netrashetty
Netra Shetty
Continental Airlines (IATA: CO, ICAO: COA, Call sign: CONTINENTAL) is a major American airline based in Continental Center I in Downtown Houston, Texas. On October 1, 2010, the acquisition of Continental airlines by UAL Corporation (the parent company of United Airlines) was completed and on the same day UAL changed its name to United Continental Holdings, Inc. These airlines are in the process of merging their operations under the name United Airlines. During the integration period, both airlines will, for a time, run separate operations under direction of a combined leadership team of the new parent company based in Chicago.[5] The merger transaction is estimated to be worth (USD)$3.2 billion.[6][7]
At the time of its acquisition by United Continental Holdings, Inc., Continental was the fourth-largest airline in the US based on passenger-kilometers flown and the fifth largest in total passengers carried. Continental operates flights to destinations throughout the U.S., Canada, Latin America, Europe, and the Asia-Pacific regions. Principal operations are from its four hubs at Newark Liberty International Airport, George Bush Intercontinental Airport, Cleveland Hopkins International Airport and Antonio B. Won Pat International Airport in Guam.
The origin of Continental Airlines dates to the 1934 formation of Varney Speed Lines which operated airmail and passenger services in the American Southwest. The carrier was renamed Continental Air Lines in 1937 and expanded its domestic U.S. network in the 1960s with jet aircraft. International flights to Southeast Asia and South Pacific destinations began in 1978 following industry deregulation. Continental was embroiled in ownership struggles in the 1980s and entered bankruptcy in 1983 and 1990. The carrier exhibited a financial and operational turnaround after 1996,[8] and embarked on international route expansion in the 2000s.
Continental has ownership interests and brand partnerships with several carriers. Continental is a minority owner of ExpressJet Airlines, which operates under the 'Continental Express' trade name but is a separately managed and public company. Chautauqua Airlines also flies under the Continental Express identity, and Cape Air, Colgan Air, CommutAir, and Gulfstream International Airlines feed Continental's flights under the Continental Connection identity. Continental does not have any ownership interests in these companies.
d generic strategy, differentiating the product or service, requires a firm to create something about its product or service that is perceived as unique throughout the industry. Whether the features are real or just in the mind of the customer, customers must perceive the product as having desirable features not commonly found in competing products. The customers also must be relatively price-insensitive. Adding product features means that the production or distribution costs of a differentiated product may be somewhat higher than the price of a generic, non-differentiated product. Customers must be willing to pay more than the marginal cost of adding the differentiating feature if a differentiation strategy is to succeed.
Differentiation may be attained through many features that make the product or service appear unique. Possible strategies for achieving differentiation may include:
warranties (e.g., Sears tools)
brand image (e.g., Coach handbags, Tommy Hilfiger sportswear)
technology (e.g., Hewlett-Packard laser printers)
features (e.g., Jenn-Air ranges, Whirlpool appliances)
service (e.g., Makita hand tools)
quality/value (e.g., Walt Disney Company)
dealer network (e.g., Caterpillar construction equipment)
Differentiation does not allow a firm to ignore costs; it makes a firm's products less susceptible to cost pressures from competitors because customers see the product as unique and are willing to pay extra to have the product with the desirable features. Differentiation can be achieved through real product features or through advertising that causes the customer to perceive that the product is unique.
Differentiation may lead to customer brand loyalty and result in reduced price elasticity. Differentiation may also lead to higher profit margins and reduce the need to be a low-cost producer. Since customers see the product as different from competing products and they like the product features, customers are willing to pay a premium for these features. As long as the firm can increase the selling price by more than the marginal cost of adding the features, the profit margin is increased. Firms must be able to charge more for their differentiated product than it costs them to make it distinct, or else they may be better off making generic, undifferentiated products. Firms must remain sensitive to cost differences. They must carefully monitor the incremental costs of differentiating their product and make certain the difference is reflected in the price.
Firms pursuing a differentiation strategy are vulnerable to different competitive threats than firms pursuing a cost leader strategy. Customers may sacrifice features, service, or image for cost savings. Customers who are price sensitive may be willing to forgo desirable features in favor of a less costly alternative. This can be seen in the growth in popularity of store brands and private labels. Often, the same firms that produce name-brand products produce the private label products. The two products may be physically identical, but stores are able to sell the private label products for a lower price because very little money was put into advertising in an effort to differentiate the private label product.
Imitation may also reduce the perceived differences between products when competitors copy product features. Thus, for firms to be able to recover the cost of marketing research or R&D, they may need to add a product feature that is not easily copied by a competitor.
A final risk for firms pursuing a differentiation strategy is changing consumer tastes. The feature that customers like and find attractive about a product this year may not make the product popular next year. Changes in customer tastes are especially obvious in the apparel industry. Polo Ralph Lauren has been a very successful brand in the fashion industry. However, some younger consumers have shifted to Tommy Hilfiger and other youth-oriented brands.
Ralph Lauren, founder and CEO, has been the guiding light behind his company's success. Part of the firm's success has been the public's association of Lauren with the brand. Ralph Lauren leads a high-profile lifestyle of preppy elegance. His appearance in his own commercials, his Manhattan duplex, his Colorado ranch, his vintage car collection, and private jet have all contributed to the public's fascination with the man and his brand name. This image has allowed the firm to market everything from suits and ties to golf balls. Through licensing of the name, the Lauren name also appears on sofas, soccer balls, towels, table-ware, and much more.
COMBINATION STRATEGIES
Can forms of competitive advantage be combined? Porter asserts that a successful strategy requires a firm to aggressively stake out a market position, and that different strategies involve distinctly different approaches to competing and operating the business. An organization pursuing a differentiation strategy seeks competitive advantage by offering products or services that are unique from those offered by rivals, either through design, brand image, technology, features, or customer service. Alternatively, an organization pursuing a cost leadership strategy attempts to gain competitive advantage based on being the overall low-cost provider of a product or service. To be "all things to all people" can mean becoming "stuck in the middle" with no distinct competitive advantage. The difference between being "stuck in the middle" and successfully pursuing combination strategies merits discussion. Although Porter describes the dangers of not being successful in either cost control or differentiation, some firms have been able to succeed using combination strategies.
Research suggests that, in some cases, it is possible to be a cost leader while maintaining a differentiated product. Southwest Airlines has combined cost cutting measures with differentiation. The company has been able to reduce costs by not assigning seating and by eliminating meals on its planes. It has then been able to promote in its advertising that one does not get tasteless airline food on its flights. Its fares have been low enough to attract a significant number of passengers, allowing the airline to succeed.
Another firm that has pursued an effective combination strategy is Nike. When customer preferences moved to wide-legged jeans and cargo pants, Nike's market share slipped. Competitors such as Adidas offered less expensive shoes and undercut Nike's price. Nike's stock price dropped in 1998 to half its 1997 high. However, Nike reported a 70 percent increase in earnings for the first quarter of 1999 and saw a significant rebound in its stock price. Nike achieved the turn-around by cutting costs and developing new, distinctive products. Nike reduced costs by cutting some of its endorsements. Company research suggested the endorsement by the Italian soccer team, for example, was not achieving the desired results. Michael Jordan and a few other "big name" endorsers were retained while others, such as the Italian soccer team, were eliminated, resulting in savings estimated at over $100 million. Firing 7 percent of its 22,000 employees allowed the company to lower costs by another $200 million, and inventory was reduced to save additional money. While cutting costs, the firm also introduced new products designed to differentiate Nike's products from those of the competition.
Some industry environments may actually call for combination strategies. Trends suggest that executives operating in highly complex environments such as health care do not have the luxury of choosing exclusively one strategy over the other. The hospital industry may represent such an environment, as hospitals must compete on a variety of fronts. Combination (i.e., more complicated) strategies are both feasible and necessary to compete successfully. For instance, DRG-based reimbursement (diagnosis related groups) and the continual lowering of reimbursement ceilings have forced hospitals to compete on the basis of cost. At the same time, many of them jockey for position with differentiation based on such features as technology and birthing rooms. Thus, many hospitals may need to adopt some form of hybrid strategy in order to compete successfully, according to Walters and Bhuian.
At the time of its acquisition by United Continental Holdings, Inc., Continental was the fourth-largest airline in the US based on passenger-kilometers flown and the fifth largest in total passengers carried. Continental operates flights to destinations throughout the U.S., Canada, Latin America, Europe, and the Asia-Pacific regions. Principal operations are from its four hubs at Newark Liberty International Airport, George Bush Intercontinental Airport, Cleveland Hopkins International Airport and Antonio B. Won Pat International Airport in Guam.
The origin of Continental Airlines dates to the 1934 formation of Varney Speed Lines which operated airmail and passenger services in the American Southwest. The carrier was renamed Continental Air Lines in 1937 and expanded its domestic U.S. network in the 1960s with jet aircraft. International flights to Southeast Asia and South Pacific destinations began in 1978 following industry deregulation. Continental was embroiled in ownership struggles in the 1980s and entered bankruptcy in 1983 and 1990. The carrier exhibited a financial and operational turnaround after 1996,[8] and embarked on international route expansion in the 2000s.
Continental has ownership interests and brand partnerships with several carriers. Continental is a minority owner of ExpressJet Airlines, which operates under the 'Continental Express' trade name but is a separately managed and public company. Chautauqua Airlines also flies under the Continental Express identity, and Cape Air, Colgan Air, CommutAir, and Gulfstream International Airlines feed Continental's flights under the Continental Connection identity. Continental does not have any ownership interests in these companies.
d generic strategy, differentiating the product or service, requires a firm to create something about its product or service that is perceived as unique throughout the industry. Whether the features are real or just in the mind of the customer, customers must perceive the product as having desirable features not commonly found in competing products. The customers also must be relatively price-insensitive. Adding product features means that the production or distribution costs of a differentiated product may be somewhat higher than the price of a generic, non-differentiated product. Customers must be willing to pay more than the marginal cost of adding the differentiating feature if a differentiation strategy is to succeed.
Differentiation may be attained through many features that make the product or service appear unique. Possible strategies for achieving differentiation may include:
warranties (e.g., Sears tools)
brand image (e.g., Coach handbags, Tommy Hilfiger sportswear)
technology (e.g., Hewlett-Packard laser printers)
features (e.g., Jenn-Air ranges, Whirlpool appliances)
service (e.g., Makita hand tools)
quality/value (e.g., Walt Disney Company)
dealer network (e.g., Caterpillar construction equipment)
Differentiation does not allow a firm to ignore costs; it makes a firm's products less susceptible to cost pressures from competitors because customers see the product as unique and are willing to pay extra to have the product with the desirable features. Differentiation can be achieved through real product features or through advertising that causes the customer to perceive that the product is unique.
Differentiation may lead to customer brand loyalty and result in reduced price elasticity. Differentiation may also lead to higher profit margins and reduce the need to be a low-cost producer. Since customers see the product as different from competing products and they like the product features, customers are willing to pay a premium for these features. As long as the firm can increase the selling price by more than the marginal cost of adding the features, the profit margin is increased. Firms must be able to charge more for their differentiated product than it costs them to make it distinct, or else they may be better off making generic, undifferentiated products. Firms must remain sensitive to cost differences. They must carefully monitor the incremental costs of differentiating their product and make certain the difference is reflected in the price.
Firms pursuing a differentiation strategy are vulnerable to different competitive threats than firms pursuing a cost leader strategy. Customers may sacrifice features, service, or image for cost savings. Customers who are price sensitive may be willing to forgo desirable features in favor of a less costly alternative. This can be seen in the growth in popularity of store brands and private labels. Often, the same firms that produce name-brand products produce the private label products. The two products may be physically identical, but stores are able to sell the private label products for a lower price because very little money was put into advertising in an effort to differentiate the private label product.
Imitation may also reduce the perceived differences between products when competitors copy product features. Thus, for firms to be able to recover the cost of marketing research or R&D, they may need to add a product feature that is not easily copied by a competitor.
A final risk for firms pursuing a differentiation strategy is changing consumer tastes. The feature that customers like and find attractive about a product this year may not make the product popular next year. Changes in customer tastes are especially obvious in the apparel industry. Polo Ralph Lauren has been a very successful brand in the fashion industry. However, some younger consumers have shifted to Tommy Hilfiger and other youth-oriented brands.
Ralph Lauren, founder and CEO, has been the guiding light behind his company's success. Part of the firm's success has been the public's association of Lauren with the brand. Ralph Lauren leads a high-profile lifestyle of preppy elegance. His appearance in his own commercials, his Manhattan duplex, his Colorado ranch, his vintage car collection, and private jet have all contributed to the public's fascination with the man and his brand name. This image has allowed the firm to market everything from suits and ties to golf balls. Through licensing of the name, the Lauren name also appears on sofas, soccer balls, towels, table-ware, and much more.
COMBINATION STRATEGIES
Can forms of competitive advantage be combined? Porter asserts that a successful strategy requires a firm to aggressively stake out a market position, and that different strategies involve distinctly different approaches to competing and operating the business. An organization pursuing a differentiation strategy seeks competitive advantage by offering products or services that are unique from those offered by rivals, either through design, brand image, technology, features, or customer service. Alternatively, an organization pursuing a cost leadership strategy attempts to gain competitive advantage based on being the overall low-cost provider of a product or service. To be "all things to all people" can mean becoming "stuck in the middle" with no distinct competitive advantage. The difference between being "stuck in the middle" and successfully pursuing combination strategies merits discussion. Although Porter describes the dangers of not being successful in either cost control or differentiation, some firms have been able to succeed using combination strategies.
Research suggests that, in some cases, it is possible to be a cost leader while maintaining a differentiated product. Southwest Airlines has combined cost cutting measures with differentiation. The company has been able to reduce costs by not assigning seating and by eliminating meals on its planes. It has then been able to promote in its advertising that one does not get tasteless airline food on its flights. Its fares have been low enough to attract a significant number of passengers, allowing the airline to succeed.
Another firm that has pursued an effective combination strategy is Nike. When customer preferences moved to wide-legged jeans and cargo pants, Nike's market share slipped. Competitors such as Adidas offered less expensive shoes and undercut Nike's price. Nike's stock price dropped in 1998 to half its 1997 high. However, Nike reported a 70 percent increase in earnings for the first quarter of 1999 and saw a significant rebound in its stock price. Nike achieved the turn-around by cutting costs and developing new, distinctive products. Nike reduced costs by cutting some of its endorsements. Company research suggested the endorsement by the Italian soccer team, for example, was not achieving the desired results. Michael Jordan and a few other "big name" endorsers were retained while others, such as the Italian soccer team, were eliminated, resulting in savings estimated at over $100 million. Firing 7 percent of its 22,000 employees allowed the company to lower costs by another $200 million, and inventory was reduced to save additional money. While cutting costs, the firm also introduced new products designed to differentiate Nike's products from those of the competition.
Some industry environments may actually call for combination strategies. Trends suggest that executives operating in highly complex environments such as health care do not have the luxury of choosing exclusively one strategy over the other. The hospital industry may represent such an environment, as hospitals must compete on a variety of fronts. Combination (i.e., more complicated) strategies are both feasible and necessary to compete successfully. For instance, DRG-based reimbursement (diagnosis related groups) and the continual lowering of reimbursement ceilings have forced hospitals to compete on the basis of cost. At the same time, many of them jockey for position with differentiation based on such features as technology and birthing rooms. Thus, many hospitals may need to adopt some form of hybrid strategy in order to compete successfully, according to Walters and Bhuian.
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