Impact of The Microenvironment on Airline Performances

Contents

Introduction.

Impact of environment

Effects of imitation.

Key success factors.

Importance of resource-based theory.

Conclusion.

Reference.

Introduction to Competition in the Airlines Industry

The airline industry is highly aggressive and capital intensive. Furthermore, the competition in the airline industry is concentrated as obstacles to entry are low due to the liberalization of market access. Also, the industry contributes to the economic development by allowing the movement of passengers from one place to another. Also, the airlines have a vested interest in offering high-quality services most effectively. In the airline industry companies imitate each other to maintain their relative position or neutralize the aggressive actions of the competitors. The main aim of this report will help to understand different factors that can affect the overall performance of the airline industry. It will further provide suggestions that can allow the leaders to become more successful.

Impact of Environment

Internal and external environment plays a very significant role in influencing the performance of the airline industry. Furthermore, the industrial-organizational model recommends that involvement is the key point for firms to attain higher returns. Also, the external and internal environment analysis is imperative because it is the initial step in developing the form of strategic management procedure (Yao, Nerkar & Deshpande, 2016). The analysis helps to establish the forms of resource availability and capability along with the core competencies looking forward to setting commitments making decisions taking necessary actions aiming to reach competitiveness and to achieve higher Returns. Also, environmental factors related to conditions, factors liked with distinctive conditions, factors related to environmental and metrological circumstances. To fly in this difficult setting pilots need a great deal of attentiveness, knowledge, and information. It is highly crucial to recognize and elucidate the situation and the causes of aircraft catastrophe which happen due to environmental factors that will aid to avoid such type’s comparable accident in the future.

Effects of Imitation

There are various reasons that airlines are subject to imitation. Furthermore, there are only a few suppliers in the airline industry as a huge investment is required. Imitation is a widespread factor that arises in a range of business sphere. Firms imitate each other to adopt new techniques, processes, and innovation. Imitation may increase the positive and negative outcomes for the firms. Also, imitation is a competitive strategy as it helps to reduce the innovator's profit. However it is a common process in the airline business but by reducing variety it can compound the collective risks of firms in an industry (Mhlanga, 2018). Also, the experts suggest that the airline businesses must focus on innovations by improving their resources and capabilities.

Key Success Factors

Strategic leaders can become successful by possessing different qualities and skills. Leadership is one of the imperative components for strategic leaders. They must have a capacity to lead the position to pay attention, monitor, examine, use experience and consider the present likelihood to endorse suitable decision-making activities to articulate the principles, and communicate with people on the essential level. To become a good strategic leader does not mean having an effective combination of skills and traits. It mainly focuses on understanding a challenging situation, defining the circumstances and developing the necessary skills gradually. An effective leader is the one who demonstrates the best skills in the decision making process and goals related activities. In the airline industry, leadership theories play a very important role in directing the leader to implement best actions (Song, Park & Cornejo, 2016). Delta Airlines revealed how diverse theories can be applied and used to the present technical, financial, and organizational aspects. It revealed how to combine transformational, contingency and behavioural theories.

Importance of Resource-Based Theory

Resource-based theory recommends that resources are important to attain competitive advantage (Lohmann & Spasojevic, 2018). Also, the strategic resources can offer the basis to develop Firm capabilities that can lead to better performance. The theory also stated that it is important to recognize that strategic resources that can be developed by utilizing several Strategies and resources and combining them in a way that cannot be copied by any competitor. For instance, Southwest airline is complemented by approaches that cannot be copied by other competitors. The business put major emphasis on low prices and offer superior services. It has been identified that the business majorly focuses on resources and capabilities. The resource includes effective skills, knowledge, and culture whereas the capabilities focus on providing effective customer services by building a unique organizational culture.

Conclusion on Competition in the Airlines Industry

Airline industries must focus on continuous innovation to differentiate it from other competitors. The analysis revealed that Delta airline succeeds because it focuses on providing highly effective customer services at low prices. It has been identified that the resource-based model is used by successful airline companies to attain a competitive advantage. Also, effective leadership plays an important role in improving the customer services and profitability.

Reference for Competition in the Airlines Industry

Lohmann, G., & Spasojevic, B. (2018). Airline business strategy. The Routledge companion to air transport management, 139-153.

Mhlanga, O. (2018). An analysis of the impact of the microenvironment on airline performances in South Africa using Porters' five forces model. International Journal of Tourism Policy8(4), 303-318.

Song, Y. A., Park, J. M., & Cornejo, K. (2016). The Effect of a Firm's Resource Characteristics on Strategic Alliance Formation in the Airline Industry. Journal of International Trade & Commerce12(5), 149-166.

Yao, T., Nerkar, A., & Deshpande, V. (2016). Strategy, Structure, and Performance: A study of the US Airline Industry. In Academy of Management Proceedings (Vol. 2016, No. 1, p. 17760). Briarcliff Manor, NY 10510: Academy of Management.

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