Contemporary Issues in Strategic Management

Contemporary Issues in Strategic Management

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
QUESTION 11. Porter five forces model..............................................................................3
QUESTION 2. Internal analyses of Southwest Airline for analysing internal capabilities.. .5
QUESTION 3.........................................................................................................................8
QUESTION 4.......................................................................................................................11
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Strategic management refers to a set of activities which includes planning, organising and
monitoring the resources of the company so that they can achieve their pre-set goals and mission
within set deadlines (Rosenberg Hansen and Ferlie, 2016). Primary aim of this approach is to
attain maximum utilisation of resources which leads to better productivity and profitability in the
competitive market. For this report, Southwest Airlines is taken for consideration which is one of
the only airlines in the world which remains profitable since they have started their business
operations. Herb Kelleher and Rollin King started Southwest Airline in 1966 and bought three
Boeing 735 and hire few employees to manage their aircrafts. To analyse the external
environment, Porters five forces model will be implement so that environment in which company
is running is analysed and monitored. Besides this, value chain analysis will be done on
company’s capabilities and its competencies so that generic competitive strategy would be made
to sustain its market position. Apart from this, importance of culture and how its affect
Southwest Airlines at the time of implementation of company’s strategies accordingly. At last,
various opportunities which company could attain by crossing US borders will be explained with
the use of various techniques and concept of management.
MAIN BODY
QUESTION 11. Porter five forces model.
The Porter five forces model was developed Michael Porter which helps in understanding the
attractiveness of the market. It consist of five different forces and the primary motive of this is to
build and develop a thorough system in order to evaluate the position of the company. It helps in
ascertaining the different types of threats which the company is facing. Furthermore, by
analysing and conducting Porter five forces model on US airline industry, it will be easy to have
a clear image of organisations profitability and position at the market place (Gamble, Peteraf and
Thompson, 2014) . The following are the five different forces that will be taken into account and
help the company in various ways:
 Rivalry competition within the industry: This type of force is concerned with depicting
the level of competition which is being faced by the organisation at the market place.
This force is high in US airline industry. It is because the big airline industry travels or
fly to similar airports at different prices and other facilities. This means there are large

number of competitors in the market which have the direct impact on the operations of
the organisation. There are dozen categories of fares at which different airline industry
operates. The major competitors for the company are Southwest airline, Delta, etc. The
higher level of competition and low fares has led to increase in demand for the airline
industry.
 Bargaining power of buyers: The customer or buyers are the most crucial elements of
every business organisation. Every product is produced by taking into consideration the
requirements and demand of the customers. This force is related to determine the power
of customers in order to minimise the prices or improve the quality of the products and
services served by the US Airline industry (Grant, 2016). So this force is high as
customer have greater amount of power because of different low cost flights available in
the market. The switching cost is very low so customer can easily shift from one
company to another. Furthermore, each customer is required to get useful information
regarding the flights, timing, safety, etc.
 Bargaining power of suppliers: There are different suppliers for the airline industry who
supplies the company different and useful materials which are needed for daily
operations. The suppliers have high bargaining power because of the three crucial factors
which can affect the operations of the US airline namely, fuel, aircraft and labour that
have direct influence from exterior business world. In this context, there are limited
suppliers of the products which are essentially needed in order to fly a plane which places
greater amount of emphasis in maximising the prices of the products and services. Due to
increase in prices of fuel, the airline industry faced the problem of overall increase in the
costing that has directly influenced the financial position for the firm. In such cases, the
US airline company has started charging for the food which they serve in flights,
established a maximum weight which are allowed by per person in the flight and over
and above that will be chargeable.
 Threat of new entrant: This force examines the level of threat which the company can
face from the entry of exit of the new companies in the same industry. Earlier, the US
airline industry were have very weak or low threat from the new entrants because this
requires heavy amount of investment, highly professional workforce who are well trained
and have the ability to fly plane, etc. But after the deregulation, it has sent tumbling in