Case on- US Airways Cost Structure
US Airways Corporation (formerly US Air) was formed with the merger of several diverse regional airlines including Allegheny Airlines, Mohawk Airlines, Lake Central Airlines, Pacific Southwest Airlines and Piedmont Airlines. The mergers that ultimately led to the establishment of US Airways did not come without difficulties.
US Airways possesses a diverse fleet of aircraft, unlike the much more successful Southwest Airlines, which flies only one type of plane, the Boeing 737. US Airways’ diversity results in higher costs of maintenance and crew training and in a much more complex crew scheduling problem.Because of the traditionally week competition in its Northeast market stronghold, US Airways had the highest yield in the airline industry in 1993.
The combination of high yields and very high costs per available seat mile invited competition. With the cloud of a potential bankruptcy hanging over it, US Airways looked for ways to control its costs in order to restore its financial health. Cost control is a difficult problem in any corporation. It is, however, especially difficult in a capital-intensive industry such as this.

Case on- Rising Marginal Cost of 747s
Boeing and Airbus provide all the wide-bodied jets the world needs. Boeing 747, 767 and 777s typically have a 60-70 percent share of the worldwide market, but Airbus accepted the majority of the new orders in 1994-1995 and doubled their output rate from 126 to 232 planes per year. Eventually incremental variable costs must rise as designers and shop floor get congested with new instructions and new diagrams.
Alternatively a company like Boeing can secure a 40% increase in the production rate of final assembly by contracting out more sub-assemblies. In the late 1990s, wide body prices did not rise because of intense competitive pressure from Airbus, but the marginal cost certainly did. As a result, every Boeing 747 plane delivered had a price less than its marginal cost-i.e., a negative gross profit margin.

Case on- Resurrecting Apple Computer
Despite once overwhelming superior products, Apple Computer has discovered that competitive advantages may not be sustainable when product advantages narrow. In the mid-1980s Apple Computer introduced the graphical user interface that revolutionized personal computing. One problem was pricing, and another was distribution.
Personal computer assembly of outsourced components became a small minimum efficient scale operation necessitating perhaps only 200000 unit sales. In addition Apple had stale product design and closed architecture. Connectivity to IBM and Windows OS had been resisted by Apple and offered only by outside vendors.
Steve Jobs regained the leadership of the company intent on restoring the brand image of the once highly innovative Apple machines. What price and volume to sell, distribution channels to use, and alliances to form remained to be decided.

Case on- The Dynamics of Competition at Amazon.com
On-line retailing has started very slowly in clothing and other search goods that buyers want to “touch and feel”, but has excelled in one experience good- namely, books. One dollar of every $27 spent on the internet in 1996 went to Amazon Books, the first on-line retailer in this industry.
One difficulty for Amazon.com is that internet retailing is a classic example of a business with low barriers to entry and exit. Amazon.com has responded by offering customized notification and book discussion services to add value for readers with special interests.
Margins remain this low in part because massive marketing expenditures are required to maintain brand equity in internet based retail businesses.

Case on Dominant Microprocessor Company Lagging Behind Next Trend
With continuous innovation, even faster more-powerful chip designs, and a business plan riveted on supplying the $160 billion PC industry, Intel Corporation has dominated the high-end market in microprocessors.
In addition, Intel sells 90 percent of the chip sets that control the flow of data from the microprocessor to the display screens, modems and GUI. Although the worldwide PC market is expected to continue to grow at 15 percent per year, U.S. shipments of non-PC devices for accessing the internet are expected to exceed consumer-PC shipments by 2002. The digitalization of consumer electronics may prove to be a market even bigger than the PC market.
Information appliances in the home and in hand-held devices will demand inexpensive chips that process data very fast, not high-end Intel chips designed to run Microsoft’s complex software. Hitachi and Advanced Micro Devices (AMD) are likely leaders in this new chip segment, and Intel must reinvent itself again to meet this competition.