Assignment

Instructions

Stand-Alone Project: Stand-Alone Project: Strategic Audit

You should begin working on the Stand-Alone Project early in the course. Each assignment provides a benchmark for completing the Stand-Alone Project in a timely manner while working through the course. You will find this information in the "Stand-Alone Project Benchmark" section of each assignment.

Instructions: The Stand-Alone Project requires you to perform an in-depth strategic audit of AirTran Airways, Inc. The strategic audit is comprised of six parts. Use the following instructions to guide your research and writing. Your Stand-Alone Project responses should be both grammatically and mechanically correct, and formatted in the same fashion as the project itself. If there is a Part A, your response should identify a Part A, etc. In addition, you must appropriately cite all resources used in your response and document in a bibliography using APA style. (300 points) (A 20-page double-spaced response is required for the combination of Parts A, B, C, D, and E.)

AirTran (known as ValueJet before a disastrous crash in the Everglades) was the second largest low-fare schedules airline (after Southwest) in the Unites States in terms of departures and along with Southwest the only US airline to post a profit in 2004. The company's labor costs as a percentage of sales were the lowest in the industry. Will AirTran continue to be successful in this highly competitive industry?

You are required to take on the role of a strategic analyst and suggest ways by which AirTran Airways can compete effectively in an industry where the rules of the game have changed drastically. Based on the AirTran Airways case (Wheelen & Hunger, pp. 35-1 to 35-5) and your own research on AirTran Airways and the domestic airline industry, prepare a strategic audit using the format outlined below.

The following steps are suggested in preparing your strategic audit.

Read all of the instructions below and then perform research on American Airlines. Make notes of the information that you will need to use in writing your strategic audit as well as notes that you think will be helpful in making decisions and recommendations. Obtain the information you need (regarding the organization, specific industry, and recent events and changes) using the following resources. The American Airlines Web site Hoover's (This can be accessed through ProQuest: Use American Airlines as your search term and limit your search to within the Hoover database.) Articles on ProQuest that are specifically related to the industry or current events regarding the company Other sources of research, which are recommended (but not required), include newspapers, business magazines, news programs, trade journals, etc. Based on the information and insights obtained from your research, apply your knowledge of the concepts and techniques in the textbook, your professional and personal experiences, and your analytical and reasoning skills to critically evaluate the strategic performance of the company (at the corporate, business, and functional levels) and suggest recommendations for future strategic initiatives. In addition, read the Stand-Alone Project Benchmarks in each Assignment to get an idea of how to progress in this strategic audit as you work through the course.

Part A

Current Situation: Discuss the following issues related to American Airlines' current situation. (55 points)

1. Current Performance: How has the company performed over the last few years in terms of revenues, profitability, and market share?

2. Strategic Posture

a. Mission: What is the company's vision/mission statement?
b. Objectives: What are the corporate, business, and functional objectives? Are they consistent with each other and with the mission?
c. Strategies: What strategies has the company employed in order to be able to meet these objectives? Are these strategies consistent with each other and with the overall mission?

3. Corporate Governance

a. Directors: Who are the directors? Are they internal or external? What do they contribute to the corporation in terms of knowledge, skills, and background?

b. Top Management: What persons or groups constitute top management? How suited is the management team to the achievement of corporate objectives?

Part B

External Analysis

1. Porter Analysis: Perform an in-depth analysis of the firm's task environment using Porter's Approach to Industry Analysis (Wheelen & Hunger, 2004, p. 60). Analyze the importance and impact of the following five forces.

a. Threat of New Entrants
b. Bargaining Power of Buyers
c. Bargaining Power of Suppliers
d. Rivalry Among Competing Firms
e. Threat of Substitute Products or Services

2. Other Characteristics: Describe at least three other industry characteristics that you think are important and that affect the performance of firms in this industry.

3. Opportunities: Discuss at least five opportunities available to the firm based on the industry analysis.

4. Threats: Discuss at least five threats facing the firm based on the industry analysis.

5. External Factors Analysis Summary: Develop an External Factors Analysis Summary (EFAS Table) for American Airlines listing the five (5) opportunities and five threats described above. Discuss why you consider these external factors to be important.

Part C

Internal Analysis

1. Core Competencies

a. Description: Describe at least two core competencies that the firm possesses or can develop.
b. Distinctiveness: Are these distinctive competencies? Explain.

2. Competitive Position

a. Current Position: What is the firm's current competitive position? Discuss.
b. Competitive Advantage: Does the firm possess a significant competitive advantage over other firms in the industry? Explain.
c. Sustainability: Can the firm sustain its competitive advantage over the long term? Explain.

3. Strengths: Discuss at least five strengths of the firm based on the competitive analysis.

4. Weaknesses: Describe at least five weakness of the firm based on the competitive analysis.

5. Internal Factors Analysis Summary: Develop an Internal Factors Analysis Summary (IFAS Table) for American Airlines listing the five strengths and five weaknesses described above. Discuss why you consider these internal factors to be important.

Part D

Analysis of Strategic Factors (SWOT)

1. Situational Analysis: What are the most important internal and external strategic factors (Strengths, Weaknesses, Opportunities, and Threats) that strongly affect the company's present and future performance? List 12 strategic factors (3 each of the opportunities, threats, strengths, and weaknesses) and discuss the relevance/importance of each to the strategic planning process.

2. Strategic Factors Analysis Summary: Develop a Strategic Factor Analysis Summary (SFAS) Matrix for American Airlines using the strategic factors described above.

3. Review of Mission and Objectives: Are the company's mission and objectives relevant in light of the above external and internal strategic factors? Explain.

4. TOWS Matrix and Strategies

a. Matrix: Develop a TOWS Matrix for American Airlines, listing three opportunities, three threats, three strengths, and three weaknesses.

b. Strategies: For each category (SO Strategies, WO Strategies, ST Strategies, and WT Strategies), develop at least two alternative strategies based on these factors; this is a total of eight strategies.

Part E

Strategic Alternatives and Recommended Strategies (64 points)

1. Strategic Alternatives: What are the major feasible alternative strategies available to the company? Select and describe the top four strategies that you think upper management should consider as part of the strategic planning process.

2. Recommended Strategies: Which of the above strategic alternatives do you recommend for the organization? You must make at least two comprehensive recommendations that describe the strategic direction you think the firm should take based on its current situation and issues. Your recommendations can include corporate, business, or functional strategies based on the facts of the case and your analysis of the firm. Number your recommendations and group them as applicable (for instance, if you recommend a low-cost business strategy, list any functional strategies that lead to it as sub points).

NOTE: There are no right or wrong choices; however, you need to justify your recommendations in terms of their impact on the profitability and long-term competitive position of the firm.

3. Justification: Justify your recommendations in terms of their impact on the profitability and long-term competitive position of the firm. Use the following criteria to guide each of your recommendations.

a. Relevance: Discuss the following issues related to relevance.

1) Appropriateness: How is the recommendation appropriate given the current situation of the firm?

2) Effectiveness: How does the recommendation deal effectively with the strategic issues facing the organization?

b. Sustainability: How does the recommendation lead to a competitive advantage that is sustainable over the long term?