Company Analysis Of United Airlines
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Final Analysis
Evaluate and assess the strategic implications of your companys finances vis-Ðo-vis the other companies in the industry. Are there particular financial results that could impact, positively or negatively, the companys ability to compete? How can the company leverage strong financial results or lessen the impact of weak financial results in order to compete successfully?
The strategic implications of United Airlines have similarities and differences when comparing them to the competitors in the airline industry. United is just exiting bankruptcy, and has less than impressive financials. Yet, due to the exit barriers that airlines face, United must constantly make investments and strategic decisions to stay competitive in the industry. In comparison with other airlines, United is second behind American Airlines in total revenue and sales, which suggests that Uniteds customer base is large and loyal. However, Uniteds financials also show that while they are second among competitors in total revenue and sales, their net income is (21,176,000), which is less than the next lowest net income by $20,000,000, which happens to be American Airlines.
United and American are seen as the two largest legacy carriers, but are still unable to turn a profit due to their large operating costs which is representative of the constant competition in the industry and both airlines focus on staying ahead of their nearest competitor. Overall the financials of United are not attractive to the average investor, but analysts have hope for United upgrading it from a company to stay away from to a company to purchase common stock of. Since exit barriers are in place for United, we dont believe that weak financials will really affect their ability to compete in the industry. Airlines are constantly in and out of bankruptcy, yet always end up back on their feet, with new operations and new competitive strategies.
United must evaluate their financial position to truly compete in the market. They will always be in the market, but they must create strategies to improve their financials and look where they can cut operating costs so they can slowly improve their net income and begin to create profits. Ideally, they will continue to attract customers to the service that they provide, continue to grow their customer base and continue to increase total revenue and sales yearly, ultimately successfully turning the corporation around.
How strong is your companys competitive position compared to the other companies in the industry? Construct a Competitive Strength Assessment chart that includes your company and the other companies in the industry. Use the chart to evaluate your companys strengths and weakness compared to the other companies in the industry.
Competitive Strength Measure
United
SouthWest
JetBlu
Virgin
Atlantic
American
Airlines
Relative market share
Costs relative to Competitors costs
Ability to match or beat rivals on key product attributes
Ability to benefit from strategic fits with sister businesses
Bargaining leverage with suppliers/ buyers; caliber of alliances
Brand image and reputation
Competitively valuable capabilities
Profitability relative to competitors
Sum of assigned weights
Overall industry attractiveness scores
10/1.8
7/1.0
8/1.2
6/.7
9/1.4
10/.9
9/1.3
10/1.5
10/1.5
10/1.8
8/1.3
6/.8
9/1.5
10/1.8
9/1.6
10/1.8
7/1.2
10/1.8
8/1.2
5/.7
8/1.3
10/1.8
9/1.6
10/1.8
6/.8
5/.7
7/1.0
6/.9
8/1.1
9/1.4
8/1.2
10/1.0
10/1.7
6/.8
8/1.1
5/.6
9/1.4
10/1.1
9/1.2
10/1.5
United is a relatively strong company compared to other airlines in the industry. United is one of the strongest companies when in the industry when it comes to international flights, but not as strong when it comes to low-fare travel. When it comes to international travel United is probably number 1 or number 2 in the industry; in the low-fare market they are probably fourth or fifth.