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Value Chain Analysis and Achieving Competitive Advantage

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Added on  2020-04-15

Value Chain Analysis and Achieving Competitive Advantage

   Added on 2020-04-15

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Air YEA SimulationValue Chain Analysis and Achieving Competitive AdvantageReport
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Executive SummaryAir Year is one of the key industry players in the airline business. The company is an average airliner in its category with a stock value of $28.76. With a net profit of $186005, it has a cumulative net profit of $438137. The company exists within a highly competitive industry. Standing as a middle level brand, the company’s reliability matches the industry leaders; its quality level surpasses most of the high earners. The airline industry best practices include a competitive value chain, a stable resource base, strategic decision making and brand development. This report considers Air Yeas performance in comparison to other brands in its industry to bring out gaps in the company’s business level approaches. Lessons from industry simulation brings out concepts of value chain for Air YEA’s adoption. Like othercompetent industries, the airline sector places high value on decision-making as an integral part of its management practices. As Air YEA’s management team, we need to use different business strategies such as reduced costs, partnership, differentiation and value chain to build its resources and capability (Strategy Simulation, 2017). The team has options from business models in the industry on how to cope with industry challenges, competitor strategies and other plans. Building and improving on models needs a continuous process with a focus on its value chain. Lessons from a simulation exercise brings out YEA Airline needs for a better business model that covers its internal operations with the external factors. Experimenting with businesses processes gives us key elements for implementation.
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Contents1.0 Assessing YEA’s Internal and External Environment...........................................................................4Value Chain Analysis...............................................................................................................................4Improved efficiency.............................................................................................................................4Differentiation and cost leadership.......................................................................................................42.0 Improving YEAs Strategic Business Unit.............................................................................................52.1 Market Trends....................................................................................................................................52.2 Creating a Competitive Advantage through Strategic Planning Process...........................................6Fares and marketing plan.....................................................................................................................6Financial ratio and Stakeholder Perspective (Acquisition)..................................................................7Scheduling............................................................................................................................................7Corporate Level Strategy.............................................................................................................................93.1 Operational efficiency........................................................................................................................9Learning Experience..................................................................................................................................10APPENDIX................................................................................................................................................11References..................................................................................................................................................15
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1.0 Assessing YEA’s Internal and External Environment The airline industry presents a good example of a service industry where simulation is applicable[CITATION Smi14 \l 1033 ]. An assessment of the internal environment of YEA shows an adoption of strategies from the external market of competitors. Industry level strategies revolve around the focus, cost factors and differentiation. Gaps in the airline means it needs improvements in the value chain through factors influencing customers and the airline industry and its effects of additional revenue to Air YEA. This analysis also looks at how to boost YEA’s intangible assets.Value Chain AnalysisHistorically, YEA Airline had a startup of 2700 passengers in 5 routes with just 20,000 passengers by first quarter. Showing cyclical profitability, the company made loses and gains. The trend reveals a needfor major changes in the primary and support activities. Improved efficiency in value chainAlthough the brand shows an improved number of passengers at 73% per flight, it requires technologicalimprovements, better HR and efficient management to reach a breakeven point and overcome industry challenges. From Table 1 there is progress with steady increases in yield per revenue, per passenger and miles but there are fluctuations in Net profits. This is an efficiency concern that calls for an analysis of its outbound activities and operations. The unpredictable fuel trends in the market implies changes in procurement and general administration. Differentiation and cost leadershipYEAs business model shows gaps and it needs a strategy that builds on its resources. The company has fixed assets ranging from airplanes, ground equipment, trucks, hangars, office facilities, office equipment and others. As a regional airliner, it has a moderate number of passengers from a small market location. Table 1 below shows progressive drops in revenue despite increased yield per mile. A
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