Delta Airlines & Innovation

Delta Airlines & Innovation - Delta Airlines &...

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According to our class readings about innovation, there are several key aspects that a company, particularly one in the airline industry, should consider if it wants to become "innovative." In Peter Drucker's article "The Discipline of Innovation," the author defines innovation as the effort that a company makes to increase a company's potential through focused and directed change. Drucker notes that there are multiple resources that a company can look to for innovation opportunities, including industry and marketing changes, unexpected occurrences, incongruities, process needs, changes in perception, demographic changes, and new knowledge, for which the accessibility of, as Friedman highlights, is expanding exponentially. Companies should examine these resources for potential innovation using the framework of Porter's "Five Forces that Shape Strategy." In the airline industry, big companies such as Delta have recently found it very difficult to attempt to counter the threat posed by new low-cost carrier entrants, whose fleets are made up of a single type of jet craft, which helps to counteract the bargaining power of suppliers, and who lack labor unions that they have to contend with. With these low-cost carriers and the advent of instant internet price comparisons, combating the bargaining power of customers has also proved difficult for the major airlines. To temper the threat of substitute products or services and limit price wars arising from rivalry among existing competitors, for which the major airlines cannot win, airlines need to offer products that differ significantly from competitors' products and provide wider accessibility. Since Delta cannot compete with the prices offered by the low-cost carries, it is putting resources into the expansion of its international travel, which is a market with minimal low-cost competition and few transportation substitutes. Airlines should also look to their core competencies for innovation. Though it did not last, the culture of teamwork between management and labor, which resulted under the leadership of Gerald Grinstein, can be viewed as one of Delta's core competences. These competencies represent the collective learning of an organization that, if aligned
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This note was uploaded on 11/02/2010 for the course CRN 81616 taught by Professor Poonamnath during the Spring '10 term at Georgia State University, Atlanta.

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Delta Airlines & Innovation - Delta Airlines &...

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