Cathay Pacific [Case Analysis]

Due to substantial deregulation of the airline industry in the 1980s, a highly competitive environment arose for airline carriers. Cathay Pacific, for one, was particularly efficient in making the most of this new environment, and this is largely attributable to how the airline has managed its IT operations. By outsourcing (mainly non-strategic) functions that were not core competencies, for example, they did not only cut down on costs but they also effectively reduced risks. So as the airline continued to grow, it rigorously transitioned from “strictly building and operating to acquiring and managing.” Facilitated by its global linkages, Cathay Pacific now found itself in a better position to identify key suppliers and infrastructure. This new stance allowed the airline to narrow searches down to optimal combinations of suppliers that remained competitive. Although this would later become a hindrance, as newfound partners would hold “partner” statuses that made it difficult for the airline to issue standard requests for pricing, it had an overall significant effect that put the company in a stronger position to compete. Cathay, did however, eventually replace the “smart-sourcing” strategy around 2004, when the new theme of corporate purchasing process was competition.

smartsourcing:

Under this new strategy, the airline focused on using fewer and longer-term suppliers that consistently demonstrated flexibility and competitiveness. Also, acquiring proven technology and solutions became another priority of the company, making it common to acquire well-integrated suites over best-of-breed solutions that they were accustomed to choosing. Despite changes in strategy and operations, there is one thing that has remained rather steady, however, and that is that the evolving IT strategy has consistently reflected business