Strategic Management Assignment Example | Topics and Well Written Essays - 4000 words

Strategic Management - Assignment Example In this definition, the scope and direction of the strategy and the configuration of resources are within the purview of the organization. External competitive forces determine the 'environment' in which the organization works. Michael Porter (2004) describes five such forces that have an effect on the competitiveness of an organization. These five forces comprise the 'outside-in' business strategy tool as diagrammatically depicted below: 1.1. About Alitalia: Alitalia is the smallest of Europe's full service airlines (after the merger of KLM with Air France and Swissair with Lufthansa) in terms of revenues generated, flights operated and passengers flown and other financial parameters. (See Table-1 below. Table-2 provides comparative statistics for low budget airlines) Alitalia (Alitalia - Linee Aeree Italiane S.p.A) has been operating as a full service airline that flies passengers and cargo for sixty years. Alitalia is Italy's national airline with the government holding 49% equity (other shareholders including employees hold 49% and Air France holds 2%). The airline has a fleet of 177 aircraft and flies to 102 destinations in Italy, Europe, the middle and far East Asia, Africa and the Atlantic. Alitalia has modernized its fleet keeping in view the distances and load factors involved in various sectors. In fact the company boasts of operating one of the youngest and most efficient fleets in the world. During the year 2005, 24 million passengers flew Alitalia, which represented a growth rate of 7.8% year on year over 2004. In April 2004, the company acquired the bankrupt regional airline Gandalf Airlines to gain additional slots at several European airports, mainly Milan (Linate) and Paris (Charles De Gaulle). In September 2004 the company sought to lay off almost 5000 employees to avoid bankruptcy and possible liquidation. A vicious fight ensued with employees unions striking work which finally ended with government intervention and provision of a bridging loan. There was a proposal to merge the company with Air France-KLM but it petered out. During this period, to save costs, the company was, splicd into two holding companies. They are Alitalia Fly which controls Alitalia Express, Volare SpA, Volare Airlines and Air Europe. The company holds 51% equity in the new formation Alitalia Servizi which controls the following: Alitalia Airport which operates ground handling services in Rome Fiumicino, Palermo, Cagiliary and passenger handling services in Catania and Naples; Alitalia Mainatenance Systems 40% of which is owned by Lufthans