Tiger airway case study Essay Example | Topics and Well Written Essays - 1750 words

Tiger airway case study - Essay Example Managers in Tiger use the low fares as a tool for attracting customers – also for keeping their existing customers. However, this practice has affected the firm’s overall competitive strategy. Also, other parts of the organizational activity, for instance the level of the firm’s profits but also the quality of the service delivery has been influenced by the decision of the firm’s manager to adopt a ‘low-fares’ strategy. The above problem would be made clear by referring primarily to the relevant literature. Then, reference should be made in the relationship between the firm’s low-fare strategy and the other elements of the organization, as described above. In accordance with Daly (2002) pricing is a valuable competitive strategy; it is noted that even a minor decrease in the price of a product/ service can help a firm ‘to get a contract’ (Daly 2002, 14). On the other hand, Smith (2011) states that pricing is not always a co mpetitive advantage; reference is made specifically to the case that a firm decreases its prices lower than its competitors. It is explained that in the above case pricing cannot be characterized as a competitive advantage since the firm has no profits, and in this way, no advantage exists for the firm by adopting the particular strategy (Smith 2011, 272). From another point of view, Porter (1998, 528) notes that through pricing, a firm can support its brand name. This view is particular important in the case of low fare airlines, like the firm in the case under discussion. Moreover, Marn, Baker and Zawada (2010, 81) state that pricing can be accepted as an effective competitive strategy but only under the terms that the laws on fair competition are not violated. Towards the same direction, Spulber (2007) supports that pricing can be a highly effective competitive strategy but only if it is combined with another strategy of similar scope; reference is made, for example to the combin ation by firms of pricing and distribution strategies for achieving a competitive advantage (Spulber 2007, 176). In the case under examination the effects of the firm’s low-fares strategy on its other strategies, would be described as follows: a) the firm’s competitive strategy have been affected by the low-fare practice at the following points: a1) it is difficult for the firm to develop other competitive strategies due to the reduction of its profits, a2) the firm’s brand name is enhanced – as a low – fare airline services provider, a3) because the quality of the firm’s services has been decreased, the actual benefits of the firm in regard to its competitiveness towards its rivals are minimized; b) because of the decrease of fares, the profits of the firm are decreased; this fact, inevitably affects the firm’s performance, since it is not possible for the firm to introduce plans for securing its position in the market; c) at the nex t level, the limitation of the firm’s profits has led to the decrease of the quality of its services – a fact highlighted in the case study (where reference is made to the lack of cleanliness of the cabin, the inappropriateness of the seats in terms of space left for passengers, the lack of facilities and stores in the waiting area of the airport – referring to the part of the airport where the passengers of the particular firm have to wait – and so on); from this point of view, the decrease of the firm’s fares has not led to the acquisition by the firm of a