Introduction
Air transport is one of the growing businesses due to increased globalization and the presence of technology. Delta Airlines has been in the airline industry since 1929, after its creation in 1925. This report explains major general environmental segments that affect the existing air transport Delta Airlines offers. It also addresses the strength, weaknesses, opportunities, and threats (SWOT) that the company faces in its day-to-day operations. The work reviews Delta Airlines’ structure and how it may succeed by addressing its weaknesses.
General Environment
The general business environment comprises two significant segments: technological, social, technical, economic, and political. All these factors are put together; the technological and political factors are the most influential on Delta Airlines’ activities. They affect the company’s decision-making process and alter the profits level. The technical segment affects the firm’s accuracy and speed in running its duties, whereas the political one affects its nature by dictating the rights and wrongs in operations.
Political Segment
Delta Airlines is a firm that operates within the laws of the United States and the regions where its hubs are. Therefore, political factors and decisions affect its spending, profits, and how it treats its customers (Sheckel, 2020). Tax payment laws jeopardize the organization’s profitability as high taxes reduce profit levels. On the other hand, low tax demands indicate high profits. Other laws that affect the business are migration laws that determine the regions the company accesses. The profits increase when the firm serves a large customer base than when restricted from doing parts with many migrants.
Other laws like restriction laws also influence the number of customers the business serves daily. For instance, Delta Airlines recorded reduced revenue when the government restricted movements within and outside the country in 2020 after the emergence of the COVID-19 pandemic. Government laws affect the planning and allocation of funds in the business. It influences major economic decisions the company makes, such as pricing. Restrictions also prevent employees’ attendance to their duties since they are prevented from accessing their workplaces. Thus, the political segment is vital for Delta Airlines’ extension and growth because it influences allocation and work attendance.
Technological Segment
Another segment that highly affects Delta Airlines’ business is the technological segment. Technology affects the speed at which the organization serves its customers. High technology aids the firm in proper record-keeping by eliminating tedious work and creating easy data storage and retrieval access. Additionally, high technology clears the increased demand for labor since it can do work that requires more personnel, like carrying cargo within a short period, thus saving time and money. Delta Airlines works ethically to create a better avenue for technological advancements that facilitate easy workflow, uniformity, and easy access to information and marketing strategies.
Five Forces of Competition
Competition is a common phenomenon in most businesses in the world. For Delta Airlines, it is not different because it faces competition from other key players in the same field like American Airlines, United Airlines, and many others. The five forces of competition that affect the business include; the service render’s bargaining power, the customer’s bargaining power, competitive rivalry, the threat of substitution, and the threat of entry of new entities. All these affect the firm’s operation by altering the consumer preference that interferes with the turnover. Delta Airlines controls a large customer audience due to its long-term service provision, enhancing its consumer-handling intelligence and experience. The most influential among the five factors is the service provider’s bargaining power and competitive rivalry.
Seller’s Bargaining Power
Delta Airlines has a high bargaining power because it is a veteran service provider working across many countries. The firm serves enormous numbers of travelers empowering its bargain on significant decisions regarding air travel. The bargaining power bonds the business with the government until it listens to and addresses the firm’s demands. Delta Airlines can easily change its partners such as suppliers when disagreements arise because it has already created a brand name that grants it power. The firm operates the business without fear of making independent decisions.
Competitive Rivalry
Another vital force significantly affecting Delta Airlines is the competitive rivalry with critical players in the market like American Airlines and Southwest Airlines. The scramble for customers between the firms affects their profitability. If only one firm serves the entire market, it will earn many benefits. The competing firms affect each other’s pricing since the prices to similar destinations should not vary with a considerable difference. The competition also creates demand for better marketing strategies involving budgeting and planning during a business’s financial periods.
Future Improvements
Delta Airlines may improve its future by planning how it will use the two major segments above to meet the rising number of participants in competition forces. The business should adopt new technology in its marketing strategies and form a sustainable approach when implementing its ideas. Additionally, the firm may use the political environment to its advantage because it has the good bargaining power to set standards that guide its operations.
Greatest External Threat
Delta Airlines’ greatest external threat is its competitors, which are well-adapted to the business. The firms control wide market ratios and affect the regions’ price determination. They also operate within many countries and take and relay competition the attraction of customers through well-operated promotion strategies (Michael, 2020). Competition affects the firm’s behavior in the market, affecting the majority of the operations through budget and price interference.
Greatest Opportunity
The most incredible opportunities lie in its marketing strategies and tourism consumer base. The firm should use social media platforms to pass most of its information and advertisements. Using social media platforms will also help the organization access its second-largest opportunity to target millennials as its main customers. Millennials are the biggest consumers of air travel today since they move from one region to another for tourism, business, and entertainment.
Strengths and Weaknesses
Despite the firm’s challenges through competition forces, it enjoys some benefits through its strengths. It owns one of the largest fleets consisting of 750 aircraft and operates both jets and helicopters based on the distance they travel. It has also created its brand value and image that favors its existence in the business for a long. Product positioning is the strength that positions it better to influence local and international air travel.
However, the company fails in some areas that prevent its full penetration into the market. First, it is dependent on North America as its primary market (Monteiro et al., 2018). Second, there is attrition of the workforce compared to other competing firms. Dependency on a single market lowers the firm’s opportunity to increase its market base, while the erosion of the workforce undermines its working capacity.
Strategy or Tactic
Delta Airlines should include a vigorous campaign to create awareness about its existing services among its strategies. The strategy should involve the usage of media platforms to attract millennials who spend most of their time on these platforms. The use of social media platforms as advertisement channels reaches a broad audience and creates a speedy engagement between the service renderer and the customers.
Resources, Capabilities, and Core Competencies
Delta airlines have managed to use its fleet of aircraft, physical infrastructure, and ground facilities as its long-term resources. It operates its fleet of aircraft to conduct its main business transporting passengers and cargo. The physical infrastructure provides Delta Airlines with an appropriate structure to run the industry in an organized manner. Ground facilities help provide space for smooth operation and hostage of offices and equipment. The business is also famous for its intelligent behavior of honesty and integrity that create customer trust. The company has the capability in expanding its operations globally through proper social media advertising.
References
Michael A. H. (2020). Strategic management: Concepts and cases: Competitiveness and globalization, (13th ed.). Cengage Learning.
Monteiro, A., Durka, P., Flandorfer, C., Georgieva, E., Guerreiro, C., Kushta, J., Malherbe, L., Maiheu, B., Miranda, A. I., Santos, G., Stocker, J., Trimpeneers, E., Tognet, F., Stortini, M., Wesseling, J., Janssen, S. & Thunis, P. (2018). Strengths and weaknesses of the FAIRMODE benchmarking methodology for the evaluation of air quality models. Air Quality, Atmosphere & Health, 11(4), 373-383. Web.
Sheckell, A. (2020). Industry life cycle in the airline industry: A case study of Delta and Southwest (Doctorate). Kalamazoo College. Web.
