 張嘉修  高雄人  大一加入國術社至今  大二新竹市長盃男子長器械第二，當社長  大三以後擔任社團教學  刀、棍、劍、槍、大刀  94~97 交大環校路跑  In William Lab

Author: JAMES A. KLING and KEN A, SMITH Presenter: 張嘉修 指導老師 : 任維廉教授 2009/10/12 運管碩一 張嘉修

 Introduction  Background  Porter’s generic strategic  Data  Methodology  Groupings and validation of results  Conclusion  Critique  Q&A, discussion 2009/10/13 運管碩一 張嘉修

 The deregulation in 1978  Relative competitive positions (strategic groups)  Michael Porter’s strategy  Data of nine airlines  1991~1993 profit margin to validate  Suggestion 2009/10/1 運管碩一 張嘉修 4

 The deregulation in 1978  “Big three" U.S. airlines :United, American, and Delta  Bankruptcy during the early 1990s: America West, TWA, and Continental  The nine major U.S. passenger air carrier ◦ Southwest, Northwest, USAir, American, TWA, Continental, America West, Delta, United  These airlines account for 90% 2009/10/1 運管碩一 張嘉修 5

 Cost leadership ◦ Produce goods or services at a lowest cost  Differentiation ◦ Being unique and for which buyers are willing to pay a premium price  Focus ◦ Serve the needs of specific customer group or market segment  Stuck in the middle ◦ No basis for competitive advantages 2009/10/1 運管碩一 張嘉修 6

 Available seat mile (ASM)  Cost / ASM (X-axis) ◦ Cost to fly one seat one mile  Airline quality rating (AQR) (Y-axis) ◦ Weighted by nineteen factors 2009/10/1 運管碩一 張嘉修 7

2009/10/1 運管碩一 張嘉修 8 Quality (AQR) Cost Per ASM (Mean of 8.8) (I) Differentiation (II) Focus (III) Cost Leadership (IV) Stuck in the middle

2009/10/1 運管碩一 張嘉修 9 AirlineRevenueAQRCost/ASMLength Continental$4.1 billion mile America West $1.3 billion mile Average$5.6 billion mile Stuck in the middle-3.57 USAir-4.28 Northwest0.43 Continental-3.85 TWA-6.60

 Average 1.39% ◦ (I)Differentiation: American, United, and Delta ◦ (II)Focus: Southwest ◦ (III)Cost Leadership: America West  Average -3.57% ◦ (IV)Stuck in the middle: TWA, Northwest, USAir, and Continental 2009/10/1 運管碩一 張嘉修 10

 (I)Differentiation: American, United, and Delta  Intense competition  (II)Focus: Southwest  Short and high density routes  Low cost and high quality  (III)Cost Leadership: America West 2009/10/1 運管碩一 張嘉修 11

The suggestion to “stuck in the middle” firms  Continental ◦ Improve quality to follow Southwest  TWA and USAir ◦ Hard to survive 2009/10/1 運管碩一 張嘉修 12

 Northwest ◦ Better financial than other stuck firms ◦ Not adequately explained ◦ May focus on market segment which doesn’t have severe competition in north-central US 2009/10/1 運管碩一 張嘉修 13 Stuck in the middle-3.57 USAir-4.28 Northwest0.43 Continental-3.85 TWA-6.60

 Wrong word (p.29) “Airlines with above average…”  Wrong quadrant (p.30) “(II) and (IV) ”  Insufficient hypothesis and test  Obscure boundary of Porter’s model  The reference index (AQR, ASM, cost)  Variables in Accounting  The change of AQR factors are based on 15 elements for 2007 (  The strategies really are taken by airlines 2009/10/1 運管碩一 張嘉修 14

Group/AirlinesAverage profit margins of 1991~1993 Differentiation-0.76 America0.39 Delta-0.11 United-0.56 Cost leadership America West-0.48 Focus Southwest with strategies /10/1 運管碩一 張嘉修 15

( July June 2009)  America West was absorbed by America West Holdings Corporation in 2007  TWA was acquired by American Airlines in 2001 ( 2009/10/1 運管碩一 張嘉修 16 AirlinesShareOriginal strategies American14.2%Differentiation Southwest13.4%Focus United10.8%Differentiation Delta10.8%Differentiation US Airways8.3%Stuck in the middle Continental7.6%Stuck in the middle Northwest6.2%Stuck in the middle

 The basis of Porter’s model 2009/10/1 運管碩一 張嘉修 17

Characteristics :  Extent of product (or service) diversity  Extent of Geographic coverage  Number of Market segments served  Distribution Channels used  Extent of Branding  Marketing Effort  Product (or service) quality  Pricing policy ( 2009/10/1 運管碩一 張嘉修 18

Useful in several ways :  Helps identify who the most direct competitors are and on what basis they compete  Raises the question of how likely or possible it is for another organization to move from one strategic group to another  Strategic Group mapping might also be used to identify opportunities  Can also help identify strategic problems ( 2009/10/1 運管碩一 張嘉修 19

Q&A Discussion 2009/10/120 運管碩一 張嘉修

About the manifest performance of Southwest  1992: Southwest won the first annual Triple, and began service to the Ohio cities of Cleveland and Columbus.  1993: Southwest expanded to the east coast and began service to Baltimore/Washington International Airport, and Louisville. The acquisition of Morris Air was completed, which opened up the Pacific Northwest to Southwest service. ( 2009/10/1 運管碩一 張嘉修 average Southwest

 Barrier (entry, regulation, Freedoms of the Air)  Porter’s U-shape  Qualitative perspective (hypothesis and test)  Quantitative perspective (discussion)  The history of Southwest  The different index to group  The different model developed from strategic groups  How to develop issues from a article 2009/10/1 運管碩一 張嘉修 22