Strategic Management and Competitive Advantage Essay

Strategic Management and Competitive Advantage - Essay Example In the business environment of the air industry there are various challenges to be faced in order to achieve a positive mark. This paper is analyses Case of Scandinavian Airline System. 1. Briefly analyze external environment of and internal strategic capabilities of the company. The knowledge of business external environment is important because it influences entry approach into the market. Scandinavian Airline System external environment consisted of competitors from other airline companies. These competitors were a threat to SAS because they competed for the same segment of customers. SAS had customers scattered in various locations making its operation very costly. Political system favored business environment for SAS because SAS could easily conduct its operation in America and European countries. This enabled the business to expand its market share. SAS realized that it had to redefine its strategic capabilities if it had to meet the needs of its customers in these locations. T he airlines decided to integrate its customers’ needs as a means of serving their interest. It followed that the business had to define its product refinement, process innovation, and service delivery. The arrival of new technology in the airline industry acted as an opportunity for the business to increase its profit. Currier services in Europe led to the introduction of SAS cargo air, which enhanced market grip of the airlines. Internal strategic reformatting of the company included reorganization of the company by decentralizing responsibility. Fragmentation helps in reducing cost while enhancing business performance. When a business becomes very large the management becomes a problem. In this case, Scandinavian Air System decided to decentralize its management body, thus reducing risks that occur due to centralized management system. The decentralization of management was to reduce cost of operation, which was a great threat to the success of the business. Operating cost of the airliner was a threat to its success because high operation cost reduces profit margin. 2. Describe the strategic choices made. SAS divided its market into various zones such as Europe, Latin America and Scandinavian countries. This strategy took into consideration factors such as cultural trends, economic trends, legal conditions, technological changes, demographic trends, and specific international events. SAS developed relationship with other airlines such as KLM and Swissair and strengthened technological cooperation in this industry. Business analysts believe that external growth strategy in business tends to root for horizontal integratio