Question 1Why is the development of corporate strategy important for the major European airlines?The markets of the world are in a state of flux. In order to understand and change the stratagem one must understand the market conditions and some of the history of the industry. Professor Lynch states that of the two approaches to strategy both rely on three core areas namely.
Ã¢ÂÂ¢Analysis of the environmentÃ¢ÂÂ¢Analysis of resourcesÃ¢ÂÂ¢Identification of vision, mission and objectivesIn analysing the environment of the European airline industry the history of the industry should be considered1.In the 1950's the jet engine was introduced making long distance travel possible.
2.In the 1960's larger high capacity aircraft was introduced making travel more comfortable.
3. In the 1970's the technology was improved and 300 seater planes introduced. Also there was an oil crisis which impacted negatively on the industry as a whole. This oil crisis caused the industry to cut expansion plans, the airline industry is very affected by the global economic mood.
Deregulation of the industry caused airlines to cut profits in order to stay compeditive.
4.At the start of the 1990's economic recession caused more that 1000 aircraft to be parked in the deserts of the US.
5.In 2001 on September 11 a terrorist attack using 4 hijacked aircraft caused consumer confidence in air travel safety to plummet. This lead to the bankruptcy of some airlines.
The other factors in considering development strategy of an airline is what market niche the airline feels comfortable operating in. These areas are represented below in the following table.
Low cost flights This market has the passengers on low budget, packed into the smallest space, no frills or meals, booking are not done. This means that the airline relies on volume of fairs rather than quality...