U.S. Airline Industry Analysis Essay Example | Topics and Well Written Essays - 1750 words

U.S. Airline Industry Analysis - Essay Example The US airlines industry again returned to profitability track by 1995 and continued this growth until the close of the 20th century. However, the 2001 terror attack together with a depressed world economy further worsened the growth status of the US airlines industry. This paper will critically analyse the US airlines industry using international business theories and other strategic frameworks. A critical analysis During the beginning stages of the US airline industry, three airlines namely United Airlines, American Airlines, and TWA were in charge of transcontinental routes. In 1938, the Civil Aeronautics Board (CAB) was established with intent to manage the structure of the industry (Dempsey, 1979-80). The CAB set flight fares on the ground of cost plus a fixed margin and hence aircraft operators could pass cost increases to customers. In 1970, rampant increase in fuel costs and political shifts towards economic liberalization created the impetus for a total reform of the airlines industry. The development of contestable market theory also contributed to this strategic shift. According to this theory, â€Å"industries did not need to be competitive structured in order to result in competitive outcomes† (Grant, 2002). ... Hence, this strategic shift might assist them to operate more number of aircrafts using the same amount of resources. As regulators argued, the deregulation resulted in new entries and price competition. In the words of Grant (2003, p. 31), although the deregulation strategy was potential enough to improve the declining industry growth, some unexpected contingencies like oil shock of 1979 and the air traffic controllers’ strike of 1981 caused severe difficulties to the US aviation industry. In order to overcome these troubles, aircraft operators across the US widely adopted mergers and acquisitions approach as they believed that combined operations would trim down operating costs. As Heimlich (2011) argues, M&A approach significantly assisted the US airline industry to overcome several cultural barriers. The ‘hub and spoke’ system introduced in 1980 greatly benefited the US airlines industry to increase its operational efficiency, reduce maintenance costs, establi sh dominance in specific regional markets, and to place barriers to new entrants. The development of this new system can be linked to the strategic management theory, which argues that a â€Å"change creates novel combinations of circumstances requiring unstructured non-repetitive responses† (Kahn, 2010). Introduction of low cost carriers became a potential threat to the industry by the beginning of 1990s and hence the country’s major airlines extremely struggled to confront with such budget airlines. As discussed earlier, the deregulation Act directly led to the evolution of a competition era and the major aircraft operators offered almost similar facilities to their customers. As a result, travellers could not easily distinguish between the offerings of

Environmental analysis case study Essay Example | Topics and Well Written Essays - 2250 words

Environmental analysis case study - Essay Example It starts by outlining a brief historical background of the organisation in question for the sake of easier understanding then followed by an analysis of the above mentioned tools for scanning the environment in which the organisation operates. Environmental scanning plays a pivotal role in helping the marketing managers of an organisation to be better positioned to know the situation obtaining on the ground for them to be able to gain a competitive advantage especially in view of the competition that exists. Background According to Datamonnitor (2004) â€Å"Tesco PLCTesco is the largest food retailer in UK, operating around 2,318 stores worldwide. It operates around operates around 1,878 stores throughout the UK, and also operates stores in the rest of Europe and Asia. Tesco.com is a wholly-owned subsidiary offering a complete online service, including tescodirect.com and tesco.net. The company also offers a range of both online and offline personal finance services. Tesco is headq uartered in Hertfordshire, UK.† Against this background, this essay seeks to outline the organisation’s PESTEL analysis, Porter’s five forces model as well as the value chain. Kotler (1999) posits to the effect that PESTEL analysis is a powerful tool in determining as well as understanding the market forces that affect the growth of business. In other words, it determines the direction for operations in any given business. PESTEL analysis for Tesco PESTEL stands for factors which may affect the operations of business such as political, economic, social, technological, environmental as well as legal factors (Lancaster & Reynolds 1999). This is a very useful tool in analysing the environment in which an organisation operates. It can be noted that there are various factors that affect the operations of any given organisation and these have to be taken into consideration by the senior management so as to achieve a competitive advantage by the organisation. Any given organisation is guided by certain factors that so as to ensure that it does not violate the needs and interests of the consumers as well as the other stakeholders. Political In UK and Europe at large, there are policies that govern the operations of all retail stores. There are laws that govern monopolies as well as competition and these are some of the main political factors that affect the operations of Tesco. It can be noted that Tesco’s success is owed to the observation of these policies where protection of the consumer interests is take as a virtue. Consumer law in UK is effective and under the EU law, every big organisation like Tesco is expected to protect the needs and interests of the customers. Continuous scanning of the political environment greatly helps Tesco to gain a competitive advantage over other rival competitors. On the other hand, it can be noted that the current political environment prevailing in the EU is not exploitative which is seen as the reason w hy Tesco is able to keep pace with the demands of the market. The government in the UK determines the value of the currency as well as the exchange rates and it can be noted that the success of Tesco is greatly owed to compliance with these rules and regulations promulgated by the government. The Competition Commission for instance suggests that a supermarket should not account for more than 25% of the national market and these are som