenge is also the increasingly growing market for low budget flights and whether they in the future are going to compete on long distance flights.

2 External diagnoses
In this chapter we will strive to give an impression of the sector that the airline company of Air France is a part of. In 2.1 we will focus