Airlines and the Oligopoly Market Structure Assignment

Airlines and the Oligopoly Market Structure - Assignment Example These advantages are witnessed in service pricing, destination services, marketing, and promotion, as well as the established hub philosophy that drives either point-to-point destination services or major hub development. Much of these competitive advantages come from establishing a market-oriented culture, defined as â€Å"delivering superior value to customers† (Narver, Slater & Tietje 1998, p.242). It is about aligning the business model based on three dimensions, having a customer orientation, a competitor orientation, and the ability to coordinate all business units with an inter-functional, systems-based philosophy and structure (Gauzente 1999, p.2). The majority of the airlines identified in the research article have established a market-oriented business model and internal culture, that provides both competitive advantages over other airlines in this oligopoly as well as a strong brand in the consumer market. A market orientation strategy â€Å"is a powerful competiti ve advantage, because it is an invisible asset that takes a long time to establish and one that is difficult to imitate† (Johnson & Verayangkura 2001, p.2). ...   a market structure, constant environmental scanning occurs to witness the competitive behaviors of rival firms to avoid market share losses or loss of brand reputation in consumer markets. Nickels, McHugh & McHugh (2005) identify a competitive advantage as better development of core competencies. These are â€Å"functions that the organization can do as well or better than any other organization in the world† (Nickels, et al., p.257). In the article â€Å"the joys of oligopoly†, it is identified that the core competencies of Southwest Airlines, as one example, is the ability of the firm to structure its scheduling, labor, and point-to-point destination services to provide low-cost, no-frills service that continues to bring the business significant revenues from satisfied customers. While larger competitors with more market presence continue to provide customers better in-flight services that require a higher pricing model, Southwest is able to manage its services ef fectively and with limited perks for the more frugal consumer. Southwest is also able to follow an A to B flight philosophy which fills more seats daily rather than waiting at a regional hub for connecting traffic that allows for almost instantaneous departure after a flight has arrived at the airport (Associated Press 2001). The core competencies of Southwest are labor-related, flight capacity scheduling, and independence from hub philosophy. However, other airlines that do utilize a hub philosophy consider this a competitive advantage in this market structure as it provides â€Å"greater frequency, more destinations and lower fares than customers could expect without it† (Associated Press, p.3).