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Read the “Delta Air Lines (A)” case in your HBSP course-pack.Answer the questions listed below. Submit your answers in a double-spaced Word document, clearly separating out each question . 1. Complete...

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Read the “Delta Air Lines (A)” case in your HBSP course-pack.Answer the questions listed below. Submit your answers in a double-spaced Word document, clearly separating out each question .

1. Complete a Porter’s Five Forces analysis of the airline industry, and then explain/discuss why most airline firms have been unable to achieve profitability.

2. Why have the major legacy airlines like Delta and Continental not done well but low-cost airlines like Southwest and JetBlue have done well in the same industry environment? (Hint – How did differences in the strategies and value chain activities of legacy airlines and low-cost airlines contribute to differences in competitive advantage and performance?).

3. Why have legacy airlines not been able to imitate the success of their low-cost competitors? Even when legacy airlines like Delta launched low-cost subsidiaries like Delta Express, such strategies have failed. Why?

4. Mark Balloun’s team at Delta is considering four strategic options (these are listed in the case). Which option would be the most effective strategy for Delta? Justify your answer.

Answered 2 days AfterMar 19, 2022

Solution

Deblina answered on Mar 21 2022
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Title: Delta Airlines – Case Analysis Assignment
Contents
Response to Questions    3
Porter’s Five Forces Analysis of the Airline Industry    3
Competitive Advantage of Low-Cost Airlines    4
Failure of Low-Cost Strategies by Legacy Airlines    5
Effective Strategy for Delta Airlines    6
Works Cited    7
Response to Questions
Porter’s Five Forces Analysis of the Airline Industry
Delta Airlines has been one of the largest airline careers in the world which faces enormous challenges and threats that had effectively impacted its performance. The airline industry is one of the most competitive industries and Porter's five forces analysis is effective enough to understand the competitive dynamics of the airline industry.
The five forces model of competition was introduced by Michael Porter in 1978 that explains the competitive forces at work in any particular industry. The collective actions of several forces determine the profitability and the potential aspect of the industry (O’Connell). Customers, suppliers, substitutes, potential entrants, and the forces of rivalries are the potential factors that determine the intensity of competition and profitability in the airline industry.
· The threat of new entrants- This accounts for the new capacity and companies that enter into the industry for gaining a substantial market share. Companies usually need to invest a large proportion of financial resources to function in the airline industry. This aspect of competition creates a ba
ier to entry in the airline industry. The airline industry is one of the most expensive industries in the economy and therefore due to the large proportion of the cost of buying aircraft and other investments it is considered to be one of the most saturated industries which hardly finds advantages for new companies to enter in the market.
· Bargaining power of the buyers- Buyers or the customers have a highly competitive force as they can influence the prices in the market at the expense of the airline's profitability. The power of the buyers depends upon several factors that can influence the stability of the Airlines industry. The market situation and the relative importance of its purchase can influence the bargaining power of the customers. Business-class passengers are the prominent choices of the airlines which forms be an...
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