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MGT 6570 Innovation Strategy and Corporate Sustainability

Published : 07-Sep,2021  |  Views : 10

Questions:

1. Compare and contrast Boeing and Airbus technological changes from the late 90s to present.

a. What types of aircraft and fleets have been produced to meet the global demand? Are legacy airlines making larger orders? What type of orders are being made by new cost leader carriers?

b. In general, what are your observations? Are airlines ordering larger or smaller aircrafts? What are the trends? Are consumers making choices in terms of seat comfort and/or space? Please elaborate with specific airline examples.
 
c. Strategically for the industry, have circumstances changed since 2008? Is Porter’s argument flawed? Support your claims with quantitative data.

d. Please conduct external research (in addition to the materials provided) and present your data in graphs and/or tables.
 
e. Based on your research and report, what have been the managerial implications for those leading the airline industry?
 
2. Airlines and the ethics of conducting business. Due to the nature of the air transport industry and all of the ‘dilemmas’ associated with travel, please identify and pin-point some of the critical moral, ethical, and diversity issues facing the industry.
 
a. Based on past course learnings, discuss some of the appropriate frameworks that can apply in trying to analyze the ethical problems and their alternative solutions in addressing the critical issues for the airlineindustry.

b. In terms of sustainability, diversity and innovation, have airlines made a leap in implementing more sustainable solutions (i.e. green engines, fuel consumption, safety etc.)?
 
1.Of late, airlines are facing a crisis of legitimacy surrounding the unsustainability of air travel. There is some multilateral attention being paid to the problem, and some firms have also tried to address this. Is this a problem that airline firms need to take seriously? Suggest one strategic action they should take in this regard.
 
ii. Are there any technology issues that need to be addressed? (Remember, the internet was especially unkind to the airlines,
when passengers used their enhanced access to information to bargain down prices. How did the airlines solve this problem? You
can argue that technology is incidental here (regulation, fuel prices and other issues might be more explanatory), but do offer an assessment on the role of technology in this industry.
 
iii. Do diverse groups of stakeholders experience United as a fair organization, or can a case be made that they discriminate within stakeholder groups? 

Answers:

1a.As the competition continues being intense between Boeing and Airbus in providing carriers that meet the global demand by the airlines, diversified carriers have been produced. Boeing has faced increased competition from Airbus since the 1970s and that has seen the family of aircraft expand (Campos, 2001). As of stoday, Airbus is competing in areas that were once the stronghold of Boeing. In 2003, Airbus delivered more planes than Boeing for the first time. In 2007, Boeing won more orders as compared to the Airbus (Hollinger, 2015).The A320 was selected by more than 222 operators and is now gaining ground as it is becoming popular among low-cost operators compared to the Boeing 737.     

b.The business class passengers are accustomed to having a fully flat bed and those using the economy class have little to enjoy in the recent past. As the search for increasing the cabin density among the airlines continues, the economy class has seen more comfort with the introduction of wider seats that seem to generate more comfort as the passengers can turn and move their legs. (AirlineTrends)The Mexican carrier, on the other hand, has introduced the super diamond that has better specifications regarding offering larger space and more privacy and is similar to the airways found in Qatar such as 787s that offer live channels on a 18inch touchscreen on high definition screens. Airlines are ordering large crafts to accommodate the many specifications that cater for the needs of their passengers regarding space and privacy in some planes. The large seats in economy class require a large plane.

c.Capital requirements in the airline industry are overwhelming, the profits seem to be reduced, and the reputation seems tainted according to a flying specialist Boyd. Airline companies such as Skybus Aircrafts and Ata carriers have fizzled, and even the Virgin America which is the best failed to realize significant benefits I the first five years with its initial flights (Porter, 2008). In 1979 there was deregulation of the airline industry a move that saw misfortunes accompany airline carriers. Recently, more than $ 60 billion was lost by the domestic carriers due to the increased costs of fuel leading to insolvencies of some airline companies and others merging.

d.A myriad of challenges exist for the airline industry, for instance, there has been substantial pressure to improve operational efficiency, and thus financial performance has become a critical factor in defining the success of the airline. Airlines are becoming more radical about the business that they need to carry on and the routes to continue serving. Such choices depend on the understanding of the economics of the business and the desire to embrace ideas that are unconventional (Egon Management). In such an industry, there is the need for greater flexibility and adaptability of the business model to the dynamic needs of the market. The CEOs are thus tasked with the duty of transforming their enterprises into profitable businesses with long-term missions.    

e.The above table shows the profitability of airlines declining as compared to other industries showing how the airlines are cutting down their prices with an aim of ensuring relevant and also due to the rising cost of fuel.

2. a) While profitability is the sole objective of most businesses, IATA reports indicate that in 2010, airlines made more than $ 7.9 billion in profits. However, the airline industry is still grappling with some ethical challenges in their way to make profits. The issue of cramping seats seems to be a matter of concern where airlines place many seats in the planes as the plane can accommodate (Williams). Such a practice is uncomfortable, and passengers are at risk of developing some medical problems such as having blood clot due to the failure of muscles to contract. The issue of false advertisements is also another ethical matter of concern for airlines. In one of the traveler’s website, a round-trip from Newark to London had been priced at $236 only for the passenger to realize that it was $803 after inclusion of tax and fuel charges. Lack of honesty is the factor that makes most airlines to pay lower amounts for commissions by the travel agents.
b) i)Of late airlines are still grappling with the challenge of unsustainable air transport. In the past few months, airlines from Qatar faced a huge loss regarding passengers when the country was banned together with its flights to the Gulf countries over some diplomatic issues. Doha, the capital city of Qatar where most flights and airports are located facing the crisis, and the tussle is still on-going. It is crucial for the countries to discuss and solve their issues amicably to avoid hurting the airlines business in the region. The other day following the hurricane Irma, FAA had to come up with concrete strategies that helped calm the situation in airports delaying most flights, and others were banned for that day following the crisis (Garsia, 2017). In most cases, issues to do with bad weather are dealt with using having appropriate infrastructure that forecasts weather patterns, and in the case for instance of hurricane Irma, most of the airports had been warned and were prepared. However, airlines should be concerned about the weather changes as it affects their scheduled flights and in some cases that are unforeseen may have devastating effects where planes have accidents, and there is massive loss of life. It is therefore important to have the necessary equipment in airports that forecast weather patterns.
ii) The technological changes in the airline industry seem to impact the industry in a big way. Many courses have been abandoned leading to higher charges and provide avenues for other flights to venture into the business with reduced prices for instance in 1971, saw Southwest Aircrafts adopt such a strategy. The high oil costs are also making many airlines to have their planes full.

iii) The issue of discrimination is an ethical problem that faces most airline companies, and in most cases, the passengers are neglected. Prejudices occur in the stakeholder's groups as evidenced in one occasion in Hungary where one woman died after being denied two seats due to her size. The woman had diabetes and wanted to catch her plane home (Williams). However, she had been denied the seats on various occasions, and according to the husband, he claimed she died because she could not attend her medical treatment since she was declined on many instances.

References

AirlineTrends. (n.d.). Cabin/Seats. Retrieved October 8, 2017, from AirlineTrends: http://www.airlinetrends.com

Campos, L. (2001). On the competition between Airbus and Boeing. Air and Space Europe, 11-14.

Egon Management. (n.d.). Egon Zehnder - Global Passenger Airline Market: Five Megatrends and their Implications for Talent Management. Retrieved October 8, 2017, from Egon Zehnder: http://www.egonzehnder.com

Garsia, M. (2017, September 22). How the FAA keeps US airspace on track in a crisis. Retrieved October 8, 2017, from tnooz: http://www.tnooz.com

Hollinger, P. (2015, JUNE 12). Boeing and Airbus face mammoth task to clear order backlog. Retrieved October 8, 2017, from Financial Times: http://www.ft.com

Porter, M. (2008, January). The Five Competitive Forces That Shape Strategy. Retrieved October 8, 2017, from Harvard Business Review: http://hbr.org

Williams, T. (n.d.). Business Ethics for Airlines. Retrieved October 8, 2017, from azcentral: http://yourbusiness.azcentral.com

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