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Self-introduction

Self-introduction. 張嘉修 高雄人 大一加入國術社至今 大二新竹市長盃男子長器械第二，當社長 大三以後擔任社團教學 刀、棍、劍、槍、大刀 94~97 交大環校路跑 In William Lab. Identifying Strategic Groups in the U.S. Airline Industry: An Application of the Porter Model. Author: JAMES A. KLING and KEN A, SMITH Presenter: 9832505 張嘉修 指導老師 : 任維廉教授.

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Self-introduction

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  1. Self-introduction • 張嘉修 • 高雄人 • 大一加入國術社至今 • 大二新竹市長盃男子長器械第二，當社長 • 大三以後擔任社團教學 • 刀、棍、劍、槍、大刀 • 94~97交大環校路跑 • In William Lab

  2. Identifying Strategic Groups in the U.S. Airline Industry: An Application of the Porter Model Author: JAMES A. KLING and KEN A, SMITH Presenter: 9832505張嘉修 指導老師: 任維廉教授 運管碩一 張嘉修

  3. Agenda • Introduction • Background • Porter’s generic strategic • Data • Methodology • Groupings and validation of results • Conclusion • Critique • Q&A, discussion 運管碩一 張嘉修

  4. Introduction • The deregulation in 1978 • Relative competitive positions (strategic groups) • Michael Porter’s strategy • Data of nine airlines • 1991~1993 profit margin to validate • Suggestion 運管碩一 張嘉修

  5. Background • The deregulation in 1978 • “Big three" U.S. airlines :United, American, and Delta • Bankruptcy during the early 1990s: America West, TWA, and Continental • The nine major U.S. passenger air carrier • Southwest, Northwest, USAir, American, TWA, Continental, America West, Delta, United • These airlines account for 90% 運管碩一 張嘉修

  6. Porter’s generic strategic • Cost leadership • Produce goods or services at a lowest cost • Differentiation • Being unique and for which buyers are willing to pay a premium price • Focus • Serve the needs of specific customer group or market segment • Stuck in the middle • No basis for competitive advantages 運管碩一 張嘉修

  7. Data • Available seat mile (ASM) • Cost / ASM (X-axis) • Cost to fly one seat one mile • Airline quality rating (AQR) (Y-axis) • Weighted by nineteen factors 運管碩一 張嘉修

  8. Methodology (I) Differentiation (II) Focus Quality (AQR) (IV) Stuck in the middle (III) Cost Leadership Cost Per ASM (Mean of 8.8) 運管碩一 張嘉修

  9. The situation of Continental 運管碩一 張嘉修

  10. Groupings and validation of results • Average 1.39% • (I)Differentiation: American, United, and Delta • (II)Focus: Southwest • (III)Cost Leadership: America West • Average -3.57% • (IV)Stuck in the middle: TWA, Northwest, USAir, and Continental 運管碩一 張嘉修

  11. Conclusion • (I)Differentiation: American, United, and Delta • Intense competition • (II)Focus: Southwest • Short and high density routes • Low cost and high quality • (III)Cost Leadership: America West 運管碩一 張嘉修

  12. Conclusion The suggestion to “stuck in the middle” firms • Continental • Improve quality to follow Southwest • TWA and USAir • Hard to survive 運管碩一 張嘉修

  13. Conclusion • Northwest • Better financial than other stuck firms • Not adequately explained • May focus on market segment which doesn’t have severe competition in north-central US 運管碩一 張嘉修

  14. Critique • Wrong word (p.29) “Airlines with above average…” • Wrong quadrant (p.30) “(II) and (IV) ” • Insufficient hypothesis and test • Obscure boundary of Porter’s model • The reference index (AQR, ASM, cost) • Variables in Accounting • The change of AQR factors are based on 15 elements for 2007 (http://www.aqr.aero/pastaqr.htm) • The strategies really are taken by airlines 運管碩一 張嘉修

  15. Critique 運管碩一 張嘉修

  16. Critique (http://www.transtats.bts.gov. July 2008 - June 2009) • America West was absorbed by America West Holdings Corporation in 2007 • TWA was acquired by American Airlines in 2001 (http://en.wikipedia.org/wiki) 運管碩一 張嘉修

  17. Critique • The basis of Porter’s model 運管碩一 張嘉修

  18. The strategic group analysis Characteristics : • Extent of product (or service) diversity • Extent of Geographic coverage • Number of Market segments served • Distribution Channels used • Extent of Branding • Marketing Effort • Product (or service) quality • Pricing policy (http://en.wikipedia.org/wiki/Strategic_group) 運管碩一 張嘉修

  19. The strategic group analysis Useful in several ways : • Helps identify who the most direct competitors are and on what basis they compete • Raises the question of how likely or possible it is for another organization to move from one strategic group to another • Strategic Group mapping might also be used to identify opportunities • Can also help identify strategic problems (http://en.wikipedia.org/wiki/Strategic_group) 運管碩一 張嘉修

  20. Thanks for listening Q&A Discussion 運管碩一 張嘉修

  21. Additional supplement About the manifest performance of Southwest • 1992: Southwest won the first annual Triple, and began service to the Ohio cities of Cleveland and Columbus. • 1993: Southwest expanded to the east coast and began service to Baltimore/Washington International Airport, and Louisville. The acquisition of Morris Air was completed, which opened up the Pacific Northwest to Southwest service. (http://www.southwest.com/about_swa/airborne.html) 運管碩一 張嘉修

  22. Discussion issues • Barrier (entry, regulation, Freedoms of the Air) • Porter’s U-shape • Qualitative perspective (hypothesis and test) • Quantitative perspective (discussion) • The history of Southwest • The different index to group • The different model developed from strategic groups • How to develop issues from a article 運管碩一 張嘉修

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