Week3-Activity2-answers

Week3-Activity2-answers - Faculty of Economics and Business...

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Unformatted text preview: Faculty of Economics and Business Discipline of Business Information Systems INFS1000: Digital Business Innovation TBL Group Activity Sheet Group code SID Name Contribution Signature Contribution: out of 100%, 100% means participation in all activities. Signature: Do not sign for other group members, as this is regarded as serious academic misconduct. If incorrect: Please correct any information provided in the table above. Activity W3(2): Strategic analysis of Jetstar Airways 1. What competitive strategy does Jetstar Airways use? • • • Jetstar follows a cost leader strategy. It does not focus on a niche, as it serves the entire domestic market. In its advertisements it always stresses that the company is renowned for its low fares (price strategy!). 2. Carry out a five forces analysis. First, identify the relevant market players, then discuss the competitive influence that these market players have on Jetstar (Jetstar’s position vis ­à ­vis these players). Force Market players Influence / position Competitors Concentrate on Virgin Blue is larger and was in the market earlier. domestic It is the direct competitor, while it also competes market: with its sister company QantasLink. Tiger Air is  ­ Virgin Blue emerging as a new competitor (subsidiary of  ­ Qantas Link Singapore Air).  ­ Tiger In order for these Airlines to become viable they need to grab a reasonable market share. So they are competing fiercely with low prices. On top of this, in times where people are reluctant to fly, price competition increases (to fill empty seats). Customers Leisure travelers Customers have the choice between different Business options on most domestic routes. It is impossible to travelers lock ­in customers. Hence, bargaining position vis ­à ­ vis customers is not that good. If a company is focusing on price they attract customers who buy the cheapest flight. Hence, it must be the cheapest, as customers can compare prices online quite easily. Check: Marked? no Page 1 / 1 Faculty of Economics and Business Discipline of Business Information Systems INFS1000: Digital Business Innovation Force Suppliers TBL Group Activity Sheet Market players  ­ Aircraft manu ­ facturers  ­ Airports  ­ Caterers  ­ Maintenance, service companies Influence / position There is fierce competition between Boeing and Airbus. This puts Airlines in a good bargaining position, as manufacturers compete for their contracts. However, Airlines that are small are not that important to them. But Jetstar is part of bigger Qantas, which increases power. In some cities (Melbourne) airports compete for airlines, which puts airlines in a good bargaining position, while in others (Sydney), they have no choice. New entrants Subsidiaries of With deregulation of the air travel market, international international companies try to break into the airlines (e.g. Australian market, which increases competition Tiger Airways) and puts pressure on prices and profitability. Substitutes e.g. Train Travel If the government were to decide to build a fast train between Sydney and Melbourne this would take business away from air travel. All in all, Budget Airlines such as Jetstar are under significant pressure:  ­ Running an Airline takes a lot of capital (Jetstar is well positioned, it has Qantas in the background)  ­ Competition is fierce and carried out on the basis of price  ­ New entrants make it even harder  ­ The position vis a vis suppliers is not bad. I summary, running a successful low ­cost airline requires very efficient operations, which is achieved through superior business design & management, facilitated through modern Information Systems (high degree of process automation, e.g. using the Internet for most customer interaction processes). 3. What does Jetstar’s Value Chain look like? As Jetstar is providing a service and not a physical product, its value chain differs from what has been described by Porter in its original model. Try to identify the primary activities necessary to describe Jetstar’s business:  ­ Marketing and Sales o TV ads, Internet marketing o Online sales, call ­center etc.  ­ Passenger handling / ground operations o Comparable to inbound/outbound logistics o Check ­in process, boarding/un ­boarding planes o Baggage handling  ­ Flight operations o Operating the planes (the actual flying)  ­ Service and Support o Customer service o Baggage lost & found The secondary activities are largely the same as described in Porter’s model, plus plane maintenance and repairs as another secondary activity. Page 2 / 2 ...
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