CASE STUDY

Case Study

Case Study

Introduction

This case looks at the development of the Pacific Blue airlines and New Zealand's domestic airline industry from a strategy perspective. This is in contrast to most of the existing research literature on the airline industry which tends to approach the subject primarily from an economics, regulatory or public principle perspective. This research paper traces and analyses the strategic developments and the strategy responses of the key airline players that have had deep impact on the shape and main heading of the industry. As the essence of strategy formulation is contending with affray (Porter, 1979), the latter will be dwelt on in great detail all through the paper. The key developments and issues enclosed encompass the deregulation of the industry, the nature and span of affray, the emergence of “brand”/differentiation-based affray, and airline alliance developments, strategies and the longer-term implications.(Prestowitz, 2003, 557) These strategic developments have shaped and administered the airline industry and will extend to manage so in the years ahead. This research paper also provides a glimpse into what the future will contain for the world airline industry, encompassing the prospects of increased global market concentration and the emergence of mega consortia, comprising of lead airlines from key regions of the world, on the global stage. These global consortia, which will marginalize other players, will also contend against each other on the basis of branding/differentiation.

 

Case Analysis

The next case analyses the industry natural environment for the domestic airline industry using Porters five force model. This case will resolve why the potential for returns is so reduced in this industry using Porters diamond. The case analysis will incorporate appropriate and adequate discussion of key theoretical concepts and clear linkages between idea and practice demonstrating understanding of subject matter.

The focal airlines which I have chosen to analyze in the next case are Pacific Blue airlines and New Zealand's domestic airline industry, in which I will be analyzing the effects of porter's five forces.(Clougherty, 2002, 557)

Air travel has changed the way persons reside and know-how the world today. The airline industry is a strategic sector that plays a fundamental function in the globalization of other industries since it promotes tourism, world trade, and foreign investment and, thus, leads to financial growth. However, all airlines inside the industry operate in a highly dynamic natural environment where various legal, social, technological and financial forces interact with each other, thus leveraging their decisions and actions.(Prestowitz, 2003, 557)

The airline industry is very comparable and Michael Porter's five-force form can be used to analyze the intensity of the affray and the profitability of this industry. Porter's five forces form is a business unit strategy device which is used to make an analysis of the value of an industry structure. The analysis is made by the identification of 5 fundamental comparable forces. These include:• Entry of Competitors• Threat of Substitutes• Bargaining Power of Suppliers• Bargaining Power of Buyers• Rivalry among the existing players

 

Entry Of Competitors

One of the forces recognised by this form is the ...