Competitive Strategy Exam - Desklib

This report discusses British Airways' low-cost subsidiary, hybrid strategy, Ryanair's growth strategy, and Next's value chain analysis. It explains the issues and trends encouraging BA to establish a low-cost subsidiary, the rationale behind pursuing both differentiation and low-cost strategies, and the potential difficulties in pursuing a hybrid strategy. It also discusses the factors influencing Michael O'Leary's desire to achieve rapid growth after COVID-19 using Porter's five forces model. Finally, it explains how Next became an online powerhouse using value chain analysis.

Competitive Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
SECTION A.....................................................................................................................................1
1. Identify the issue or trend encouraging British Airways to consider establishing a low-cost
subsidiary at Gatwick Airport................................................................................................1
2. Discuss British Airways rationale for attempting to pursue both a differentiation and low-
cost strategy, which contradicts Porter’s argument of being “stuck in the middle................2
3. 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.....3
4. Discuss the potential difficulties British Airways would confront pursuing a hybrid
strategy...................................................................................................................................5
SECTION B.....................................................................................................................................5
5. Discuss how Next exploited its resources and capabilities to become an “online
powerhouse” using value chain analysis”..............................................................................5
6. 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..............................................................................................................................6
7. Identify other key resources or capabilities possessed by Next discussed in the article....7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Competitive strategy is considered as the longer term plan of specific firm for gaining
competitive edge upon their competitors within sector. Moreover, this intent at developing
defensive position into industry as well as creating a superior ROI (Return on Investment). This
is essential as it assists entity to keep them concentrated upon their objectives (Apraiz, 2020).
From the give case study two companies are undertaken that are British Airways and NEXT.
British Airways is known to e the flag carriers’ airline of UK which have headquarters is in
London. While on other side Next plc is growing British multinational footwear’s, home and
clothing’s and having headquarters is in Leicester. The topics that are to be discussed in this
report are issue or trend encouraging British Airways to consider establishing a low-cost
subsidiary and British Airways rationale for attempting to pursue both a differentiation and low-
cost strategy. Moreover, potential difficulties British Airways would confront pursuing a hybrid
strategy. Apart from this, Next exploited its resources and capabilities to become an “online
powerhouse, valuable insights value chain analysis could offer Next management
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MAIN BODY
SECTION A
1. Identify the issue or trend encouraging British Airways to consider establishing a low-cost
subsidiary at Gatwick Airport.
British Airways which operates their business within airline industry. Moreover, they were
planning to establish new low cost subsidiary at London Gatwick. The issues or tends that
encourage BA to undertakes in developing low cost subsidiary at Gatwick are:
 This suspended operations at UK’s second biggest airport at initiation of pandemic as
well as re-launch short haul services.
 British Airways have been specifically hard hit through corona virus associated travel
restrictions as the bulk of business depends upon longer haul flights among North
America and Britain in which restrictions has only been released.
 The new Gatwick airline would retain British Airways as well as would seek & feel as
they do at Heathrow. Additionally, in about 16 A 320 aircraft would initially be
transferred from Hearthrow to Gatwick which implies that rest A319 aircraft might be
pensioned off.
 In addition to this, the pilots would be asked to undertake a secondment from Heathrow
to Gatwick upon new seasonal, contracts based upon the basis of BALPA that balloting
pilots related to it but is recommended acceptance.
 Also, the new operations would have their own operating license as well as be a
standalone British Airways subsidiary addition to the lines of BA City Flyer.
2. Discuss British Airways rationale for attempting to pursue both a differentiation and low-cost
strategy, which contradicts Porter’s argument of being “stuck in the middle.
Based upon the article, it has been suggested that British Airway wants to replicate the
offers as well as models which are performed through Rynairs, easy jet and Wizz Air, but this
concentrates instead upon leveraging benefits like brand, reliability, and loyalty and flight times.
So, the British Airways obtain various benefits by attempting both strategy that are low cost and
differentiation. Low cost strategy is undertaken as the kind of pricing strategy wherein entity
provides the goods at lower costs. Moreover, the organisation could obtain cost benefits through
enhancing its effectiveness, undertaking economies of scale benefits or through obtaining raw
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material at lower cost (Cotterill, 2019). In differentiation strategy, entity seeks to be innovative
into their particular sector with few dimensions which were broadly valued through purchasers.
This opts one or above attributes which several buyer into airline perceives as vital. So, some
rationale are they can able to perform the new operations would have their own operating license
as well as be a standalone British Airways subsidiary addition to the lines of BA City Flyer.
Also, become competent to conduct unique services at low cost for beneficial of customers that
faces the trouble due to pandemic period.
The low cost strategy will help the business to establish effective profit margin which will
be beneficial for increasing the company strength. Company should focus on increasing the
different perspectives of porter's growth strategy in order to develop cost leadership. Cost
leadership is an effective medium of increasing the parameters of business in a financial manner.
Companies in the recent times also focus on developing the parameters of cost cutting in order to
use all resources in a significant manner. The qualities of cost cutting should be maintained with
principles and goals of marketing in order to attract desired customers. Companies in the recent
times are hiring a separate financial management for development of different operations. Low
cost strategy can be easily adopted by British Airways to develop possibilities of profit and
growth in a specific span of time. In the recent times, companies should also prefer to develop
porter's generic growth strategy for systematic development of business firm. In order to achieve
the organisational targets in a set period of time, it is major responsibility of the company to gain
competitive advantage. Companies should also take into consideration a major business practices
of developing individual goals and objectives. The British Airways must also preferably allow
marketing and financial management to come up together for the welfare of business operations.
Companies should also preferably give permission to strategic management to analyse impact
caused by cost differentiation in order to achieve marketing objectives. Business organisation
should also majorly include practices which are developing in nature for business growth.
Companies in marketplace develop an appropriate business strategy which is helpful for gaining
a static growth in the company. Business entity should also keep an eye and vigilance over
different functions to gain systematic growth. Companies should take help of human resource
management in order to develop performance of the employees and to achieve sustainability in
activities. The increasing in productivity is major priority of every company so it should be
achieved in a set manner that is according to planning. In the launching of an advertisement
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campaign a company must consider to provide discounts and offers to different customers. In
order to attract the target customers, companies should focus on goals and objectives.
3. 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.
Michael O’Leary’s who is known to be the CEO of Ryanair. It is the leading airline based
In Ireland which performs into lower fare category. Its headquarters is in Dublin, Ireland.
Additionally, as the pandemic times airline industry have to faces lots of problems which mainly
breakdown their business monetary. So, some factors that influences the CEO of RYNAIR to
attain the rapid growth after financial damage which was caused by COVID-19. It would be
explained with assistance of Porter five force model:
Competitive rivalry
There are various low cost airlines that operate upon routes likewise Rynairs.
Additionally, it incorporates Easy jet, GO, Wizz Air and others. As, British Airways is also one
of them which provides low cost subsidiary at Gatwick so this represents that competitive rivalry
is higher but it encourages Rynaires to operate much effective with low cost strategy and attain
their desires.
Threats of new entrants
The airline sector is known as one of the costly industry for new entrants. This represents
that entry barriers are higher and buying or even leasing jets is much costly. During COVID-19,
the operation of respective industry falls down which simply states new entrants’ threats is low
(Danso, 2019).
Bargaining power of suppliers
As, there are only two manufacturer of airplanes such as Airbus and Boeing. Ryanair
usually purchase their planes from Boeing due to this, the bargaining power of suppliers is higher
within it. But during COVID-19, as the business are not going well respective firm have to goes
through some financial issues. This stop them to not to perform any purchase at present. But after
pandemic, they do purchase at lower cost in comparison to market rates because Boeing have
some soft corner for Rynair.
Bargaining power of buyers
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The low fare airline sector lacks loyalty of brand and cost. As during COVID-19 the
travelling from flights is totally banned. But thereafter the CEO of Ryanair planned to provide
low cost services with full safety. As increases in price means customer may shift to others.
Threats of substitutes:
Within any areas, there are various other systems like train, bus, and many other which
may be utilised for travelling over short haul routes. but due to COVID-19 and after that also
people usually do not want to travel to these kind of public transport as this may have adverse
impact on their heath (Dzwigol, Dzwigol-Barosz and Kwilinski, 2020). So, they become more
curious about it, so they feel to take flight that has low cost and full safety. Therefore, this is
helpful for CEO of Ryanair to attain rapid growth in effective and efficient way.
Therefore, apart from all these Ryanair have few 200 737 max aisle Boeing aircrafts upon
order as well as their CEO have been bellicose related to its plans for growing quickly while
rivals are stills recovering from monetary damages through pandemic. Additionally, Wizz Air,
the Hungarian upstart, has declared its own ambition to take 20 per cent of the take-off and
landing slots at Gatwick. BA has 18 per cent of the slots, while before the pandemic easyJet had
about 45 per cent. So, this influences Michael O’Leary’s, CEO of Ryanair, and desire to achieve
rapid growth.
4. Discuss the potential difficulties British Airways would confront pursuing a hybrid strategy.
Hybrid strategy renders the products sale at low cost in comparison to competitors who at
similar period providing high quality for goods. Moreover, this blends low cost as well as
differentiation strategy for offering items to clients with competitive edge (Galbreath, 2020). In
addition to this, there are some difficulties which British Airways would faces while pursuing
hybrid strategy:
As they opt hybrid strategy which would help them to operate their business in short haul
after COVID-19 also but competing with lower cost operators is much tough for legacy carriers.
This outcome in, they failed twice for running low cost operation of their own. The impact of
current economic situation on business will impact its functioning at the marketplace and also it
will lead to create obstacles for the business. British Airways should also focus on developing
parameters of COVID-19 planning in order to develop the hybrid strategy. Lack of
professionalism in the organisation will also help British Airways to develop perfect strategy
related to hybridisation. Companies in the competitive marketplace, look for developing strategy
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related to COVID-19 for welfare of whole business. The hybrid strategy and its implementation
requires precise supervision and control on different operations. It is also a key responsibility of
the business to develop systematic operations with the help of key approach and objectives. In
the long run, this will help the business to establish different milestones. Companies also focus
on developing effective objectives at the marketplace by choosing an appropriate planning.
Hybrid strategy and its implementation will help the business of British Airways to get desired
boom. It is also useful for the company to choose different solutions of COVID-19 in order to
gain desired success at the marketplace. The hybrid strategy should be also followed with the
major advantage in order to grow at marketplace with greater stability.
SECTION B
5. Discuss how Next exploited its resources and capabilities to become an “online powerhouse”
using value chain analysis”.
Value chain analysis is regarded as the procedures in which entity determined their
primary as well as support practices which added value to their goods and thereafter these
practices would helpful in minimising costs or enhancing differentiation. Additionally, this
highlights the internal activities a company involves in when converting their inputs into outputs.
In addition to this, Value chain analysis states practices which undertake within business as well
as associates them in analysing competitive strengths (Matioson, 2019). In respect to Next plc,
its core competencies is to utilise internet for online shopping as well as also have developed an
effective brand posture with style, beautiful designs, efficient quality and reasonable costs. Also,
their stores are specious and they also utilise stand alone lime stores (Stouten, 2019).
Furthermore, its financial resources and excellent capabilities boost them to be the foothills of e-
commerce. Also, they undertake the catalogue as well as credit operations that develop through
its predecessor and turn them an online powerhouse which was not able for riding out the
COVID-19 effective than much store dependent competitors. In order to develop a systematic
value chain in the organisation, it is major task of a company to deliver major business practices
that are effective in nature. The management of logistics and supply chain should be performed
by skilled and trained workers to achieve major marketing objectives. Management of value
chain is a tough and rigid task for the business, so it is also a major task of the company to
manage value chain. Value chain helps a business to increase the customer satisfaction be
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increasing the development of the products. In order to become online powerhouse at the
marketplace, it is crucial for the company to take help of IT experts and professionals. The
British Airways should use advanced technology to overcome various practical challenges and
issues. Therefore, there is a need of developing business goals and advantages using the advise
of top and strategic management.
6. 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.
As per the article provided, within year 2002, Next plc sales as well as finance income is
about £360m. But in year 2020, the figure was equivalent in around £2.3bn which is over half of
while sales and attained without a catalogue insights. in addition to this, Respective firm has
avoided key forays outside United Kingdom, that cite their management time and investment
which are needed to develop store estates and creating brand awareness. But the enhancement of
e-commerce business maximises the employment of resources and financial resources that low
down those barriers. Also, they invested billions in online capability. Apart from this, the final
extension of Next’s online sales capability is Total Platform, a pay-as-you go e-commerce
service for companies that want to expand online but cannot afford the upfront capital costs and
the risks. It offers an end-to-end service, rather than focusing on websites and payments or
warehousing in isolation, and charges users a simple percentage of sales. It is the major role of a
business to use advanced tools and techniques in order to overcome various facts and situations
at the marketplace that will lead to develop essential focus on management operations. The value
chain development related to next management will be possible using appropriate techniques of
management. The systematic management approach will also help the company to deliver
effective business practices that stood for Next development. In order to deliver the desired
business practices in the business, it is majorly important for the company to focus on future
endeavours. Also it is the major role of strategic management of a company to achieve ethics in
different operations and functions of the company to lead the marketplace. In the era of stiff
competition between different companies, it is the major job of top level management to develop
value chain analysis. This will help the company to develop organisational goals on regular basis
and will help the company to establish sustainability in different operations. Companies in the
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national and international marketplace focus on achievement of goals and objectives with the
support of proper planning to recover at marketplace.
7. Identify other key resources or capabilities possessed by Next discussed in the article.
The Next plc has various resources and capabilities which would assists them in operating
their business effectively and efficiently. Some of the key resources and capabilities possessed
by Next are financial resources, technological resources, human resources, innovation and
creativity etc. Some of the capabilities are online, sales and many others (Tatiana and Mikhail,
2020). The financial resources is helpful in enhancement of e-commerce business, maximises the
employment of resources and financial resources that low down those barriers and also in assists
in online business expansion. Also, they invested billions in online capability. This will help the
company to develop organisational goals on regular basis and will help the company to establish
sustainability in different operations. The management of Next should develop an effective
approach to utilise all resources in an optimum manner for gaining competitive advantage. Also
the company should deliver best major practices related to resource utilisation in order to gain
marketing advantage. Focus of a business should be on long and short term objectives
achievement in order to lead the marketplace with great stability. The strategic management of
the company should be ready to develop an appropriate framework related planning for desired
marketplace growth.
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CONCLUSION
As per the above report, it has been concluded that competitive strategy plays vital role
within company as this intent at developing defensive position into industry as well as creating a
superior ROI (Return on Investment). This is essential as it assists entity to keep them
concentrated upon their objectives. Moreover, both Low cost strategy and differentiation strategy
is helpful in performing unique services at low cost for beneficial of customers that faces the
trouble due to pandemic period. In addition to this, there are some factors such as competitive,
environmental and others that influence the CEO of RYNAIR to attain the rapid growth after
financial damage which was caused by COVID-19. The adoption of hybrid strategy help firm to
operate their business in short haul after COVID-19 also but competing with lower cost operators
is much tough for legacy carriers. This outcome in, they failed twice for running low cost
operation of their own. Also, value chain analysis highlights the internal activities a company
involves in when converting their inputs into outputs. Along with it, Value chain analysis also
states practices which undertake within business as well as associates them in analysing
competitive strengths. Apart from this, key resources and capabilities possessed by Next are
financial resources, technological resources, human resources, innovation and creativity etc.
Some of the capabilities are online, sales and many others.
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REFERENCES
Books & Journals
Apraiz, J.C., Richter, N.F., de Antonio, J.M. and Gudergan, S., 2020. The role of competitive
strategy in the performance impact of exploitation and exploration quality management
practices. European Business Review.
Cotterill, R.W., 2019. Competitive strategy analysis in the food system. CRC Press.
Danso, A., Adomako, S., Amankwah‐Amoah, J., Owusu‐Agyei, S. and Konadu, R., 2019.
Environmental sustainability orientation, competitive strategy and financial
performance. Business Strategy and the Environment, 28(5), pp.885-895.
Dzwigol, H., Dzwigol-Barosz, M. and Kwilinski, A., 2020. Formation of Global Competitive
Enterprise Environment Based on Industry 4.0 Concept. International Journal of
Entrepreneurship, 24(1), pp.1-5.
Galbreath, J., Lucianetti, L., Thomas, B. and Tisch, D., 2020. Entrepreneurial orientation and
firm performance in Italian firms: The moderating role of competitive
strategy. International Journal of Entrepreneurial Behavior & Research.
Matioson, A., 2019. The Exploratory Study of Competitive Strategy CV. Austin in Surabaya.
Stouten, G.R., Hogendoorn, C., Douwenga, S., Kilias, E.S., Muyzer, G. and Kleerebezem, R.,
2019. Temperature as competitive strategy determining factor in pulse-fed aerobic
bioreactors. The ISME journal, 13(12), pp.3112-3125.
Tatiana, B. and Mikhail, K., 2020. Problems of Competitive Strategy Choice According to
Industry and Regional Factors. International Journal of Technology, 11(8), pp.1478-
1488.
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