Case Summary and Important facts Despite the fact the airline industry had 87 new-airline failures in the US over the past 20 years. David Neeleman convinced a group of investors and quickly raised $130 million from venture-capital community. With its strong capital base, JetBlue acquired a fleet of new Airbus A320 aircraft and focused on innovation, providing the most valuable and the most excellent travel experience, low-cost, point-to-point service to large metropolitan areas with high average fares or highly traveled markets that were underserved, mainly on central and Western routes in the US. During 2001 and 2006, the airline industry was facing a number of external stress, such as the 911 terrorist attacks, Iraq War, SARS, high price of petroleum, ect. The airline industry in US has been challenged and many of firms were bankrupt.
Market Analysis – Southwest Airlines What is the market structure for your good or service selected in Week Two? After almost thirty years of service, Southwest Airlines has emerged as one of the world's premier airlines. The Southwest approach to business and the industry at large have enabled the company to continue to grow at profit in times of true economic downturn. Presently, the market for air carriers is saturated and highly fragmented. Overcapacity has led the major United States airlines to compete with Southwest's low fare pricing strategy.
Their service strategy is based on short-haul, point-to-point direct flights that are accomplished with amazingly short turnaround times. With their strategy, Southwest has a strong majority of the market share in the point-to-point market. Southwest’s goal is to make air travel affordable to all, both the time-sensitive business traveler and the price-sensitive leisure traveler. They are able to offer their low ticket fare because of good management-labor relations, fast turnaround time at the gate, faster speed of operations offered with smaller airports, and lower maintenance costs due to flying only one model of airplane. The strong leadership, strategy and culture that were built and are supported by Herb Kelleher, the former CEO of Southwest, support all these items that keep ticket fares low.
In 2000, both manufacturers believed that Asia would register the world’s highest growth rate over the next 20 years. This is a big part of the reason why Airbus decided to develop the A380. The Boeing’s competitive response against the A3XX will affect the sales of the plane. Initial sales of plane – Financial success depended on getting enough early sales to drive down costs through learning curve effects. The basic idea was that unit costs, such as direct labor, declined as a function of cumulative output.
Sustaining Growth A key issue facing ECP is sustaining its growth. From a turnover of £50,000 in 1978 ECP has shown rapid growth particularly in recent years defying the downward trend of the UK economy. In 2011 alone ECP increased its revenue by 25% whilst adding 12 new branches and over a thousand new employees to the team. This was a direct result of ECP’s heavy investment in people, infrastructure, technology and marketing. The growth was also aided by a shift in the market of service, maintenance and repair work away from manufacturer’s franchised dealer networks to independent repairers who constitute the bulk of ECP’s customer base.
This had increased the price or value of the company and thus increased to $ 6.1 billion. The factors which will create the synergies are the restructuring the organization. They are considering to reduce the airport operating expenses by $ 75 million per year. They are also considering to
Case Recap South West Airlines, in existence since 1971, has slowly grown its business by focusing on cheaper fares, excellent customer service and employee engagement. In 1994 it was declared eighth largest airline based on Revenue Passenger Miles (RPM) flown. In same year it recorded net income of $179.3 million with total operating revenue of $2.6 billion. It’s excellent low cost operations became model for Airline Industry. Other Airlines, such as United and Continental started copying Southwest’s operations model and competing directly with Southwest by introducing a concept called Airline-Within-an-Airline.
(Wal-Mart Corporate Website) Huge turnover, large customer base and returning customers show that Wal-Mart has been able to achieve this goal in its 50 years of existence. Wal-Mart sources material from third world countries at low price. Very efficient supply chain management and bargaining power has enabled Wal-Mart to sell goods at low price. Company is also pursuing vertical integration strategy to lower cost. Answer-2) Wal-Mart Stores had turnover of $446.95 billion and net income of $15.77 billion in financial year ending
The company initially focused on Asia and central Europe. Most recently it has made its entry into the US market. In 1997 Tesco first decided to diversify and according to the company itself this was the basis of its recent success. As a result of this strategy several new businesses have been created by Tesco for the last 12 years and most of these businesses are profitable and competitive (Tesco plc, n.d.). Tesco has developed its strategies which are primarily focusing on five important factors, 1) its core UK business, 2) community, 3) non-food, 4) retailing services and 5) international market.
Boeing has customers in more than 90 countries world-wide and is one of the largest U.S. exporters in terms of sales. The company values innovation and is continually expanding their product line and services to meet emerging customer needs (About Us). Boeing generates $66 billion in revenues from their global aerospace and defense markets and conducts business through three operating segments. Boeing Commercial Aircraft (BCA; 50% of revenues and 49% of operating profits in 2007) and EADS's 80%-owned Airbus division are the world's only makers of 130-plus seat passenger jets. Integrated Defense Systems (IDS; 48%, 48%) is the world's second largest military contractor behind Lockheed Martin Corp. Boeing Capital Corp. (2%, 3%) primarily finances commercial aircraft for airlines (Business).