Strategic Management - Grade: 8 PDF

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This document expounds on the strategic management methods employed by company directors and management to increase corporate efficiency...

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Running head: STRATEGIC MANAGEMENT

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Strategic Management What is strategic a management and how can Delta Airlines use this business practice for their betterment? Honestly, even if you have never booked a reservation with a carrier before, it’s very possible you have heard of Delta Airlines. What began as a means of transporting farm products is now among the best airlines globally. How was this possible? Well, thanks to strategic management which involves identification and sorting out of various strategies which managers use to better the competitive advantage and performance of a firm (Albers et al., 2017). When the income of a given firm is higher than the average income of competitor firms in the industry, that firm is said to have gained a competitive advantage in the given market. In order for Delta Airlines to get the best out of strategic management, managers ought to employ a variety of functional areas and strategies that involve Business Level Strategies, Corporate Level Strategies and consequently the competitive environment (Beiger && Agosto, 2017). 1.0 Business Level Strategies The core competencies of Delta Airlines should be aimed at satisfying the preferences and needs of their current and potential customers. These needs include but are not limited to amenities like excellent bathrooms and boosting continuous customer productivity. No passenger should feel like they are wasting time while at their, of course, comfortable seats. Therefore, in a fast world where almost everything can be done from the comfort of a smart device, internet

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connectivity is a must. These moves will result in desirable returns. This can be achieved by employing crucial business level strategies (Schneider, Spieth && Clauss, 2013). Strategies in the above mentioned level entail actions and measures put in place to provide quality customer service hence acquire a competitive benefit over competing firms that provide flight services. The main concern of a business level strategy is an organization’s position and share in the market, in relation to competitors as well as the main forces of competition (Nandakumar, Ghobadian, && O'Regan, 2010). Since the business level strategy that a flight firm adopts in the present can heavily affect its future decisions, it’s very crucial to get everything right. Delta Airlines can achieve this by concentrating on its main competences, the market and finally the competitor’s strengths that enable them vie for customers. Porter argues that adopting a hybrid strategy model is risky and can lead to business failure. It’s therefore wise for a business to adopt a single strategy for its prosperity. 1.1 Differentiation Business Level Strategy Differentiation business level strategy relies on the simple principle that, simple is better. In Delta’s case, this means simplicity. Simplicity on booking reservations, customer service, entertainment, catering etcetera while maintaining quality. The aim of this strategy as an airline is to make sure that you provide attractive services than what competitor’s offers the airline industry. There is no essential thing that an airline is required to pay more attention to than providing a satisfactory in-flight experience to its passengers. The point is, give a passenger what he really wants on his during his flight. Delta Airlines can do this by providing 4 crucial features to their airline passengers that include

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1. Streaming Services Although few passengers prefer sleeping during flights, the larger lot prefer surfing the net and watching movies. But unfortunately, most airlines around the world don’t provide in-flight apps for such entertainment capabilities. It’s therefore prudent that Delta Airline aims at offering such apps to enhance passenger entertainment experience.

2. Productivity As mentioned earlier, an average passenger dislikes time wastage. And arguably anybody who will prefer a flight is keen on saving time. Therefore, providing a means through a passenger can constantly communicate with the outside world is crucial. In-flight Wi-Fi can be handy in bridging this gap. 3. Amenities In cases where passengers are required to be in the plane for long hours, amenities are key. In order to stay ahead of the competitor, Delta Airline needs to provide simple items like deodorant, toothpaste, wet wipes, toothpaste and not forgetting a crucial feature, an airplane charging adapter. These items can make a big difference when it comes to enhancing customer comfort and making them feel refreshed (Kaufman, 2014). 4. Better Seating Poor seating is one major thing that is sure to ruin a good flight. Anyone who has ever used a plane knows what is being referred to. In some instances, in-seat in-flight entertainment systems cannot adequately satisfy the passenger. It’s therefore wise Delta Airlines including the following to their IFE systems; in seat storage space, in seat power, reclining seats and passenger privacy options.

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Due to the experiential value or additional features an airline is offering, passengers can be willing to pay more for the same. At the long run, an airline is able to absorb greater operating costs proving this to be a lucrative strategy. It’s crucial to note that for differentiation as a strategy to be successful, articulation of service value or uniqueness of features to passengers should be carried out through sales and marketing and thorough advertisement to create carrier awareness. Even though being the best business strategy, differentiation has its own setbacks such as imitation from competitors. When a carrier, say Delta Airlines releases a flight package or introduces a new customer service that shakes the market, be sure it will be copied by competitors in a heartbeat. Therefore, an airline using this form of strategy to win the market ought to keep a keen eye on the market and regularly respond to changing customer needs (Massingham, 2012). 2.0 Corporate Level Strategy It is never through any random occurrence that a business succeeds. It’s an outcome of thorough preparation, planning and execution. This starts by defining a firm’s strategy. To be specific, it begins when a firm adequately defines their corporate level strategy. Imagine of a corporate level strategy as a firm’s destination that must be reached. This projected destination affects all aspects of the firm including other strategies, finances and not forgetting the firm’s decisions (Furrer, 2016). For its business competition, an airline expects to have great corporate advantage. To gain corporate advantage, Delta as a carrier needs to employ market driven strategies basing on the resource capability and market attractiveness. Generally, Delta airline ought to look in areas of

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flight security, flight punctuality, security and profit gain in order to stay operationally optimal. They can also tap into the domestic market since it’s fairly attractive and with great potential. Delta Airline ought to choose a corporate level strategy that has a great impact on its management, finances, flight services, areas to be covered that is, internarial or local markets or both and human resources. An airline should utilizes corporate level strategy to aid in increasing competitive advantage against competitors and foster continuity in provision of outstanding flight packages and services to travelers. There are a number of corporate strategies an airline can use to increase its competitive advantage, but expansion strategy would be a better one for an airline such as Delta. This strategy will enable the firm to tap into new markets. For example they can starting cargo transportation or specialize in shipping instead of ferrying travelers alone 2.1 Expansion Strategy Expansion strategy being part of the broader spectrum of corporate level strategy can be explained in a number of ways. This is a type of strategy that a business adopts when, 1. It concentrates on strategic decisions due to an increase in the speed of activities around its current business definition. For instance, Delta Airlines will consider expanding if they starting processing reservations faster than normal. They will be required to hire more personnel or better their technical capability. At the long run this measures will increase customer satisfaction, attract more customers and consequently increase returns 2. It serves its consumers with an additional service or product or introduces new functions or adds new markets to its definition. In a case where Delta Airline makes a strategic decision of venturing into new flight routes, they will obviously be required to expand in terms of operations. New markets imply more passengers resulting to increased returns as far as overhead costs are considered

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Many a times expansion strategy is taken to be an entrepreneurial strategy in which businesses progress and enter new markets and introduce new products. Expansion is often thought to be a means of improving performance (Phillips, 2012). Delta Airline can use expansion strategy in the following ways: 2.1.1 Concentration This entails a firm directing resources in terms of functions, products or markets to one of an organization’s businesses thus resulting to an expansion in that given business. This strategy can be referred to as focus, specialization or intensification. In the case of Delta Airline, the carrier can decide to most of resources such as airplanes to one or few flight routes such as New York to London that are considered to have many passengers. Concentration as a strategy can also be used during certain sessions of the year such as during summer when the number of travelers to recreational facilities is high. 2.1.2 Market Development This involves a firm’s attempt in maintaining the security of its products in the present market while entering new markets. An airline can develop its market by going international if it was operating domestically. Even though Delta Airlines is already cruising international skies, they can still expand even farther. The aviation industry is diverse and dynamic, therefore the airline should constantly explore new markets in order to stay ahead competing aviation firms. Doing mergers with superior or less developed aviation firms is another form of market development that an airline can adopt (Lee, Hwang && Lee, 2013). 2.1.3 Product Development Creating new products or improving on the existing ones is what is referred to as product development. Delta Airlines can use this strategy to design flight packages that carter for recreational destinations thus entering markets mostly dominated by smaller aviation firms. 2.2 Why Expansion Strategy?

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1. Expansion strategy is a necessary survival strategy hence suitable in volatile business environments like aviation. 2. Scholars belief that the society benefits better when expansion strategy is employed hence it’s a suitable business growth strategy. 3. There is more financial growth when expansion growth is used to grow a firm. 4. This strategy enables a business to obtain benefits due to the experience curve operations scale. 3.0 Competitive Environment In entrepreneurship being good isn’t all that matters unless or otherwise it comes from your consumers and is backed up by growth in sales and the market. Macro environment factors and competition in various businesses mean that a given firm’s market position can be affected easily if the said firm fails to predict correctly movements and trends within the global market and the economy under which it is operating. Neither is it possible or practical for a firm to develop good business positioning strategies while lacking proper knowledge of the environment in which it operates. Also, a firm needs to understand competitor strengths and weaknesses (Orsato, 2011).

To shade more light, the competitive environment involves all external factors that bring about competition with the commodities of a firm. When a firm ignores these factors, poor decisions are made thus affecting the business negatively. The obvious elements of a competitive environment include regulatory sources and technological and social changes. 3.3 Regulatory Sources These are state laws and regulations that have an impact on how business. They can be either favorable or unfavorable. Airport slot allocation is a major challenge in the aviation sector. It’s required by law that a carrier must be allocated a slot to takeoff or land in any given airport.

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Delta airlines can overcome this challenge by prior planning for new market destinations before the desired airports get crowded (Erek et al., 2011). 3.4 Technological and Social Changes Changes in technology usually affect a business’s competitive environment. Technology in the aviation industry can be used in a number of ways. First, identity management through the use of biometrics has proven to be handy considering that security is now a major concern for any firm. Secondly, technology is now employed in luggage tracking thanks to block chain technology. Third, there are more bookings than before since customers are able order for reservations from their smartphones. Lastly, traffic control has greatly improved making air travel even safer. Aviation firms like Delta Airlines should be alert on the emerging trends with regard to technology so that they are able to compete effectively in the market. 4.0 Market Cycles Slow Cycle Markets are the ones in which a firm’s upper hands are ensured against impersonation for lengthy time periods. These type of businesses are almost monopolistic. Imitation in such a market is expensive. Currently, markets with such firms are non-existent. In contrast, Fast Cycle Markets provide leeway for imitation in that an organization’s competitive advantage is not shielded. Imitation isn’t expensive and occurs quickly (Hasbrouck, 2013). In general, slow cycle markets are opposite to fast cycle markets. As already discussed, there exists forgery in fast cycle markets. Competitive advantage in this kind of market isn’t guaranteed. Firms operating in this cycle take much consideration on speed. In the same context,

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aviation firms aren’t left out either, they are affected this kind of market cycles (Liehr et al., 2011). Take an example of an airline providing free refreshments as a competitive advantage. In a fast cycle market, other aviation firms will not hesitate copying your practice if it has proven effective in luring customers. Conclusion In summary, strategic management is a process that involves formulation of strategies that can enable a firm stay ahead of competitors. There are different levels of strategies that a firm can employ in order to gain competitive advantage, these levels include: business level strategy, corporate level strategy and competitive environment. The aviation industry is a fast growing sector which requires these firms to act accordingly to meet customer needs and preferences while making favorable returns.

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Albers, S., Baum, H., Auerbach, S., & Delfmann, W. (2017). Strategic management in the aviation industry. Routledge. Beiger, T., & Agosto, S. (2017). Business models in the airline sector–evolution and perspectives. In Strategic management in the aviation industry (pp. 41-64). Routledge Campbell, M. (2015). Corporate-level strategy Erek, K., Loeser, F., Schmidt, N. H., Zarnekow, R., & Kolbe, L. M. (2011, July). Green It Strategies: A Case Study-Based Framework For Aligning Green It With Competitive Environmental Strategies. In PACIS (p. 59). Furrer, O. (2016). Corporate level strategy: Theory and applications. Routledge. Hasbrouck, J. (2013). Trading fast and slow: Security market events in real time. Kaufman, B. E. (2014). High‐ level employee involvement at Delta Air Lines. Human Resource Management: Published in Cooperation with the School of Business Administration, The University of Michigan and in alliance with the Society of Human Resources Management, 42(2), 175-190. Lee, S., Hwang, T., & Lee, H. H. (2013). Corporate blogging strategies of the Fortune 500 companies. Management decision Liehr, M., Größler, A., Klein, M., & Milling, P. M. (2011). Cycles in the sky: understanding and managing business cycles in the airline market. System Dynamics Review, 17(4), 311332. Massingham, P. (2012). Linking business level strategy with activities and knowledge resources. Journal of Knowledge Management.

STRATEGIC MANAGEMENT Nandakumar, M. K., Ghobadian, A., & O'Regan, N. (2010). Business‐ level strategy and performance. Management Decision. Orsato, R. J. (2011). Competitive environmental strategies: when does it pay to be green? California management review, 48(2), 127-143. Phillips, E. D. (2012). Corporate social responsibility in aviation. Schneider, S., Spieth, P., & Clauss, T. (2013). Business model innovation in the aviation industry. International Journal of Product Development 12, 18(3-4), 286-310.

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