American Airlines Strategy Paper Essay

American Airlines Strategy Paper Essay.

Currently the airline industry as a whole seems to be on the road of recovery. We, American Airlines, the fourth largest carrier recently avoided bankruptcy, but had a summer full of pressure due to ongoing union struggles and questionable executive compensation packages. After having incurred such big losses, this recovery has come about because of the government bailout and many of our large competitors’ abilities to survive the turbulence in the industry. So far, the prospects look promising. Revenue has improved across all regions of the business.

Domestic unit revenue was up almost 10 percent and Latin American revenue has increased by close to 11 percent in the last quarter of 2012 compared to the same period the prior year. We are performing better than other airlines that have filed for protection and have done so without slashing capacity.

In short, American is doing the right things to return to business efficiency and customer effectiveness. In order to establish a sustainable position for the future, American Airlines must adopt a three-pronged strategy moving forward.

First, we should focus on low priced operations and increased marketing strategies to improve customer demand. We have to enhance customer experience and our volume of loyal customers to build a stronger presence in Airline Industry. Second, we must focus on increasing and improving the routes to cater to large customer base. Lastly, we must address the difficulties our company might face in integrating with the culture of US Airlines. Our future success is highly dependent on these two entities efficiently operating as a single organization.

Industry Analysis
Current Position

US Airline industry today is dominated by five major domestic carriers. United, Delta and Southwest each has more than 15 percent market share. American is fourth, with around 12 percent and US Airways is fifth with around 10 percent. Four of these five are profitable — all but American. We lost $2 billion in 2011 and $1.7 billion in the first quarter of 2012.

Future Strategy

Our emphasis in 2013 is on operational flexibility, international growth through alliance and selective network expansion, and domestic partnerships to reduce operational and balance sheet risks. American’s market differentiation is based on emphasizing and meeting the needs and expectations of high value customers (particularly large global corporates) and better alignment with the one world airline network and value proposition. Also, being the lead carrier between not only the United States and Latin America but, increasingly, the world and Latin America—connecting through Dallas, Los Angeles, or Miami. This strategy makes sense; if they can get all labor work groups on board, they should be able to make it happen. That is still the main challenge, as is competitor contestation, particularly from larger traditional rivals like Delta and United.

Improve Customer Demand
Lower Operational Costs

American passenger division which already has 57 fewer planes in service than an year ago, should further shrink by another 57 planes this summer. This would improve operational efficiency. Current service levels include 275 cities with a fleet of over 1000 aircraft. American carries about 80 million passengers daily and receives more than 329,000 reservation calls, handles more than 293,000 pieces of luggage and flies more than 4300 flights in one typical day. In order to reduce costs further over 27000 jobs will have to be eliminated. Because of high competition in the industry, substantial price fluctuations occur related to fares.

Enhance Customer Base

Increase value added services offered through our interactive website, Any differentiation that convenience added capabilities offer is the center of focus. Busy hiub systems and schedule patterns need to be looked at to improve efficiency and routing effectiveness, thereby enhancing customer experience. We need to do rigorous marketing to attract more customers. Our marketing is currently focused on seasonal and business travelers and much analysis is taken in order to optimize peak travel seasons as well as frequent flier miles programs and pints systems. The Making More Room in coach program is the original marketing ploy of American to project a perception of higher passenger comfort levels. As increased advertising and intense market share is gained, we will continue to remain a key player assuming passenger demand goes up as projected. We will focus on upgraded in-flight entertainment systems, football game special fares, and buy-on board meal options to further enhance customer experience.

Improve Network

American Airlines’ new network strategy is designed to improve profitability by offering the routes and schedules that attract and retain not only their own high value customers but also those of alliance partners, an important source of revenue through codeshare agreements and closely aligned loyalty programs. The network is the core product that works in concert with lie-flat seats, onboard amenities, and customer service. Latin America is a prominent focus, due in part to our strong presence in key hubs to Latin America such as Dallas and Miami. This is where the profits are. Passenger growth forecasts for Latin America for 2013-17 are 6 percent for Latin America North (Central America and the northern rim of South America) and 8 percent for Latin America South (southern cone countries such as Brazil and Argentina). This compares with 3.6 percent for Europe and 4.4 percent for Asia.

Increase International Routes

To follow the growth markets, we must change our portfolio mix to focus more on international rather than domestic routes. This is a gradual process, moving from 38 percent international and 62 percent domestic capacity in 2013 towards a 44/56 percent balance by 2017. As we refocus more of our flying towards international opportunities, it is likely to look towards increased code-sharing with domestic carriers like Alaska Airlines, jetBlue, and others to further enhance our network in places like Los Angeles and New York City. This is likely to have initial teething problems, due to terminal colocation and product disparity issues. For instance, the business passengers that we are pursuing may be disgruntled by jetBlue’s more restrictive carry-on baggage policies or by extra time and added security checks if they are required to change terminals.

Refurbish domestic feed

Our plan is also to diversify our domestic feed by increasing the number of regional carriers with which we do business to reduce operational and balance sheet risk. Today, we primarily get a feed from our wholly-owned subsidiary, American Eagle, which has higher costs than some other regional carriers. American Eagle is going through its own restructuring to lower its costs, and it may ultimately be spun off.

Synergies with US Airlines

Merger with US Airways will result in the largest carrier in US. It would create roughly $1.2 billion in financial benefits.

American Airlines Strategy Paper Essay

A Study of IKEA’s Product Design and Pricing Strategy Essay

A Study of IKEA’s Product Design and Pricing Strategy Essay.

IKEA’s competitive priority is based on producing quality products at a low price. This concept is exemplified in its’ corporate mantra ” price with meaning”. This is achieved by creating inexpensive products without making its customers feel cheap. This manta is followed from design to the customer’s home. 2. Describe IKEA’s process for developing a new product?

IKEA starts the process by picking what the new product will cost. This will help to determine color, materials used, and design. Next they choose a manufacturer using their network of manufactures.

They do this by determining which manufacturer can most efficiently produce the new product. Next they design the product, keeping in mind efficiency, ie. Packaging, shipping ect. Every inch of the product is reviewed in order to maximize their ability to manufacture, ship and store the new product. Finally they ship it. While shipping, the key word is flat, in fact the flatter the better. From vacuum packing pillows to exclusively producing disassembled furniture, IKEA is committed to not shipping air.

Lastly they must sell their new product. 3. What are additional features of the IKEA concept (beyond their design process) that contribute to creating exceptional value for the customer? The way they ship their products is clearly one of its greatest contributors to its low prices. By remaining flat, shipping only 65% full containers and by building its distribution centers near ports, railways, and highways IKEA is able to ship with great efficiency. They are able to ship the maximum amount of products, at the right time to the right stores keeping their prices 20 the 30 percent lower than their competition. 4. What would be important criteria for selecting a site for an IKEA store? IKEA stores require a large area to accommodate a large showroom, daycare and food court…

A Study of IKEA’s Product Design and Pricing Strategy Essay

Nike, Operational Strategy Essay

Nike, Operational Strategy Essay.

An example of an operational strategy I found was within the Nike organization. Nike was created in 1972, by co-founder Bill Bowerman & his University of Oregon runner Phil Knight. Together, with the people they hired, the company was able to grow and expand from a U. S. based footwear distributor to a global marketer of athletic footwear, apparel & equipment that is unrivaled in the world today (www. nikeinc. com).

Operations strategy is the development of a long term plan for using the major resources of the firm for a high degree of compatibility between these resources & the firm’s long term corporate strategy (Schroeder & Rungusanatham, 2011).

On May 5, 2010 Nike unveiled one of its strategies & key initiatives to achieve sustainable, long term growth across its global portfolio of brands & businesses (www. nikemedia. com) their plan consists of a revenue target of 27 billion by the end of 2015 and over 12 billion of free cash flow from operations through 2015.

Nike  also uses an outsourcing strategy, where they have subcontractors scattered throughout the globe.

The cross functional decisions associated with a company of this magnitude is enormous & would involve a multitude of people and departments. Nike main cross functional decision making process involved that of Dennis Dwyer, Senior Manager Footwear Division; Vice President & CFO, Donald W. Blair; President, Mark G. Parker; Divisional V. P. & General Manager, Craig Zanon; V. P. of New Business Development, Clare L. Hamill; GM, Kirk Richardson and Director of Communications, Jack Gould (www. ifestagingblog. com).

There are two types of strategies involved with the supply chain strategy and they are imitative and innovative (Schroeder & Rungusanatham, 2011). Imitative strategies generally relies on following or imitating other companies, while having predictable demand, are efficient and have a low cost supply chain. The Innovative strategy is different from other companies but may still have a sort of “sameness” imitation, whereas there is unpredictable demand, are flexible and have a fast supply chain.

Nike, Operational Strategy Essay

The Comprehensive Written Analysis of GM Essay

The Comprehensive Written Analysis of GM Essay.

This assignment requires you to apply the entire strategic-management process to the particular organization. When preparing a comprehensive written analysis, picture yourself as a consultant who has been asked by a company to conduct a study of its external and internal environment and to make specific recommendations for its future. Prepare exhibits to support your recommendations. Highlight exhibits with some discussion in the paper. Comprehensive written analyses are usually about 10 pages in length, plus exhibits.

Steps in Preparing a Comprehensive Written Analysis

In preparing a written case analysis, you could follow the steps outlined here, which correlate to the stages in the strategic-management process and the chapters in this text.

(Note—The steps in presenting an oral case analysis are given on pages 356–358, are more detailed, and could be used here).

Step 1 Identify the firm’s existing vision, mission, objectives, and strategies. Step 2 Develop vision and mission statements for the organization. Step 3 Identify the organization’s external opportunities and threats.

Step 4 Construct a Competitive Profile Matrix (CPM).

Step 5 Construct an External Factor Evaluation (EFE) Matrix. Step 6 Identify the organization’s internal strengths and weaknesses. Step 7 Construct an Internal Factor Evaluation (IFE) Matrix. Step 8 Prepare a Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, Strategic Position and Action Evaluation (SPACE) Matrix, Boston Consulting Group (BCG) Matrix, Internal-External (IE) Matrix, Grand Strategy Matrix, and Quantitative Strategic Planning Matrix (QSPM) as appropriate. Give advantages and disadvantages of alternative strategies.

Step 9 Recommend specific strategies and long-term objectives. Show how much your recommendations will cost. Clearly itemize these costs for each projected year. Compare your recommendations to actual strategies planned by the company. Step 10 Specify how your recommendations can be implemented and what results you can expect. Prepare forecasted ratios and projected financial statements. Present a timetable or agenda for action.

Step 11 Recommend specific annual objectives and policies.
Step 12 Recommend procedures for strategy review and evaluation.

The Comprehensive Written Analysis of GM Essay

How to Do Strategic Analysis of a Company Essay

How to Do Strategic Analysis of a Company Essay.

This article is about how to do strategic analysis of a company. Students get several homework and assignments related to how to do strategic analysis. This would be a good reference for students with their assignment and homework regarding strategic management. Strategic analysis of a company starts with analysis internal and external environment factors having an impact on business. A strategic analysis is also effective to determine opportunities and threats for the business within the market and also their strengths and weaknesses.

Company Analysis:

The company analysis is the first step to start the strategic analysis. A company analysis contains information related to history, existing environment and present perspective of the company. This analysis explores profile, growth, profitability, and culture that a company has at present time. At the same time, it includes future objectives of a business that are decided in the mission, vision, goals and objectives of the company that a company wants to achieve for long-term growth and sustainability in the industry.

This stage helps to determine the strategic perspective of the business and also the relevancy of current strategies.

SWOT Analysis:

A clear goal and objective inspires to get competitive advantages that a company could obtain by analyzing its internal and external environment. SWOT analysis is an important part of the strategic analysis that contains internal and external environment analysis of the company. Information for strengths and weaknesses of the company determines internal assessment and opportunities and threats external assessment. In this step, analysts should make a proper matrix for internal and external elements that helps to make effective strategic decisions.

Industry Analysis:

The next step for strategic analysis is to perform industry analysis to determine existing level of competition in the market. This analysis provides a clear description of the industry in which company is operating. Additionally, it also states trends and strategic opportunities for a company within the industry. In this analysis, a company can analyze bargaining power of suppliers and customers, threats from new entrants and substitute of the company and rivalry among the existing companies that helps to make better strategic decisions to achieve competitive advantage.

BCG Matrix:

BCG matrix is another important element of the strategic analysis that determines portfolio of a business unit. BCG matrix plays an important role to ensure long-term value creation through determining two dimensions namely market share and market growth of the company. BCG matrix helps to understand the strategic mistakes of company and in making strategic for their reduction. It helps to determine the strategic position of the business within the industry.

PEST Analysis:

PEST analysis is also a useful tool for strategic analysis that provides big picture to understand the external environment in which a company is functioning. It provides several factors that may affect the internal and external environment of the. It helps in determining the strategic factors that should be considered by a firm in its international business environment. Thus, through these tools an organization could do strategic analysis and may frame better strategies.

How to Do Strategic Analysis of a Company Essay

Hewlett Packard Swot Analysis Essay

Hewlett Packard Swot Analysis Essay.

The Hewlett-Packard and Compaq merger decision case study provided many points necessary in the understanding of why these two companies would undergo a risky business venture. Compaq was a company that began successfully with record setting financial statements, but in an attempt to expand its market, threatened company stability. With the acquisition of Tandem Computer and Digital Equipment Corporation, Compaq experienced decreased revenues resulting in their inability to fully recover. In a competitive information technology market, HP was one of the industry leaders.

Due to a failure to be proactive to market changes, HP grew stagnant and looked to reinvent company strategies through newly appointed President/CEO Carly Fiorina.

Competitive advantages for both HP and Compaq included imaging and printing segment and high performance PC technology respectively. Management’s reasons for the merger included their assumption that together, HP and Compaq would be able to replicate and overtake competitors. Oppositions to the merger included a decrease in shareholder interests, a reduction of focus for company core competencies, and an unprofitable future.

Several financial advisors and industry analysts were in agreement that the proposed merger would not be in the best interests of either company. Despite the uncertainties, information gathered and forecasts projected were in favor of the merger, which resulted in shareholder approval and the merger of Hewlett-Packard and Compaq Computer.

SWOT Analysis

In researching Hewlett-Packard’s present-day company position, a strengths, weaknesses, opportunities, and threats (SWOT) analysis was conducted. Strengths found include HP’s strong market position internationally and on the domestic end, a successful growth throughout large acquisitions, and a considerable brand value. HP currently has a 28.6% market share in the United States of America while internationally they stand at 17.7%. As the current number one leader in PC sales, HP has a solid market position. Although the strengths are allowing HP to maintain market position, there are also weaknesses present in all companies. Compared to other companies in the same industry, Hewlett-Packard lacks significant software product and management consulting services. As a result, Hewlett-Packard’s weakness is its weak market segment integration. HP is able to answer consumer demand when it comes to PC technology and imaging and printing software, but they fall short in the software product creation and consulting services to combine with their successful departments of PC technology and imaging and printing services.

As Hewlett-Packard continues to grow and seek an increase in market position, opportunities surface. A spin-off of the PC technology business, entering the cloud computing market, and expanding imaging and printing solutions portfolio are opportunities HP has going forward. In placing more emphasis on the PC technology aspect of the company, HP may find that this venture will become as profitable as the imaging and printing department in the long-run. With the announcement of this spin-off, their share of US PC shipment increased from 25.4% to 28.9%. This positive reaction from consumers is an early indicator of possible success as a result of placing resources to build up the PC technology department. Cloud computing is a fairly new concept in which resources and software are delivered through a network, mainly over the Internet. As this is market quickly growing in demand, HP’s introduction of HP Cloud Assure is a great opportunity for future prosperity. With success comes opportunities of threats, and Hewlett-Packard is no exception.

With projected decrease in information technology (IT) in the near future, an increase in demand for non PC devices, and competitors with more diversified portfolios, HP’s threats are numerous. Industry analysts have projected a decrease of IT in upcoming quarters which will decrease HP’s profitability. HP has already witnessed a decrease in consumer spending during last quarter’s back-to-school spending. If analyst projections prove to be true, changes will quickly need to be made. As more and more consumers are entering the non PC device era, HP is losing a segment of the market with their inability to provide products for this demand. HP’s more diversified competitors such as Dell and Samsung are able to easily capture the demand for these tablets.

Future of the Company

Through the case study, present-day SWOT analysis, and outside research conducted on Hewlett-Packard, the group has concluded that the company will remain constant, but unless strategies are implemented to answer more consumer demands, they may lose market share. New CEO Meg Whitman has a technology visionary that will shift HP’s focus to answering consumer demands. Her leadership capabilities and projections for company future are a desirable mix for a company to achieve sustainable future relevance. With the implementation of HP Cloud Assure, a new venture capitalizing on the growing consumer interest of cloud computing, HP is already adapting to answering the demands of consumers. As long as the company continues to anticipate and provide the products and services desired, sustainability will be maintained.


1. What are the strategic challenges that HP is facing?

Strategic challenges: Cost- reduction initiatives that included “difficult but necessary voluntary- severance programs” and manufacturing consolidations. “Unacceptably high expense growth” contributed to a decline in earnings from operations and net earnings. HP had a weak macroeconomic environment and competitive price pressures that led to slumping sales. Management was unable to keep pace of the changing market conditions which were a key contributor. HP management failed to follow Dell’s lead in adopting a low- cost, Internet based direct sales channel to offset its reliance on the retail channel. * Accelerating growth in existing businesses

* Streamlining the existing decentralized operating model to fuel growth opportunities * Implementing a “total customer experience” approach * Taking advantage of HP’s strong balance sheet and cash generation capability to fund new growth initiatives * Leveraging HP’s market position

* Creating e- services ecosystems and placing HP at the center

2. Is the proposed merger likely to address these challenges? Benefits from the merger included personal systems, improved economics, and innovation. HP management believed that the combined company would have a lower cost structure due to economies of scale. HP would also be able to leverage Compaq’s progress in developing a direct sales channel, yielding a more flexible distribution model. Complementary leadership in key markets: Compaq’s strength in industry standard servers, coupled with HP’s Linus and UNIX offerings, would result in an industry- leading product line spanning the entire server category. By adding HP’s strength in high- end storage, the combined company would be the industry leader in both the enterprise storage segment and the fastest growing sub-segment storage area networks.

Doubling HP’s sales force, the merger would allow HP to increase account coverage and better compete for important customer engagements around the world. IT Services: Strengthened Business Provides Critical Mass in Key Growth Market- Management believed the merger would significantly strengthen HP and Compaq’s combined services business for several reasons. Financial Benefits- As predicted the merger would yield $2.5 billion in annual cost saving by mid-2004. Yes, we do believe the proposed merger is likely to address the challenges HP faces.

3. How do you interpret the market’s reaction to the proposal deal? We interpret the market’s reaction to the proposed deal to be negative. Just two months of the Merger announcement, HP’s share price trailed the preannouncement level by 27%, representing a loss of $12.3 billion of market share value at the same time comparable companies increased 9.9%. 4. If you were a shareholder of HP, how would you vote on the deal? If we were shareholders of HP, we would vote against the deal. It is obvious the company is losing a great deal of money at the same time other companies in the same industry are making money. The merger is not looking out for the best interest of the shareholders so we would not vote for the merger.

Bloomberg Businessweek CNN Money Hewlett-Packard Website
Hewlett-Packard Case Study
“Hewlett-Packard – Compaq: The Merger Decision”
Marketing Research–

Jennifer Brown Synopsis

The process of completing this assignment has helped me discover how to view business decisions in a more analytical way. When approaching this one it seemed overwhelming at first. I began pulling outside sources and background information that helped me gain a better understanding of the project at hand. That extra research was very useful in explaining what the companies were going through and giving different perspectives as to why. I was able to apply what I have learned in my accounting classes when the case study and articles referred to financial ratios and provided financial reports. That was helpful when trying to answer the questions assigned. Working with a group was also beneficial because there were several times my group members made great points that I may have missed working alone.

Our group has met several times since the project has been assigned. I have been present at each meeting. Before we met the first time we decided we would read the case study in full to have an understanding of what we would need to do. Our first meeting we discussed the case study and our stance on what HP should do. We also discussed the questions within the case study and started our outline for our power point. Outside of the meeting I researched articles to gain background information. Our group had several more meetings at which we outlined our strategy report and assigned each person a portion of the report. When we were finished with our portion we would submit it to the rest of the group for proofreading. Everybody completed their task as set and we came together as a group and finalized the report. I, as well as the other members of the group, contributed to the makeup and layout of both the strategy report and the power point.

Charnele Hodge Synopsis

Being that this has been my first time in a group doing a strategy report on a company, I took away a few key elements. I have learned, understood, and properly used the purpose of a SWOT Analysis. I know this form of analysis will be used in my future endeavors, so I know it will be very beneficial to me. Also, I learned while in a group setting how to effectively achieve a SWOT Analysis to inform and persuade others to understand and see our point-of-view on our particular position. As a Business Management major, this group project has helped me realize that in not every group setting, that there needs to be a set leader. In my group, I felt that everyone meshed well with each other and there was not a constant need for someone to be in charge. Every group member knew what was at stake and that being at meetings and pulling her part in the group was essential.

My individual contribution to the group was making sure that I gave my opinion on the different positions that we would be taking on the SWOT Analysis. I made it my individual objective to make sure that I pulled my part in completing each and every task that I volunteered to work on, that it was done properly, as well as completed on time. Being a Business Management major, I believe I helped bring balance among my other peers that are majoring in different genres in the college of business. I took a more realistic, rational approach to the group, in who would be better fit for particular objectives.

Sakina Middleton Synopsis

Conducting a strategy report required using resources from all aspects of my undergraduate studies. I was able to read the Hewlett-Packard and Compaq merger decision and understand the different aspects used to compile the information. In utilizing marketing concepts, I was able to conduct a strengths, weaknesses, opportunities, and threats (SWOT) analysis of Hewlett-Packard’s present company structure. My management background allowed for an understanding of company decisions made, such as whether to undergo a merger. Finally, the accounting knowledge I have acquired thus far has enabled me to read and comprehend the many financial statements used to decide which options should be made based on the factual numbers provided. Overall, my primary takeaway was my ability to read, comprehend, and analyze a case study regarding two merging companies with the knowledge and education provided by Savannah State University’s College of Business Administration.

Throughout this project I was able to increase my ability to problem solve in a group of my colleagues. No one group is perfect, but the communication skills I have acquired allowed me to handle all situations appropriately and in a timely fashion. For this strategy report, I was responsible for arranging all group meetings regarding the collection and accumulation of information for the paper. I was the initiator of correspondence and also the channel of delivery for every member’s designated portion of the paper. My personal contribution includes the compilation on the strengths, weaknesses, opportunities, and threats of the present-day company Hewlett-Packard. I was also responsible for the editing of the final paper.

Summer Wilcox Synopsis

In March 2002, Hewlett- Packard’s current CEO and president, Carleton Firiona announced the acquiring of HP’s rival company, Compaq Computer. The merging of the two companies was designed to put Hewlett- Packard/Compaq in a position to challenge one of its top leaders in the industry, IBM. The merger was also designed to create a global technology powerhouse that would provide consumers with products and services demanded by profitable enterprise customers.

After reading over the case, I started to feel like the merger was not going to be a success. The merger presented itself to be too risky. Although Hewlett Packard was aiming to become the industry’s leader by expanding into new markets, the idea of the merger just didn’t seem to look out for the best interest of the company. Management felt that HP and Compaq needed to improve their whole business structure to effectively compete with Dell which was the industry’s leader. They also felt that HP and Compaq’s leadership would complement each other in key markets such as the enterprise storage segment and storage area networks, and by having a broader portfolio of products and services. Management believed that HP and Compaq had a weak combination of products and services, and merging would strengthen that area.

While some thought that the merger would be a success to Hewlett- Packard, there were some who were against it. Among those few were the director and son of HP cofounder William Hewlett, Walter Hewlett. Walter Hewlett was HP’s second largest shareholder and had a very powerful, important voting privilege of HP. Walter was against the merger for 4 main reasons. He felt the proposed merger would be worse, the integration risk of the proposed merger would be substantial, the financial impact on HP’s stockholders would remain negative, and the position of the company would not improve.

I agree with opposing the merger of HP and Compaq. They knew from the beginning stages that the merger was going to be risky. Shareholders would lose and ample amount of value on their shares. Stockholders would get a very small amount of the combined company’s contribution to earnings. The merger would drown the stockholder’s interest in the imaging and printing business which is the most profitable of HP already. The merger would not improve the position of the company. Furthermore, HP had no experience with handling a merger of that size. All HP had to do was invest and focus more on the printing and imaging part of the company. The printing and imaging varied in low-end printers and supplies to commercial printing solutions. Instead of taking such a risky acquisition, they could have focused on something that proved already successful for the business.

My contribution to the overall strategy report was to research where HP stands now. I also found official documents filed by both HP and Compaq to the SEC about the planned merger. The documents further explained forward- looking statements, assumptions, uncertainties, and risk of the planned merger between the two companies.

Hewlett Packard Swot Analysis Essay

Tesla in Automotive industry Strategy project Essay

Tesla in Automotive industry Strategy project Essay.

1. Introduction The Encyclopaedia Brittanica defined the automotive industry as all the companies and activities involved in the manufacturing of motor vehicles, including most components, such as bodies and engines; but excluding tires, batteries and fuel1. The automotive industry started with the production of what is widely considered to be the first ever automobile, the Benz Patent-Motorwagen in 1886. Although the first car was originally manufactured in Germany, in the many decades to come, the United States led the world in total automobile production until the start of the 21st century, when China took the top position.

Today, China produces nearly 20 million units per year, almost double the amount of the United States. It is one of the world’s most important sectors when measured by revenue and it is a business that is still growing significantly. Last year for example, over 87 million automobiles were produced worldwide, a 3. 6% increase compared to the year before and a 43. 82% increase compared to 20032. Needless to say, the automotive industry is big business and it is very probable there are business opportunities that are yet to be exploited.

Tesla Motors is an American car manufacturer that tried to exploit such a business opportunity.

It’s an American company that designs and manufactures electric vehicles and electric car components3. Founded in 2003, Tesla’s goal was to lessen the world’s dependence on petroleum-based transportation and drive down the cost of electric vehicles. Moreover, Tesla’s aim is to prove that electric vehicles can be awesome as well4. This might not sound particularly unique, but Tesla Motors does have a very distinct strategy in the sense that it wants to enter the automotive market by first focusing on high-end luxury cars and sports cars.

Later, when Tesla’s products and consumers acceptance have matured, they would move into the market for the middle-class consumer, which is larger but also significantly more competitive5. The idea is to establish a strong brand name at first, which will aid the company in a later stage when the decision is made to start producing lower-priced automobiles. Tesla’s first 1 http://global. britannica. com/EBchecked/topic/45050/automotive-industry 2 http://www. oic a. net/category/production-statistics/ 3 http://www. te slamotors. com/ 4 http://www. teslamotors. com/about 5 http://www. greenc arreports. com/news/1022275_msnbc-calls-ev-drivers-lunatic-fringe 3 model, the Roadster, had a base price of approximately $100. 0006.

Their second car, Model S, is priced at $63. 750 including a $7. 500 tax credit. The company now has plans to launch a $30,000 small SUV the Tesla Model X 7. Eventually, Tesla wants to become a mass producer of electric vehicles and service both upper- and middle-class customers8 This discussion aims to analyze Tesla’s strategy. It is clear that Tesla has a very differentiated strategy and we will want to determine whether or not Tesla is likely to succeed in achieving its goals and become a successful enterprise.

Firstly, we will take closer look at the ‘environmental’ automotive industry using Porter’s theory. Secondly, we need to closely look at Tesla’s strategy. How will Tesla try to win a respectable share of the market? As mentioned before, Tesla is a very young company and it will inevitably face fierce competition from incumbent firms. A clear plan to establish a foothold in such a market will be essential for the firm’s survival. The next step is to see if Tesla identified all relevant factors and industry forces, and if it has defined a strategy that takes all of these elements into account.

It will surely need to attain a unique strategy if it wants to position itself in a key position in the market. What is it exactly that differentiates Tesla from other car manufacturers and in what way could this be beneficial for the firm? Does their strategy have a high chance of success? How can Tesla create a network of electric chargers? Before evaluating Tesla’s strategy, we must first clearly take a closer look at the company Tesla Motors itself and define the market in which the company is active. Even though they are currently operating in a smaller niche market (mid to high-end luxury cars), the plan is to eventually address the middle-class consumer and enter the ‘standard’ automobile market.

This will inevitably complicate our discussion but it is essential for determining the chance of success. The paper includes a discussion on the high entry barriers that are typically associated in the automotive industry and the possible presence of strategic entry barriers raised by incumbent firms to reduce the likelihood of new entrants. We will also mention any other strategies adopted by firms in the automotive industry who want to improve their competitive position. Furthermore, the extent to which the industry is concentrated will be discussed, as well as the possible presence of strategic complements and substitutes.

Moreover, Tesla will also need to take the non-market environment into consideration. Typical for the automotive sector is that it is an industry with very strict safety regulations. Tesla of course will also 6 http://jalopnik. com/5135290/tesla-increases-prices-on-already-ordered-roadsters 7 http://onpoint. wbur. org/2009/09/25/teslas-elon-musk-on-a-sub-30000-electric-car 8 http://www. marketwatch. com/ story/strategic-corporate-profile-of-tesla-motors-global-operations-2014-01-13 4 have to face the challenge of producing vehicles that respect these requirements.

On top of that, the relatively recent discovery of global warming, partially caused by car emission (CO2), has led to the implementation of a series of emission standards that aim to reduce the greenhouse gasses emitted by petroleum-powered vehicles. This may not seem relevant for Tesla Motors at first since its goal is to produce electric vehicles. These regulations are however accompanied with a credit system, which means that car manufacturers that do not meet the standard are penalized and have to buy credits from other manufacturers that have a surplus of credits9.

Since Tesla Motors only produces emissions-free vehicles, it has a major surplus of credits which it can sell to other car manufacturers. General Motors for example has to buy additional credits from Tesla in order to respect the regulation. This implies large transfers of wealth across car manufacturers. As a result, companies selling cars with a (too) high emission must raise prices to pay for the credits. On the other hand, the beneficiaries of these wealth transfers such as Tesla can now use the extra revenue to lower prices and take on a more competitive position in the market.

All of this will of course be discussed more thoroughly in our discussion below. The paper concludes with a summary of the discussion and our prognosis regarding the future success of Tesla Motors in the automotive industry. 2. Market definition This paper only looks at models available in the US because it’s the largest electric car market, the EU is the second largest market but is much more complex because EU-countries have different legislation for electric cars.

Some countries have large subsidies for electric cars and thus large market shares such as Norway, on the other hand some countries have almost no market share. The Model S is the only available model at the moment targeting the middle to high-end luxury car market. This model costs between 63. 750$(base model, 7500$ tax credit) and 125. 220 $(full option, 7500$ tax credit). 10 Because the model S is all electric, we can compare the car to slighter cheaper models because of lower long term ownership cost thanks to lower cost for electricity compared to fuel.

The base model is a full-size 5 adult seat sedan powered by a fully electric 60 kW-h motor achieving 302hp. Top speed is relatively low at around 200km/h but acceleration is very good at 5. 9 seconds to 100 km/h, this is typical for an electric engine. More expensive models offer better range and performance and a warranty with unlimited kilometers on the battery for 8 years compared to 200. 000km for 8 years on the base model. 9 http://mitsloanexperts. mit. edu/californias-auto-emissions-policy-hits-a-tesla-pothole/ 10 Teslamotors. com 5 We will consider the mid to high-end luxury market containing one electric the Tesla, a couple of hybrids and a lot of traditional cars.

Mid-end starts at prices of approximately 50. 000 $ with cars such as the BMW 5-serie, Audi A6 and Mercedes E-class. 11 High end stops at prices above 130. 000$. For the following analyses we will sometimes look at broader markets containing cheaper alternatives because even though these cars aren’t substitutes they are still relevant. Research show that tesla owners were most likely to previously own a Toyota prius hybrid or secondly luxury BMW and Mercedes.

12 3. Industry attractiveness and profitability In this section the overall attractiveness of the ‘environmental’ automotive industry is assessed using Porter’s influential five forces model. The term environmental indicates those vehicles that do not solely rely on the combustion of fossil fuels to power their engine. Examples are electric vehicles, hybrid vehicles or plug-in hybrid electric vehicles (PHEVs). Both the pure electric automotive industry as well as the overarching environmental automotive industry is presented, as these cannot always be seen separately. In his model, Michael Porter identifies five key competitive forces that determine the structure and profitability of a certain industry.

The five forces are the bargaining power of suppliers, the bargaining power of buyers, the threat of substitutes, the threat of entry and the rivalry among existing competitors. Porter’s model enables managers, in an easy and straightforward way, to understand their industry environment and to shape their firm’s strategy accordingly. As a rule of thumb, the stronger the five forces, the lower the industry’s profit potential and hence the industry’s attractiveness to competitors. The most influential forces that have shaped and continue to shape the environmental automotive industry are discussed in the following paragraphs.

A first restraint on the overall profitability of a firm is the bargaining power of its suppliers. For the environmental automotive industry the bargaining power varies among the suppliers of different components. An important component in the construction of hybrid and electric vehicles is the battery. The bargaining power of the battery companies is low as there are a lot of manufacturers present on the market. Tesla Motors, for instance, buys Li-ion cells from different manufacturers. Consequently, in the case any problems occur with a particular battery supplier, Tesla can easily switch or threaten to switch to other suppliers at low costs.

Among others, Tesla works together with Daimler AG and Panasonic to develop battery packs and chargers (Boyke, Cheng, Clevers, Schroeder, & Strupp, 2010). Another important component of any vehicle is the chassis. For the construction of the chassis 11 http://buyersguide. caranddriver. com 12 h%p://www. wired. com/2014/03/tesla-model-s-toyota-prius/ 6 specialized engineering skills are required. These skills can often be obtained through strategic partnerships with other car manufacturing companies.

In the case of such strategic interdependence the bargaining power of the suppliers is higher than in the ‘take-it-or-leave-it’ battery case. In the past Tesla had an exclusive partnership with Lotus for the physical construction of the Roadster13. As of recently Tesla and Toyota Motor Corporation also agreed to cooperate on the development of electric vehicles, parts, the production system and engineering support14. In conclusion, however, the overall bargaining power of suppliers in the automotive industry is low. The supplier firms must contend with substitute products for sale to the industry.

Tesla has more than 150 suppliers around the world, which provide over 2000 parts to Tesla. For the production of the Model S, Tesla uses a highly integrated manufacturing approach, even negotiating with suppliers to manufacture products on site to use the excess capacity. In this way, the integrated approach enables Tesla to alleviate its dependence on supplier performance (Boyke, Cheng, Clevers, Schroeder, & Strupp, 2010). A second force that determines the profitability in an industry is the bargaining power of buyers. The bargaining power of buyers concerns the pressure buyers can put on the margins of producers by demanding a lower price or a higher product quality.

In the environmental automotive industry the bargaining power of buyers is rather low. For Tesla in particular this is even more so. For starters, Tesla does not sell products in bulk. This means that for the consumers that purchase the finished products no real scale effects are present. Moreover, Tesla has a quite unique position on the market. Tesla is the only manufacturer on the US market that produces high-end, full electric cars that can drive autonomously for over 400 km. By employing a highly skilled, technocratic labour force and management team, Tesla has branded itself as a cutting-edge, innovative firm.

They manufacture high quality electric vehicles that are very performing while being environmental-friendly and fun at the same time. The buyers of the Model S also have the possibility to entirely customize the vehicle to their taste. This creates a sense of exclusivity among the clients. Besides the B2C applications Tesla has also established a strong position in the B2B environment 15. Tesla for example licenses its patented processes and technologies to other companies.

Especially in the area of battery technology 13 http://www. teslamotors. com/blog/lotus-position 14 http://www.teslamotors. com/about/press/releases/tesla-motors-and-toyota-motor-corporation- intend-work-jointly-ev-development-tm 15 http://www. slideshare. net/joseangeldf/darden-school-of-business-tesla-strategic-analysis 7 and the construction of ‘supercharging’ stations Tesla has a lot of expertise16. The proper licensing of these assets will benefit the entire environmental automotive industry as a whole. An especially important force in the electric automotive industry is the threat of substitutes from outside the given industry.

Hybrid vehicles and more specifically PHEV provide a similar functionality as the full electric vehicles. Those manufacturers within these strongly related industries, which produce vehicles and services with an attractive price and performance, pose a serious threat to the established electric car manufacturers. For the Model S the most important substitutes are those mid to high-end hybrids. These vehicles offer low emissions and a good fuel economy at a similar price as the Model S. The most successful alternatives within the US automotive industry are discussed in the next chapter. In the specific price range of the Model S the threat of substitutes is still

limited as Tesla is gradually positioning itself as a high-value, exclusive and environmental brand with a growing number of enthusiasts17. Nonetheless, a possible future expansion into the mid-end and low- end market segment will significantly increase the threat of substitutes. There are, however, some complementing factors that might reduce the threat of substitutes both for Tesla as well as the electric automotive industry in a whole.

The scope for future development in battery technology, the presence of several tax and parking incentives for electric vehicles and the expected rise in oil prices in comparison to electricity prices might spur the attractiveness of the electric automotive industry. These market dynamics both play on the level of customers as well as producers. One possible negative factor in the realisation of potential sales is the low availability of charging and home charging facilities. However, Tesla Motors is addressing this issue by investing heavily in strategically located charging facilities and by expanding the power and endurance of the battery pack 18. Tesla’ s battery pack technology is critical to the company’ s positioning and competitive differentiation.

The low cost of the battery pack allows Tesla to not only design cars with battery ranges greater than the competition but also place equal emphasis on design, performance, and energy efficiency. On the short term, the threat of new entrants in the electric US market is rather limited because of several entry barriers. The industry is characterised by high capital requirements and high sunk costs. 16 http://www. sl ate. com/articles/technolog y/technolog y/2013/05/tesla_model_s_the_electric_car_compa ny_is_a_little_bit_apple_a_little_bit. html 17 http://www. wikiwealth. com/five-forces:tesla-motors, http://www. releases.

18 http://www. slideshare. net/joseangeldf/darden-school-of-business-tesla-strategic-analysis, http://www. reuters. com/article/2014/02/26/us-tesla-battery-panasonic-idUSBREA1O1MF20140226, http://www. t eslamotors. com/supercharger 8 Moreover, advanced, often patented, technologies and processes as well as a highly skilled workforce are required to successfully manufacture an electric car. The success of a firm in the industry is also largely determined by its brand image and the realisation of economies of scale19. Therefore, it is not easy for a potential new entrant to establish a foothold.

This is even enhanced by the fact that the incumbent firms have a large and flexible production capacity that can be used as a retaliation device in case of entry (Boyke, Cheng, Clevers, Schroeder, & Strupp, 2010). However, established vehicle manufacturers with deep pockets that have currently missed the ‘environmental train’ or disruptive innovators like Tesla Motors might overcome these entry barriers in the long run. The current competition in the US environmental automotive industry is moderate. Only a few major brands are competing.

Because of the high entry barriers and the threat of substitutes not a lot of brands risk burning cash in an innovative and insecure business. However, as the sector matures and more people consider switching to an electric car this will change. In a recent report of the Electric Vehicles Initiative (EVI) a global goal of 20 million electric passenger cars, including plug-in hybrid vehicles, battery electric vehicles (BEVs) and fuel cell electric vehicles, in stock by 2020 is set forward. This is still a long way to go as the total worldwide electric vehicle stock at the end of 2012 only amounted to a large 180. 000 units. In 2012, 38. 585 PHEVs and 14.

592 BEVs were sold in the US. The cumulative stock in the US in 2012 was 71. 174 units (Clean Energy Ministerial, Electric Vehicles Initiative, International Energy Agency, 2013). In 2013 roughly 96. 000 electric vehicles were sold in the US environmental automotive industry(including hybrids)20. The three top selling brands are the Chevrolet Volt, the Nissan Leaf and the Tesla Model S. It is clear that the popularity of electric vehicles has significantly increased over the last few years. It is expected that this trend will only continue in the future as the number of models on the market increases.

The share of electric cars is still only about 3,5% of the total number of cars that are sold annually in the US market21. Hence, the growth potential of the environmental automotive industry is huge, this both on a domestic as well as an international level. In conclusion of this section an assessment is made of the overall profitability of the environmental automotive industry. As previously argued, the bargaining power of suppliers and buyers is rather limited in the industry. Therefore, the vehicle manufacturers can attract more profits than their up- and downstream partners.

The industry is also characterised by several entry barriers, especially on the 19 http://www. wikiwealth. com/five-forces:tesla-motors 20 http://www. greencarreports. com/news/1089443_plug-in-electric-car-sales-for-2013-almost-double- last-years 21 http://electricdrive. org/index. php? ht=d/sp/i/20952/pid/20952 9 short term. The effective prevention of possible entrants reduces the pressure on prices and allows incumbent firms to attract a significant share of the profits. The threat of substitutes is one of the most important restrictors on the profitability within the industry.

Because of the similarity in functions between electric brands and hybrid brands it is important for the incumbent firms to create a positive consumer image towards their products. The growth potential of EVs is the most important driver of future profitability of the industry. Until now incumbent firms have undertaken a lot of R&D initiatives in the area of battery and charging technologies. The sales numbers in the US market show that these investments are finally starting to pay-off. In the long run, with a growing global popularity of EVs, it is to be expected that also other companies will consider entering the environmental automotive industry.

4. Tesla in the market Tesla differentiates itself by producing environmental responsible cars that have all the benefits of a luxury vehicle. By equally emphasizing on speed, handling, design, comfort, and zero-emissions, Tesla creates a unique balance between performance, efficiency and aesthetics. Through the offering of this first fully electric luxury sedan car, Tesla attained a first mover advantage. Together with its ‘Silicon Valley’ culture, an approach that is innovative, competitive, and effective, Tesla achieved a solid brand name in the automotive market. (Mangram, 2012) Tesla’s battery technology is also critical to the company’s competitive advantage.

With its cutting-edge battery technology, combined with essential technology research, Tesla is able to design and produce electric cars with a far greater range than its competitors. Its lithium-ion based battery, for instance, is 250 kilograms lighter compared and has a range of up to 500 kilometers. Bron ? vergeleken met wat ? But even with a supercharger a full charge is approximately one hour. Moreover the company produces many of its key parts in-house, thus making it harder for competitors to replicate.

With the expansion of its own retail shops and the establishment of a network of free recharging points for its customers, Tesla keeps challenging the traditional car companies (The Economist, 2013). Tesla’s main strategy can be seen as a reflection of the innovative marketing approach Apple used for its ingenious technology. It holds that any new technology is often very expensive and wealthy customers are regularly the first to accept it. Consequently, Tesla produced its first vehicle, the Roadster, for the premium sports car consumer segment. Nowadays, with the production of the Model S Sedan, the middle to upper- middle class consumers are being targeted.

Finally, by 2015 Tesla plans to produce and market an electric car available at a mass-market consumer price range (Tesla Motors, 10 2014). Although this ‘Apple Computer’s business model’ is considered to be rather exceptional in the automobile industry it helped the company to position itself as groundbreaking, self-determining, and cool. Tesla BMW Daimler AG General Motors Toyota Revenue 2 billion 60 billion 117 billion 155 billion 22 trillion Net Income -74 000 2 billion 6,4 billion 5,35 billion 962 billion Sales Growth 387% 7,2 % 3,22 % 2,08 % 18,73 % The luxury car market is highly competitive, with several incumbent companies with loyal customers.

Tesla’s main competitors in the luxury car segment are BMW, General Motors, Toyota and Mercedes. While the number of any competitive electric car is still low, an increase can be expected. General Motor’s Chevrolet Volt is one of the main competing vehicles in the market. It covers a wide target market and comes at a notable lower price than Tesla’s Model S. Toyota remains the global leader when it comes to selling hybrids. Although Toyota has 4 electric cars (the Prius, the RAV4 EV, the FCHV fuel cell car, and the Scio IQ-EV), it strategically collaborates with Tesla to improve the electric car development.

This alliance has been one of the main factors of Tesla’s growth as Tesla consumers can get customer service in Toyota sites (Toyota Motor Corporation, 2014). The chart compares Tesla’s main competitors on the basis of revenue, net income and sales growth. As we can see, its sales growth is overwhelming. Given that is a rather new company, it indicates its rapid expansion on the electric car market. However, Tesla’s net income remains negative. Nonetheless, the company’s share is currently being traded at 20 times its earning, and as the company continues to grow these numbers are expected to rise.

According to an article by Wall Street, 43 new hybrid, electric, and fuel-cell vehicles will be produced in the US market by 2015. Moreover, the market share of alternative fuel cars will increase from 3% in 2012 to almost 5% in 2014 (Wall Street, 2013). New electric vehicle entrants and existing plug-in hybrids manufactures will continue to compete with Tesla in the near future. While the traditional car manufactures are firmly entrenched, Tesla’s competitive advantages could develop to the securing of a significant market share in the electric car market. 5. Sustainability of the competitive advantage.

This chapter analyses the degree of sustainability of Tesla’s competitive advantage. First the relevant trends and developments in the automotive industry are briefly reviewed. Furthermore, the 11 predominant isolating mechanisms in force given the market position of Tesla are discussed. We argue Tesla is a textbook example of a disruptive technology. To conclude, strategy recommendations hereupon are formulated. The primordial focus of our analysis shifts in this chapter from the luxury car market to the overarching automotive industry.

The rational hereof is clear-cut. On the one hand, the trend analysis for the automotive industry applies to and sufficiently covers the luxury car segment. On the other hand, Tesla continuously voices the strategy to level down through the segments. Furthermore, the majority of car manufacturers produce for multiple segments of the industry. The sustainability of Tesla’s competitive advantage thus strongly depends on the industry rather than the Model S market segment. 1. 1 Trends in the automotive industry The automotive industry is, may be argued, rather conservative. The market structure is little dynamic, without change in market leading firms for long.

Furthermore, the industry evolved the past century merely through optimising the traditional ‘automobile’, with limited major breakthroughs. To illustrate, though fuel efficiency and exhaust of the combustion engine has greatly improved, working principles remain unchanged. The emergence of (electrical) alternatives that are sold commercially is only a recent phenomenon. We review three developments that will impact the automotive industry. First, the society-wide surge of environmentalism a fortiori impacts the automotive industry. A thickening body of government actions forces car manufacturers to produce cleaner cars.

This both directly, through legislation (e.g. CO2 output limits for new cars), or indirectly by altering consumer behaviour through excises or tax incentives. Furthermore, consumers are increasingly environmentally conscious. Bottom-line, car sales undeniably grow more eco-friendly. Furthermore, the panoply of driver assisting technology that brakes automatically for obstacles or parks the car will be further developed. Self-driving cars may be short-term everyday reality, with Google pulling the cart. Lastly, Gen Y is argued to focus on services rather than ownership.

The emergence and success of car sharing by Zipcar or Cambio illustrates this shift in mentality for the automotive industry. 1. 2 The isolating mechanisms The electric car is strongly based on the century old inventions of Serbian engineer Nikola Tesla. We nevertheless argue that the electric car is a text book disruptive technology. This technology, spearheaded by Tesla, will herewith potentially overturn the automotive industry, challenging the 12 incumbents. The early-mover advantage in this creative destruction may enable Tesla to sustain its competitive advantage. The disruptive technology concept is extensively reviewed in the of literature.

We apply the framework to the Tesla case. First, the environmental movement and increasing fuel prices created momentum for alternatives of the traditional combustion engine. Both incumbent car manufacturers and many start-ups invested in research. The hydrogen car made the press as a promising technology, but proved little feasible. Eventually the electric car showed market-viable. Many innovators inter alia Fisker, failed. However, as statistics dictate tech start-up Tesla got ahead in the race at the expense of dominant car manufacturers.

The 2400 Tesla Roadsters produced, sales manifestly unattractive  toincumbents, were a great success and learning opportunity for the start-up. The Tesla Model S unprecedented battery range no longer forces consumers to trade off fuel efficiency for convenience. Herewith it can shift from niche product for wealthy eco-hipsters to head on competition for the traditional luxury sedan. The Model S proves superior to its competition threefold. First, the position of the battery pack lowers the gravity centre of the car for superior handling (and creates a spacious trunk in the back and front). The electric engine also delivers instant torque, further allowing sporty driving.

Furthermore, the Model S was granted a record safety score of 5,4 out of 5. Lastly, electric engines are maintenance free. Note that the electric car still offers greater potential for technological progress than the more tried and tested combustion engine. The incumbent firms are wary of this potential shift to electric for the automotive industry, note the growing number of electric cars offered. However, extensively studied, the difference in investment dynamics with nimble start-ups impedes them to appropriately and successfully commit to the disruptive technology. The sunk cost and replacement effect are strong in this case.

Therefore, it is Tesla that has a head start, with Daimler and Toyota asking the new kid on the block for help. The early-mover advantage of Tesla will sustain its competitive advantage threefold. First, we consider the economies of the learning curve. The first car manufacturer to fully grasp the paradigm shift Tesla benefits hereby manifold. The design-from-scratch approach is inevitable to exploit the electric car technology to the full. The Model S is a thus a step ahead of the build-on competitors, quickly adding to Tesla’s experience with every unit sold.

Furthermore, the superior battery packs are en route to continue to offer greater range and faster charging at a lower unit cost. Note that Tesla supplies its electric powertrain to Toyota and Daimler, further adding to its cumulative experience. Moreover, the strong experience gained is further protected from imitation through multiple patents. The literature further arguments the reputation for quality to be an important source of early-mover advantage for experience goods. Thus, the brand image of an electric car brand may be considered important, notwithstanding the ubiquitous possibilities for test drives.

Tesla has a rock solid reputation 13 for quality, though much like Apple it has irrational haters22. To illustrate, the Tesla recall threat due to 3 car fires was resolved by an overnight software update that would slightly raise the Model S when driving on the highway. The Tesla stock price had a field day23. Furthermore, the Model S production cannot keep up with sales. Herewith, Tesla doesn’t spend a dollar on marketing. Thirdly, Tesla benefits from network effects to sustain its competitive advantage. Tesla heavily invests in the supercharger network, that quickly expanding adds to the convenience of driving an electric car station by station. For competitors it is meanwhile.

Tesla in Automotive industry Strategy project Essay

“Early Bird” or “Second Mouse” Essay

“Early Bird” or “Second Mouse” Essay.

“The early bird may get the worm, but the second mouse gets the cheese.” Decide which of the strategies (“early bird” or “second mouse”) is the most effective in your life as a student and life in general.

The early bird may get the worm, but the second mouse gets the cheese was first recorded in 1605 in William Camden’s book of proverbs and has remained part of the misplaced work ethic ever since. The early bird gets the worm meaning it is best to start the day early and also not procrastinate on things.

‘But the second mouse gets the cheese’ meaning the first mouse got killed in the mousetrap and so you got rewarded for starting late or procrastinating. So let the other eager person screw up and then learn from their failure and then reap the reward.

I am neutrally in this option. If the early bird gets the worm, then how can it be that the second mouse gets the cheese? If we need to motivate our staff to get up and get started, then we might want to state that the early bird get the worm, so let’s get up and get going so as to get there early before anyone else.

On the other hand, if the competition has come out with something quicker than we have, then in order to get everyone on point we might say, “The second mouse gets the cheese.” In other words, if we build upon the original idea that may have been invented first, then we can build something bigger and better.

“ The early bird may get the worm” meanings that success comes to those who prepare well and put in effort. Preparation is the cost you need to pay in order to be truly rewarded. You can’t just jump in the ring and expect to win the fight without having first learned how to box and prepare your body for the required endurance. From the moment of birth till death, we work very hard to succeed.

In childhood, we learn how to walk and communicate with others though persistence and willingness. Throughout our adolescence, we study hard to achieve good marks and to get a proper job. For example as I am a student, it is best to study early and in small increments well before the test. Do not cram the night before the exam is the best advice for me from my secondary school teacher that make me successfully went into university.

However, “second mouse” is another effective strategies in my life as a student and life in general. Sometimes in life it is smart to learn from the risks that others take and the mistakes they make. The dead mouse in the trap saw the cheese and went for it. Did not work. But the second mouse, though still cautious, was in the enviable position of reaping the reward with no risk.

We are all human, therefore we all make mistakes, but the one thing that comes out of these mistakes is we usually learn a lesson. Making mistakes is human nature, none of us are exempt. That is even true in writing this paper, I will have to write many drafts without errors, and to meet what I feel is right. It will only be natural for me to make these mistakes. But, just as in making errors on this paper and making the corrections, making mistakes in life and correcting those makes for a better human being. We need to be smart so that we will be the “second mouse that get the cheese but not the first mouse that in the trap.

“Early Bird” or “Second Mouse” Essay

Global Strategy and Local Needs in the Luxury Car Market Essay

Global Strategy and Local Needs in the Luxury Car Market Essay.

1 Introduction Since the 1980’s researchers have been trying to understand what globalization is and how competitive advantage can be gained out of it. This study will look at this movement with a critical eye and reflect whether or not it is sometimes better to give local needs priority in management decisions. The purpose of this study is to analyse whether the “Global strategy, but local needs” assumption leads to success. The objective is to provide scientific evidence for this strategy, analyse different organizations’ strategies and provide a possible recommendation for the best practice.

Global Strategy and Local Needs in the Luxury Car Market Essay

Customer Service Strategy of British Airways Essay

Customer Service Strategy of British Airways Essay.

British Airways is one of the worlds leading airlines with a network that provides passenger and freight services to 149 destinations in 72 countries. Its airline network is centered on the United Kingdom where 85% of its 47,500 workforce is based. The mission of the company is to deliver services that matter for people and how to fly. In order to achieve or realize this mission; British Airways recognizes the importance of working in partnership with its stakeholders. This has significantly influenced its approach to corporate social responsibility.

The main reason why the company has decided to engage CR is to help it achieve its long-term strategic goals in providing growth opportunities around the health airport

Today most companies are redesigning their operations and management style in order to increase customers satisfaction and productivity. With the introduction of the new technology, a lot of changes have been brought in the business environments. Different companies are coming up with various types of new information and technology in order to improve their businesses.

This paper therefore utilizes the various tools   of writing a research proposal to investigate how the new technology has made British airways company to improve the way it serves its customers what should be noted is that the success of any organization will depend on the quality of customer service skills employees have. The company has not been left out in coming up with new method s of satisfying its customers.

Communication more efficiently

If we consider the number of immigrants (passengers) visiting United Kingdom from east and central Europe, it can be said that the company has realized a lot of benefits. However the company needs to do a lot in order to attract more passengers and tourists into the region.

To date many tourists are raising questions about security measures and long lines made when booking for flights movements from major cities to the air ports has also not been possible. This research proposal has therefore been developed to investigate the efforts the company has put forward to improve customer satisfaction which covers the area of booking, traveling to the Airport in order to catch up with time and finally security measures that have been taken. This is because terrorism and drug trafficking has been mentioned as public enemy number one in the region. Passengers or tourists would not like to risk their lives when cases of terrorism are high. This means that the company needs to address the issues of tight security to ensure that its customers are protected.

            In any research proposal there must be an area dealing with significant of study that is the rationale of the study (Gill and Johnson, 1997). The company to make some adjustment in order to improve their services and attract more customers will use the information on the study. The government will also use the information to address areas that needs provision of services such as upgrading public transport system, security and provision of social amenities.

Research question

            The research question in this study will focus on the way the British airways company has improved its services to attract more customers and serve its customers better (Veal, 1997) .The following research questions will be used to assist in directing the study in this given area. The questions are as follows.

  1. Are there changes in the way passengers are served at airports?

      2) What measures should be taken to ensure that security and safety of passengers                are provided by British Airways?

3) Is there any link between public transport and airports to improve passengers’ satisfaction in order to reduce congestion?

4) What should British airways do in order to grab the biggest share of this growing market?

Objectives of the study

            This research proposal is on investigating how British Airways has tried to improve the service to passengers. According to Clark (1998) the objectives of any study should be specific, smart, realistic and time bound.  The specific objectives on the study will be:

  • To evaluate the safety and security measures taken by airports and airlines security department to ensure passenger are protected.
  • To find out the measures taken to promote easy movement of passengers.

      (3) To investigate how the company has tried to address the issue of customer satisfaction

            especially passengers.

Hypothesis of the study

            Hypothesis developed in this paper will be used to provide a general answer to the problems being searched on. However these hypotheses are subjected to clarification where by they will be tested to confirm whether they are true or not (Johns and Lee-ross,1998). The following alternative hypotheses therefore have been constructed to achieve objectives stated above.

H2: Online booking of tickets has been developed to improve services offered to passengers.

H3: Public transport has been established to help in easy movement of passengers from and to the airports.

H4: Security has been increased to ensure that passengers are protected from any threats.

Literature review

Literature review is one of the most important aspects of a research proposal (Hart, 1998). It involves reviewing the existing literature in order to a void wasteful duplication of work other researchers had previously done. It is divided into three sections whereby the first section deals with online booking, second section deals with modification on transport and last one on security measures.

Online ticketing

            The effects of the new technology have been seen in the air transport sector. To date it can be said that online shopping has become a feature of modern life. Passengers who are traveling using air transport can now take or find their tickets through the use of Internet (Debra and Colin, 2003,p7). They can further customize their tickets by adding meal preferences and self selected seat numbers to make them feel satisfied. The new technology has also made it easier for airlines to communicate information to passengers very easily about conditions attached to fares and about general conditions of carriage (Arnold, 2004). This has led to reduction of cases of inconveniency during travel (Finn, Elliot and Walton, 2000)

            A number of airlines are now shifting from traditional way of obtaining tickets to modern way where online shopping is encouraged. For instance easy Jet has ensured that over 98% of its bookings are made online (Rigas, 2002,p31). The Internet according to passengers has made booking of air tickets much easier than ever before. Among the advantage it has include saving time, and money since passengers will tend to avoid agents premiums and booking fees. Passengers therefore have time to make their decision on what to pick on.

Online ticket sales by region



Customer Service Strategy of British Airways Essay