...Week 11: Swissair 1. Companies need to be able to find a scale and product mix that fits the markets they operate in. Was Swissair free to define itself in response to the marketplace? In what ways was it not and what effects did those constraints have on the Company? Swissair was not free to define itself in response to the marketplace. It all started in 1992 when the Swiss “voted against integrating the country into the European Economic Area.” Swissair was not positioned to compete with the rest of the market. The “American aviation industry had been going through a deregulation process since 1978, which encouraged more than 50 new companies to enter the business” and the “European market for air transport had grown dramatically…[to] 32 times bigger than it had been in 1960.” Additionally, the interconnectedness of the leadership within Swiss companies is another reason why Swissair was unable to define itself in response to the market. Too many people were worried about prior negotiations/deals made with the same people in different companies. The public, the government and trade unions also created issues for Swissair surrounding a potential merger. So Swissair, instead of negotiating an amicable merger with Scandinavian Airlines, Austrian Airlines and KLM Royal Dutch Airlines, decided to implement a hunter strategy. This hunter strategy created a downward spiral for the company resulting in poor decisions made by a select few and many frequent changes in leadership...
Words: 730 - Pages: 3
...531 April 13, 2010 Tim Buchanan For several decades, Switzerland’s former national airline, Swissair, has had a reputation as being an almost perfect embodiment of traditional Swiss virtues like technical innovativeness combined with reliability and solidity at the same time. They were so financially stable that they were known as the “Flying Bank.” Established in 1931, Swissair epitomized international transportation until the late 1990s, when the management decided to follow the aggressive borrowing and acquisition policy known as the Hunter strategy. This strategy was a major expansion program initiated by Swissair aimed to grow its market share through acquisition of small airlines rather than entering into alliances agreements. The buying spree created a major cash flow crisis for parent company SAirGroup (Swissair Group), and was exacerbated by environment caused by the September 11 attacks. Those attacks put a void in the company’s plans and Swissair found itself hamstrung with debt. Unable to make payments to creditors on its large debt, and the refusal of UBS AG (Union Bank of Switzerland) to extend its line of credit a month later forced the entire Swissair fleet to be grounded in October 2001. Management was the blame for how this company failed because of failure to conduct a market research and not taking competition seriously. Swissair figured that they could just “muscle” the little guy and the consumer would keep using their product. A couple...
Words: 756 - Pages: 4
...1. What was the difference between the scuba diving markets in Ahmed and Pemuteran? Which market was more competitive? Which of the four market structures did the two markets most resemble: perfectly competitive, monopolistically competitive, oligopolistic or monopolistic? The only difference between the two markets is the amount of producers in the market with there being more producers in the Ahmed market than the Permuteran market. The Ahmed market was more competitive due to the higher number of competitors. It’s more competitive state can be seen in the reduction of price for scuba diving tours. Due to the large amount of producers, the market price is pushed down by competing producers to increase their demand. The two markets most resemble oligopolistic markets since both markets have more or less identical products and the markets are dominated by a few producers. 2. How were the dive operators in Pemuteran able to charge 60% more than the operators in Ahmed? The dive operators in Permuteran were able to charge 60% more than the operators in Ahmed due to the high amount of market power that each producer had and the low amount of producers in the market. Since the whole market is dominated by 3 producers, each producer has large control over the market and has a relatively inelastic demand. Therefore, each producer can charge a much higher price without losing too many customers. 3. What do you think is keeping one of the three dive operators in Pemuteran from...
Words: 759 - Pages: 4
...article discusses the failure of Swissair by analyzing the financials of the company prior to the year 2001 when the company became grounded. It begins by giving the company’s profile and its history from establishment in 1931. The paper highlights the company’s successes and gives a table that shows the gradual increase in the number of fleet, employees, revenue, cities served, and the break-even load factor from 1931 to 2000. The paper goes ahead to explain the reasons why the company failed to consider the alliance strategy that was commonly used by similar companies as well as elaborating other principal causes of failure such as government interference and uncritical media coverage, A five year financial review of the company is provided beginning 1996 to the year 2000 showing how the operating revenue increased while the EBIT and profits decreased and finally led to losses. Mileski, J., & Nwabueze, U. (2008). The Challenge of effective governance: a case study of Swissair. Journal of Corporate Governance, 8, 5, 583-594 This article begins by giving a brief history of Swissair Company making note of its initial successes and good management practices. It then explores the best managerial practices that are crucial for the success of any business, laying emphasis on the precepts of effective corporate governance and their impact on businesses. The paper then explores the corporate governance practices that were common in the Swissair Company comparing them to the best...
Words: 1531 - Pages: 7
...Business Failure This paper is a brief examination into how different variables both dependent and independent in relation to various theories of organizational behavior played a significant role in the failure of the once profitable and prominent Swiss Air Airline company. It provides specific examples of how certain organizational behavioral theories if applied before the company’s insolvency might have predicted the airlines impending bankruptcy. It also compares and contrasts the different aspects of the company’s leadership, management, and corporate structure, and the significant role that these organizational behavioral variables played in the company’s downfall. Swissair The year of 2001 was not only noted for the terrorist attacks of 911, but it was also the year that the world witnessed the collapse of Swissair, one of the world’s most successful airlines and the first to officially fly the Swiss Flag as a national carrier. In October of that year the airlines was forced into filing Sweden’s form of Chapter 11 in an effort to protect itself from its creditors. Several organizational behavioral theories and their associated variables could have predicted the likelihood of the failure based on the behavior of the corporation’s top leadership and the management of its subsidiaries as the company began the strategic implementation of merging and acquiring other airline companies in an effort to secure a greater market share. The Behavior The airline company traditionally known...
Words: 1232 - Pages: 5
...s nmnsn m EAR GOVERNMENT COCA COLA SWISSAIR PASSENGERS 50 issue 25. summer 2006 EBF D6PTH By Dominique Turpin, IMD "No comment". Those two simple words can shatter a company's reputation and cost it millions in lost sales. So how can you turn a corporate crisis into competitive advantage? n October 2001, news of potentially harmful bacteria found in a McChicken Burger in Buenos Aires, Argentina, spread across South America via television and the internet. Although no one was proved to have been made sick or placed at risk, the incident cost McDonald's several million dollars in lost sales and damaged brand eguity {Turpin, 2002). Effective or ineffective communication during the first hours - or even minutes - of an emergency can have dramatic implications for the image of a company (Dawar and Pillutla, 2000). A study of 2,645 consumers conducted by the advertising agency DDB Needham showed that a company's handling of a crisis ranked as the third most important influence on consumer purchasing, after product quality and handling of complaints {Marketing News, 1995). issue 25. summer 2006 51 When disaster strikes: communicating in a crisis Crisis-management experts are unanimous in concluding that it is not a matter of if a company wiil be faced with a crisis, but when and how weii-prepared executives wili be to weather the storm {Albrecht, 1996). Indeed, no company is immune to a potential crisis created by flawed products, blackmail by unscrupulous...
Words: 3441 - Pages: 14
...Introduction In the contemporary world, teamwork has been an important way in organizational practice. It is applied to over 80 percent of Fortune 500 companies (Joinson, 2000) and widely used in most of countries at present. A team is described as “a small number of people with complementary skills who are committed to a common purpose, set of performance goals, and approach for which they hold themselves mutually accountable” (Katzenbach and Smith, 1993: 113). In the teamwork, the concerted efforts of its members can generate positive synergy (Robbins and Judge, 2006) and improve organizational performance (Delarue et al, 2008). However, some negative aspects of teamwork also impact on the performance and behavior of a team (Mullins, 2006). This essay will discuss both negative and positive effects of teamwork via several contemporary examples, and conclude that positive aspects outweigh the negative aspects in the perspective of its impact on the whole team. Negative Effects of Teamwork Some researchers argue that teamwork has certain negative effects on performance and behavior of a team (Mullins, 2006). Social loafing and groupthink are two of the adverse aspects that result from teamwork. Social loafing is the phenomenon that individuals exert less effort in teamwork than they do alone (Karau and Williams, 1993). The reason is that the contribution of each member cannot measure accurately in a team, so individuals tend to hide inside a team and reduce their...
Words: 1343 - Pages: 6
...STRATEGIC ALLIANCES IN THE GLOBAL AIRLINE INDUSTRY Abhishek Goel1 Abstract Strategic alliances are common to any industry. Their presence is felt quite significantly in the airline industry. Starting in the US in 1978 deregulation of airline industry has since brought about sea changes in functioning of the industry. This paper attempts to understand the developments and strategic alliances that have occurred in the airline industry since deregulation. These strategic alliances exist in various forms and differ widely in scope and no consensus on classification was found. The advantages and disadvantages of strategic alliances with respect to the airline industry have been discussed. It is felt that the industry is getting increasingly concentrated. However, no conclusive remarks can be made about consumer welfare. “Airline Business Alliance Survey of 2000 reports that there are 579 alliance agreements in place, up from 280 agreements (more than double) in 1994 when the survey was first conducted. Five major alliances (Star, Oneworld, Qualiflyer, Sky Team, and Wings) account for some 60 percent of all air travel.” (Mason, 2002) The lines above make the issue important enough to understand the phenomenon that is guiding the industry. Almost a decade back Oum, Taylor and Zhang (1993) argued that the airline industry will be marked by strategic alliances and these alliances will be global in nature. The guiding factors will be several that include formation of blocs, resource...
Words: 12277 - Pages: 50
...Explanation of the various elements of the marketing process Need help? ☎ 0115 966 7955 T he elements of the marketing process are ref erred to as "a set of controllable tools that the f irm blends to produce the response it wants in the target market, so it consists of everything the f irm can do to inf luence the demand f or its product”( Kotler and Armstrong, Principles of Marketing 2004, Tenth Edition, New Jersey Pearson Education Inc.). T he Elements of Marketing or Marketing mix which is f amously known as the “4P’s of Marketing”( stated by McCarthy in 1960) which include Product, Price, Placement or Place and Promotion. When these elements of marketing are analysed with the Easyjet case study, it gives a good example as how the 4P’s help an organization scale to new heights with increased sales and customer base. T hey are; Product:- In the respective case study as Easyjet is a airline industry, its main f leet consists of Airbus A320200, Airbus A319 and Boeing 737-700. Easyjet is a budget airliner and intended to attract business customers and leisure travelers spending lesser time travelling between destinations. T he company does not provide complimentary meals or ref reshments on board to reduce costs and increase space to accommodate more customers, whereas customers can buy items on board by using Easyjet Bistro (buy on board programme). T he onboard programme also helped the airliner to increase its revenue. Easyjet has also got other value added services like Eastcars...
Words: 3017 - Pages: 13
...a) Explain why, according to economic analysis, there are benefits from large scale production. Large scale productions are usually by large firms as they have the resources to do so. Benefits from large scale production means that the company would earn more profits through a higher output. This can be attained from earning more revenue and incurring lesser cost during production. When the firm generates more revenue from large scale production, it will have the funds to invest in research and development. This will allow them to improve the quality of their services and facilities. For example, airline companies would be able to install better televisions and more comfortable seats for their passengers. They can also provide more channels and entertainment and the increased in variety will cater to different tastes and preferences. More passengers will thus be attracted to taking these flights overseas due to the attractive new features the airline companies provide in their airplanes. This will allow the company to earn more revenue and profits. In addition, with more revenue earned from a greater output, the firm will have funds to advertise and this gives them a benefit over smaller firms that do not have the means to do so. With more advertising and promotion of their airlines, passengers will be more aware of the services these airlines provide. For example, Singapore Airlines constantly has advertisements on television on their quality service and this encourages passengers...
Words: 706 - Pages: 3
...Unit 3 Individual Project Dana J. Walker Strategic Management October 13, 2013 American Intercontinental University Abstract The following paper will be a comparison of the advantages and disadvantages of the first mover theory and the last mover theory. It will show examples of real firms that have been either successful or a failure as they have employed one of the theories at their company. In my conclusion I will give my recommendation on which theory I think should be used and I will support that with not only details but also an example of a company that I feel validates my claim. The first mover theory can be summed up as “being the first in a new market allowing for an advantage over ones potential rivals” (First-Mover Advantage,” 2013). Doing this will allow for both advantages and also disadvantages to the business that adopts this mind set and then proceeds on that course of action. First Mover Advantages: * Ability to capture market share majority – This is important because “the market’s perception of the product or service is driven by your market share and that determines you prerequisite for growth” (“Why is Large Market Share,” 2008). * Ability to become the low cost leader – Doing this means the firm can minimize your cost to pass the savings on to the customers. This builds customer loyalty to you brand or service. * Create and protect intellectual property – The creation and protection of intellectual property allows the firm to...
Words: 1139 - Pages: 5
...This memo provides an insight on why a board’s composition plays a crucial role to perform and function effectively and why board diversity has become increasingly necessary in order to add more value to the firm. The board’s composition is likely to impact how the board functions, how it makes its investment and financial decisions and how authority and influence are allocated and manifested within the board.[1] Each organisation has its own regulations and guidelines for the formation, roles and compensation of the management board as there is “no one size fits all” rule, they are largely governed by governmental regulations and other international regulatory bodies such as the Organization for Economic Co-operation and Development (OECD) and the International Finance Corporation (IFC). Some positive relationships have been explored between the number of women, director ages, nationalities and other minorities on the board and the overall value of the firm. Being a household products and pharmaceutical company it is imperative for HouseDreams to incorporate measures to include more women on its board of directors thereby making it more diverse. This is because of the fact that women are the prime household decision makers and have a better understanding on the company’s target consumer. Boards with no or limited female membership may be weak in terms of understanding and connecting with the customer and workforce and offer limited encouragement to female employees. Based on...
Words: 3671 - Pages: 15
...Corporate governance refers to the set of systems, principles and processes by which a company is governed. They provide the guidelines as to how the company can be directed or controlled such that it can fulfil its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long term. Stakeholders in this case would include everyone ranging from the board of directors, management, shareholders to customers, employees and society. The management of the company hence assumes the role of a trustee for all the others. Corporate governance is based on principles such as conducting the business with all integrity and fairness, being transparent with regard to all transactions, making all the necessary disclosures and decisions, complying with all the laws of the land, accountability and responsibility towards the stakeholders and commitment to conducting business in an ethical manner. Another point which is highlighted in the SEBI report on corporate governance is the need for those in control to be able to distinguish between what are personal and corporate funds while managing a company. Fundamentally, there is a level of confidence that is associated with a company that is known to have good corporate governance. The presence of an active group of independent directors on the board contributes a great deal towards ensuring confidence in the market. Corporate governance is known to be one of the criteria that foreign...
Words: 3550 - Pages: 15
...RUNNING HEAD: First and Last Mover Theories First and Last Mover Theories AIU – MGT680 Abstract This paper will include a comparison of the advantages and disadvantages of the first and last mover theories. It will include examples of real firms which have been successful or failures as they employed one of the theories at their company. The conclusion will be a recommendation on which theory should be used with supportive details and an example of a company that validates the claim. First and Last Mover Theories The first-mover theory is all about being first to enter a new market which allows a business to gain the advantage over its rivals (First-Mover Advantage, 2014). This is true for developing new geographical or demographic markets for existing products or to introduce new products to an existing market. The first-mover theory advantages include the first one to the market gains defensible ground because it captures the market share much more easily without rivals. The first one to the market also has a leg in with the competition when it does come because the customer is already familiar with their product. The first one to the market also consolidates its position in order to compete more effectively. The first one to the market also captures the majority share and become the lower cost leader. Being first to the market also allows for many disadvantages (First-Mover Advantage, 2014). The first-mover theory disadvantages include that the mistakes the first...
Words: 1512 - Pages: 7
...Acct:6302.720 Contemporary - Control Systems Journal Critique 2 Dr. Carol Sullivan July 3, 2015 The Accounting Competency Crisis within the U.S. By Max Jackson Tell me something... What do Bear Stearns, Swissair, Health South, World Com/MCI INC. Tyco Ltd, Enron and Arthur Anderson all have in common, they all shared one weakness that has killed all companies alike.... the inability and the lack of quickness to spot bad accounting practices and procedures that were in place that lead to their immediate demise. It is because of this bad oversight and bad practices that Corporate America is railing for new talent, only for the talent not to be at the caliber they wanted. Some within Corporate America blame the current education system for not preparing today's "OVER ENTITLED STUDENT" who feel as though they can rightfully command a 6 figure salary as if they were Moses parting the Red Sea, with regards to doing the job they have been hired to do only to do nothing! In my paper, I not only place blame where it needs to be, at both the foot of the Educational System and Corporate America for not doing their part in order to prepare today's students, but I also state from those what can be done to help today's student over come today’s current job disparities within the field of accounting. Intro: In today’s tough job market, companies all across the United States are in a race as if it were a nuclear arms deal in order to find the top talent within the accounting...
Words: 1747 - Pages: 7
