abhishreshthaa
Abhijeet S
Avnet, Inc. (NYSE: AVT) is a technology Business-to-business B2B distributor headquartered in Phoenix, Arizona. Electronics Supply & Manufacturing magazine reports that Avnet Inc., a Fortune 500 company, may be the world's largest franchised distributor of electronic components and subsystems. Avnet has 16 centers and locations in more than 34 countries.
In 1921, Charles Avnet, a 33 year old Russian immigrant, began buying surplus radio parts and selling them to the public on the Radio Rows of United States port cities. In the mid 1920's, when factory-made radios began to replace radio parts, Avnet adjusted his distribution pipeline and began selling parts to manufacturers and dealers. During the Great Depression, Avnet shifted the focus from relating to wholesalers.[5]
In the mid 1920's to the early 1930s, Avnet diversified by branching out into car radio kits and automobile assembly kits. In World War II Avnet made antennas for the U.S. armed forces. His son, Lester Avnet, joined the business at this time.[6]
Avnet was incorporated in 1955. In 1956 a second connector assembly plant was opened in 1956 near Los Angeles for the aircraft industry. In 1959 the company went public on the American Stock Exchange. In the mid 60's Avnet briefly owned several record labels including Liberty Records and Blue Note.[7] Over the next ten years Avnet expanded with several acquisitions in the new fields of semiconductors, relays, and potentiometers.[5]
The company relocated its corporate headquarters to Phoenix (from Great Neck, NY) in 1998.
The company has a logical incremental view and command view. The airline industry is highly competitive and there is a great environmental pressure on every airline. The company tries to adapt to the changes in the external environment in a step-by-step approach. The strategy of the company is developed by the top management which is composed by a group of people. The guiding principle of Ryanair which can be traced to its foundation is to provide low airfare to the passengers. The various strategies of Ryanair from its foundation up to the present are discussed below.
Strategy One: Alternative to Large Airlines
Initially, Ryanair’s strategy was to offer simple low-cost fares and exemplary customer service. Ryan Air was founded in 1985 by the Ryan family to provide scheduled airline services between Ireland and the United Kingdom, as an alternative to state monopoly carrier, Aer Lingus. Ryanair was the first low-cost, no frills airline that had an impact on the European airline industry. During its launching in 1985, it targeted the Irish ethnic market between Ireland and the United Kingdom by offering a more or less traditional type of service with a two-class cabin but at significantly lower fares.
Strategy Two: Direct Competition with Large Airlines
The strategy of Ryanair to become an alternative to large airlines in the United Kingdom was successful. Not only did it become an alternative, it also became the airline of choice for an increasing number of passengers. In 1986 Ryanair received permission from the regulatory authorities to begin flying four flights a day on the Dublin-London route with two 46-seat BAE748 turbo-props. In doing so, they challenged the high cost monopoly of British Airways and Aer Lingus with fares that were set at half the prevailing fare of £209. In 1986 (the first full year of operations) they flew 82,000 passengers and began negotiations to acquire their first jet aircraft and additional routes. During the later part of the 1980s, Ryanair continued to compete vigorously with British Airways and Aer Lingus while adding additional routes and jet aircraft. By the end of 1989 Ryanair had 6 BAC-111 jets and 3 ATR 42 turbos.
Strategy Three: Restructure
Despite the breath-taking increase in the number of passengers, the company suffered large losses. Its unit costs, though lower than those of Aer Lingus, were not low enough to sustain its low fares strategy. By 1991 its accumulated losses amounted to close on (Sterling) £18 million and the airline was facing serious cash flow problems. It had also gone through five chief executives. The company has no other choice but to restructure. The entrance of a new CEO, Michael O’Leary to the company marked the beginning of a new strategy. O’Leary visited Southwest Airlines in Dallas, Texas to learn the fundamentals of Low Cost Leadership in the airline industry. After O’Leary’s visit to Southwest Airlines, he decided to reinforce the low-fare strategy of Ryanair. He abandoned the all frills in order to reduce costs. Ryanair moved its London base from Luton to Stansted airport, which was new and offered high-speed access to Central London.
Strategy Four: Leadership in the Low-Cost Arena
Ryan Air is considered as the largest low-cost airline in Europe. The company carries more or less 35 million passengers on 325 low fair destinations across twenty-one countries in Europe. The airline has 12 European bases, a large fleet that has more or less 250 aircrafts and more that 2700 employees. In order to maintain its leadership position in the low-cost sector, Ryan Air renders point-to-point services, cutting airport charges. Part of the strategic intent of the company is to maintain its leadership position by acquiring other companies. According to Michael Porter (1980; 1985), in order for a firm to maintain a sustainable competitive advantage, it must follow one of the three generic strategies. These strategies are:
1. Low-Cost – involves the sacrifice of some quality, fashion and even product innovation in order to keep costs low – the lowest in the industry (cited in Proctor 2000, p. 175).
2. Differentiation – focuses on the factors ignored by the low-cost strategy such as product variety, quality and service (cited in Proctor 2000, p. 176).
3. Focus – requires a firm to concentrate on a particular market segment rather than the overall market (Reid et al 1993).
The firm exemplifies most of the characteristics of a cost focus strategy. In order to keep the costs down, the airline maintains a no frills strategy. No frills is a direct approach to low cost which removes all frills and extras from a product or service. The goal is to generate a cost advantage that is sustainable for one of two reasons. First, competitors cannot easily stop offering services that their customers expect. Second, competitors’ operations and facilities have been designed for such services and cannot easily be changed (Proctor 2000).
In 1921, Charles Avnet, a 33 year old Russian immigrant, began buying surplus radio parts and selling them to the public on the Radio Rows of United States port cities. In the mid 1920's, when factory-made radios began to replace radio parts, Avnet adjusted his distribution pipeline and began selling parts to manufacturers and dealers. During the Great Depression, Avnet shifted the focus from relating to wholesalers.[5]
In the mid 1920's to the early 1930s, Avnet diversified by branching out into car radio kits and automobile assembly kits. In World War II Avnet made antennas for the U.S. armed forces. His son, Lester Avnet, joined the business at this time.[6]
Avnet was incorporated in 1955. In 1956 a second connector assembly plant was opened in 1956 near Los Angeles for the aircraft industry. In 1959 the company went public on the American Stock Exchange. In the mid 60's Avnet briefly owned several record labels including Liberty Records and Blue Note.[7] Over the next ten years Avnet expanded with several acquisitions in the new fields of semiconductors, relays, and potentiometers.[5]
The company relocated its corporate headquarters to Phoenix (from Great Neck, NY) in 1998.
The company has a logical incremental view and command view. The airline industry is highly competitive and there is a great environmental pressure on every airline. The company tries to adapt to the changes in the external environment in a step-by-step approach. The strategy of the company is developed by the top management which is composed by a group of people. The guiding principle of Ryanair which can be traced to its foundation is to provide low airfare to the passengers. The various strategies of Ryanair from its foundation up to the present are discussed below.
Strategy One: Alternative to Large Airlines
Initially, Ryanair’s strategy was to offer simple low-cost fares and exemplary customer service. Ryan Air was founded in 1985 by the Ryan family to provide scheduled airline services between Ireland and the United Kingdom, as an alternative to state monopoly carrier, Aer Lingus. Ryanair was the first low-cost, no frills airline that had an impact on the European airline industry. During its launching in 1985, it targeted the Irish ethnic market between Ireland and the United Kingdom by offering a more or less traditional type of service with a two-class cabin but at significantly lower fares.
Strategy Two: Direct Competition with Large Airlines
The strategy of Ryanair to become an alternative to large airlines in the United Kingdom was successful. Not only did it become an alternative, it also became the airline of choice for an increasing number of passengers. In 1986 Ryanair received permission from the regulatory authorities to begin flying four flights a day on the Dublin-London route with two 46-seat BAE748 turbo-props. In doing so, they challenged the high cost monopoly of British Airways and Aer Lingus with fares that were set at half the prevailing fare of £209. In 1986 (the first full year of operations) they flew 82,000 passengers and began negotiations to acquire their first jet aircraft and additional routes. During the later part of the 1980s, Ryanair continued to compete vigorously with British Airways and Aer Lingus while adding additional routes and jet aircraft. By the end of 1989 Ryanair had 6 BAC-111 jets and 3 ATR 42 turbos.
Strategy Three: Restructure
Despite the breath-taking increase in the number of passengers, the company suffered large losses. Its unit costs, though lower than those of Aer Lingus, were not low enough to sustain its low fares strategy. By 1991 its accumulated losses amounted to close on (Sterling) £18 million and the airline was facing serious cash flow problems. It had also gone through five chief executives. The company has no other choice but to restructure. The entrance of a new CEO, Michael O’Leary to the company marked the beginning of a new strategy. O’Leary visited Southwest Airlines in Dallas, Texas to learn the fundamentals of Low Cost Leadership in the airline industry. After O’Leary’s visit to Southwest Airlines, he decided to reinforce the low-fare strategy of Ryanair. He abandoned the all frills in order to reduce costs. Ryanair moved its London base from Luton to Stansted airport, which was new and offered high-speed access to Central London.
Strategy Four: Leadership in the Low-Cost Arena
Ryan Air is considered as the largest low-cost airline in Europe. The company carries more or less 35 million passengers on 325 low fair destinations across twenty-one countries in Europe. The airline has 12 European bases, a large fleet that has more or less 250 aircrafts and more that 2700 employees. In order to maintain its leadership position in the low-cost sector, Ryan Air renders point-to-point services, cutting airport charges. Part of the strategic intent of the company is to maintain its leadership position by acquiring other companies. According to Michael Porter (1980; 1985), in order for a firm to maintain a sustainable competitive advantage, it must follow one of the three generic strategies. These strategies are:
1. Low-Cost – involves the sacrifice of some quality, fashion and even product innovation in order to keep costs low – the lowest in the industry (cited in Proctor 2000, p. 175).
2. Differentiation – focuses on the factors ignored by the low-cost strategy such as product variety, quality and service (cited in Proctor 2000, p. 176).
3. Focus – requires a firm to concentrate on a particular market segment rather than the overall market (Reid et al 1993).
The firm exemplifies most of the characteristics of a cost focus strategy. In order to keep the costs down, the airline maintains a no frills strategy. No frills is a direct approach to low cost which removes all frills and extras from a product or service. The goal is to generate a cost advantage that is sustainable for one of two reasons. First, competitors cannot easily stop offering services that their customers expect. Second, competitors’ operations and facilities have been designed for such services and cannot easily be changed (Proctor 2000).