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Comparing different value chains

Introduction

You can find out a great deal about a company by checking out its value chain: where and how the company creates customer value. Infect, the value chain is a relatively good way to compare and contrast competitors in your own industry. You may even want to use this information to revisit your strategic groups of competitors.

Ryan air and EasyJet, for example, are major players in the socalled ‘budget’ segment. Compared with other airlines, these companies can make several additional flights a day in each airplane, based on their capability to turn the plane around – unload, reload and take off – in about 20 minutes. Most of the costs in the airline industry are tied up in things such as aircraft and buildings, so extra flights a day mean extra profits for an airline – or lower prices for customers

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Operations

Budget airlines have efficient personnel, ace ground crews and state-of-the-art equipment that allow them to get planes in and out of airports as fast as humanly possible, meet tight flight schedules and reduce overall costs.

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Distribution

These airlines have built up regional route systems that tend to bypass the most crowded airports and overly competitive destinations. Periodic reviews of passenger traffic and competition suggest expansion opportunities that are in line with the carrier’s low-cost strategy.

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Management

They have put together teams of managers and professionals who have the skills, aptitude and temperament to deal with considerable job stress and who work well together.

By contrast, British Airways is a global, full-service carrier at the opposite end of the airline spectrum from the budget crew. The company serves hundreds of destinations daily and offers frequently scheduled flights to most major commercial airports in the world.

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