Management 3830 Introduction to Strategy Notes II.pdf - Tuesday September 3 2019 Management 3830 The landscape of competition(US Airline Industry •

Management 3830 Introduction to Strategy Notes II.pdf -...

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Tuesday, September 3, 2019 Management 3830 - The landscape of competition (US Airline Industry) Forces of competition seek to put pressure on our firm and margins US Airline Industry - Barely makes more profit than grocery stores Not very profitable - The landscape has changed Cluttered with dead firms 1 - Rivalry Fragmented industry Industry service has become “standardized” and “commoditized” - What they do is not significantly di ff erent Slow industry growth - Grows at the same rate of GDP and population High fixed cost industry - When times are tough, there might be an incentive to sell tickets at a loss to cover fixed costs - Rather have some revenue rather than an empty seat - Perishability When a plane takes o ff with empty seats, you can never get that revenue back You cant put it in the warehouse and wait for a customer to buy it Drive down prices and dive costs up Legacy (Full service, global, international, diverse, highly capitalized): American, Delta, United (Slowly building share, now.
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