...Competitive Advantage in the US Airline Industry The GREENair Strategy Executive MBA in Business & IT Class of 2014 Module 4 - Strategy & Organization - Assignment Author: Luís Faria Reviewer: Prof. Dr. Isabell Welpe Competitive Advantage in the US Airline Industry The GREENair Strategy Subject Page Module 4 - Strategy & Organization - Assignment 2/17 Abstract The US airline industry experienced many years of difficult and had consistently failed to earn returns that covered its cost of capital. Several changes such as regulation, deregulation and consolidation have affected the structure of the industry. The new conditions of competition led to changes on the strategy of airlines as they struggle for a competitive advantage. This document describes the current situation of the US airline industry and shape the strategic position of a medium-sized airline in the US market. Table of Content Abstract ..................................................................................................................................... 2 1 Introduction........................................................................................................................ 3 2 The US Airline Industry ................................................................................................... 4 2.1 Industry competitors ................................................................................................ 4 2.1.1 Major legacy carriers (United, American , Delta...
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...ECO 365 Week 5 Learning Team- B Competitive Strategies and Government Policies Get Tutorial by Clicking on the link below or Copy Paste Link in Your Browser https://hwguiders.com/downloads/eco-365-week-5-learning-team-b-competitive-strategies-government-policies/ For More Courses and Exams use this form ( http://hwguiders.com/contact-us/ ) Feel Free to Search your Class through Our Product Categories or From Our Search Bar (http://hwguiders.com/ ) Competition and Policies Influencing the Airline Industry Emerging Companies, Mergers, Globalization, Pricing, and Profits The airline industry is characterized by increased levels of competition as a result of new companies that venture into the market. Such new entrants bring about an increased level of competition for the existing volumes of consumers that the different airlines have to share. Mergers occur when two companies come together to combine resources, market share, and experience to acquire a better position in the market. Mergers also create a greater pool of resources and stability, which is attractive to consumers. Globalization brings about a higher level of travelling where people will be moving from one point to another. As a result, airline services will be at a greater demand and hence increase business. However, this will also mean that airlines from foreign nations can access any region and as a result there is greater competition (Botten & McManus, 1999; University of Phoenix, 2011)...
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...EWMBA 299 – Competitive Strategy Southwest Airlines Introduction The domestic US airline industry has been intensely competitive since it was deregulated in 1978. In a regulated environment, most of the cost increases were passed along to consumers under a fixed rate-of-return based pricing scheme. This allowed labor unions to acquire a lot of power and workers at the major incumbent carriers were overpaid. After deregulation, the incumbent carriers felt the most pain, and the floodgates had opened for newer more nimble carriers with lower cost structures to compete head-on with the established airlines. There were several bankruptcies followed by a wave of consolidation with the fittest carriers surviving and the rest being acquired or going out of business. Analysis of the airline industry To determine the profitability of the airline industry, we will do an industry analysis using Porter’s five-forces framework. This industry analysis will help us in understanding the size of the Potential Industry Earnings (PIE), and how much of this the different participants can extract. Rivalry among competitors There is intense rivalry among different airlines. In the pre-deregulation days, airlines competed mostly on things like service, meals and in-flight movies etc., since prices were mandated by the Civil Aeronautics Board. In the post-de-regulation era, this rivalry has taken on the form of severe price competition, with airlines ruthlessly undercutting each other...
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...Southwest Airlines Prepared for: Mr. Balasubramanian Shankar Due date: Monday, 5th October 2015 Submitted by: Jiyeon | CT00000000 | TABLE OF CONTENTS 1. INTRODUCTION 2 2. COMPANY BACKGROUND 3 3. PESTEL ANALYSIS 4 3.1 Political 4 3.2 Economic 4 3.3 Social 5 3.4 Technological 5 3.5 Environment 5 3.6 Legal 6 4. PORTER’S FIVE FORCES ANALYSIS 7 4.1 Threat of New Entry 7 4.2 Threat of Substitution 7 4.3 Buyer Power 7 4.4 Supplier Power 8 4.5 Competitive Rivalry 9 5. STRATEGIC RECOMMENDATIONS 10 5.1 Managing Technology Advancements 10 5.2 Maintain Cost Advantage 10 5.3 Geographical Expansion 10 5.4 Product Diversification 11 6. CONCLUSION 12 7. REFERENCES 14 1. INTRODUCTION The focus company in this report is Southwest Airlines (SA), a major low cost carrier in the United States (US). The aim of this report is to examine the current market environment and competitive power of Southwest Airlines. In order to have a substantial overview of its environment, two analyses, the PESTEL analysis and Porter’s Five Forces analysis, will be used to evaluate SA. With the findings, strategic recommendations will be made for the problems that the airline is facing or may encounter in the near future. 2. COMPANY BACKGROUND Southwest Airlines is a budget airline established in 1967 by Rollin King and Herb Kelleher and had its first flight in 1971. Headquartered in Dallas, Texas, SA is an important airline in the...
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...EWMBA 299 – Competitive Strategy Southwest Airlines Introduction The domestic US airline industry has been intensely competitive since it was deregulated in 1978. In a regulated environment, most of the cost increases were passed along to consumers under a fixed rate-of-return based pricing scheme. This allowed labor unions to acquire a lot of power and workers at the major incumbent carriers were overpaid. After deregulation, the incumbent carriers felt the most pain, and the floodgates had opened for newer more nimble carriers with lower cost structures to compete head-on with the established airlines. There were several bankruptcies followed by a wave of consolidation with the fittest carriers surviving and the rest being acquired or going out of business. Analysis of the airline industry To determine the profitability of the airline industry, we will do an industry analysis using Porter’s five-forces framework. This industry analysis will help us in understanding the size of the Potential Industry Earnings (PIE), and how much of this the different participants can extract. Rivalry among competitors There is intense rivalry among different airlines. In the pre-deregulation days, airlines competed mostly on things like service, meals and in-flight movies etc., since prices were mandated by the Civil Aeronautics Board. In the post-de-regulation era, this rivalry has taken on the form of severe price competition, with airlines ruthlessly undercutting each other...
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...General Comments This analysis is directly relevant to the assessment. It demonstrates a wide range and excellent application of the strategy tools to the organisation. A very good analysis that has excellent clarity. Generally coherent and with accompanying logical arguments. Contains some excellent elements of independent thinking. A critical appraisal of up to date literature. The report is well written. Students please note that this assignment was graded in the range 70% and above. Students: Please note there is no need to place the basic strategy models in the appendices e.g. Porter’s (1985) Five Forces, SWOT analysis, etc.. It would be more beneficial to apply the models directly to the organisation and place them in the appendices and discuss the main identified issues in the main text. 2 Corporate Strategy: Emirates Airline By Student How has Emirate airline managed to remain competitive in such a saturated industry? Emirates Airline “An exceptional journey from start to finish” (Emirates, 2010). 3 Introduction: ............................................................................................................................... 4 Background to Emirates Airline: ............................................................................................... 4 Competitive Advantage: ............................................................................................................ 5 Porter’s five...
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...Bachelor of Science (Hons) in Aircraft Engineering Competitive position of Singapore Airlines Module No : EG3080 Module Title : Business Application in Engineering Submitted by : Chia Kok Kwang Alvin (K1068496) Table of Contents Page 1. Abstract 3 2. Introduction 4 3. Background 5 4. Singapore Airline’s Macro Environment (PESTEL Analysis) 6 5.1 Political Factors 6 5.2 Economic Factors 7 5.3 Socio-cultural Factors 7 5.4 Technological Factors 8 5.5 Environmental Factors 8 5.6 Legal Factors 9 5. Competitive forces and firm strategy (Porter’s 5 Forces Analysis) 10 6.7 Threat of new entrants 10 6.8 Threat of substitutes 10 6.9 Power of buyer 11 6.10 Power of supplier 11 6.11 Competitive rivalry 12 6. Strategic Capabilities (SWOT Analysis) 13 7. Strategic Choices (Porter’s Strategies) 14 8.12.1 Cost leadership 14 8.12.2 Focus 14 8.12.3 Differentiation 14 8.12 Strategic choice of Singapore Airlines 15 8. Challenges ahead of Singapore Airlines 16 9. Conclusion 17 10. References 18 & 19 1. Abstract Singapore Airlines leaves a deeply positive impression in many people’s heart as a leading airline that is dedicated to bring the highest level of products...
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...Critically examine the impact of political, economic & legal factors affecting the airline industry. The airline industry has had its fair share of ups and downs the following are the factors that are affecting the airline industry Economic factors A huge amount is spend in landing fees, time spend in foreign lands and all these fees are paid in US Dollars and it might expensive to some airlines especially if the exchange rate is weak. Fuel prices are also in US Dollars so the stronger the currency of origin against the US Dollar the cheaper it becomes to reduce overall operational costs for the airlines however the sad story is that only a fewer currencies are stronger than the US Dollar. Fuel prices have consistently increased and is likely to continue into the future while price wars between airline companies have become ever more intensive due to increased competitive levels in the industry. Fuel costs as play a significant role in the day to day running of an airline as fuel costs constitutes 30% of total operational cost. This is due to existing rivalries as well as new entrants within the discount airline market segment. In contrast to its rivals SIA has preferred policies of adding extra value through customer service rather than ones of pure discounts on prices. Similarly investment in technology such as the development of an e-ticket system enhanced its strength in terms of cost effective sales and billing systems. These developments have been supported by skilled...
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... CRAFTING AND EXECUTING STRATEGY Submitted by: John-Miguel Onkony Winter Quarter 2011 Strayer University Introduction This document presents an analysis of one case presented in the textbook (Thompson, A.A., Strickland, A.J., & Gamble, J.E. (2010). Crafting and executing strategy: The quest for competitive advantage: Concepts and cases: 2009 custom edition (17th ed.). New York: McGraw-Hill-Irwin.), entitled “JetBlue: A Cadre of New Managers Takes Control”. The case describes the reasons for the success of JetBlue, a three-year-old, low-cost airline, operating in the USA. Trends in the U.S. Airline Industry and their Impact on Company’s Strategy Since 2001, the US airline industry has faced an unprecedented set of challenges. Following the terrorist attacks of September 11, 2001, the airline industry reported tremendous losses and several of the largest US airlines went into bankruptcy. To recover from this situation and try to remain financially viable, many measures have been taken by airlines. As a result, the airline industry has been a very dynamic industry over the last few years. U.S. legacy carriers said international...
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...Question 1: Southwest competes with firms within the airline industry by aligning all company activities in order to achieve the lowest cost possible within the industry, and thus adopting a cost leadership strategy. According to Porter, a cost leadership strategy emerges when a company can design all its activities in such a way that all of them align under the premise of low cost operations. If these activities are properly aligned, then the firm can gain a competitive advantage over its rival firms (CITE strategy article). A firm’s activities can be divided into primary and support activities, each of which has specific organizational resources associated with it. As a whole, the sum of primary activities and support activities a firm does, and the relation they share between each other, is called a value chain (cite Barney book). Southwest has been mindful in the design of their value chain, so that all activities reinforce their low cost strategy. All of Southwest’s primary activities were designed in a way that reinforced its cost-leadership strategy. When they began to operate in the early 70’s, they counted with as few as 3 planes in their fleet and only focused on short 90-minute flights. It was imperative for the survival of the airline to have the planes be operational for as many hours as possible (11-12 hours a day). This meant that planes needed to have a short a turn-around time between destinations, in order to maximize aircraft utilization. The “10-minute turn...
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...Professor Edward Desmarais BUS 470 Business Policy and Strategy Spring 2004 SOUTHWEST AIRLINES CASE ANALYSIS Presented by: The Stategizers Lawrence Bluemmel, Irene Johnson, Dennis Mackey, Dorothea Morgan, Elaine Pereira, Jeff Piecuch, Heather Pontifex, Nicole Soucy TABLE OF CONTENTS I. Executive Summary 3 A. Mission 3 B. Vision 3 C. Objectives 3 D. SWOT Summary 6 E. Recommendations 7 II. Current Situation 8 A. Current Performance 8 B. Strategic Posture 9 III. Corporate Governance 25 A. Board of Directors 25 B. Top Management 25 IV. External Factors 27 V. Internal Factors 118 VI. Action Plan 178 Appendix A. Stakeholders Worksheet 206 Appendix B. Answers to Panel’s Questions 212 I. EXECUTIVE SUMMARY A. Mission To provide a low-cost/low-price/no-frills, reliable, friendly service with “more value for less money” mode of transportation for consumers traveling short distances for business and/or leisure. B. Vision ...
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...I. Company background Southwest Airlines is one of the US based major air carrier based out of Dallas Texas where it commenced operations on June 18, 1971. It was founded by Rollin King and Herb Kelleher got together and decided to start a "different kind of airline”. " They began with one simple notion: If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline" (1). Southwest started with three Boeing 737 aircrafts with focus of serving mainly three cities in the state of Texas; Houston, San Antonio and Dallas. By summer of 1993 Southwest already became the 7th largest airline in the US. Today Southwest operated more than 3,400 flights a day serving 93 destinations across the US and five other countries in the Americas with over 665 aircrafts in its fleets. Southwest strategy is clear and simple, it’s a three headed monster strategy that focuses on, short-haul, high -frequency and low-cost. The NYSE symbol for the company is LUV, which indicated the home of the company at the Dallas Love Field airport and the theme of the cordial relationship created and maintained between Southwest employees and its customer. On Jan 22nd 2014, CEO and chairman of the board announced a record annual income of $1.1 billion or $1.64 per diluted share which is 20 cent higher than the industry average return per share during the same period. This...
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...I. Company background Southwest Airlines is one of the US based major air carrier based out of Dallas Texas where it commenced operations on June 18, 1971. It was founded by Rollin King and Herb Kelleher got together and decided to start a "different kind of airline”. " They began with one simple notion: If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline" (1). Southwest started with three Boeing 737 aircrafts with focus of serving mainly three cities in the state of Texas; Houston, San Antonio and Dallas. By summer of 1993 Southwest already became the 7th largest airline in the US. Today Southwest operated more than 3,400 flights a day serving 93 destinations across the US and five other countries in the Americas with over 665 aircrafts in its fleets. Southwest strategy is clear and simple, it’s a three headed monster strategy that focuses on, short-haul, high -frequency and low-cost. The NYSE symbol for the company is LUV, which indicated the home of the company at the Dallas Love Field airport and the theme of the cordial relationship created and maintained between Southwest employees and its customer. On Jan 22nd 2014, CEO and chairman of the board announced a record annual income of $1.1 billion or $1.64 per diluted share which is 20 cent higher than the industry average return per share during the same period. This...
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...Contents South West Airlines 4 Goals and Objectives 5 Their Mission and Vision Statement 5 Strengths 6 Weaknesses 6 Opportunities 8 Threats 8 Analyzing company’s external environment 9 Analyzing the nature and strength of competitive forces 11 Competitive pressure stemming from bargaining power of buyer: 16 Determining whether the collective strength of the five competitive forces is conductive to good profitability: 17 Competitive pressure from seller of substitute products 18 Sign that competition from substitute is strong 19 Competitive pressure stunning from supplier bargaining power 20 PESTEL ANALYSIS 24 SCENARIO PLANNING 56 SCENARIO NO.1 58 SCENARIO NO.2 59 SCENARIO NO.3 59 SCENARIO NO.4 60 SCENARIO NO.5 60 SCENARIO NO.6 60 SCENARIO NO.7 61 SCENARIO NO.8 61 Competitors Objectives 62 Competitor's Current Strategy 63 Competitor's Resources and Capabilities 64 Competitor’s Assumptions 66 Regional Factors 67 Value chain activities: 68 Key competitive advantages: 72 Solutions: 82 Weights of Key success factors in five airlines: 86 COMPETITIVE ADVANTAGE 92 FIVE GENERIC COMPETITIVE STRATEGIES: 92 LOW COST PROVIDER STRATEGIES: 92 DIFFERENTIATION STRATEGIES: 95 BEST-COST PROVEDER STRATEGIES: 96 FOCUS (MARKET NICHE) STRATEGY: 96 STRATEGIC ALLIANCE AND PARTNERSHIP: 97 MERGER AND ACQUISITION STRATEGIES. 98 VERTICAL INTEGRATION. 98 OUTSOURSING. 98 OFFENSIVE...
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...”To stay competitive, organizations must change with market conditions and customer desires” (MacVicar & Gooderham, p1). Classic Airlines is facing a difficult time in their history. The organization has lost many of its loyal customers and its remaining customers are flying less frequently. The organizations CEO, Amanda Miller has challenged the marketing team with improving their number of loyal customers while increasing Classic Airlines profitability and stock price. All must be accomplished with a 15% cost reduction. To assist in its growth strategy, Classic Airlines marketing team is looking at growing globally and adding the United Kingdom to their international market. This paper will review channel and pricing strategies Classic Airlines must consider to achieve its desired results. Justification of choice of international market – UK Loyalty is a difficult goal and the most marketers can do at times is to encourage consumers to purchase one brand over another. Classic Airlines choice for an international market is access to the vast number of air travelers each year in the United Kingdom. The Department for Transportation in the United Kingdom estimates that “carrying over 235 million passengers a year and over 2.3 million tons of freight. Demand for air travel is projected to grow in the medium to long-term. Department for Transportation has put in place a long-term framework that balances the delivery of social and economic benefits from aviation...
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