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Part 2 of the assignment looks inside at the airline you have chosen to analyze. It considers both the strategy of the firm, as well as the resource base the firm draws upon. The specific questions you must consider in this part of the assignment are as follows: What is the strategy your airline is following? Be sure to include the following components of the strategy: *Overall strategy (Hambrick & Fredrickson typology) *Business-level strategy *Corporate-level strategy How well does the strategy work? Do the financials indicate a successful strategy? What is your evidence? Do you believe the strategy will be successful considering the industry conditions you identified in part 1? Why or why not? What is the firm’s resource base? What are its core and distinctive competences? Consider your industry analysis from part 1. What challenges do these create for the firm? What opportunities do they create that the firm might be able to exploit? What internal strengths and weaknesses does the company have to meet those challenges and opportunities? Does the firm’s resource base appropriate for the strategy it is trying to achieve? Why or why not? Overall, what are the major leadership and management issues faced by the firm? Why did you choose them, as opposed to some other set?
1. Strategy analysis: Complete a detailed summary of the firm’s strategy using the Hambrick & Fredrickson typology. Identify each of the five dimensions of strategy (arenas, vehicles, differentiators, staging, and economic logic) and summarize what they tell you about the firm’s strategy. Analyze the elements that make up each part of your firm’s strategy: business-level, corporate, cooperative, and international. 2. Financial analysis: Apply appropriate financial analysis to aid in understanding the performance profile of the firm you chose to analyze. 3. Internal analysis: Evaluate leadership and management issues faced by the firm. 4. Resource and competence analysis: Carefully identify all the potential resources and competences possessed by the firm. Categorize them according to the VRIS scale, and identify whether they are core, distinctive, both, or neither.
*Not more than 4000 words.
*References should be the latest (year 2007 and onwards)
*Use the American Psychological Association (APA) or Harvard format.
*Plagiarism is not acceptable
*Part 1 is attached as a reference to make part 2
Part 2 of the assignment looks inside at the airline you have chosen to analyze. It considers both the strategy of the firm, as well as the resource base the firm draws upon. The specific questions yo
THE AIRLINE INDUSTRY 1 Introduction The aviation industry can be abroad term because it can have many moving parts. This is due to the many data sources and different statistics available depending on the many individual segments of the aviation industry (Seo & Park 2018 ). We will look at the sector section that contains the most accessible information for this report. The two destinations are cargo planes and commercial passenger planes. We will describe a lot of data and information focused on these two types. In addition to the available data, we have chosen this focus due to combined discussions on these two main components. The first important topic to consider is the general regulation of the industry. This will usually occur within a country’s borders, focusing on established global standards. Other examples of regulatory bodies are the Civil Aviation Authority (CAA) in the U.K., the Federal Aviation Administration (FAA) in the United States, and Transport Canada (Bak ır& Atal ık 2021 ). These organizations work tirelessly to keep pace with the changing international standards of the aviation industry. Porter Five Value Chain Analysis This model breaks down all the processes, functions, and infrastructure that make up a company. It has two main components: “Support Functions” and “Main Functions.” Support services in the aviation industry include: Firm infrastructure Procurement Technological Development Human Resource Management Primary Activities in the airline industry consist of: Service (child escort, lost baggage, customer follow up) Sales and marketing (promotions, social media, adverting) Outbound Logistics (connecting flights, rental car reservations, hotel reservations) Operations (pilots, baggage crew, maintenance, agents) Inbound Logistics (route planning, screw scheduling, flight schedule) Airline Industry Size in Canada The accessible statistics were available on the Canadian statistics website. We will focus our efforts on the most commercial airlines. This report can be broader if you do not THE AIRLINE INDUSTRY 2 focus on aspecific area. According to StatsCan, 24 of the world’s largest airlines are eligible for Level Ior Level II (Thongkruer & Wanarat 2020 ). The aircraft must have at least 100,000 non-cash passengers or 50,000 tons of cargo in the last calendar year to qualify for this group (Karaman & Akman 2018 ). Total operating revenue for 24 significant airlines was equivalent to $ 6.5 billion in the third quarter of 2016; this is a6.5% increase from the same period in 2015 (Tahanisaz 2020 ). Compared to the costs and operating losses, the total revenue of these 24 airlines was estimated at $ 997 million (Gunarathne et al., 2018 ). This was equivalent to 15.4% in the third quarter of 2016. The data shows significant profits exist but are directly related to higher operating costs. This can be easily seen by looking at the high operating profit and the meagre income. Passenger numbers rose in the third quarter of 2016 to 22.3 million people (Hwang & Lyu 2018 ). This is an increase of 10.6% compared to the previous one in 2015. The increase was mainly due to an increase in passenger flights on scheduled flights by 10.8%, up to 22 million, and adecrease of 3.6% on chartered flights, down to 348,000 (Seo & Park 2018 ). Airline Industry Size in the U.S. As one might expect, an airline in the United States is far more valuable than could be expected in Canada (Bak ır& Atal ık2021 ).Twenty-five major network companies in the U.S. had anet profit of $ 168.2 billion in 2016. R125.2 billion (74.5%) of that revenue comes directly from airline costs (Thongkruer & Wanarat 2020 ). About $ 4.2 billion came from freight payments, and $2.9 billion came from booking replacement costs. Although operating income was relatively high, the information noted in Canadian financial data remains unchanged in U.S. operating costs. Equivalent to $ 143.3 billion, fuel costs of 15.6% or $22.4 billion, and 34.7% or $ 49.7 billion (Karaman & Akman 2018 ). The top 25 network companies had $ 13.5 billion in tax revenue in 2016, down from $ 24.8 billion in 2015 (Tahanisaz 2020 ). This is probably most closely related to the fact that the fuel price was meagre in 2015. 58.3 million Passengers flew to these same carriers in February 2017 (Gunarathne et al., 2018 ). As one will see, this is astaggering amount of capacity compared to just over 22 million passengers carried by Canada’s most prominent carriers in the third quarter of 2016 (Hwang & Lyu 2018 ). In addition, these 25 major American carriers were operating in a THE AIRLINE INDUSTRY 3 high-load (total capacity) area of 79% in February; this was only 1.2 points with the February high burden of 80.2% (Seo & Park 2018 ). Airline Fares in Canada The domestic rate for the third quarter fell 0.7% to $174 from the same period in 2015 (Bak ır& Atal ık 2021 ). Home fares dropped in 8 of the ten selected cities; Winnipeg and Saskatoon posted anotable drop, while Regina and Vancouver were the only ones to climb. Vancouver and Toronto still hold the highest home prices in all Canadian cities. The average international fare has dropped by 5.0% to $324.10 (Thongkruer & Wanarat 2020 ). Airline Fares in the U.S. The average domestic fare (adjusted due to inflation) dropped to $ 344 in 2016 (Karaman & Akman 2018 ). It was the highest of $ 396 in 2014 (the highest since 1995). Fifty-three airports with between 100,000 and 500,000 passengers have amaximum domestic fare of $356 (Tahanisaz 2020 ). Airports with passengers from 1.5 million to $1.99 million had the cheapest $529 domestic food. Union Management Relations –WestJet According to the Center for Aviation, WestJet is one of the few airlines that has been able to operate without aunion (Gunarathne et al., 2018 ). Instead, the management staff is organized under the WestJet Proactive Communications team, with smaller groups representing the divisions. The program works for WestJet because they recently celebrated their 40th straight quarter profit (2015) while redesigning its focused business model (Hwang & Lyu 2018 In 2014, WestJet secured afive-year contract with its flight attendants afour-year contract with its pilots. Despite all that success in cooperation negotiations, there are still union-building ideas around WestJet. Some of these groups are considering planning before specific changes to the Canadian Labor Law 2015, making it more challenging to manage a union if they choose to do so (Seo & Park 2018 ). Although there are no unions, the relationship model looks pretty similar to the Union -a well-organized group of workers divided into groups to provide feedback, voice concerns, and make requests or demands negotiated and specified in the fixed term contract. Union Management Relations –Most Others Almost all other airlines are located where their crews have joined existing unions or formed entirely new ones. Here are some examples: Canadian Air Traffic Control Association (CATCA) THE AIRLINE INDUSTRY 4 UPE Passenger Attendants UFCW Passenger Attendants Air Line Pilots Association (ALPA –Largest pilot union in the world) Air Canada Pilots Association (ACPA) International Association of Machinists and Aerospace Workers (IAMAW) These unions are powerful because of their ability to plan and strike. The structure and procedure are always the same. Plan and determine your membership requirements and negotiate the best contract with the airline that hires them (Bak ır& Atal ık2021 ). Sometimes strikes occur during the deadlock. The process usually involves highly skilled negotiators on both sides. Legislative impact The impact of the law is fundamental in the aviation industry. The aviation industry has potential safety and security issues that the law has to deal with. Aerospace manufacturers should be regulated in the production of aircraft (Thongkruer & Wanarat 2020 ). The official impact on the aviation industry is made in the right way and safety. Government regulations are based on airport security, taxes, and levies. This law harms the aviation industry. The emission law ensures that airline companies pay for carbon emissions (Karaman & Akman 2018 ). The aviation industry is focused on compliance with the bill. The carbon emissions law has created various controversies. This is because the aviation industry is investing in reducing carbon emissions. Decisions regarding gas emissions often play arole in the aviation industry in promoting global warming. The aviation industry offers billions in tax laws. Taxes on customers and airlines are increasing. This law harms the aviation industry because it reduces profits. Social security taxes and business taxes adversely affect employment and economic growth. The aviation industry has been disrupted by terrorism. Lawson safety issues often have an impact on the industry. Law enforcement agencies ensure that the aviation industry’s safety measures are followed (Tahanisaz 2020 ). Some sections of the law are designed for congestion, oversight, and flight operations. The aviation industry must comply with the law without regard to impacts. Regular safety checks ensure that all airlines obtain airworthiness and performance certificates. THE AIRLINE INDUSTRY 5 Bargaining structure The negotiating framework includes defining institutional arrangements where employees and employers determine employment conditions. Labor laws allow workers in the aviation industry to negotiate their collective rights. Also, the negotiation process is aimed at employee development, workplace relationships, and compensation. The negotiation structure in the industry is divided into bargaining agents, negotiation rate, status, scope, and integration of negotiations (Gunarathne et al., 2018 ). A collective bargaining agreement involves workers in the aviation industry. The aviation industry has various discussion units. Bargaining frameworks often focus on employee needs, including wages and working conditions. Airline managers and crews are concerned about long-term economic stability (Hwang and Lyu 2018). Negotiating agencies include Congress and the National Mediation Board. The discussion framework incorporates all the views of the participants. The ability to intervene in the aviation industry is vital because of the strikes. Flight crew strikes could shut down air traffic. The negotiation structure is essential because the aviation industry is afraid of strike threats. It costs the airline to shut down its operations. Combined carriers are often organized when handling matters related to the aviation industry (Seo & Park 2018 ). Sectoral bargaining is an existing structure in the aviation industry. The negotiation framework is done at the sector level. It includes ajoint committee responsible for employers and employees in the aviation industry. Collective agreements bind the committee. Company- level negotiations are aframework in the aviation industry where negotiations occur at the corporate level. From ageneral point of view, negotiations in the aviation industry include working hours, salaries, vacation pay, sick pay, unemployment benefits, and pensions (Bak ır & Atal ık2021 ). Globalization and collective bargaining Global trade in markets has profoundly affected cooperation in the aviation industry. International business has expanded the market, allowing the organization to hire from different regions. The capital factor may be invested in other labor markets. It means that collective bargaining is done regionally and internationally. The current situation among workers and vast sums of money in the aviation industry is hampered by international trade (Thongkruer & Wanarat 2020 ). Globalization often poses new challenges to the aviation industry. It has changed the balance between air traffic controllers and trade unions. THE AIRLINE INDUSTRY 6 Globalization has strengthened collective bargaining. Globalization has provided all flight attendants with a platform to seek better working conditions and salaries (Karaman and Akman 2018). Work Stoppages The suspension of work in the aviation industry also affects customers looking for aviation services. An Air Canada customer wanted to book aflight to Deer Lake, N.L. Staff told him it could be a week before he flew back (“More cancellations and delays hit Air Canada Day after an illegal strike,” 2012). Airlines are pursuing orders from the Canadian Industrial Relations Board to end illegal strikes, affect their business and create chaos in travel. The decree called on the Air Canada Pilots Association to confirm all reasonable steps to end the strike and urge all pilots to resume their duties immediately (“Additional cancellations and delays have hit Air Canada after an illegal strike,” 2012). The disruption to flights and schedules has forced many customers to seek alternatives, damaging the airline’s reputation. People go online to express their frustration, and social media is compelling and hurtful. According to Tahanisaz (2020 ), “Captain Paul Strachan, president of the Air Canada Pilots Association, said it was” surprising “that frustrated workers could take such action when acoalition government violated their rights.” Labor disputes that lead to suspensions are caused by workers fighting for their rights because they feel they are not treated fairly. Mediators are hired to understand the situation and decide after due consideration. The arbitrators who resolved the Air Canada dispute were given 90 days to decide (Gunarathne et al., 2018 ).Jang’s report (2012) found the following: “When people intervene in labor disputes, it is almost impossible for both parties to negotiate a solution that will change the basic economic framework,” said John Farrell, executive director of Federally Regulated Employers -Transportation and Communications (FETCO). The organization, whose members include Air Canada. Technological change and impact Changes in technology and impact affect airline charges for customers with additional services. According to Hwang & Lyu (2018 ), “WestJet Airlines Ltd. is exploring all options to cover more sales with a weak loonie, from charging the original wallet with WiFi to increasing fares.” This was not done immediately due to technical limitations but was initiated as technology was approved. The company also plans to launch a new airline entertainment system that will help improve customer experience. This comes in the wake of THE AIRLINE INDUSTRY 7 the development of new high-end economic seats last year. This requires the aircraft to be restructured to accommodate the current technology to be implemented. These initiatives require atime-consuming regulatory approval process, at least 90 days. These additions help the company generate more revenue once they are implemented. Technological advances have also made the business more competitive in international markets. Seo & Park (2018 ) state, “WestJet Airlines states that it can take advantage of its competition with Air Canada overseas by establishing an international service using alarge aircraft.” The aircraft that will compete with the Canadian airline business is available due to technological advances. This will help the company generate more money invested in technical research or profits. The technology is also operational and integrated with solutions to manage customer relationships. As Bak ır& Atal ık(2021 )states, “Airlines, for example, have many customer data to process. By touching that information and applying A.I., They can continuously advise customers about the best times to drive to an airport and what procedures to take — arriving based on the length of the line of defence. There are endless opportunities to ensure that travellers have a good trip, first and foremost. ” Conclusion The destiny of the aviation enterprise is encouraging, and it has awhole lot to offer. More enormous and higher planes are constructed as generation permits. There are many inventions withinside the aviation enterprise and studies funded to broaden the aviation enterprise. According to Thongkruer & Wanarat (2020), “The Emirates Airline A380 plane attracted spectators three years while itfirst arrived in Canada. The crowd got here to peer the elemental plane ever to land at Toronto’s Pearson Airport which is 3.2% longer and holds 139 passengers extra than the Boeing 747400; and has 14 luxurious rooms (Gunarathne et al., 2018). “These massive tendencies have confirmed the promise of a far extra prosperous aviation enterprise. The aerospace industry is creating huge demand due to rising productivity. According to Peter Arment, chief research analyst, aerospace companies will not be cheap, so consumers should buy now. The WestJet model is agrowth factor in the aviation industry, where low-cost carriers build new routes to cities that often do not have regular airline service, creating the need for more airlines. Oil is another factor that affects the future of the aviation industry. The high price of oil is significant in the aviation industry. In the past, the fuel cost was estimated at 15% of the company’s operating costs Thongkruer & Wanarat 2020 ).The oil price is estimated at $100 abarrel, close to 40%. Fuel-efficient flights are now THE AIRLINE INDUSTRY 8 needed because airlines want to reduce costs. Trading an older aircraft like the McDonnell Douglas MD80 aircraft for anew Boeing 737 can help improve fuel efficiency by about 30%. References Bak ır, M., & Atal ık, Ö.(2021). Application of fuzzy AHP and fuzzy MARCOS approach for evaluating e-service quality in the airline industry. Decision Making: Applications in Management and Engineering ,4(1), 127-152. Gunarathne, P., Rui, H., & Seidmann, A. (2018). When social media delivers customer service: Differential customer treatment in the airline industry. MIS Quarterly ,42 (2), 489-520. Hwang, J., & Lyu, S. O. (2018). Understanding first-class passengers’ luxury value perceptions in the U.S. airline industry. Tourism Management Perspectives ,28 ,29-40. Karaman, A. S., & Akman, E. (2018). Taking-off corporate social responsibility programs: An AHP application in the airline industry. Journal of Air Transport Management ,68 , 187-197. Seo, E. J., & Park, J. W. (2018). A study on the effects of social media marketing activities on brand equity and customer response in the airline industry. Journal of Air Transport Management ,66 ,36-41. Tahanisaz, S. (2020). Evaluation of passenger satisfaction with service quality: A consecutive method applied to the airline industry. Journal of Air Transport Management ,83 , 101764. Thongkruer, P., & Wanarat, S. (2020). Logistics service quality: where we are and where we go in the airline industry context. Management Research Review .