Introduction
For any airline industry to succeed in the US, a good business strategy is essential. When choosing business strategies, the industry should ensure that the success of the business-level strategies is promoted. The US Airline Industry can achieve this by meeting the following critical requirements: horizontal integration, vertical integration, building cooperative relationships, engaging in competitive bidding and short term contracts and being part of strategic alliances and long term contracts. Apart from a good business strategy, excellent management tools and effective leadership also play a crucial role when it comes to success in this industry.
Question 2: Identify Critical Requirements for a Strategic and Competitive US Airline Industry and Global Advantages to the organization
Horizontal Integration/consolidation is one of the critical requirements for a strategic and competitive airline industry. The airline industry will take part in acquiring or merging with its competitors to gain the lucrative benefits that come with having a large size and scope of operations. The US Airline Industry will have to purchase another company or merge with another company and come together to jointly pool their resources such that they compete better in the airline industry. For example, The US Airways and The America West Airlines can merge to make more profits together.
Consolidation has a myriad of advantages, one of which is improving revenues for the airlines involved. Through consolidation, airlines are able to acquire aircraft fleets that assist in expanding their operations. In addition, they acquire other facilities such as hubs that also help in increasing their volumes of operations thus greater revenues. However, there are a couple of disadvantages in consolidation/ merging. To begin with an airline may in the process get resources that it no longer has use for such as old jets and other airport infrastructure hence losses. In addition, not all mergers go as planned; there might be marginal gains compared to the amount of investment placed.
In my opinion, South west Airlines is a ‘package of success’ because they source it from many things. To begin with, southwest manages to treat their employees well despite how many they are. In addition, they have managed to simplify their work formula by using the same aircraft, Boeing 737. Southwest Airlines also handle their customers very well through rewards programs and constantly improving their service quality. Southwest Airlines should not try to integrate with other airlines mostly because it has not been very successful in their previous attempts. For example, they got fleets of Boeing 717 from Air Tran which does not fit their operations. Consolidations will affect their currently successful operations.
Vertical Integration is another critical requirement that the airline can use to strategically compete. Using this strategy, the airline industry can expand its operations either backward or forward into the industry by operating at more than one level of their distribution channel. For example, the US airline industry can come together with a travel agency and tour operations company. Some of the benefits the company will get from using this strategy include; more control over the value chain, mostly in prices, having a significant ability to control costs throughout their markets. The industry will also be able to manage to block their competitors from gaining access to their important markets and access to more production inputs and distribution resources
Building Cooperative Relationships with other companies is a critical requirement because it will help the US Airline Industry to engage in activities that are normally just performed by their suppliers and buyers. The US Airline industry can use the following strategies to build such relationships; offering credible commitments and making sure they always keep their part of the bargain.
A competitive bidding strategy will have the different service suppliers within the airline industry striving to be picked to deliver their services. If the airline industry wins the bid, their contract, however, will only last for less than a year and they won’t result in specialized investments. Strategic alliances on the other hand, will help the US airline sign lasting contracts that bind them in agreements that to bring new goods and services into the market. If the airline uses this critical requirement for competition, it will have a couple of advantages, i.e. it avoids bureaucratic costs and the profitability of the involved companies grows.
Question 3: Management Characteristics and Tools for Effective Strategic Leadership
Airline Managers have to portray certain characteristics so as to excel in their work. The said characteristics can include but are not limited to; innovative and creative thinking; which help in achieving success in the airline industry when it comes to creating and implementing policies and ideas that improve airline services as well as maximize profits. Another characteristic of airline managers is good negotiation skills. Such skills help to come to good agreements with equipment suppliers. A good airline manager is also a critical thinker; they have the ability to analyze situations critically and come up with the best solutions that have the airline’s interests at heart (Jones et al, 2014).
Tools for strategic leadership create a space where every employee in all levels in the airline industry can effectively accomplish their designated duties. Leadership tools basically demonstrate how leadership can be practiced; they also give a full range structure on how to execute a wide range of leadership work. The tools include; team building, coaching, measurements, action learning and leadership development. These tools are essential in helping the industry determine their main issues, come up with long-term solutions and create new markets. The said tools are also useful when it comes to strategic thinking, communication planning and execution of objectives (Jones et al, 2014).
Reference
Hill, C., Jones, G., & Schilling, M. (2014). Strategic management: theory: an integrated approach. Cengage Learning.
