Strategic Management Model
Linda Gay Cahill
Table of Contents:
Company Introduction 3
PEST Analysis (Political, economic, social & technological factors) 4
Resource-Based View 6
Value Chain Analysis 8
SWOT Analysis 11
Strategy recommendations 13
Alaska Airlines is the ninth–largest U.S. airline based on passenger traffic and is the dominant U.S. West Coast air carrier. Headquarter in Seattle, Washington, Alaska carriers more passengers between the state of Alaska and the Lower 48 than any other airline. During recent years it has expanded significantly to serve more U.S. East ...view middle of the document...
Alaska maintains a 50% market share based on passenger enplanements at Seattle, Los Angeles, Portland, and Anchorage airports. When looking at industry as a whole very few airlines realize a profit. Alaska Airlines, the smallest of the nation’s nine largest airlines in terms of flying capacity, showed the biggest profit, with $88 million in net income. Chairman, president and chief executive William Ayers called it "one of the best quarters we've had in a very long time." He suggested that Alaska's small size helped it be nimble during a difficult period. "We are closer to our customers and able to make changes and adapt to economic realities more quickly."2
To have the best people, provide the safest and best service, for the best value, to each customer each day.
The PEST analysis is a useful tool for understanding market growth or decline, and as such the position, potential and direction for a business. A PEST analysis is a business measurement tool. PEST is an acronym for Political, Economic, Social and Technological factors, which are used to assess the market for a business or organizational unit.
The recent increase of safety concerns has led toward the Federal Aviation Administration (FAA) to enforce stricter safety regulations
and add reforms. The recent news of airline companies forgoing service intervals has led to an increase in the number of inspections to ensure better analysis and completeness of data collected. Just recently the FAA after improving inspections fined Southwest Airlines $10.2 million and grounded 38 planes because of the skipped maintenance intervals. 12 With recent filings of bankruptcy and the American Trans Air (ATA) going under on April 3, 2008, we should wonder, as do passengers, just how many corners airline companies are cutting.11. Expiring taxes would make it hard for the Airport Improvement Program (AIP) to fund its expected funding of $42 billion for 2007 to 2011.12 Taxes related to the Airport and Airways Trust Fund are due to expire. Overall this makes a very difficult situation for the FAA to handle with the ongoing safety concerns and management issues. The inspections could lead to losses in revenue due to increased fines.
Political support for the airlines has allowed the industry to cut costs associated with labor, mostly due to airlines filing Chapter 11 bankruptcy. In 2008, US Air was given permission by a bankruptcy judge to cut union pay by 21 percent. Many US airlines have benefited from operating under Chapter 11 bankruptcy protection. 12 This protects them from hostile take overs and allows for the company to restructure, but the company has no equitable financial capacity.
Political barriers have also included the regulation of Open Sky treaties with the US. Individual airlines, as well as, airline alliances are required to maintain contracts with the FAA. The events pertaining to 9/11
have caused political uproars with regards to security...