Chap 12 Considering New Ventures and Corporate Renewal

Chap 12 defined new ventures, initial public offerings (IPO) and corporate renewal.  When an idea is formed and an opportunity is seen then it sparks entrepreneurship (new-venture creation), meaning that a business is created from the ground up. Initial public offerings is the public sale of company stock. This generally occurs early in a firm's life cycle and is a pivotal shift from small company to established. The term corporate renewal is just that breathing life into a dismal corporation through a re-evaluation of the strategy.

With the terrorist attacks on September 11, 2001, the airline industry tailspinned out of control.  Delta Airlines took its first financial loss in six (6) years. This unexpected traumatic event almost caused an organizational failure. The economic change in the environment caused management to discuss corporate renewal.

http://www.managementsite.com/494/Organizational-Resilience-in-Times-of-Crisis.aspx

Chap 11. Organizational Structure, Systems and Processes

Chap 11 discussed how the organizational structure, systems and processes are vital to the corporate strategy and play an important role in how the strategy is implemented. The framework of an organization is structure. What is structure? It is the arrangement and division of tasks, and people within an organization. This arrangement provides an efficient way for information to flow from the gatherer of information to the decision makers in the organization. Structure provides a level of consistency for coordinating resources and information. The most firm structures are functional, multidivisional, matrix and network.

Delta Airlines is no different from other organizations where organizational structure, systems and processes are important to the implementation of the corporate strategy.  Every employee with Delta has  The utilization of the multidivisional structure gives specific functional areas such as marketing and finance specific responsibilities and tasks that mange activities that make it possible for Delta to be successful. CEO  Richard H. Anderson and President Edward H. Bastian are at the top of the multidivisional structure.

http://www.delta.com/about_delta/investor_relations/corporate_governance/board_of_directors/index.jsp

Chap.10 Studying Mergers and Acquisitions

Mergers and acquisitions sound the same but they are quite different. When the transfer of ownership occurs and a firm is bought by another company then that is called a acquisition. And when a company is consolidated with another that is called a merger. Chap 10 discussed the benefits and drawbacks of such a transaction and what is the motivation behind the deals.

On October 29, 2008, Delta Airlines merged with Northwest airlines, eliminating an industry competitor and expanding their presence worldwide. The former CEO of Delta airlines Gerald Grinstein, called this transaction "anti-competitive" and that it would "threaten the future stability of our nation's transportation industry". With the economy in a downturn and oil prices increasing combining resources would give the company capital needed for growth.

http://money.cnn.com/2008/02/20/news/companies/delta_northwest_analysis.fortune/index.htm

Chap 9. Understanding Alliances and Cooperative Strategies

Chap 9 discussed why strategic alliances are so important, and the motivation behind alliances. What is a strategic alliance?  It is a partnership in which two or more firms combine resources and capabilities with the goal of creating mutual competitive advantage. As with every relationship it has a beginning and an end, and Delta Airlines has agreed to many alliance with the intention of creating a competitive advantage within the airline industry.

"Alliances that take you farther" is the joint venture partnership created with Air France, KLM, and Alitalia. This partnership created a global network offering 250 flights daily across the Atlantic  and flights to 500 destinations within Europe. Collectively, this network creates a seamless connection when arriving and departing a Delta hub.

http://www.delta.com/planning_reservations/plan_flight/flight_partners/air_france_joint_venture/index.jsp

Chap 8. Looking at International Strategies

What is International Strategy? It defined as processes by which a firm approaches its cross-border activities and those of competitors and plans to approach them in the future.  Chap 8 discusses how global trends can lead a firm into new market opportunities and grow consumer demand. Why should we expand is a question that top management asks in regard to providing or selling their services in foreign markets.

The recent merger of Delta Airlines with Northwest airlines was part of the international strategy to expand their presence into the Asian markets and making Delta the largest commercial airline in the world. Having a global balance is what gives Delta Airlines the flexibility to overcome economic conditions internationally.

http://www.ajc.com/business/deltas-international-strategy-struggling-94932.html

Chap 7. Developing Corporate Strategy

This chapter requires companies to answer questions. If you are in the airline industry should you also be in the railroad industry? The corporate strategy deals with this issue as well as all issues affecting the overall efforts of the company. Should we diversify be entering into more than one arena or stay true to our core competencies?

While staying true to their core competencies, Delta Airlines has been able to diversify and enter into different arenas and be successful. Being an industry leader, their corporate strategy is very clear and concise. Stick with what we do best and that is provide exceptional customer service throughout the entire travel experience, offer premium in-flight amenities, and the frequent flyer rewards program. The brand Delta speaks for its self and the differentiation strategy keeps Delta Airlines on top.

Chap 6. Crafting Business Strategy for Dynamic Contexts

Chapter 6 discussed how even in dynamic competition, firms are able to develop competitive advantages.  The meaning of dynamic is constant changing of the environment where you must adapt to new situations and overcome possible obstacles. Technology is a dynamic environment that is constantly changing and if companies want to keep a competitive advantage they must respond quickly and adapt.

As Delta Airlines passengers adopt the trend of owning web-enabled smartphones, wireless computers, and with the explosion of social media, the airline is leading the way in how the industry interacts with its customers thus improving the travel experience.

http://www.flightglobal.com/articles/2011/05/24/357128/passenger-experience-in-the-spotlight-as-technology-advances.html

Chap 5. Creating Business Strategies

This chapter discussed how businesses create their strategy in order to capitalize on core competencies while looking for opportunities in the competitive environment.  Strategic positioning within the industry is important. Micheal Porter's concept generic strategies result in four (4) strategic positions; low-cost leadership, differentiation, focused cost leadership, and focused differentiation.

Out of Micheal Porter's concepts, Delta Airlines concentrates it's generic strategy on Differentiation.  The brand legacy is unique and is recognized throughout the industry.  In the attempts of competing with low-cost carriers, Delta created Song airlines a low-cost carrier.  Evan though Delta was not a low-cost leader, the implementation of this strategy failed. They were trying to be something they were not.

What sets Delta apart from others; its customer service throughout the system, premium in-flight amenities, and its frequent flyer rewards program.

http://www.academicmind.com/unpublishedpapers/business/management/2008-06-000aao-delta-an-anyalytical-view.html

Chap 4. Exploring the External Environment: Macro and Industry Dynamics

The general concepts that are discussed in this chapter deal with the external environment that affect corporations. The macro environment refers to the larger picture of the environment. A tool utilized in assessing the sociocultural, economic, political, and technological environment in which a company operates is called PESTEL analysis. This tool creates a list of potential influences that help managers gain a better understanding of possible opportunities and threats so that the firm can compete and be profitable.

One aspect of the PESTEL is environmental issues. In Delta Airlines macro environment, their commitment in preventing pollution is not an option.  The company has created programs to reduce its footprint in the environment by the reduction and recycling of operational waste, increasing aircraft fuel efficiency and searching for alternative fuels. These programs are just some of the ways they are reducing greenhouse gas emissions.

Another initiative is the in-flight recycling program where employees were able to recycle 1,108,000 pounds of material in 2010.
http://www.delta.com/about_delta/global_good/environment/index.jsp

Chap 3. Examining the Internal Environment: Resources, Capabilities and Activities

This chapter explores companies strengths and weaknesses based on resources, capabilities and activities.  Have you ever wondered why some businesses outperform their competition within the same industry? Companies generally differ in their core competencies and what they need to improve on; those differences will and can determine who will have the competitive advantage over the competition. The decisions that upper management make when deciding the activities of their core competencies in regard to outsourcing certain functions within the company.

An industry leader, Delta Airlines took the lead by bringing outsourcing to the travel industry.  The company has 2 reservation call centers in India. This move has saved Delta $25 million a year.  This strategy is risky.
http://articles.cnn.com/2004-12-23/travel/bt.outsource.airlines_1_united-airlines-outsourcing-reservations?_s=PM:TRAVEL

They also outsourced its European finance and accounting functions as a cost-saving solution so that they can concentrate on the core competencies of improving customer service levels and company visibility in the industry.
http://www.accenture.com/us-en/Pages/success-delta-financial-outsourcing-summary.aspx

Delta Leadership

In 2005, under the leadership of Leo Mullin, Delta Airlines, the 3rd largest airlines in the U.S.entered into bankruptcy.  The terrorist attacks  of 9/11 rocked the industry to its core; accompanied with high fuel prices and competition from low-fare competitors, leadership had no other option.

Strategies that led to Bankruptcy

• 2001 Labor deal with pilots that paid salaries in the $300,000 range.
• launch of Song discount airlines to compete against JetBlue (very high exit barrier costs)
• Management always had to have the biggest and the best, it was "The Delta Way"

"The Delta Way" almost caused Delta Airlines to not exist.

With the dismissal of Leo Mullin, Gerald Grinstein stepped in as CEO and had to get all employees on board to believe in his strategy.  Signs of a good leader is to lead by example.

• Deep pay cuts for everyone. (he took a 25% pay cut)
• Working with creditors

By 2009 Delta Airlines was out of bankruptcy and with a new CEO, Richard H. Anderson.  Under his strategic leadership Delta Airlines has maintained growth with the merger of Northwest Airlines.

Strategy

• Joining forces with Northwest added strength in Asia combined with their stronghold in Europe.
• Built around paternalistic culture

The strategic leaders of Delta Airlines continue to lead by example in making the right decision at the right time.

  http://www.businessweek.com/magazine/content/09_21/b4132036798289.htm

Chap 1

From its humble beginnings in 1924 as a crop dusting operation, Delta Airlines company perspective has given them a competitive advantage built on safe and reliable air travel, unique customer service, and Southern hospitality.  Their vision is what sets them apart from other airlines because of the willingness to go above and beyond in providing superior customer service and always exceeding customers' expectations in their transportation service. 

When using The Business Strategy Diamond, Delta Airlines is able to answer 5 major questions to make sure that their strategy fits together.

Arenas:

• Currently Delta Airlines operates as a passenger, cargo, & mail carrier and provides 13,000 daily flights.
• They pioneered the "spoke and hub system" meaning they provide service to smaller cities (the spoke) and instead of flying them to their destination non-stop they bring passengers, mail, and cargo to major cities (the hub). This allows for more a more efficient use of resources. 
•  To read more go to http://en.wikipedia.org/wiki/Spoke-hub_distribution_paradigm
• The market segment is divide into 2 targeted segments
• Business Travelers - the most profitable
• Leisure Travelers - not as profitable

Vehicles:

• From the beginning Delta Airlines used acquisitions or mergers with other carriers as a strategy to grow their operations to what you see today.  Below are the airlines that have been acquired over the years.
• Chicago and Southern Airlines
• Delaware Airlines
• Northeast Airlines
• Western Airlines
• Pan-Am Airlines
• Northwest Airlines (most recently)
• Delta has continued to expand their operations through joint ventures with Air France-KLM and Alitalia. 
•  http://www.delta.com/about_delta/corporate_information/index.jsp

Differentiators:

• Delta Airlines has a long standing tradition of providing excellent customer service
• They are looked upon as a leader in the industry.
• They are not a low-cost leader and create value through pricing. 
• The product that is offered is reliable.

Staging & Pacing:

• In the 90's Delta Airlines acquired Pan-Am Airlines and expanded their presence as an international carrier with new European routes. 
• With the recent acquisition of Northwest Airlines, Delta has expanded into the Asian markets.

With answering all these questions Delta Airlines is able to shape an Intended Strategy into a realized Strategy that will help in the implementation process.

Welcome To Tamera's Blog

The company that I plan to discuss on my blog is Delta Airlines.  I look forward to you reading what I have to say and your comments are appreciated. Now let's get this semester started.