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Strategic Management - Research Paper Example

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Strategic Management

Stable political situation in America and economic relations with Europe supported development and growth of international operations. Government policies and employment law have a positive impact on company's performance, its market position and organizational structure. Economic factors included stable economic development of the region, low interest rates and low inflation rates; regional and international cooperation, high record of airline industry growth. Social/demographic included lifestyle changes (involve aging of population), and increasing number of travelers. Technological forces generate problem-solving inventions. Airline target was on average as dependent on reliable information technology as any other businesses. Improvements in cargo ships and handling equipment, increasing containerization, applications of IT to scheduling and controlling shipments and to customs procedures, new plains, and a host of other technological advances and innovations have reduced the costs of services and information. On the other hand, airline technology cost is one of the highest among other industries (Rinehart, 2005; Meyer 2003).
After 9/11 Delta Airlines experienced profit loss and lost it market share. ...
Many potential passengers prefer to use alternative transport even if it takes more time to get to the place of destination. In this case the bargaining power of customers is not crucial. The ultimate aim of customers is to pay the lowest possible price to obtain the services that they require. Events of 9/11 forced many carriers including Delta Airlines invest in security systems and increase safety of airplanes (Meyer 2003; Delta Air Lines 2007).
Porter's 5 P's (forces) include: the threat of entry of new competitors; the threat of substitutes; the bargaining power of customers; the bargaining power of suppliers; the degree of rivalry between existing competitors (Porter 45). Before 9/11, new entrants to an industry raised the level of competition, thereby reducing its attractiveness. Competition did not have a great impact on Delta Airlines obtaining a string market position and brand image. The presence of substitute services like trains, ships or automobiles transportation did not influence the industry and the price levels. A source of customers' power was the willingness and ability to achieve backward integration. Supplier power in the airline industry was the converse of buyer power. Suppliers had enough leverage over industry firms, and raised prices high enough to significantly influence the profitability of their organizational customers (Delta Air Lines 2007; Marks 2007).
After 9/11, the threat of substitutes and the bargaining power of customers were the main 'drivers' in this industry. Many customers use alternative transport because of safety concerns. The high fuel prices do not allow Delta Airlines to decrease prices and attract wider target ...Show more


Delta Airlines is the main American carrier that operates both domestically and internationally. Since the terrorist attacks of 9/11, airline industry was one of the profitable industries in the world marked by rapid technological and marketing changes, and competitive environment…
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