West Jet Case Analysis

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| | |WestJet: Environmental and Porter Analyses | |BUSM 4200 | |

Table of Contents
Executive Summary2
Mission Statement and Vision4
1.4
1.0 Political/Legal4
2.0 Economic4
3.0 Socio-cultural5
4.0 Technological5
5.0 Demographic5
5.1 Geographical6
5.2 Income Distribution6
6.0 Global7
7.0 Porter’s Five Forces8
7.1 Bargaining Power of Suppliers8
7.2 Bargaining Power of Buyers8
7.3 Threat of Substitute Products9
7.4 Threat of new entrants9
7.5 Intensity of Rivalry among Competitors9
8.0 Core Competencies10
9.0 Porter’s Value Chain11
9.1 Primary Activities11
9.2 Supporting Activities12

Executive Summary

This report identifies and analyzes key information and issues about 'WestJet Airlines Ltd.' for business purposes. It examines the company's general and industry environments, its core competencies, and its value creation activities. Most importantly, the increase in demand for lower-priced air carriers coupled with its decentralized infrastructure and strong integrated strategy, has helped make WestJet the second largest Canadian airline by market share and one of the most efficient airlines in North America. As such, WestJet is in a strong position in facing the treat of major crises, like a global recession.

The general environment presents major threats and opportunities for the airline industry. The Canadian Government’s privatization of airports has increased landing costs and the global increase in terrorism has increased safety measures and waiting times. Such trends have decreased demand for Canadian air travel. The aging population provides a new opportunity for WestJet as it has proven to be effective at market segmentation. The use of the Internet has made comparison easier, suggesting consumers will recognize the value in purchasing WestJet services. Finally, increases in workforce diversity create unique opportunities and threats for management.

Similarly, the industry environment poses significant threats and opportunities fpr the airline. There is strong rivalry as WestJet closes in on Air Canada’s domination of Canadian market share. In addition, the relatively high purchasing power of both suppliers and buyers affects WestJet’s business decisions and operations. West Jet’s main core competency, its integrated cost-differentiation focus strategy and implementation, has proved to be a recession-proof solution that gains considerable media and business attention. This strategy, fully embraced by each WestJet employee, is designed to continuously identify new areas for growth, such as an additional low-capacity regional line to underserved markets and WestJet Vacations packages. Finally, the airline’s ability to liquidate assets quickly and maintain low leverage makes WestJet a very lucrative TSX investment.

Mission Statement and Vision

WestJet aims “to enrich the lives of everyone in West Jet's word by providing safe, friendly and affordable air travel. “By 2016, West Jet will be one of the five most successful international airlines in the world providing guests with a friendly and caring experience that will change air travel forever”1.

1.0 Political/Legal

Extensive laws regarding airline safety and security, the provision of services, competition, and environmental and labour concerns govern Canada’s airline industry2. Government bodies such as Transport Canada, the Competition Bureau, the...
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