Premium Essay

Case Analysis of Porter Airlines and Their Business Level Strategy

In: Business and Management

Submitted By brittchalk
Words 4579
Pages 19
Through Their Expansion Plans, How will Porter Airlines Effectively Utilize Their Low-Cost Business Level Strategy to Increase Their Customer Base?

Table of Contents

Executive Summary…………………………………………………………………….p. 3
Porter Airlines…………………………………………………………………………..p. 4
The Expansion..………………………………………………………………………...p. 4
What is Organizational Strategy………………………………………………………..p. 7
Porter Airlines Business Level Strategy………………………………………………..p. 9 Core Competencies …………………………………………………………….p. 9 Competitive Advantage………………………………………...………………p.12 Low Cost Business Level Strategy………………………………………...…..p. 13
Low Cost Business- Level Structure………………………………………………….p. 15
Conclusion…………………………………………………………………………….p. 17
Appendix……………………………………………………………………………...p. 18
References…………………………………………………………………………….p. 20

Executive Summary
Porter asserts that their secret to success relies in combining a low-cost business-level strategy with a focus on higher yield passengers who value premium service (Preville, 2014). The company has been profitable for the last two years, and as a result has been focusing efforts on expanding their domain and customer base. After conducting an interview with an operations manager at the company, Ashley Hammill, I was able to acquire information about the company’s expansion plans, business strategy and structure (See Appendix A). I will be using the information provided by her primarily, with some secondary sources allowing me to go into further detail about the company. This paper will analyze through their expansion plan, how Porter Airlines will effectively utilize their low-cost business level strategy to increase their customer base. Furthermore I will conduct an in-depth analysis on Porters’ core competencies and coordination abilities used to establish a competitive advantage; expanding into how Porter matched its’ strategy and structure in order to…...

Similar Documents

Premium Essay

Southwest Airlines Case Analysis

...MGT 4315*2 Team 4 Strategic Profile and Case Analysis Purpose In the airline industry competitors have to work hard to maintain market share and even more to increase their share. Southwest Airlines has become the market share leader in terms of passengers carried with the simple strategy: “low-cost/low-price/no-frills.” They have done an excellent job in implementing and executing their strategy elements. Some of the most crucial executions in the Southwest strategy are their point-to-point scheduling of flights, customer service and customer satisfaction, and appreciation of employee involvement for continuous company improvement. Although many other airlines can implement the same strategic elements as Southwest has, they would still be behind the times since Southwest has been working efficiently from inception. Throughout this analysis of their performance, one may conform his or her own opinion on how to grade Southwest with the information provided. Alternative strategic suggestions will be evaluated with a preferred alternative choice that could improve the Southwest image and performance. Situation Analysis General Environmental Analysis Until the Airline Deregulation Act of 1978, the government had control over airline fares, routes, and market entry. But since Southwest's initial plan was to fly only intrastate routes, they did not have to come under the regulation of the Civil Aeronautics Board. Southwest did, however, encounter some......

Words: 2295 - Pages: 10

Premium Essay

L'Oreal Business Strategy Case Analysis

...Background In 2003 L’Oreal was the world largest cosmetics company. L’Oreal started in 1909 by a French chemist name Eugene Schueller. After starting his business and selling in Paris, he decided to start exporting to other European countries. Gradually, the products were distributed to the United States, South America, Russia and the Far East. By 2003, they had entered 103 countries through 290 subsidiaries with more then 80% of their sales outside of France. Since it’s establishment, L’Oreal has marketed over 500 brands, with more then 2,000 products. The products are divided into four product categories: consumer, luxury, professional and active. With these four categories, they were able to cater to the needs of hair, skin, and makeup for different cultures. Every year, they were able to produce a high return even with the economy at a decline. Ran by CEO Lindsey Owen-Jones, they were being lead strongly in a competitive market. They understood the importance to invest in their research and development for the future of their products and company. L’Oreal is unique in that it understands whom it is catering to and from there; they plan a strategic execution for it. L’Oreal understand that competition is local and caters to their local completion depending on where they are. There products and as well as their marketing promotes the products that they know will do well. Strengths L’Oreal is a strong global company, and the Financial Times voted them as the 20th......

Words: 1209 - Pages: 5

Premium Essay

Business Strategy Case Study on China Airline

... Executive summary China Airlines Ltd. (CAL) is a Taiwan-based airline. It was founded in 1959. In the early years, it undertook mostly military contract work. It was then declared as the official airline of Taiwan in 1968. Early on, CAL had a lot of problems including poor safety in 1990s which severely discredited the image, faulty pilot recruitment policies, lax maintenance systems, high cost operational structure, inefficient corporate culture, and strained political relations between China and Taiwan which prohibited the airline from launching flights to route in China. On top of that, the economic crisis caused the company huge loss. However, CAL put remarkable efforts to revive their business to profitibility. This report provides analysis, evaluation, and recommendation for China Airlines. Strategic Difficulties • Outrageous crashes record (safety issue): there were 12 fatal crashes in its history that heavily discredited the image and revenue of CAL. All due to low standard of recruiting and training captain, pilots and crews, wrong policies and low standard of maintenance at the time (cost-cutting in maintenance), and desperate responses to save its image. • Constrain on China and Taiwan relationship: Taiwan’s airlines (flights and cargo) were required to land in Hong Kong or Macau before entering the mainland China, which wasted time and added extra unnecessary costs. Moreover, tourists travelling from China were not allowed to travel to Taiwan......

Words: 2574 - Pages: 11

Premium Essay

Southwest Airlines Case Analysis

...Southwest Airlines provides short haul, high frequency, point-to-point, low-fare services to and from 58 cities across the United States. The company is known for its low-cost fares and superior customer service in the airline industry. The company was started in 1971 with a motto still lived by today, "If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline." This motto has been effective for the company because they recently reported their 58th straight quarterly profit. SWOT Analysis The SWOT analysis describes the internal strengths and weaknesses, opportunities and threats of a company. The strengths of Southwest include its market leadership, its low-cost business model, and its strong financial performance. Weaknesses are the poor short-term liquidity situation, having only one established alliance, and the declining passenger revenue yields. Opportunities for the company include its new services, the new code-sharing agreement with ATA Airlines, and the overall positive outlook for the airline industry. Threats to Southwest include the increasing jet fuel costs, uncertainty in demand, and an increase in competition. Corporate and Business-level Strategies Southwest's corporate level is to focus on obtaining more of the low-fare market of the airline industry rather than to enter into other aspects of the airline industry....

Words: 291 - Pages: 2

Premium Essay

Business- Level and Corporate- Level Strategies, signature, select services and extended stay. Marriott own chains such as Marriott Hotels & Resorts, Courtyard by Marriott, Residents Inn, Fairfield Inn, and Marriott Vacation Club International, BVLGARI, The Ritz Carlton just to name a few. The commonality between all of the properties that Marriott International owns is that they all have a clear business-level strategy that allows them to focus on particular customer groups. Analyze the business strategies for the corporation you chose to determine the business level strategy you think is most important to the long –term success of the firm and whether or not you judge this to be a good choice. Justify your opinion. Marriott business strategies vary depending on the lodging segment. Examples include the Residents Inn is focused on customers that need amenities that go beyond the average but allow the traveler to have a sense of freedom, like they are at home or the Marriott Vacation Club International, which is classified as a luxury timeshare operation. The Fairfield Inn chain is currently using a focused cost leadership business-level strategy. In Fairfield Inns, there are several things that allow the Marriott Company to control cost and offer accommodations at a reduced rate to customers. There are usually no full-scale restaurants within in the main hotel. This means that the company does not have to employ staff to run it, which is costly to the bottom line. Also, the company uses value......

Words: 1619 - Pages: 7

Premium Essay

Business-Level and Corporate Level Strategies

...Business-Level and Corporate Level Strategies General Motors (GM) is a public company based in the United States that is headquartered in Detroit, Michigan. In the year 2011, the company was able to acquire the title of the largest automaker in the world by achieving the highest number of vehicle unit sales since inception (General Motors, 2012). General Motors led global automobile unit sales for 77 consecutive years from 1931 through 2007; however, the company lost its position to Toyota, which has continued to dominate the market with GM standing at second. The core competencies of a corporate corporation are focused on ensuring that the business entity is able to satisfy the needs and preferences of their customers. This stands as the main determinant in realizing above average returns especially in a highly competitive business environment. This is achieved through business level strategies, which are strategies that outline the various actions to be taken in order to ensure that the company is able to provide value to its customers in addition to gaining the critical competitive advantage by utilizing its core competencies in specific, service markets or individual products. Business level strategy therefore pertains to the corporation’s firm position in its operating industry compared to its main competitors and the five forces of competition. One of the fundamental business level strategies that General Motors has employed is cost leadership. The company has...

Words: 1619 - Pages: 7

Premium Essay

Business Level Strategies

...Roll Number: J060 Subject: Strategic Management Topic: Summary Article on Business Level Strategy In the pursuit of operationalising the concept of business-level strategy in research, Donald C. Hambrick explains that strategy is generally viewed as a pattern of important decisions that guides the organization in its relationships with its environment, affects the internal structure and processes of the organization, and centrally affects the organization's performance. Numerous variables (e.g., nature of the industry, product life cycle,other environmental attributes) can be introduced to enrich the array of possible strategy-performance theories to be tested. Miles and snow [1978] have systematically examined the linkage between business-level strategy and structure. The range of organizational processes and managerial activities that could be tested for their associations with business level strategies appears to be substantial. Research on business-level strategy has implicated basically four different approaches to operationalising the construct. First, some researchers have seen strategy as a situational art that can best be studied through in-depth case studies. When cases are used in an attempt to build theory, they likewise involve qualitative descriptions of business-level strategies. An attraction of textual characterizations of strategy is that they may be used when strategy is treated as a predictor, mediator, or criterion variable in a research......

Words: 2138 - Pages: 9

Premium Essay

Business-Level and Corporate-Level Strategies

...corporation. McDonald’s business strategies has been said to be the best in the fast food industry, maintaining cost leadership while producing dependable food with great service. Today we see McDonald’s in a mature industry that uses product proliferation to meet many needs in the fast food industry while deterring new entrants (Hill and Jones, 205). McDonald’s prides their strategy by setting the standards with their products and within the industry as well. I feel that the strategy McDonald’s incorporates within the company is the best for them, setting the standard to be the best in the industry promotes the necessary competitive edge needed to ensure the company continues to delivery its winning edge products that keeps customers loyal to the name. McDonald’s is also known for their child meal concepts selling hamburgers French fries soft drinks breakfast items chicken sandwiches and deserts. McDonald’s business level strategy also responds to the competitive dynamics of the industry by innovating new products, such as the Snack Wrap, market penetration, such as into the breakfast industry, product proliferation, such as burgers, and market development such as the McCafe with specialty coffees (Hill and Jones, 209-211). McDonald’s also carefully select who they market their product to as well as the locations and how they market the products depending on what country they are providing services to. McDonalds corporate level strategies are used to elevate......

Words: 1107 - Pages: 5

Premium Essay

Porter Airlines Strategic Analysis

...Executive Summary Porter Airlines, a short-haul commercial airliner established in 2002, have enjoyed significant and steady growth since inception. The concern now is to devise a solution that will allow Porter to continue its controlled expansion strategy, as it has been so successful and integral to the growth of the company over the past several years. Situation Analysis Porter Airlines operates in a fiercely competitive airline industry, where competitors compete based on price, service, and comfort of passengers, and frequently engages in predatory practices to squeeze out smaller players in the market. The performance of the company depends on external environment factors, such as economic factors of oil and fare prices that will influence margins, or political factors impacting the future bridge and accessibility improvements to the city center airport. Porter’s competitive advantage is linked to the convenience of the Toronto City Center Airport, such as proximity to business core and expedited security and check-in times. Additionally, a critical success factor for Porter is to maintain the commercial exclusivity on the airport, to take advantage of cost savings as a result of being the owner, tenant, and operator. Competitive advantage is also a result of operating a single class of aircraft that has significant cost and operational efficiencies. Alternatives and Recommendation ------------------------------------------------- Several alternatives were......

Words: 3097 - Pages: 13

Free Essay

Porter Airlines

...Introduction: Porter Airlines has managed to find success where many small carrier airlines have not. The company has survived predator competition from Air Canada to become a recognized brand in South Eastern Canada for the time-sensitive business traveller segment. The company has developed a loyal customer base and continues to capitalize on its strengths which include it location, ownership of the Billy Bishop Airport. Despite its success the company is currently focused on expanding its operational efforts both nationally and cross-border to the US and must consider a variety of options which can achieve this. Situational Analysis: External Environment: PESTEL: Political: Porter operates largely within Canada. Its home terminal is located in Toronto so it largely affected by the political environment in Canada, at large, but more specifically by the political environment in Ontario. The local and national political environment in Canada is relatively stable as there are no significant unrests in the country to impact the operations of the Porter Airlines. Economic: The economic environment in Canada has also been stable in recent years. Inflation rates are currently decreasing and lower than the GDP growth rate of 2.63% . The stabilization of oil prices will lead to savings for companies since fuel costs are a major expense for most airlines. Tax policies are favourable for Canadian corporations. However, the Canadian dollar has been experiencing recent......

Words: 2062 - Pages: 9

Premium Essay

Business Level Strategy

...through Business-level strategies. Business level strategies detail actions taken to provide value to customers and gain a competitive advantage by exploiting core competencies in specific, individual product or service markets. Business-level strategy is concerned with a firm's position in an industry, relative to competitors and to the five forces of competition. Customers are the foundation or essence of a organization's business-level strategies. Who will be served, what needs have to be met, and how those needs will be satisfied are determined by the senior management. Who are the customers? Demographic, geographic, lifestyle choices (tastes and values), personality traits, consumption patterns (usage rate and brand loyalty), industry characteristics, and organizational size. What are the goods and/or services that potential customers need? Knowing ones customers is very import in obtaining and sustaining a competitive advantage. Being able to successfully predict and satisfy future customer needs is important. (Perhaps one of Compaq's mistakes was not understanding who their real customer was and what that customer -- end user -- wanted.) How to satisfy customer needs? Organizations must determine how to bundle resources and capabilities to form core competencies and then use these core competencies to satisfy customer needs by implementing value-crating strategies. Business-Level Strategies There are four generic strategies that......

Words: 1157 - Pages: 5

Premium Essay

Business Level Strategy of Samsung

...Business level strategy of Samsung Introduction Samsung Group (Samsung, 2016) is the largest group or the giant in Korea. Samsung Electronics is the biggest subsidiary of it, which initiated in 2011. A Korean consolidated company generates an average income of $ 150 billion every year. Samsung Electronics has 144 consolidated subsidiaries which 28 were recently combined at the end of 2014. Samsung Electronics contains three core divisions: • Device Solutions, a Business to Business (B2B) division handling semiconductors, various other chips and also Liquid Crystal Display (LCD) and other components.. • Digital Media & Communications (DM&C) is primarily a Business to Consumer (B2C) Company making computers, television sets and phones and also everything in between. • Samsung Advanced Institute of Technology (SAIT) is the research power of Samsung that likewise manages (at the moment) its brand-new companies. The three company divisions deal with nine business level units. Image 1 These all units are regulating by each different ways. Numerous marketing and advertising strategies, various marketing projects, different devices, various PhD owners, in addition to numerous purposes with goals For that reason these products are numerous business devices of Samsung Company. Important point is that there are numerous rivals for each system around the world with suitable competitors that needs to manage each unit by various business unit level techniques. Business Level......

Words: 2637 - Pages: 11

Premium Essay

Business-Level Strategy

...BUSINESS-LEVEL STRATEGY By Alan S. Gutterman 1 Abstract Growth is a key goal and objective for emerging companies and management must carefully determine the best way to combine the core competencies within a firm’s functional departments to provide the firm with the best opportunity for achieving and sustaining a competitive advantage in its chosen environment. This report focuses on the process of setting business level-strategy, which includes (1) selecting the domain(s) in which the firm will be competing for scarce resources (e.g., capital, personnel, technology, inputs and customers) and (2) positioning the firm in each chosen domain so that its function-based core competencies are most effectively leveraged to establish a competitive advantage. The overall goal of business-level strategy is to protect the firm’s position in its current domain and, if possible, enlarge the domain in which the firm can operate with a competitive advantage. I. Overview Senior executives and managers involved in the development and implementation of business-level strategies are tasked with identifying the core competencies within the various functional departments of the company and combining them in a way that provides the company with the best opportunity for achieving and sustaining a competitive advantage in its chosen environment. The key choices that must be made when setting business-level strategy include: (1) selecting the domain(s) in which the company......

Words: 5116 - Pages: 21

Premium Essay

Master Business Case Delta Airlines

...MASTER BUSINESS STRATEGY CONSULTING , DELTA AIRLINES CASE To determine the profitability of the airline industry, we will do an industry analysis using Porter’s five-forces framework a) Rivalry among existing competitors Concentration The concentration and the number of competitors make very difficult any agreement about pricing. Diversity of competitors There are many competitors with approximately the same size, especially for the legacy carriers. Product differentiation Concerning the significant product differences and brand identities between the competitors, we have two types of competitors: the legacy competitors and the low cost carriers. In this industry, we have an intense price competition, particularly since the coming in the market of the low cost carriers. Would customers incur significant costs in switching to a competitor? The answer is no, indeed, there are no costs in switching to another competitor in an industry who almost one-third of customers are price concerned and then buy their tickets with looking at the price before anything else. This fact makes the price competition harder than ever in this industry. We are also dealing in this industry with a high fixed cost and a low marginal cost, excess Capacity, in an intense price competition environment, these facts contribute to low industry profitability. Indeed, the combination of high cost and excess capacity led the major airlines to charge prices almost twice as high as......

Words: 1749 - Pages: 7

Premium Essay

Soutwest Airlines Case Analysis

...CASE ANALYSIS Southwest Airlines, Co. COMPANY NAME: Southwest Airlines Co. INDUSTRY: Regional Airlines COMPANY WEBSITE: COMPANY BACKGROUND: Southwest Airlines was founded in 1967 (Yahoo Finance, 2012) and started out as an idea from Rollin King, a San Antonio entrepreneur of a commuter air service. The idea was a response to complaints from his banker about the expense and inconvenience of ground travel between the cities of Houston, Dallas and San Antonio, also known as the Golden Triangle (Dess, Lumpkin, & Eisner, 2010 page C194). King, wanting to bring the idea to fruition, pooled his money together with a San Antonio lawyer, Herb Kelleher, who later won many of the company’s legal and territorial battles, and they started Southwest Airlines. After four years of legal battles with major airlines while the company was still very new, Southwest Airlines (SWA) finally launched its first flight in 1971 and continued to run with the assistance of many key people. One of the key people who got the company on its feet was Lamar Muse, former CEO. Howard Putnam later took Muse’s place as CEO from 1978 to 1982 and was then replaced by Herb Keller who was previously Chairman of the Board. Under the influence of Keller and SWA’s “low-cost strategy” (Dess, Lumpkin, & Eisner, 2010 page C194), SWA expanded from flying to only 14 cities, but still earning $270 million, to later servicing 64 cities, all at low rates. SWA continues to be a......

Words: 1832 - Pages: 8