This paper aims to investigate in the limitations and benefits of the strategic group model in relation to the appliance of the model to the European airline industry. Therefore, the first part will shortly summarize the model including issues concerning the appliance as well as advantages. The second part will than have a short look at current trends and factors driving the industry. This will be followed by the appliance of the model to the chosen industry while plotting the 22 investigated enterprises within strategic group maps each showing the interrelation of two chosen criteria. Finally, the model will be critical evaluated concluding in giving evidences about the overall value of the model.
Table of Contents
1 Introduction
2 External analysis with the strategic group model
2.1 Application
2.2 Advantages
3 The European Airline Industry
4 Appliance of the Model to the European Airline Industry
4.1 Vertical integration in interrelation with geographical scope
4.2 Product range in interrelation with geographical scope
4.3 Service quality in interrelation with organization size measured in fleet size
5 Critical appraisal
5.1 Direct critique drawn from the application of the model to the industry
5.2 Additional critique drawn from literature review.
6 Conclusion
Research Objectives and Core Themes
This paper aims to investigate the benefits and limitations of applying the strategic group model to the European airline industry, using it as a tool to map competitive dynamics and identify strategic positions among 22 selected enterprises.
- Theoretical overview and application of the strategic group model
- Industry trends and competitive factors in the European airline market
- Strategic mapping based on vertical integration, product range, and service quality
- Critical evaluation of the model's effectiveness and descriptive value
- Analysis of competitive relationships versus strategic similarities
Excerpt from the Book
4.1 Vertical integration in interrelation with geographical scope
Primary, vertical integration can be defined as backward or forward integration into adjacent actions in the value chain or network (Johnson & Scholes, 1014). European airlines therefore have developed part wise interesting structures from integrating aeroplane maintenance, training facilities for future pilots, cargo to tour operations and even IT services. In interrelation with the geographical scope in which the chosen companies operate it can be assumed that all global operating airlines have at least a narrow level of vertical integration. The geographical scope axis derives from the distances (domestic, medium-haul & long-haul) each airlines serves. Therefore, the mapping of airlines groups along the axis of vertical integration and geographical scope allows drawing three further conclusions.
1. This interrelation does not just offer opportunities of strategic windows e.g. for multinational focused airlines to enlarge their level of vertical integration in order to gain more efficiency, but also shows that Luxair established is position within that interrelation as one player.
2. Comparing Virgin Atlantic and Austrian Airlines which both have to be grouped in international focused airlines with medium integration, it has to be noted that Virgin actually in contrast to Austrian Atlantic just operates long-haul distances, while Austrian Airlines serves all distances. In this case the question should be raised how international operation is defined.
3. All airlines which had to be grouped within national focused airlines of no integration are actually part of the vertical integration of the international focused airlines with broad integration. They all act as feeder airlines for their international “mother”-airlines and certainly benefit from their integrated actions e.g. maintenance.
Chapter Summary
1 Introduction: Outlines the purpose of investigating the strategic group model's utility and limitations when applied to the European airline sector.
2 External analysis with the strategic group model: Defines strategic groups as an analytical tool for segmenting industries and discusses its key benefits and application methods.
3 The European Airline Industry: Provides an overview of the industry's status, liberalization, and the various market trends and competitive pressures currently faced.
4 Appliance of the Model to the European Airline Industry: Details the empirical application of the model by mapping 22 airlines against variables such as vertical integration, product range, and service quality.
5 Critical appraisal: Provides a reflective critique of the model's limitations, including its subjective nature, methodological challenges, and underemphasis on innovation.
6 Conclusion: Summarizes findings, affirming the model's value as an intermediate analytical tool while recommending broader approaches for comprehensive strategic planning.
Keywords
Strategic Management, Strategic Group Model, European Airline Industry, Vertical Integration, Competitive Strategy, Market Segmentation, Mobility Barriers, Porter, Service Quality, Industry Analysis, Strategic Mapping, Corporate Strategy, Business Environment, Competitive Advantage, Organizational Size
Frequently Asked Questions
What is the core focus of this research paper?
This paper examines the practical application of the strategic group model within the context of the European airline industry to evaluate its efficacy as a strategic management tool.
Which dimensions are used to map the airlines?
The study utilizes three main dimensions: vertical integration relative to geographical scope, product range relative to geographical scope, and service quality relative to organizational size (fleet size).
What is the primary objective of the work?
The objective is to critically evaluate whether the strategic group model effectively captures competitive dynamics and provides actionable insights for managers in a highly dynamic industry.
Which scientific methodology is employed?
The author uses a qualitative and quantitative research approach, gathering company data to construct strategic maps and comparing these findings against existing strategic management literature.
What topics are addressed in the main body?
The main body covers the theoretical definition of the model, an overview of the European aviation market, the construction of three specific strategic group maps, and a critical analysis of the model's limitations.
Which keywords best describe this study?
The study is characterized by terms such as Strategic Group Model, Industry Analysis, Vertical Integration, and Competitive Positioning.
How does the author define a "strategic group"?
The author references Porter’s definition, characterizing a strategic group as a set of firms within an industry that are similar to one another in terms of key strategic dimensions.
What is the main limitation identified by the author regarding the model?
A significant limitation identified is that the model is highly subjective, often requiring a "rule of thumb" approach to select variables, and fails to adequately account for ongoing innovation or complex competitive relationships.
Does the author suggest replacing this model with another?
No, the author suggests that while the strategic group model provides a useful intermediate view, it should be complemented by broader tools like Porter's Five Forces, PESTEL analysis, or scenario planning to gain a comprehensive strategic picture.
- Citar trabajo
- Sandy Katrin Schmidt (Autor), 2008, Strategic group model of the European airline industry, Múnich, GRIN Verlag, https://www.grin.com/document/89843
