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Applying Strategic Management Models to the Airline Industry

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Catherine Rooney

on 7 April 2014

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Transcript of Applying Strategic Management Models to the Airline Industry

Applying A Strategic Management Model to the Airline Industry
Ansoff's Model
Market Penetration
Market penetration occurs when a company penetrates a market with its existing product range and strategic capabilities and obtains increased market share (David, 2009)




Diversification



MARKET PENETRATION
Conclusion
British Airways
Lecture Overview...
Introduction
Ansoff's Matrix
Application to the Airline Industry
British Airways Case Study
AirAsia Case Study
Conclusion

Airasia
MARKET DEVELOPMENT
airBaltic lets passengers customize their buy-on-board meal


DIVERSIFICATION
Introduction
Iberia implement online auction scheme that allows customers to bid for seating upgrades.


Singapore airlines and budget market-tiger airlines
PRODUCT DEVELOPMENT
Ansoff's


References
The Airline Industry
IATA, 2014
Servair chefs surprise visits
Market Development
Product Development
The market development strategy involves offering existing products to new segments, new users and new geographies (Johnson et al, 2008).
Diversification strategy is distinct as an organization essentially moves out of its current products and markets into new areas. (Yashodha, 2012)
The product development strategy is implemented when an organization delivers modified or new products or services to an existing market ( Johnson et al, 2008).
Ansoff's Model
IM
BALTIC!
Emirates & Delta and their sports lounges at soccer stadiums.
Strategy theorists have proposed various definitions regarding strategic management, each with certain elements of strategy that an organisation should employ.

Johnnson et al (2008) defines it as "the long-term direction of an organisation."

When deciding on the strategic path that your company can take you can refer to the models of Ansoff's Growth Matrix, Bowmans Clock and the BCG Matrix.
It is obvious that in such a competitive industry as airlines it is vital that companies have a clear vision of their long term direction. By employing good practices of strategy it can result in definite competitive advantage.

Our examples from the industry show that companies must constantly strive to implement new and attractive innovations.

Always having a direction in place will assist in the positioning of the organisation, the strategic choices for the future and managing the strategies that have been adopted.
(Yashodha, 2012)
(Njau, 2012)
1920's
1940's
1990's - 2011
1970's
1918
1908
1923
First permanent airport and commercial terminal used solely for commercial flights opens at Flughafen Devau near Konigsberg, East Prussia (Russia)
1940s
Many commercial airlines and airports go offline to commercial traffic to support World War II military efforts.
1973
The first female airline pilot, Emily Warner, flies as second officer for Frontier Airlines.
1995
First airline tickets are sold via the internet.
1908
First passenger flight: Wilbur Wright takes an employee along for a ride
1918
National Air Mail service launched.
2001
Transportation Security Administration established in response to September 11 attacks.
1. Airlinetrends.com. (2014) Moving beyond shirt sponsorships, Emirates and Delta open lounges at sports stadiums. Available From: http://www.airlinetrends.com/2013/10/21/emirates-delta-brand-spaces-sports-venues/ [Accessed: 28 Mar 2014].
2. Bergin, O. (2014) Virgin Atlantic takes to the skies with red lipstick. Available at: http://fashion.telegraph.co.uk/beauty/news-features/TMG9167200/Virgin-Atlantic-takes-to-the-skies-with-red-lipstick.html [Accessed: 28 Mar 2014].
3. Burnsmcd.com (2014)Timeline of Commercial Aviation. Available From: http://www.burnsmcd.com/Aviation-Special-Report/Article/Timeline-of-Commercial-Aviation [Accessed: 28 Mar 2014]
4. Carrington, D. (2014) Place your bids for Business Class: Airline upgrades now up for auction. Available From: http://edition.cnn.com/2013/09/03/travel/place-your-bid-for-business-class/ [Accessed: 28 Mar 2014].
5. Clark, J. (2014) JetBlue’s new transcontinental A321s to feature private suites and a ‘snack station’. Available from: http://www.airlinetrends.com/2013/10/06/jetblue-mint-transcontinental-business-class-suites/ [Accessed: 28 Mar 2014].
6. Cole, G.A (1997) Strategic Management: Theory and Practice. 2nd ed. Thomson. London.
7. David, F. (2009) Strategic Management: Concept and Cases,. 12th ed. London: Pearson International Edition.
8.Iata.org. 2014. IATA - Economics & Analysis. Available From: https://www.iata.org/publications/economics/Pages/index.aspx [Accessed: 31 Mar 2014].
9. Gulfair.com. (2014) Sky Nanny| Gulf Air. Available From: http://www.gulfair.com/English/info/OnBoard/Pages/SkyNanny.aspx [Accessed: 28 Mar 2014].
109. Johnson, G., Scholes, K., Johnson, G. and Whittington, R. (2008) Exploring strategy. 8TH Harlow: Financial Times Prentice Hall.
11. Kollau, R. (2014) Air France KLM ‘employs’ frequent flyers as mystery shoppers. [online] Available from: http://www.airlinetrends.com/2013/10/15/air-france-klm-employs-frequent-flyers-as-mystery-shoppers/ [Accessed: 28 Mar 2014].
12. Kollau, R. (2014) Servair chefs make a weekly ‘surprise’ appearance onboard an Air France flight. Available from: http://www.airlinetrends.com/2014/02/18/servair-onboard-chefs-air-france/ [Accessed: 28 Mar 2014].
13. Kollau, R. (2014) Virgin Atlantic launches Google Glass and Sony Smartwatch ‘wearable tech’ trial. Available from: http://www.airlinetrends.com/2014/02/10/virgin-atlantic-google-glass-sony-smartwatch-wearable-tech-trial/ [Accessed: 28 Mar 2014].
14. Kollau, R. (2014) Vueling launches world’s first ‘smart watch’ boarding pass. Available from: http://www.airlinetrends.com/2014/03/19/vueling-smart-watch-boarding-pass/ [Accessed: 28 Mar 2014].
15. Loukas, N. (2014) AirBaltic lets passengers customize their buy-on-board meal. Available from: http://www.airlinetrends.com/2013/04/11/airbaltic-customize-buy-on-board-meal/ [Accessed: 28 Mar 2014].
16. Njau, A. (2014) A Strategic Analysis of British Airways. Available from: http://press.ba.com/?p=1517 [Accessed: 28 Mar 2014].
17. Pappyn, D. (2014) Air France upcycles old life jackets and advertising posters into stylish must-haves. Available from: http://www.airlinetrends.com/2013/04/03/air-france-upcycles-life-jackets-ad-posters/ [Accessed: 28 Mar 2014].
18. Podmore, S. (2014). First Class on the Emirates A380: A taste of the sky-high spa treatment. Available from: http://www.heraldsun.com.au/travel/travel-advice/first-class-on-the-emirates-a380-a-taste-of-the-skyhigh-spa-treatment/story-fnjjv799-1226863617754 [Accessed: 28 Mar 2014].
19. Yashodha, Y. (2012) AirAsia Berhad: Strategic analysis of a leading low cost carrier in the Asian. Elixir Management Journal, 51 (1).



Helps businesses identify strategic direction.

Clarifies the organisations current position.

Widely employed by airline industry ( evident in examples).
Unlike BCG Matrix it does not outline the performance levels of products/services.

Bowmans includes pricing strategy.

Ansoffs is considered a simplistic model and lacking in external factors.

2014 (January)
Why did we choose Ansoff's Matrix?
Positives
Negatives
Gulf Air
Virgin - Google Glasses
Austrians Amenity Kit
Emirates in-flight Spa
Airlines Expect 31% Rise in Passenger Demand by 2017
The Future
Air travel markets increased 8% from January 2013

Burnsmcd.com, 2014
Airbus announces signing of the largest aircraft deal in history based on aircraft ordered: 200 planes ordered by AirAsia
2011
Airlinetrends.com, 2014
Airlinetrends.com, 2014
Airlinetrends.com, 2014
Airlinetrends.com, 2014
Full transcript