Competitive Strategy Assignment Sample
Section A: A case study of British Airways
- Identify the issue or trend encouraging British Airways to consider establishing a low-cost subsidiary at Gatwick Airport
The operation British Airways at the airport of London Gatwick has been hit by the onset of pandemic situation. The carrier of the UK flag is going to be set to inaugurate a new brand at the second airport of London by following the uncertainty (Britishairways.com, 2021). The issue of a turndown of the airline operation has encouraged British Airways to consider implementing a local subsidiary at the Gatwick airport (Britishairways.com, 2021). The airline company is going to operate at a low cost in regards to the structure of operation but the services are going to retain the full running of BA. In 2021, it seems that British Airways (BA) has fully suspended the major short-haul operation from Gatwick. This is because the airline company is unable to earn the support of the union to continue the operation of the business from the second airport of London.
- Discuss British Airways rationale for attempting to pursue both differentiation and low-cost strategy, which contradicts Porter’s argument of being “stuck in the middle”.
The topology of strategies of Business developed by Porter is beneficial to comprehend the models of e-business. Michael Porter has argued that organizations choose between two types of competitive advantage which is low-cost leadership and differentiation. As opined by Schnittker et al. (2018), these competitive aids collaborate with a competitive score that is the large mask market of the organization or are restricted one to make four well-known strategies of the business which includes Focused low cost, focused differentiation, cost leadership and differentiation. The cost leader must not look out for the interesting traits that differentiate services or products for the fear of being” stuck in the middle” (Bryce et al. 2020). British Airways offer the successful services of low fare but eventually initiated to add fancier and destinations in the services of the flight. According to Michael Porter, an organization must strive in pursuing general strategy but fail in accomplishing any of them is considered to be “ stuck in the middle”.
Michael Porter claimed that form must be able to sustain its competitive advantage relying on the source and the number of the different sources and constant up-gradation and improvement. Potter made a comparison between the low order benefits such as cheap raw material and higher-order benefits such as product differentiation or appropriated process Technology based on the unique services and product (Gössling et al. 2020). The author has critically argued that the cost advantages are generally less than ever than the factor of differentiation. It is critically reflected in the family of competitive strategy that cost leadership is treated as the poor cousin. It is critically debated among the different renowned authors that other than British Airways, many other airline companies such as wirz, Easyjet and Ryanair pursue a dual strategy of competitive advantage (Dadashi and Amiri Lolaki, 2019). British Airways has adopted a cost leadership strategy to sustain its position in the potential market of the airline industry and pursue the differentiation strategy to show the innovation of unique features and trends unit operation to take a competitive benefit.
The notion of the differentiation strategy is required to be particularized where the business strategy of cost leadership is considered to be self-explanatory. Self-explanatory means that organizations pursue the strategy in offer a probable low cost to the customers as compared to its competitors. British Airways has to be clear regarding the rules and procedures in the adaptation of the differentiation strategy of a business in the airline sector (Britishairways.com, 2021). The strategy of differentiation and cost leadership fit between the major successes factors in the environment of competitiveness. As cited by Wada (2018), the strategy of business also fit between the bases of differentiation that the organization utilizes and core competencies that have developed which are identified as a key determinant of the performance of the business in the management literature strategy. British Airways focused on the reliability of the brand, timings of the flight and loyalty to the customers to sustain its potential position in the market.
- Discuss what influences Michael O’Leary’s, CEO of Ryanair; desire to achieve rapid growth after the financial damage caused by Covid-19 using Porter’s five forces model
The onset of the airline business of all the living organisation and Michael O’Leary’s Have desired in accomplishing the traffic growth after the financial loss due to pandemic situation and utilise Porter five forces model to obtain that. It is extremely necessary for the organisation to look out for the bargaining power of suppliers, customers, and the threat of new entrants and substitutes its position into this potential market firmly.
Bargaining power of supplier: Boeing has been conventionally the major supplier of Ryanair And it is interesting inC919 aircraft planned by Comac which can be improved to its rivals the Airbus A320 and Boeing 737, the dominant player in the airline market (Britishairways.com, 2021). The cost of supplier is extremely high for this organisation due to the significant amount of expenses that is engaged with the retaining needs of the pilot. The pilots of the airline have strong bargaining power in the industry because there are no experienced and highly qualified pilots in the industry.
Bargaining power of customers: The bargaining power of the purchaser is considered as a benefit that emerges from gathering collaboratively to put the allocated pressure on the manufacturer to lower the cost of developing quality (Dadashi and Amiri Lolaki, 2019). The customers of this organisation enjoy high bargaining power because transforming the preferences to other airlines is extremely visible and not related to the associated expenses.
The threat of new entrants: The threats of new entrants is extremely low for this organisation due to remarkable barriers of entry that are related to the entering sector of the airline which includes access to distribution channels, Capital requirement and Economics of scale (Britishairways.com, 2021). The new entrance is relative to such extent of disability concerned with competing with the present market players and entering into a certain industry
Threats of new services and products: A substitute is considered asThe services or products of another industry that makes relevant value for the customer. The threat of substitution of services and products is a huge factor that depends upon the profitability level of that industry (Pervan et al. 2018). Substitute services for this airline company include sea transport, coach transport and railway network.
- Discuss the potential difficulties British Airways would confront pursuing a hybrid strategy
British Airways is currently experiencing different commercial challenges which include rising fuel costs, environmental issues, employee stripe calls, turbulent Economic Time and substitutes that have caused the airline company to face a minimized base of customers, plummeting profits and dissatisfaction of employees. Airline Company of the UK has been operating its business for a long time with innovative executives of business-minded (Britishairways.com, 2021). The company has undergone a transformation at the employee level and the management system to foster profitability in the market. The onset of covid-19 has shuttered the business operation of the business sector and the Tourism and travelling sector are considered the most affected one among them all due to constant restriction movement (Hofmann and Osterwalder, 2017). The management of the airline operation has identified the challenges and decided to make a radical decision to take the competitive directive against rivalries to realize the profit, maintain the lead and stay in the market.
This is the reason that the airline company has adopted a hybrid strategy to hold its potential position in the market and fight against its competitors. As cited by Gorondutse and Abdullah (2017), the company has created a strategic plan which is going to create the company even in the present economic times. It is asserted that this is a well-formulated strategy to win against the economic challenge and retain more customers gradually. Hybrid strategies facilitate British Airways to sell the product and services of the company at the lowest prices on the computer while maintaining the quality of the product and services.
Section B: A case study on Wolfson looks to leverage Next’s opportunity in Ecommerce
- Discuss how Next exploited its resources and capabilities to become an “online powerhouse” using value chain analysis”.
Resources are considered as the assets, skills and knowledge of the organization which demonstrates the ability of the organization to efficiently make utilization of resources. NEXT has generated finance and sales of 316 million pounds in total (Next Plc.co.uk, 2021). The signature achievement of Woolfson Consideration and the operation of credit was formed by the predecessor and turned into an online powerhouse. After the sudden emergence of covid-19, the businesses are trying to shift towards the online business due to constant restriction movement around the world. The Organization has exploited its capabilities and resources to be an “online powerhouse” which is critically discussed by utilizing Value Chain analysis (Next Plc.co.uk, 2021). The company’s profile has made it one of the largest retailers in the UK which offer financial services and shopping other than the fashion stuff.
NEXT operates more than 200 stores in the UK and Ireland and 35 stores in Asia, Europe, Middle East and employs 28000 employees globally. The organisation has expanded its products and services into bridal wear, financing and home furnishing. As opined by Prieto‐Sandoval et al. (2019), the organisation has around 20 franchised outlets overseas to its International completely owned subsidiaries. The companies are rethinking a strategy and shifting towards a social policy to create profitability (Kaukab et al. 2020). “Individuality is the key to profit” and it reflects that the average body of the organisation has completely transformed for the betterment. The main focus of the company is to provide the customer with the best services that product of what they deserve.
- Apart from the strategic initiatives highlighted in the article, discuss other valuable insights value chain analysis could offer Next management about its employment of resources and capabilities
NEXT plc has the powerful marketing strategy to maintain and sustain its position potentially in the marketplace. Apart from the initiative Strategies and mission and vision of a company, the organisation has its strong resources and capabilities in terms of a directory, sportswear, physical changing and social listening and adjustment to the age structure.
Directory: At present, the active customers of the organisation have been raised by 4% and the trading profit is amplified by 19%. The outcome reflects the probabilities of development and the organisation has125000 pounds on the development of e-business. It is claimed by the company that it is the era of digitalization and advancement of Technology where most of the businesses are based on the internet (Behnam and Cagliano, 2019). This is the main reason that NEXT Has invested more in technology to develop a catalogue on the internet so that customers can order custom structured jeans.
Sports Wear: Leisure and sports clothing have been an emerging sector while the market for kids of football is now worth 150 million pounds. Investment in this sports clothing by women has developed by an estimated 70% with the branded name which has images and rising important elements of this sector. As opined by Jones et al.(2019), advertising for tickets products has taken the company to maximize its profit in every field of the business because the kids emerge to the shop with the parents and the whole family comes to purchase the clothes. These factors can be linked to large events such as the World Euro Championship or Olympics.
Physical changing and social rethinking: People are becoming more conscious regarding the environment and significance of nature. In the past, nobody cared about the air filters for production with the environment, raw materials and natural fibres but at present, it matters ( et al. 2018). The number of people who support the organisation in building the task to protect the environment is gradually maximizing and is going to be a good aim in focusing the advertisement on this fact. The company is paying attention to the changes and recognising that those changes are important for the feeling of the individual.
Adjustment to the age-structure: Self-consciousness and awareness of living and progress in the services medical in relation with the development of a rising number of career women which has led to a grammatical e transforming the structure of the social age. The number of young people is gradually minimising as the number of elder people are developing (Prieto‐Sandoval et al. 2019). The target group of the company are between 20 years and 40 years and if the organisation does not pay any attention to this transformation they might lose daily customers.
- Identify other key resources or capabilities possessed by Next discussed in the article
|Resources or Capabilities||V||R||I||O||Competitive advantage|
|Brand strength||Yes||No||No||Yes||Sustained competitive advantage|
|Global presence||Yes||No||No||Yes||Sustained competitive advantage|
|Customer Experience||Yes||No||Yes||Yes||Sustained competitive advantage|
|Innovation potential||Yes||yes||No||No||Temporary competitive advantage|
|Quality and value for money||Yes||Yes||No||Yes||Sustained competitive advantage|
|Label||Yes||No||Yes||Yes||Temporary competitive advantage|
|Sales and marketing||Yes||Yes||Yes||No||Sustained competitive advantage|
|Operational services||No||Yes||No||No||Temporary competitive advantage|
Schnittker, R., Marshall, S., Horberry, T. and Young, K.L., 2018. Human factors enablers and barriers for successful airway management–an in‐depth interview study. Anaesthesia, 73(8), pp.980-989.
Bryce, C., Ring, P., Ashby, S. and Wardman, J.K., 2020. Resilience in the face of uncertainty: early lessons from the COVID-19 pandemic. Journal of Risk Research, 23(7-8), pp.880-887.
Gössling, S., Scott, D. and Hall, C.M., 2020. Pandemics, tourism and global change: a rapid assessment of COVID-19. Journal of Sustainable Tourism, 29(1), pp.1-20.
Wada, T., 2018. Capability-based cost leadership strategy of Japanese firms. Annals of Business Administrative Science, 17(1), pp.1-10.
Dadashi, I. and Amiri Lolaki, Z., 2019. Corporate diversity and bankruptcy risk; with emphasis on differentiation strategies and cost leadership. Journal of Financial Accounting Knowledge, 6(2), pp.185-213.
Gorondutse, A.H. and Abdullah, H.H., 2017. Influence of differentiation strategy on performance of hotels: the moderating role of environmental munificence. Journal of Business & Retail Management Research, 11(4), pp.150-161.
Pervan, M., Curak, M. and Pavic Kramaric, T., 2018. The influence of industry characteristics and dynamic capabilities on firms’ profitability. International Journal of Financial Studies, 6(1), p.4.
Hofmann, E. and Osterwalder, F., 2017. Third-party logistics providers in the digital age: towards a new competitive arena?. Logistics, 1(2), p.9.
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Prieto‐Sandoval, V., Jaca, C., Santos, J., Baumgartner, R.J. and Ormazabal, M., 2019. Key strategies, resources, and capabilities for implementing circular economy in industrial small and medium enterprises. Corporate Social Responsibility and Environmental Management, 26(6), pp.1473-1484.
Kaukab, M.E., Adawiyah, W.R., Setyanto, R.P. and Suroso, A., 2020. Accelerating small firms’ production process improvement through international market knowledge and valuable, rare, inimitable, and organized resources and capabilities. Business: Theory and Practice, 21(1), pp.322-328.
Behnam, S. and Cagliano, R., 2019. Are innovation resources and capabilities enough to make businesses sustainable? An empirical study of leading sustainable innovative firms. International Journal of Technology Management, 79(1), pp.1-20.
Jones, L., Demirkaya, M. and Bethmann, E., 2019. Global value chain analysis: concepts and approaches. J. Int’l Com. & Econ., p.1.
Rawlins, J.M., De Lange, W.J. and Fraser, G.C., 2018. An ecosystem service value chain analysis framework: a conceptual paper. Ecological Economics, 147, pp.84-95.
Next plc.co.uk, 2021, About Us, Available from: https://www.nextplc.co.uk/ [Accessed on: 9th December, 2021]
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