Vertical Integration: a Case Study of Scandinavian
VERTICAL INTEGRATION: A CASE STUDY OF SCANDINAVIAN AIRLINE SYSTEM IN 1988
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Vertical Integration: A Case Study of Scandinavian Airline System In 1988
Introduction
The Scandinavian Airlines System (SAS) applied vertical integrations strategic management approach as a way of overcoming the challenges it faced especially in the 1980s. The threats in the aviation environment such as competition from other major airlines caused the profitability of the airline to decline steadily. Because of the new management, which began with Jan Carlzon as the company’s CEO, there was complete company restructuring and thus the airline began to grow steadily through vertical integration with the hotel, reservation, credit card, and the catering sectors of the aviation industry. This paper gives a critical analysis of vertical integration approach of strategic management with a special focus of the SAS as the case study.
Background
2
The establishment of the Scandinavian Airlines System came just after the Second World War and its operations began in September 17 1946. Ghoshal et al (1988, 35) say that the airline system was formed as a collaboration of three airlines from Sweden, Norway and Denmark. The partnership of the airlines, which formed the SAS aimed at taking control of the intercontinental air travel in the Scandinavian countries. Late in the 1970s and in the 1980s, the SAS experienced many challenges, which led to disagreements within its management, owners, and the staff. The stakeholders of the airline disagreed on the causes of the big losses incurred by the company and the ways, which would help the company to cut its costs. There was dire need for a turning point at this time, which would save the airline from collapse.
Following the appointment of Jan Carlzon as president of the airline in 1981, the change of management began which led to the improvement of the airline in the
Name
Course
Instructor
Institution
1
Month, Year
Vertical Integration: A Case Study of Scandinavian Airline System In 1988
Introduction
The Scandinavian Airlines System (SAS) applied vertical integrations strategic management approach as a way of overcoming the challenges it faced especially in the 1980s. The threats in the aviation environment such as competition from other major airlines caused the profitability of the airline to decline steadily. Because of the new management, which began with Jan Carlzon as the company’s CEO, there was complete company restructuring and thus the airline began to grow steadily through vertical integration with the hotel, reservation, credit card, and the catering sectors of the aviation industry. This paper gives a critical analysis of vertical integration approach of strategic management with a special focus of the SAS as the case study.
Background
2
The establishment of the Scandinavian Airlines System came just after the Second World War and its operations began in September 17 1946. Ghoshal et al (1988, 35) say that the airline system was formed as a collaboration of three airlines from Sweden, Norway and Denmark. The partnership of the airlines, which formed the SAS aimed at taking control of the intercontinental air travel in the Scandinavian countries. Late in the 1970s and in the 1980s, the SAS experienced many challenges, which led to disagreements within its management, owners, and the staff. The stakeholders of the airline disagreed on the causes of the big losses incurred by the company and the ways, which would help the company to cut its costs. There was dire need for a turning point at this time, which would save the airline from collapse.
Following the appointment of Jan Carlzon as president of the airline in 1981, the change of management began which led to the improvement of the airline in the
Bibliography: 10 Ghoshal S., Lefebure R., Jorgensen J & Staniforth D1988, “Vertical Integration: Scandinavian Airlines System in 1988”, Cases, 31-45. Peyrefitte, J., Golden, P. & Brice, J 2002, "Vertical integration and economic performance: A managerial capability framework", Management Decision, 40 (3), 217-226. 11