Relationship Between Customer and Entrepreneurial Orientation

Question: Discuss about the Relationship Between Customer and Entrepreneurial Orientation. Answer: Introduction: This particular study has provided an in-depth case study about the issues that airline industry of United States facing currently. It has been observed from the case scenario that US the popular existing airline companies are receiving innumerable market threat in order to receive organizational image and reputation. This particular study has focused to deal with the competitive force analysis with the help of which a detailed knowledge can be gathered about the current market status of new entrants airlines and existing airlines of US. Competitive force analysis is the systematic framework in order to evaluate and analyze the level of competition. A comparative analysis has also been provided on the economic performance of both the existing airlines companies and new entrants of US. The study has provided an in-depth insight about the strategies and policies that existing airlines can follow for overcoming their crisis. Some of the necessary recommendations have been provided on ho w airline industry would be able to go out from the current crisis and regain the trust of customers. Overview on US airline industry: As per the in-depth analysis provided in the case study, it has been observed that US airline industry is a facing innumerable difficulty in order to make effective profit making planning (Berthon et al. 2012). Especially the popular existing airline brands of United States such as United, Delta, and American have faced innumerable challenges in order to maintain their craze in current market due to the short-term low cost budget strategy of new entrants like Southwest Airlines, Jet Blue, Air Tran Airways, and Virgin America. The primary strategy of these new entrants is to reduce the fare cost by choosing lucrative routes with the help of which the companies can receive passengers accessibility. In addition, the new entrants such as Virgin America, Air Tran Airways like to focus on non-union labor based on which the organization can hire the labor in low cost. As a result, the operation cost of these new entrants has been reduced drastically. On the other hand, the existing brands like United, Delta, and American are possessed with high maintenance cost. These airlines fail to maintain low cost strategy in order to make an instant treat of new entrants due to their brand value. These organizations have to maintain high cost of labor (Armstrong et al. 2012). As the premium customers are the primary target market, the business exerts have to invest large amount of money for employees in order to provide them professional training so that the premium customers can get an effective customer service process. Currently, this particular strategy is getting suffered in airline industry due to the high market threat of new competitors. In addition, the airlines like United and Delta intend to maintain product quality as well. As a result, low cost strategy implementation is not applicable for running these organizations successfully in this market (Fifield 2012). In this particular study, an in-depth analysis has been provided on how the organization can implement innovative strategy and policy with the help of which the organization would regain the trust of customers. Competitive force analysis: Competitive force analysis is the framework with the help of which the business industry can critically evaluate the level of competition among the contemporary competitors. Based on the level of competition, the business organization intends to implement business appropriate business polices in order to become a market threat. Porters Five Force model is the major pathways of analyzing the competitive force (Leonidou et al. 2013). The airline industry is currently facing serious issue due to the market entry of new carriers. As a result, the study has highlighted to discuss on the Porters five-force analysis with the help of which the airline industry can evaluate the current market scenario among the various rising companies. The different aspects of Porters Five Force are as follows: Porters Five Forces Suppliers Power The suppliers power of airline industry in United State is high Buyers Power The buyers power of airline industry in United State is high Treats of the Substitutes Threat of the substitute for US is low Competitive rivalry within the industry The United States has faced innumerable challenges within the airline industry in between the existing companies and new entrants Threat of New entry New entrants of airline industry of US have not faced innumerable barriers to establish their business. Table 1: Porters five force (Source: Sheth and Sisodia 2015) Suppliers Power: The suppliers power in airline industry of US in high in range. After the entrance of new carriers in the market, the demands of aircraft, fuel and labor has been raised incredibly. As a result, the suppliers get immense scope to distribute their raw materials to the airlines (Kim et al. 2012). In addition, as per the external global scenario, the price and supply of oil has become in fluctuation due to the high range of demand in the global market. It has a major impact in the scenario of US as well. Therefore, in the realm of airline industry the demand of oil is immense along with high supply power. Buyers Power: With the proliferation of online ticket booking system, the buyers have enough opportunity to verify the best facilities and benefits of various companies. The online travel internet site of US such as Expedia, Travelocity, and Orbitz has provided innumerable facilities and benefits to the travelers with the help of which they can conduct an overall comparative analysis about price and service range facilities of US airlines (Papadopoulos and Heslop 2014). In addition, apart from the existing airlines, a large number of external new entrants have also occupied a dominant place in the realm of airline industry in US. As a result, the people have received immense alternative option to choose best products and services. Therefore, the buyers power in airline industry of US is also very high in range. Threats of the substitutes: United States do not have to face innumerable threats from the substitute transport system. US being out an out a developed country is strong enough in economically as well as technologically. Therefore, people do not have to struggle for affording the charge of flight tickets. In addition, the report shows the US inhabitants prefer to choose air as their major pathway of journey rather than road, rail track or water. As a result, the airlines providers do not have to face major preventions from their substitutes (Popkova et al. 2013). In the case scenario, it has been observed that US is possessed with a large number of airlines including new and existing. Competitive Rivalry within the Industry: After the entrance of low cost carriers, United States is facing remarkable completion in the realm of airline industry. The poplar existing airlines are struggling immensely in order to maintain organizational image and reputation due to the new entrants. The low cost carriers of US such as Southwest Airlines, Jet Blue, AirTran Airways, and Virgin America have decided to implement some major strategies so that customers show their interest for choosing their services. Low cost fare is one of the most effective strategy based on which the organization is able to provide services in limited fare. As a result, the existing companies are facing innumerable difficulties for creating market demand (Morgan 2012). These airlines like to choose non-union labors based on which the business experts have to pay limited labor cost. As a result, the entire operation cost can be highly decreased. On the other hand, the companies like United, Delta, and American do not have to face innumerable difficulties for maintaining labor cost due to the use of union labor. As a result, the business experts have to afford a huge amount of money for maintaining the operation cost. Therefore, the overall competition of airlines within the US industry is remarkably high in range. Threat of New Entry: In order to enter the business wings in market, every organization has to face innumerable barriers for establishing their entire process of business. US airlines industry is not exceptional to that. For overcoming the treat of new market entry, airlines such as Southwest Airlines, Jet Blue, AirTran Airways, and Virgin America has decided to implement low cost strategy in their business process so that the business experts can enhance the range of target customers (Shaw 2012). The airlines have chosen most lucrative routes for drawing the attention of large number of customers. From those perspectives, the new entrants did not have to face immense difficulties for expanding their wings in US. Moreover, the existing airlines have faced a sudden crisis after the entrance of low cost barriers. Economic performance: After the entrance of low cost carriers the economic growth of existing airlines of US such as United has been remarkably decreased. As per the report of third quarter revenue of 2016, the organization had gained $9.9 billion. The entire revenue level had been decreased from 3.8 percent (newsroom.united.com 2016). After the serious deterioration in economic performance this particular airlines failed to maintain a balance customers demand and supply. After the inflation of fuel price, the entire business structure of United, Delta and North waste has been decreased rapidly. As a result, United decided to merge their entire business process with continental (Bosomworth 2013). In this kind of situation, the organization has decided to implement some effective major strategies and policies so that the business experts can gain the profit level again in order to create the market demand. After getting merged the United was able to overcome the major economic crisis to some extent. The Co ntinental and United holding has been presented here: On the other hand, after implementing the low cost strategy the economic performance of new entrants such as Virgin America has incredibly raised. In the first quarter of 2016, the revenue growth of Virgin America has been reached $18.4 million. The entire revenue growth has been increased to 74.5%. As per the point of view of Chief executive Officer, David Cush of Virgin America, We reported record first quarter net income driven by continued unit revenue outperformance as compared with the domestic industry and the benefit of lower fuel costs. The company focuses on non-fuel unit cost as well so that the rate of ticket does not become high in range (Shankar, Carpenter and Farley 2012). This particular business organization after implementing strategies for lower fuel cost has drawn the attention of large number of travelers. As a result, the customer range of different geographical boundaries has been raised remarkably. The operating revenue of Virgin America in first quarter of 20 16 was $364.0 million. As a result, the organization was successful enough to provide innumerable facilities and benefits to the employees so that employees show their interest for providing best efforts for meeting organizational goals and services. The price reduction level of Virgin America from December 2014 to June 2015 is as follows: Strategies for airline profitability: As per the case scenario, it has been observed that the current airline industry of US is facing innumerable difficulties to maintain profit making planning due to the entrance of low cost carriers. The price hike of fuel is one of the most effective reasons of raising such kind of crisis in airline industries (Chan, He and Wang 2012). In order to overcome this kind of sudden crisis, the airlines such as United, Delta, and American can take some of the effective measures in order to regain the trust of people. The strategies are as follows: Implementing effective business promotion: United, Delta, and American has already lost their organizational reputation in market due to the entrance of low cost barriers. Therefore, the marketing executives should make an effective marketing and promotional plan for the customers so that the travelers from different geographical boundaries can show their interest. While promoting the products and services, these airlines can provide an in-depth overview about the product and service facilities so that customers can distinguish the different. Increasing facilities and benefits to the customer services as well as products: The business experts of United, Delta, and American would have to reduce the product cost. The travelers should get low fare cost from the service providers so that the range of target market can be enhanced. In addition, service providers would have to deal with the customers in such a way that they show their interest for purchasing service process. The success of airlines is highly dependent on service process (Zeriti et al. 2014). The service providers should never show their arrogant outlook. As a result, travelers show their reluctance for using products and services. Selecting lucrative routes to draw the attention of most of the travelers: The airlines such as United should select lucrative route for the passengers so that the passengers do not like to show their intense impatience for using the service process of these organizations. The business experts should select the routes in such a way that the most of the inhabitants of tat routes are air travelers. As a result, the organization would be able to enhance their range of target market. On one hand, the company would be able to get an effective revenue level, on the other hand, a large number of target customers would show their interest for using services. To maintain an effective communication with online ticket booking sites for business promotions: The responsibility of online ticket selling sites is to present appropriate data on how airline companies are providing necessary services to the customers. People would like to purchase the service process of those companies whose service facilities are high in range in current market scenario. Therefore, most of the airline companies like to maintain a good rapport with the travelling sites so that the agents like to make effective promotional activities for their company. The airlines such as United, Delta, and American would have to maintain effective relation with the agents of travelling sites such as Expedia, Travelocity, and Orbitz. As a result, the travelling agents would like to recommend the name of those airlines to the travelers. Discussion: The present case scenario has provided an in-depth overview about the current market scenario of airline industry of United States. Based on this particular situation, some of the eminent scholars have expressed their point of views in different ways. Griffith, D.A. and Hoppner (2013) stated that the airlines such as United, Delta, and American should maintain effective industry analysis before implementing business strategies. After the entrance of low cost carriers, these airlines should reduce the product cost so that customers do not show their reluctance for purchasing the products and services of these organizations. On the other hand, Nebenzahl and Jaffe (2013) has strongly differed the point of view of previous scholars. This particular author has opined that without maintaining high maintenance process, the target customers of these organizations would never use the service process. Conclusion: This particular study has provided a deep insight regarding the current issue that US is facing in their airline industry. In order to evaluate the current scenario, the study has focused to highlight the industry analysis with the help of which an in-depth overview can be provided on airline industry. 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