Post on 19-Feb-2023
Strategic Analysis for Delta Airlines Corp.
By: Rania Djamaluddin
1) IntroductionDelta is America’s fastest growing international carrier.
It was founded in 1928 in Monroe, LA.The present head quarter is in Atlanta, Georgia.
Flights to 458 destinations in 99 countries
They filed for reorganisation on the 14th Sept ’05 under Chapter 11 of the U.S Bankruptcy Code.
2) Vision and Mission Statement
They want to stand for safe and reliable air travel.
Distinctive customer service and hospitality from the heart.
They believe they are the leaders in the business.
They strive to provide value.The want to improve the environment.
3) a. Porter Five Force AnalysisDelta Airline falls into three major industries which are;
International airline industry Domestic American Airline Industry
Service industry
CPEST
Competition - Domestic
- International
Political and Legal factors - Government restrictions Economical factors - United States has a stable economy, big businesses and many travellers
CPEST cont.
Socio-cultural factors- Environmentally conscious- Launched ‘Delta’s Force for Global Good’
- Target Business class
Technological factors - Technically experienced- Buy only new planes - Offer technical services to other Airlines
3) b. EFE Matrix for DeltaOpportunities Weight Rating Weighted
Score1. First mover’s advantage. 10% 2 0.2
2. Domestic and international expansion strategy
15% 3 0.45
3. New and revamped planes 10% 2 0.2
4. Customer service initiatives (self-serving kiosk and e-ticketing)
8% 1 0.8
5. Maximise the frequent travellers air miles program.
12% 3 0.36
EFE Matrix for Delta cont.
Threats Weight Ratings Weighted Score
1. Fierce of competition 10% 2 0.2
2. Union Labour (Labour strikes can cause bankruptcy)
5% 3 0.15
3. Rising fuel prices and low fares
10% 1 0.1
4. Terrorist attacks 5% 2 0.l
5. Carbon footprint 15% 3 0.45
TOTAL 100% 3.01
3) c. Competitive Profile Matrix
Delta American Southwest
Weight
Rating
W.Score
Rating
W.Score
Rating
W.Score
Routes 0.2 4 0.8 3 0.6 2 0.4
Advertising 0.3 3 0.9 4 1.2 2 0.6
Financial Position
0.15 2 0.3 2 0.3 2 0.3
Service Quality
0.2 3 0.6 3 0.6 2 0.4
Customer Loyalty
0.15 3 0.45 3 0.45 2 0.3
Total 3.05 3.15 2.0
Financial Ratios
Liquidity Ratios
2006 2005
Current Ratio 0.93 0.85Quick Ratio 0.90 0.82Leverage RatiosDebt to-total-assets ratio
0.33 0.32
In Comparison with The Market (over the 5 years average)
Company Industry Sector
Sales Growth rate
4.35 16.65 11.12
Net Profit Margin
(22.49) 2.77 7.36
Assets Turnover
0.87 0.92 1.15
In Comparison with The Market over 5 years average
Financial Strength
Company Industry Sector
Quick Ratio
0.90 0.86 1.10
Current Ratio
0.93 1.12 1.38
4) b. IFE Matrix for DeltaStrengths Weight Rating Weighted
ScoreExpansion of super hub in
Atlanta 10% 4 0.4
Good corporate social responsibility
15% 3 0.45
Only airline in the world to serve over 300 destinations
10% 4 0.4
Better In Flight entrainment when compared to competitors
5% 4 0.2
Majority of their employees are non-unionized
10% 3 0.3
IFE Matrix for Delta cont.
Weakness Weight Rating Weighted Score
Chapter 11 ( filed in 2005) 15% 1 0.15
Government restrictions 10% 1 0.1
Various increased costs post 9/11
5% 2 1.0
Gross margin (5 year avg) is lower than industry as well as sector
10% 2
0.2
Route eliminations 10% 2 0.2
Total 100% 3.4
5) Existing StrategiesConcentric DiversificationProduct Development Forward Integration Market Penetration
6) a. TOW’s Matching(O&S) To expand its domestic and international routes by using its current leading reputation
(W&O) Increasing sales by competing more aggressively with competition and cutting down on direct expenses
(T&S) To market their ‘Force for Global Good’ by making the public more aware of how much Delta is contributing to the environment
TOW’s Matching cont.
(S&O) To increase customer loyalty
(T&W) Capitalizing on market share by acquiring new routes world wide
6) b. McKinsey-GE Matrix
High Strength Medium Strength
Low Strength
High Attractiveness
Medium Attractiveness
Low Attractiveness
service
Domestic
International
6) c. Future StrategiesTo increase customer loyalty
Invest to expand existing segments
Build on existing strength in order to maintain competitive ability and even to challenge for leadership
7) ConclusionWhat could go wrong? Technology advantages can be copied Overweight people could get offended People become even more price sensitive and don’t care about added value or extra amenities Unable to win over budget-minded fliers with offers of better service and lower fares
Conclusion cont.
What strategies in the future we recommend for the company…
Market their ‘Force for Global Good’ better
Expand into the Asian continent (India and China)