Issue/Decision Despite its industry-leading position, Southwest Airlines was facing new challenges in mid-2008 which threatened its annual growth potential. Historically, Southwest’s seat availability grew at a rate of 5-10% each year; however, 2008’s projected growth was limited to 3% year-over-year. This is a direct result of strengthened competition which weakened Southwest’s competitive advantage, the onset of an economic recession, a high fixed cost structure with high operating costs—particularly
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|University of Wisconsin-Madison | |School of Business | |Business Strategy MHR 723 | |Monday evening 6:15 -9:00
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to achieve advantage over rivals by adapting with available resources & build competency we need to first look into the industry level analysis, profitability potential & competitive dynamics and then assess its launch strategy. PORTERS FIVE FORCES * COMPETITORS : * Deregulation-increased rivalry, Competition for marginal customers * Strategic Alliances eg - Aer Lingus & BA * Comfort & premium services to Business Class * Increased use of online ticketing
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Positioning Porter Resource-Based View of the Firm • The Delta Model • • Porter’s Framework for Explaining the Profitability of a Business Competitive Positioning Achieving sustainable competitive advantage Industry Structure Factors affecting industry profitability Strategy Formulation and Implementation Defining and executing the managerial tasks Elements of Industry Structure: Porter’s Five-Forces Barriers to Entry - Economies of scale - Product differentiation - Brand identification
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MASTER BUSINESS STRATEGY CONSULTING , DELTA AIRLINES CASE To determine the profitability of the airline industry, we will do an industry analysis using Porter’s five-forces framework a) Rivalry among existing competitors Concentration The concentration and the number of competitors make very difficult any agreement about pricing. Diversity of competitors There are many competitors with approximately the same size, especially for the legacy carriers. Product differentiation
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Chinese Airline Industry The airline industry is very a volatile and slow growing industry. Many times the revenue does not go up in the same rate as the expenses. It is one of the industries that have one of the lowest returns on investment in many parts of the world. It is nearly impossible to enter the industry and extremely difficult to stay in business in many countries, especially in China. Since the majority of the airlines in China are stated-owned, new entrant would have many disadvantages
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Airway Corporation is an American low-cost airline and it was one of a few U.S. airlines that were profitable during the sharp downturn in airline industry affected by the September 11, 2011 attacks. With its strong capital base, the company was successful due to its impressive management team, in which, David Neelaman has rich experience with airline start-ups; COO David Barger and CFO John Ower are all experienced former senior managers from other airlines. The company’s sales rose from $104,618 to
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SITUATION 5 Table 2 AirAsia and its competitors’ profile 5 4.0 MARKET POTENTIAL & MARKET ATTRACTIVENESS 8 Table 3: Market attractiveness from a macro perspective 8 Table 4: Market attractiveness from a micro perspective 9 Table 5: Porter’s Five Forces for AirAsia 9 5.0 SEGMENTATION, TARGETING AND POSITIONING ANALYSIS 11 5.1 Market Segmentation 11 Table 6: Market Segmentation of AirAsia 11 5.2 Target Market Profile 14 Table 7: Target Market Profile of AirAsia 14 5.3 Positioning
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4. External Environment Analysis I A. Macro Environment and trends * Macroeconomic forces – * Demographic forces –store expansion strategy, selected favorable demographic locations and selected a large city to serve as a “hub”; teams of professionals were located in hub cities to support the goal of opening 20 or more stores in the hub within two years. Starbucks had vice presidents that oversaw the store expansion process in a geographic region and responsible for instilling the Starbucks
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Introduction Business SegmentsFedEx ExpressFedEx GroundFedEx FreightFedEx ServicesCorporate Strategy“Compete Collectively, Manage Collaboratively” • 3. Brand Planning AssessmentThe FedEx PositionWho is the target market?“anyone who needs to send something anywhere in the world. Whether it’s the one and only package you'll ever ship in your life or you have 1000 packages to ship every day.” • 4. Brand Planning AssessmentThe FedEx PositionWho are the main competitors?UPS • 5
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