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SMMC-EMI_G4_TP Progress Report 3– Growth and Challenges- STARLUX AIRLINES…
SMMC-EMI_G4_TP Progress Report 3– Growth and Challenges- STARLUX AIRLINES:airplane:
vertical intergration
Product Diversification
:explode:
Core Competencies and Complementary Assets
Core Competencies :star:
High-quality customer service
Demand Side and Supply Side Economies
Economies of Scale
Demand Side
By increasing the number of passengers through route expansion and service improvements, STARLUX can spread its fixed costs over a larger customer base
Lower per-unit costs for passengers lead to competitive pricing and higher profitability, attracting more customers
Supply Side
With a larger fleet and more flights, STARLUX can negotiate better terms with suppliers (e.g., fuel, maintenance services) due to higher volume
Reduced operational costs and improved resource utilization enhance overall efficiency and profitability
Economies of Scope
Supply Side
Leveraging existing resources (e.g., staff, IT systems) to offer additional services reduces incremental costs
Cost savings from shared resources and capabilities lead to higher margins and enhanced competitive advantage
Demand Side
Offering a wider range of services (e.g., luxury travel packages, premium in-flight services) meets diverse customer needs, increasing overall customer satisfaction and loyalty
Cross-selling opportunities increase revenue per customer and deepen customer relationships
Premium in-flight experience
Efficient operational management
Strong brand image in the luxury travel segment
Complementary Assets :red_flag:
Advanced aircraft fleet
Strategic alliances with other airlines and travel services
Sophisticated IT systems for booking and customer management
Highly trained and experienced staff
BCG Matrix
Question Mark
Dog
Cash Cow
Too Early to say
Guess: Domestic Passenger Transport
Only two domestic destinations
Star
International Passenger Transport
ca. 20 billion (88% of revenue)
7.8% Market Share
International Cargo
1.6 Billion (7% of revenue)
0.4% Market Share
Market Side and Supply Chain Side
Market Relatedness :!!:
Route Expansion
Service Upgrades (Luxury Class, Special Meals)
Non-Aviation Services (Travel Products)
Market Power :eight_pointed_black_star:
Entering New Route Markets
Collaborating with Other Airlines/Travel Enterprises
Increasing Market Share
Attracting High-End Customers
Enhancing Service Quality
Supply Chain Relatedness :!:
Aircraft Maintenance
STARLUX Airlines entering the aircraft maintenance business means they can maintain and repair their fleet internally instead of relying on third-party service providers.
Increases maintenance efficiency and flexibility
Reduces maintenance costs
Ensures high quality and safety standards
Ground Services
Entering ground services includes handling baggage, check-in, refueling, cleaning, and other airport ground operations.
Improves ground service efficiency
Ensures service quality
Reduces the risk of dependency on third-party service providers
Reducing Dependence on External Suppliers
By vertically integrating the supply chain, STARLUX Airlines can manage more business segments internally, reducing reliance on external suppliers
Increases autonomy and control over the supply chain.
Reduces risks associated with supplier issues, such as delivery delays or price fluctuations.
Improving Supply Chain Stability
Managing more segments of the supply chain internally ensures a stable service supply, unaffected by external factors
Enhances operational stability and predictability.
Improves customer satisfaction by reducing the risk of service interruptions.
Competitive Landscape (Multi-market Contact) :checkered_flag:
Entering New International Routes
By launching new international routes, STARLUX Airlines expands its presence in different geographical markets.
Access to new customer bases and revenue streams.
Increased brand recognition and market reach.
Increasing Competition with International Airlines
Entering new international routes inevitably brings STARLUX Airlines into direct competition with established international carriers.
Competing in diverse markets can drive innovation and service improvements.
Establishing a competitive edge through unique service offerings or superior customer experience.
Spreading Risks
Diversifying into multiple international markets helps distribute business risks across different regions and market conditions.
Mitigates the impact of regional economic downturns or market-specific challenges.
Stabilizes overall revenue by balancing performance across multiple markets.
Responding Flexibly to Market Changes
Operating in various international markets allows STARLUX Airlines to quickly adapt to changing market dynamics and customer preferences.
Enhances the ability to capitalize on emerging opportunities and trends.
Improves resilience against market disruptions.
Reducing Single Market Impact
Diversification reduces the airline's dependence on any single market, thereby minimizing the effects of adverse conditions in one specific area.
Ensures a more stable and predictable business environment.
Balances revenue streams to protect against market volatility.
Products
Branded Product line
Duty Free
Self-established
Merchandise
vi
asset specificity
Low Specificity
the need for vertical integration is less pressing
frequency
Frequent transactions
cost savings through vertical integration.
uncertainty
Risk Assessment
supplier reliability and price volatility of raw materials
entry mode
self-established
sole proprietorship
Geographical Expansion 區域擴張
coordination vs. control
e.g：Enter the North American market
coordination
Market research
Collaborate with local tour operators
control
Cost control
Service quality
country and culture difference
e.g：Enter the Japanese market
Language
Catering
Flight time
Brand promotion
Market research
national competitive advantage
Demand Conditions
High Local demand
Taiwan has a huge tourism and business travel market.
Regional market demand:earth_asia:
Frequent travel and business activities
in East Asia and Southeast Asia regions.
Factor Conditions
Human resources:silhouettes:
High-quality aviation talents :airplane:
:airplane_departure:Advanced infrastructure :airplane_arriving:
Related and Supporting Industries
Advanced aviation manufacturing and maintenance industry :male-factory-worker:
The tourism and hotel industries are well developed :hotel:
Firm Strategy, Structure, and Rivalry
Differentiation competitive strategy
High-quality service
Domestic intense competition in the aviation market
Improve service quality and operational efficiency
Advantageous geographical location
Important aviation hub
knowledge flow
Market research and data analysis
Employee training
Standardized process
Cross-departmental collaboration
e‐commerce
E-commerce platform
Localized website
Exclusive content for the region
Online marketing and promotion
Digital marketing strategy
Online advertising
Online service
Enter mode
strategic alliance
Become partners with Alaska Airlines
Establishing a North American aviation network
Los Angeles Clippers, NBA team, partner for the 2023-2024 season.
Attracting the attention of local sports enthusiasts, establishing a presence in the Los Angeles market.
GE : Vertical integration or horizontal diversification?
:check: horizontal diversification
entering new markets and serving diverse customer segments
:red_cross: vertical integration
focusing more on broadening its route network
enhancing its service offerings to attract a wider range of customers
expansion strategy
began its operations with flights from Taiwan to destinations in Asia
expanded its reach to include long-haul routes to North America
horizontal diversification
Motivation for GE: local responsiveness or cost reduction?
local responsiveness
. Each region may have unique travel demands, cultural considerations, and business opportunities
StarLux can tailor its services to meet the specific requirements of passengers in those regions
build stronger relationships with customers
and enhance its competitiveness in the global aviation market
cost reduction
increases its route network and flight frequencies
efficiencies in areas such as aircraft utilization, fuel procurement, and maintenance scheduling
opportunity to negotiate better deals with suppliers and service providers
BOTH
Internalization strategy : International, Global, Multinational, or Transnational?
:check:Transnational
balance between centralization and decentralization
leverage global synergies
adapting to local market conditions and customer preference
flexibility to standardize certain aspects of its operations for efficiency
hile also customizing services to meet local needs
integrating global coordination and local responsiveness
benefit from:
operational efficiencies
adapting its services to each market
Transnational
Corporate Life Cycle
Growth Stage: Actively expanding route network, introducing new fleets, and investing resources to lay the foundation for the future.
Vision, Mission, and Goals
Vision: To become one of the most popular airlines in the world.
Mission: Provide safe, comfortable, and innovative flight experiences while promoting sustainable development in the aviation industry.
Goals: Expand routes, enhance service quality, and achieve stable financial growth.
Business Portfolio and Business Model
Business Portfolio: Domestic and international scheduled flights, charter services, cargo services.
Business Model: Leveraging Taiwan's geographical advantage to offer diverse route options and attract high-yield business markets.
Challenges and Opportunities
Challenges
Human resource adjustments
Competitive pressure from other airlines
Opportunities
Rebound in demand for air travel post-pandemic
Continued expansion into international markets
Innovation, Transformation, and Growth
Technological Innovation: Introduction of highly automated smart warehousing systems to enhance operational efficiency.
Market Expansion: Opening new international routes.
Sustainable Development: Establishing a smart, low-carbon, and green energy aviation enterprise park in Taoyuan Aerotropolis.
Suggestion
Significant investments in current assets and fixed assets indicate major infrastructure upgrades and expansion. Future focus should be on adapting to market demand changes and flexibly adjusting routes and resource allocation to achieve stable growth.
Main Product line
Domestic Passenger
International Passenger
Self-established
International Goods
Extra Luxery Services
Economies of Learning (Experience Curve) :smiley:
Demand Side
As STARLUX gains more experience in serving premium customers, it can refine its service offerings to better match customer preferences, enhancing customer satisfaction and loyalty
Improved customer retention and reputation for excellent service attract more high-end customers
Supply Side
Continuous improvement in operational processes and employee training reduces errors and increases efficiency over time
Lower operational costs and higher service quality contribute to stronger financial performance and brand reputation
Network Effect :globe_with_meridians:
Supply Side
A larger network attracts more partners and alliances, enhancing the overall value proposition for customers
Expanded partnerships and improved network connectivity strengthen market position and operational resilience
Demand Side
As STARLUX expands its route network, the value of its service increases for customers due to more travel options and connections
Greater customer base and higher flight occupancy rates increase revenue and market presence
Aircraft engine manufacturing
Aircraft Maintenance Industry
Freight Forwarding Industry
https://www.tpex.org.tw/storage/emerging_register/2022/09/1663837975_10636_CH_2646.pdf
Executive Traveller. (2023, April 16). Will STARLUX join the oneworld airline alliance? Retrieved from
https://www.executivetraveller.com/news/will-starlux-join-the-oneworld-airline-alliance
Wikipedia. (2024, May 29). STARLUX Airlines. Retrieved from
https://en.wikipedia.org/wiki/STARLUX_Airlines
109402012 江雅甄
110212066 方俐錂
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Aircraft leasing
Aircraft manufacturing
Ground service equipment manufacturing
Airline Catering Industry
Air Transport Industry
Air Cargo Terminal Operations Industry
Ground Handling Services Industry
Petroleum Industry
In-flight Supplies Industry
Information Software Services Industry
Express Delivery Industry
Travel Agencies
General Public
110402015葉宜婷
109402043蔡羿萱
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Synergy :arrows_counterclockwise:
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Synergy :arrows_counterclockwise:
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Synergy :arrows_counterclockwise:
Synergy :arrows_counterclockwise:
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1110402018 鄭宇珊
110402016 曾于倫
112251401何品棣