The group aims to identify the generic strategy Airborne Express is pursuing, whether such strategy is sound in the context of air express industry. The company’s strengths and weaknesses are evaluated with the opportunities and threats to identify the distinctive competency that it can adapt.
Statement of the Problem
The group endeavors to identify the strategy that Airborne Express can implement to its domestic and international operations. Assessing the strategic alliances the company made and the diversification of its services including logistic services is also part of the group’s objective.
Alternative Courses of Action
Lease Out Airport
One solution that is viable to some of Airborne’s dilemmas is leasing out a portion of their airport to private aircrafts or to its competitors. As mentioned in the case, Airborne has seen a decrease in price of its package per customer area. Competition and the new methods of sending packages cause its profits to drop. Such lease can subsidize these falling rates. With the cost of building an airport well above $120 million, this would be an option for other air carriers to consider. Further, with the revenue brought by the leases, Airborne could build another runway so the leased part of the airport would not affect Airborne’s business.
However, competitors might be hesitant in giving Airborne additional revenues.
Accept DHL company acquisition
Since Airborne lacks capital for its expansion in the international scene, the takeover of DHL can be a good approach to achieve global scope. Additional facilities abroad can be accessed as well in such merger. This will provide an opportunity for the merged company to compete with UPS and FedEx and can possibly obtain increased market share especially in the international scene.
This might not be good for the ego of the new administration but, as recalled in their history, Airborne has previously experienced mergers that led to quite promising opportunities. Then again, new culture might be adopted (that of DHL) that will need lots of adjustments and changes. Yet, such predicament can be solved by giving Airborne a grace period to be prepared for the merger.
Pursue International Strategic Alliances & Logistics Services
The alliance with Mitsui and Tonami is a good mean for extending Airborne’s services to the global perspective. Not only does it receive funds for aircraft financing but it can also be a good way for Airborne to penetrate other geographical areas. Airborne will not need much capital, yet, it will continue to depend on other carriers for space lease. Airborne can remedy this buy starting to fly their own aircrafts and pursue more alliances with other groups to obtain the minimum volume for their operations. They can use the company’s Free Trade Zone (FTZ) as their primary service. Caution, however, is taken as the alliance will depend on the stability of the member companies. If the partner companies experience trouble, the domino effect would likely be felt.
Improve GDS and SDS services
The trend of shifting from overnight premium express to low margin deferred services implies that people take advantage of cheaper delivery services. Airborne can market this service to have diversified product from its competitors. However, since the service is imitable, benefits from these services can not last long, unless Airborne will decrease its prices further (this can be easily coped with its competitors or can bleed Airborne with losses).
Methods of Analysis
The group facilitated a SWOT analysis to determine the internal and external factors that influenced the company with respect to its industry. Based from this analysis, the company strengths primarily lie with its cost advantage with its economies of scales and good aircraft maintenance and its generic strategy of adopting a cost based focus, giving them...