The paper 'Strategic Management at Continental United Airlines " is a great example of a management case study. A SWOT analysis is a tool of strategic management that is used in analyzing an organization’ s internal and external factors affecting the business at the present and going forward. SWOT is an acronym standing for strengths, weaknesses, opportunities, and threats. The strengths and weaknesses are the internal aspects while the opportunities and threats are the external factors (Pearce & Robinson, 2011). Strengths United Airlines has the advantage of a strong operational network since it operates over three thousand flights to over two hundred destinations spread over the international and domestic markets.
Being a member of the Star Strategic Alliance insulates the airline from litigation with regard to price-fixing allegations and antitrust. The strategic alliance also enhances economies of scale through shared operational costs such as frequent flier, reservation and servicing (United Airlines, 2012). United ranks as one of the Airlines with the highest rate of productivity of its employees thus it has enhanced efficiency. Lastly being the fourth largest American carrier with plans for a merger with Continental United Airlines has the advantage of economies of scale. Weaknesses United Airlines has experienced weak financial performance in the last decade which may be an indicator of internal inefficiencies and weak cost controls.
This weak performance may scare away potential investors and consequently hamper the company’ s growth. United Airline's weak financial performance may be attributed to the company’ s over-reliance on the outsourcing of crucial services. This outsourcing results in spiraling costs which reflect on its financial performance. The majority of United Airlines employees are union employees which results in a high wage bill and losses during strike action. Opportunities The United States airline industry has experienced tremendous growth in recent years and this is expected to continue into the early part of this decade such phenomenal growth offers opportunities for United Airlines to upgrade its network, finances and consolidate its position in the industry.
The outlook for the airline industry is further enhanced by better tourism and travel statistics. These statistics indicate that tourism and travel have been on an upward trend and are expected to continue to grow in the coming two years.
The improved economic outlook for 2012 is also an opportunity for the airline to improve its industry position as it takes advantage of increased expenditure in business and leisure travel (United Airlines, 2012). Threats United Airlines like any other airline is faced with uncertainty over future oil prices. While the company may hedge on oil prices, the volatility of oil markets as a result of unforeseen circumstances makes oil prices very unpredictable. There is also increasing competition from mergers and other major airlines in the industry such as Delta and Southwest.
Going forward the state of the global and domestic economy also remains very uncertain. 2 A. Describe and explain the internal environment using the Value Chain Analysis and B. how it is used to evaluate the strategy of your project company Value Chain Analysis is an auditing tool for strategic management which enables the firm to determine the value of the activities it undertakes and the value they add or deduct to the company. The value Chain Analysis model was developed by Michael Porter who categorized the activities of a firm into primary and support activities.
The categorization is intended to find out which activities the organization may undertake with a perfect competitive advantage over the competition and activities which it ought to outsource (Pearce & Robinson, 2011). The primary activities are; inbound logistics; operations; outbound logistics; marketing and sales and service. These are supported by firm infrastructure; HR and management; technology development; and procurement.