Paper Topic:

Strategic Management `Michael Porter`s generic strategies`

Overview

Domestic air travel services are deemed vital to the efficient running of the US economy . The presence of local carriers flying in inter-state and also a few cross-country destinations provides logistical support to key industries in the transfer of cargoes pertinent to operations as well as a fast and reliable mode of air transport for Americans as they move about in key cities and provinces .As a premier US industry , the airline industry is subject to the intermittent movements of its economic and socio-political environment which directly affects the internal operations

of most domestic carriers . The untoward rise of bunker fuel prices in the world market tends to squeeze in profit margins political tensions in both domestic and international destinations creates setbacks to targeted passenger volume and revenues while disasters including the 911 attack create a momentary social stigma that has its ill-effects on the temporary slump of air travel sales . On top of all these elements are the potential threats from competition

In response to these industry forces , domestic carriers have initiated strategical measures to improve overall productivity and control costs In line with improvements , these carriers also need to acquire efficiencies in terms of fleet utilization , pricing and revenue management , as well as schedule optimization . While competition puts a stress on revenue margins , given the possibility of new entrants plunging air fare rates to low levels in to penetrate the market or a head-on price war between major carriers , this also comes as a welcome challenge for local carriers to streamline operations and contrive ways to beat fluctuating fuel prices to reduce costs and counter any eventualities in the market

The US market for domestic air travel is controlled by numerous low cost carriers or LCCs that serve flight routes across a number of US states While most of these LCCs employ cost leadership strategies , a few managed to apply differentiation in the delivery of in-flight services by promoting the image of quality and technological savvy that can be derived from a budget airline

On top of the US market for domestic flights is Southwest Airlines Inc , also known as the largest domestic airline based on passenger volume . It appears that being number one is a reflection of the operational efficiencies acquired by the airline over time which largely complements its clear-cut cost-leadership strategy that now defines its position in the highly competitive industry . Not far behind is New York-based LCC , JetBlue Airways Corporation . In contrast to the broad-based , purely cost-leadership strategy employed by Southwest Airlines , JetBlue employs multiple strategies to a broad market a cross between the generic strategies of cost-leadership and differentiation

Problem and Objectives

The strategical contrast between the two major carriers creates an interesting argument in ascertaining the most likely strategy that would work for a low cost carrier operating in US domestic markets . Was the solitary cost-leadership strategy applied by Southwest more effective as a positioning tool than the multiple strategies adhered to by Jet Blue Between the two carriers , who...

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