Strategic Management

Problem:  The Airline Industry is a very competitive business; the United Airlines should implement a new and innovative Strategic Management plan in order to stay on top of the competition.

 

 

Every business is subject to factors that affect the firm’s function as a whole.  These factors are the ones attributed for the success or even the failure of a business.  In the light of this, there are certain ways or techniques that can be considered in order to emerge and continue to be competitive within the market place. The marketing concept has been defined as ‘the key to achieving organizational goals’ and the marketing concept rests on ‘market focus, customer orientation, coordinated marketing and profitability’. In a profit making business the firm obviously has to try and achieve this level of customer satisfaction as a way of staying ahead of the competition and making a profit.

 

            Analyzing the status, strategies and resources of businesses and their products or services is very essential as it allows operators to determine how they will progress in the years to come. This also enables them to identify their strengths and how they will optimize them. On the other hand, business analysis also makes operators realize their weak points, allowing them to address them immediately with effective strategic actions. Conducting a business analysis also helps organizations to prepare for their future development and growth. Considering that competition in the business field is continuously growing, implementing efficient strategies through business analysis is indeed significant for all operators in any industry.

Traditionally, marketing has been utilized by the private sector in decisively increasing the capabilities of an organization. Marketing can be considered as one of the most important element underpinning successful business creation (Hills, 1994). Perhaps because of its complex applications, marketing have been defined in a variety of ways (Sheth, Gardner and Garrett, 1988). The marketing concept was first promulgated in the late 1950’s (Elliot, 1990). The importance of marketing concept incorporates oft-repeated elements such as: customer orientation; integrated marketing efforts; and resultant profitability.

 

Today, more and more people and organization are trying to be recognized in the business arena.  With this objective, these organizations had been able to competently and effectively adapt to the situation in the market place by using different strategies that enhanced their competitiveness. In lieu with this, the main purpose of this paper is to provide a comprehensive discussion of marketing and management strategies of the United Airlines, The critical evaluation of the marketing strategy also includes significant aspect such as market condition, competitors, and customers’ expectations.

Company Profile

The United Airlines declared bankruptcy of almost billion dollars. The downfall of the United Airlines was caused by the 9/11 terrorist attack. If one focuses on airline sales alone the potential is enormous. United Airlines, one of the first and most successful of the major international airlines to sell online, expects to be selling about 20 per cent of its tickets through the Internet by 2003. If one were to assume a similar penetration of Internet sales for both passengers and cargo among all the airlines of the four major alliance groupings then revenues generated would be around US billion in 2003. Perhaps not all the alliance members will be in a position to achieve such high Internet sales by 2003. However, any shortfall will be more than offset by Internet sales by several non-alliance airlines who will be achieving high Internet sales by 2003 or earlier. In the United States, forecasters predicted that 32 per cent of all US business travel will migrate online by 2003 and 10 per cent of leisure travel

Strategic Management

Primarily, the main reason for the need of the company to have a marketing strategy to the products/services is COMPETITION. Today’s market is characterized by highly competitive organizations which are all vying for consumer’s loyalty. Firms are faced with the challenge to maintain their own competitive edge to be able to survive and be successful. Strategies are carefully planned and executed to gain the ultimate goal of all: company growth. However, external factors are not the only elements which influence growth.

 

The possibility to bestow a competitive advantage is not intrinsic in all resources (Wernerfelt, 1989). Nevertheless, to a certain extent, in simply those that satisfy a thorough collection of situations (Barney, 1991; Peteraf, 1993). The first condition is that the resource has to be important. That is, it has got to supply the chance to make use of a number of environmental opportunities or counterbalance a few hazards. Resources are believed to be important when they allow an organization to conjure up of or put into practice strategies that perk up the organization’s competence or efficiency (Barney, 1991). A number of authors interpret importance in the context of satisfying a key consumer requirement (Aaker, 1989; Coyne, 1985).

 

Additionally, resources have to have the features of exceptionality. If important resources are owned by a great number of competitors or possible competitors, they no longer correspond to a source of competitive advantage. This is the key subject of heterogeneity fundamental to the resource-based view. In this context, organizations owning exceptional and inimitable collections of capacities and resources can accomplish a sustainable competitive advantage. Third, there have got to be the condition of imperfect mobility of resources. Where resources are effortlessly traded among competitors, no competitive advantage can be preserved. Imperfectly mobile resources take account of those that are characteristic to the organization (Williamson, 1979), those for which property rights are not well characterized (Dierickx & Cool, 1989), or those that are co-specialized assets (Teece et al., 1990). The imperfect mobility of assets is a decisive feature in businesses as the consumers are the key assets in a lot of circumstances, and their high mobility recurrently results in the shortfall of accounts and the materialization of new competitive threats as in the condition and eventually shifting to other companies that directly compete for the similar market.

 

For an advantage to be maintained, resources have got to be imperfectly imitable (Barney, 1991) or offer a few ex-post restrictions to competition. That is to say that following to an organization acquiring a superior position and receiving rents, forces have to be made that could limit competition for those rents (Peteraf, 1993). It was taken into account above that innovation such as the improvement of a new kind of account by a retail bank or a new promotion approach by a creative department recurrently triggers a multitude of replications from competitors. For an organization to be in a situation to make use of an important and rare resource, there have got to be a resource position obstruction averting replication by other companies (Wernerfelt, 1989). Preserving a competitive advantage over a period of time necessitates the attendance of separating instruments that thwarts replication. Quite a few such obstructions that have been taken down in the literature consist of causal ambiguity (Reed & DeFillippi, 1990) and uncertain imitability (Lippman & Rumelt, 1982), where the motivations of success are not easy to recognize. Replication may similarly be thwarted by the process of asset stock accumulation within the organization. Where these stocks have power over the features of time compression diseconomies, asset mass efficiencies, and interconnectedness, then replication is not easy (Dierickx & Cool, 1989). Without a doubt, the implication of asset stock accumulation in the business sector has been established elsewhere, when the reservoir of organizational and managerial knowledge that has been developed over the years can make available branch offices with information at a price very much inferior than a de novo indigenous organization would have to bring upon itself (Boddewyn, Halbrich, & Perry, 1986, p. 50) that is to say, an ownership advantage in global competition.

            Along with the changing business world, customers change as well, becoming more demanding and knowledgeable than before. In turn, company management had shifted their focus on their clients or customers so as to stay successful in business. This transition meant that organizations have to completely reformulate their conventional business aims and purposes from being process-focused to customer-centered. Moreover, employing proactive customer commitment involves the consideration on culture and infrastructure (Lowenstein, 1997).   Organizations that capitalize on customers’ active participation in organizational activities can gain competitive advantage through greater sales volume, enhanced operating efficiencies, positive word-of-mouth publicity, reduced marketing expenses, and enhanced customer loyalty (Lovelock & Young, 1979; Reichheld & Sasser, 1990). Rather than going after every potential source of revenue, companies eliminate useless assets that do not add value for customers’ satisfaction. Business organizations implement bureaucratic policies and procedures for the benefit of the staff, customers and the company in general. According to Bowers, Martin and Luker (1990), if consumers somehow become better customers – that is, more knowledgeable, participative, or productive – the quality of the service experience will likely be enhanced for the customer and the organization.

 

            The researcher considers COMPETITION as the strongest force to be considered in making the product/service marketing strategy. However, there are also some management perspectives to be taken at hand but it is no longer covered by the purposes of this report. Because competition is prevalent in the chosen target market and line of enterprise, it is essential to study its coverage including its limits and potential opportunities for the benefit of the business.

            To formulate such marketing strategy for the service of United Airlines, the management must take into consideration some significant aspects such as market condition, competitor analysis, and consumer expectations as foundational considerations.

            Market Conditions

The United Airlines operates under the deregulation of the airline industry in 1978, the industry began to change and transform competitively into the model implemented by most airlines today. Hence, the company is struggling for its competitive advantage by using its implemented marketing strategy.

Competitors

The top competitors of United Airlines are the multinational airlines companies that are venturing in the same market and offering similar line of services to the chosen clientele. These airlines companies are: American Airlines, Delta, Lufthansa and Japan Airlines. The effects of the global business economy, globalization, and the changing consumer behaviour and needs are perceived reasons on why MNCs are predominant in their situated venue.

 

Client’s Expectations

            The United Airlines offers a personalized line of service, the clients possess the freedom to choose from the line of services they offered. Every consumer is expecting for continuous and excellent service. They also anticipate for new service innovation that will suit their varying taste whenever new threats are present in the market. In general, consumer always expect for better products and services that will satisfy their needs.

Cost Structure

Being the most powerful tool in marketing, price is identified following the company’s established goals and objectives. These goals range from enhancing the market share of the products, improving the demands in the target markets, to extending the sales at an even rate for one whole day, week, month, or year. Pricing is utilized in several ways namely (1) to increase unit sales so that resources of the firm; (2) to restrict sales, or limit the quantities demanded per unit time;(3) to make the market less attractive to actual or potential competitors; and (4) to attract buyers so that they will buy other items once the transaction has begun.

Further, the existence of Internet and the continued revolution in the world of Information Technology are certainly positive signs for the blossoming of many new advertising opportunities. For instance, pop-up ads and email ads have started to invade the Internet. Most advertising firms have also started to exert efforts to make their advertisements appealing to the public (McAndrews & Roberds, 2001).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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