TITLE OF ASSIGNMENT CRAFTING AND EXECUTING STRATEGY STUENT MOHAMMAD HOSSAIN INSTRUCTOR DR. RHONDA POLAK COURSE TITLE STRATEGIC MANAGEMENT –BUS 599 DATE: - OCTOBER 16, 2011 Discuss the trends in the U.S. airline industry and how these trends might impact a company’s strategy. Trends in the US airline industry have an impact the performance and strategies of the airlines. As a result, the Jet Blue has struggled to survive. The trends of U.S. airlines industries are discussed as follows: (1) Increased crude oil pricing: fluctuations crude oil price lead to passenger fees for revenue generation, This dramatic price increase caused airlines to struggle to offset the cost of fuel. Presently, gas prices have dropped.
CASE STUDY: The macro environment of Airbus industry and the A380 Airbus began life in the l960s as a complicated joint venture supported by various European plane makers and their respective governments, led by the French.r3 It was a political project in so for as Europe feared the near-monopoly in passenger aircraft of US Boeing corporation. Airbus sow potential for o twin-engine passenger aircraft, smaller and more fuel-efficient than the large, wide-body 747 'Jumbo' that Boeing was developing. The Airbus A300 first flew in October 1912. After o slow start, demand accelerated and A300 expanded into o series of aircraft. Airbus' success forced Boeing to develop the rival 771 twinjet, yet by the early 1990s Airbus was winning as many orders for new aircraft as Boeing.
General Environment Analysis The US Airlines Industry was going through a tough time during the period of 2004 - 2006. Major Airlines, such as United and Continental were trying to consolidate in order to survive. US net losses include $6.1 billion restructuring costs in 2006 [Exhibit 2, Source]. With several major airlines filing for bankruptcy, it was even more difficult for the regional airlines, which were primarily dependent on the major players for their existence. A more detailed environmental analysis is provided below: Economic Trends:  Net profit trend - Although the forecasts of the International Air Transport Association (IATA) seemed to be promising for 2007(collective profit of about $2.5 Billion), the situation till December 2006, seemed to be pretty bleak (Threat)  Seasonal Fluctuations - Another problem was the seasonal fluctuations in demand.
In addition, airplanes re-orders were being rescheduled. Rising fuel prices consolidation - Cost pressure – resulted as there was a decline in the industry as a whole. Increasing competitive intensity – Airbus, Boeings competitor, offered the same airplanes at cheaper costs. 2. What is the e-Enabled Advantage?
Based on the book when there are competitive markets such as airlines, a company certainly needs to look at costs and revenue very closely. (Brickley, Smith, & Zimmerman, 2009, p. 180) In this case I believe that the flights from San Francisco t Washington DC should be discontinued. Even though United Airlines is a large company and profitable if they continue these flights in the long run they will lose money. The other option that they would have would be to increase the fares to cover those costs, but since the airline industry is a competitive market people are more likely to go with a lower cost airline. The first thing the airline must do is look at the firm supply.
After two straight years of financial losses in 1994, CEO Ron Allen rolled out a new strategy called “Leadership 7.5.” Allen targeted to reduce Delta’s cost per each available seat mile from more than 10 cents to 7.5 cents, which would match that of major competitor Southwest Airlines (Bryant, 1997). Along with a new company strategy a change followed with Delta’s human resource strategy. This changing policy devastated employee morale and resulted in a decline of customer service, efforts to unionize, and dissatisfaction among personnel. Delta couldn’t keep the past primary policy about human resources so there were several significant changes in Delta’s organization and corporate culture. There are many programs that Delta has built after passing through the cost-cutting reformation in 1997 for getting back its capabilities on customer relationships like rewards and recognition program above and beyond and more.
American Airlines was accused of predatory pricing business practices during 1995-1997 when competing against several low cost carriers in the Dallas, Fort Worth area, forcing the other airlines out of the market. Analysis American Airlines altered their pricing structure during the years of 1995-1997 in the Dallas Fort Worth Area when several low-cost airlines attempted to establish themselves in this market. In response to the low cost carriers, American Airlines reduced fares, and in some cases increased their routes to match their competitors in this particular area. When the low cost carriers failed to survive this market, American Airlines resumed flight schedules and pricing used prior to the 1995-1997 time period. Any price reductions were quickly recouped when American Airlines resumed ‘normal operations’.
JetBlue Airways: 5 forces and VRIO Porter 5 forces Analysis for JetBlue Airways: Threat of New Entrants: Moderate Deregulated industry. Threat of new entrants higher during downturns in industry (e.g. JetBlue’s entry point). Existing airlines may encroach on an opponent’s major or regional market-share. High cost of entry into industry Potential Competitors: Low - Rivalry among existing firms is intense, which affect the profits to be low.
Industry The global airline industry consist of airline firms offering domestic air transportation and/or cargo through routes based on a regular schedule. Companies whose main business were providing mail using the air transportation of mail is also a part of the industry. In December 2006 the International Air Transport Association (IATA) that passenger revenues would rise by five percent to $475 billion and cargo revenues would rise by six percent to $380 billion by 2007. The IATA also predicted that the industry gain profits of about $2.5 billion since the 9/11 terrorist attack in 2001. There are three types of domestic airline carriers: network, low cost and regional carriers.
BAIT Case Analysis I Royal Caribbean Cruises Ltd Issues: External Issue: There appeared an overall depression in traveling industry since 2001. On the one hand, the outside business climate has become perilously changeable. In addition, customers tended to book more at the last minute, putting the company to a disadvantage position due to the mis-prediction of customer resources and an average 15% commission given to agents. On the other hand, the economic downturn also impacted the travel industry. Internal Issue: There is a misalignment of IT Strategy and the whole business strategy in RCCL.