Strategic Management Indigo Airlines

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Strategic Management

INDIGO AIRLINES

Europe Asia Business School Strategic Management
Your Tutor's Name: Prof. Bella Butler

Full name of the student: Deepak Namram Full name of the student: Gargi Kumari Full name of the student: Sujata Sah

Student number: 09104 Student number: 09105 Student number: 09121

Due Date: 10th Sep 2009 Date submitted: 10th Sep 2009 We declare the attached assignment is our own work and has not previously been submitted, in whole or in part, for assessment in any other unit. We have retained a copy of this assignment for my own records. Signed Signed Signed ___________________________________________________ ___________________________________________________ ___________________________________________________

Europe Asia Business School

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Strategic Management

INDIGO AIRLINES

INDEX
Executive Summary Introduction External Environment Analysis Airline Industry Attractiveness Porter’s Five Forces Opportunities Threats

3 4 6
6 6 11 12

Internal Environment Analysis
Tangible Resources Intangible Resources Criteria of Sustainable Competitive Advantage Value Chain Analysis Strength Weakness

13
13 13 15 16 17 17

TOWS Feasible alternatives Final Recommendation APPENDIX A APPENDIX B BIBLIOGRAPHY

18 19 20 21 24 25

Europe Asia Business School

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Strategic Management

INDIGO AIRLINES

Executive Summary
Objectives
The objective of this report is to study the external environment of the Aviation Industry in India. Subsequently, internal environment analysis is conducted for IndiGo Airlines. With the help of this comprehensive study, we have suggested recommendations that can be adopted by IndiGo to sustain its competitive advantage by utilizing its cost leadership strategy.

Methods
To understand the important factors responsible for the formulation of corporate strategy, we have utilized Strategic Management tools like Porter’s Five Forces model, Value Chain analysis, TOWS matrix etc.

Limitations
Due to confidentiality clause and corporate policies of the company, accurate financial data could not be obtained for IndiGo Airlines. However, most recent and reliable data sources have been referenced for the analysis of this case.

Findings
IndiGo airlines entered the low cost carrier market in aviation industry in 2006. It has been able to achieve its break even within two years of its launch and has reported gross revenue of 60 crores this year. Despite the decline in the aviation industry and global economic slowdown, IndiGo has accelerated its growth rate. Also, IndiGo being a new entrant has managed to become a cost leader in its sector.

Europe Asia Business School

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Strategic Management

INDIGO AIRLINES

Introduction
India is one of the fastest growing aviation industries in the world. Because of the introduction of liberalization policy in the Indian aviation sector, the industry has witnessed a vast difference with the entry of the privately owned full service airlines and low cost carriers. In 2006, the private carriers accounted for around 75% share of the domestic aviation market. Besides, there was significant increase in the number of domestic air travel passengers. Some of the factors that have resulted in higher demand for air transport in India include the growing purchasing power of middle class, low airfares offered by low cost carriers and the growth of the tourism industry in India. In addition to the liberalization policy, the deregulation policy has also played a major role to encourage private players in the aviation industry. Below graph shows the gradual growth in the domestic air traffic: The growth in the aviation industry looked promising and hence attracted many low cost carriers like SpiceJet, GoAir and IndiGo after the success of Air Deccan in 2003 [Exhibit 1]. On one hand, the booming opportunities incited players to expand capacity but on the other hand, rising fuel costs and taxation rates,...
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