Competitive Advantage of Flight Center Limited - Case Study Example

Flight Center Student’s Name: Instructor’s Name: Course Code: Date of Submission: Question 1 The Blue Ocean Strategies are the strategies which are developed by an organization to create competitive advantage. Flight Center Limited is one of the leading travel and tour companies in Australia and it provides effective travel services to the customers effectively. The effectiveness of the company is based on the strategies that it has applied to meet the needs and expectations of the customers and also meet the customer expectations and this has led to sustainable competitive advantage. According to the Blue Ocean Strategy, the competitive strategy can be achieved by the ability of the organization to make the competition irrelevant despite the high competition in the market (Kim & Mauborgne 2005). However, in Australia there is high competition in the airline industry from companies such as Southwest Airlines and this means that Flight Center Limited is likely to face competition that should not be looked upon. On the contrary, the Porters Generic strategies can also be applied to improve the competitive advantage of an organization. The Porters generic strategies that are applied by organizations include cost leadership, differentiation and cost focus that help to create competitive advantage. According to Porter, competition can be created when an organisation has clear objectives and understands the competition in the market before formulating the most effective competitive strategies to meet the needs and expectations of the customers to retain them (Kim & Mauborgne 2005). For instance, the cost leadership strategy can be applied by applying strategies like competitive pricing so that the customers’ financial capabilities are considered when fixing the prices like the air tickets. This is one way in which the customers are motivated and can be retained by the organisation. In this case study of Flight Center Limited, there is various strategies that have been applied by the company to meet its competitive advantage. The strategies which have been applied by the company can be better regarded as generic strategies and not the Blue Ocean Strategies. This is because there is competition in the travel industry and the company has taken the competition to be the source of their strengths leading to competitive advantage (Flight Center Limited 2015). In the first place, the cost leadership strategy has been applied by Flight Center Limited to meet the needs and expectations of the customers. The first cost leadership strategy that has been applied is provide g lowest Airfares. This applies to all the customers both local and international travelers and businesses. The cost of airfares is cost effective for the customers and this is according to Porter’s generic strategies. Due to competition in the travel industry, the airfares of the company have helped to create competitive advantage for the organisation leading to competitive advantage. For instance, the airfare from Sydney to Auckland is $284 while the airfare from Sydney from Singapore is $456. This implies that the company focuses on cost leadership strategy as explained by Porters Generic strategies. The other reason why the strategies applied by Flight Center Limited can be regarded as Porters Generic strategies is the ability to differentiate the services which are provided by the travel agent. The services provided are unique as compared to those of the competitors like the Southern airlines making the company to stand out. In the first place, the travel agent provides the online services where the customers can make their booking online. The customers can make their booking online and this is mostly applied for domestic customers. When compared to other flights like Qantas and Virgin Australia, the online booking makes it easier for the customers to make access the information regarding the flights online and this makes the cost of transaction to be cost effective. However, the other airlines also provide their services online especially to the domestic customers but the cost of services which are provided by the Flight Center Limited are competitive (Porter 1996). The aim is to make the competition relevant so that the quality of services offered to the customers can be improved but at cost effective prices. In this way, the company is able to differentiate its products and services to the customers creating competitive advantage. The other differentiation strategy that has been applied by Flight Center Limited is the variety of services which are provided by the organisation. This means that the company has applied the diversification strategy to ensure stable revenue sources. The services which are provided by the company include travel services, holiday packages and accommodation services. The Flight Center Limited offers variety of services to the customers like air travel to various destinations at cost effective prices. The company also provides the accommodation services to the customers who request for the same and also Flight Center Limited provides various holiday packages (Kim & Mauborgne 2005). The holiday packages include the Thailand holiday package and Bali holiday package. In this effect, the varieties of services which are provided by the company make it have good reputation globally. Despite the competition, the variety of services which are provided help to create competitive advantage and this is according to Porter’s generic strategies. From this discussion, it can be clearly identified that the strategies applied by Flight Center Limited can be better described by Porter’s generic strategies. This is because the strategies which have been applied by the organisation consider competition as an important component in improving the quality of services which are provided by the company. There is competition in the travel industry and that is why Flight Center Limited has applied strategies which are helpful in beating the competition despite the many travel agents in Australia. For instance, the cost leadership strategies have been applied as well as the differentiation strategies to ensure that the customers are satisfied and can be maintained by the organisation because they will be satisfied (Kim & Mauborgne 2005). These strategies cannot be described as Blue Ocean strategy because the strategies have been developed considering the extent of competition and this is important in achieving better results. As a result, the strategy cannot be described as the Blue Ocean strategy which considers competition irrelevant but in this competition and competitors are important in shaping the quality of services which are provided. Question 2 According to Barney 1991, sustainable competitive advantage is the ability to apply strategies that can help to improve the long term competitiveness of an organisation. In this context, Flight Center Limited can be evaluated as one of the companies that have employed sustainable competitive strategies. There are various strategies that have been employed to gain competitive advantage. Flight Center Limited has applied various strategies to achieve the competitive advantage. The first strategy that has been applied by Flight Center Limited is the cost focus strategy (Barney 1991). This is the strategy that has been applied to ensure that the company engages in practices that help to reduce the cost of production. For instance, there is online booking and competitive pricing strategies that help to meet the financial capabilities of the customers. Flight Center Limited is considered as one of the lowest airfare agent. However, the airfares are not too low to make losses but to attract and retain the customers. In this effect, company has engaged in sustainable competitive advantage since for a long time it has managed to attract and retain customers without making losses. According to resources based model, the resources of the company can help to create sustainable competitive advantage. The resource based model argues that the resources of the organisation can provide the strengths and weaknesses of the company to improve the achievement of goals and objectives. For instance, Flight Center Limited has the strength of good reputation and effective pricing policies. These strengths have helped the company to diversify its products and services and currently it provides variety of services like air travel services and providing holiday packages to various destinations (Barney 1991). All this is because of the financial strength and good reputation of the company. On the other hand, the weakness of Flight Center Limited is lack of effective market segmentation. This has led to uniform pricing of the products and services which hinders the low income customers from using the services. In this regard, Flight Center Limited has engaged in sustainable competitive advantage by diversifying its services to the customers. In addition, Flight Center Limited has gained sustainable competitive advantage from the way it provides its services to the customers. Sustainable competitive advantage can be achieved when the customers are satisfied with the products and services provided by creating the value for the services and the organisation itself is able to make the profits. In the first place, the organisation has provided the customers with the opportunity to make their booking online (Porter 2008). This is one way in which the services provided by the organisation are effective in meeting the needs and expectations of the customers. When compared to other travel agencies like Southern airlines, the agency is considered to provide better services at cost effective prices. This helps to improve the quality of services which are sustainable at long term because the organisation is able to make profits to expand the business operations and also make sustainable profits that can be used as capital to expand the business operations. In this way, the company can be differentiated from others in terms of the services which are provided. In addition, the resource based view model has also been applied by Flight Center Limited to create competitive advantage. In the first place, the agency has competent and skilled workforce who help to provide quality services to the customers. This is because the quality of services which are provided depends on the ability of the workforce. Due to globalization, outsourcing strategy has been applied by Flight Center Limited to ensure that the organisation has competent workforce who meet the required standards to offer travel agency services (Mintzberg & Quinn 2009). Besides the financial capacity of Flight Center Limited, the employees are also competent to offer quality services to the customers as compared to other travel agencies. In this context, the organisation is able to attract and retain the customers and this means that it makes sustainable profits due to sustainable competitive advantage strategies. The organisation has the financial capacity to hire competent staff and also motivate them through rewards and this helps to improve the quality of services which are provided. The other capability of Flight Center Limited is the reputation of the organisation. Flight Center Limited has been providing quality services for long time and this has helped to improve its reputation in the market. The capability of the organisation is based on the variety of services which are provided that meet the needs and expectations of the customers. The reputation of the organisation has been the source of sustainable competitive advantage since most of the domestic customers and the international customers tend to search for the travel agent that can meet their needs and expectations (Porter 2008). Due to this, the online booking strategy is sustainable because the customers are able to search for the services provided by Flight Center Limited and make their booking online. The implications of these capabilities and resources is that Flight Center Limited has scanned the environment effectively applying the environmental model to identify the opportunities and threats in the market before formulating appropriate strategies. The end result is that the organisation is not engaging in business strategies which cannot be sustained by the organisation and does not make losses. In this effect, it can be determined that Flight Center Limited has applied strategies which are sustainable considering the resources of the organisation and the impact of the strategies. For instance, the competitive pricing strategy as well as the variety of services which are offered by the organisation is sustainable because of the stable financial resources of the organisation (Porter 2008). As a result, the strategies applied by Flight Center Limited have helped to create sustainable competitive advantage. References Barney, J 1991, Firm resources and sustained competitive advantage. Journal of Management, Vol. 17, No. 1, pp. 99-120. Flight Center Limited 2015, About Us, retrieved on 18th August 2015 from http://www.flightcentre.com.au/ Kim, W. C. & Mauborgne, R 2005, Blue Ocean Strategy: From theory to practice. California Management Review, Vol. 47, No. 3, pp. 105-121. Mintzberg, H & Quinn, J.B 2009, The Strategy Process, Prentice-Hall, Harlow. Porter, M. E 1996, What is strategy? Harvard Business Review, Vol. 74, No. 6, pp. 61-78 Porter, M. E 2008, The five competitive forces that shape strategy. Harvard Business Review, Vol. 86, No.1, pp. 78-93. Read More