United Airlines Holdings: Strategy Selection and Implementation

Introduction

To remain relevant in an increasingly competitive business environment, United Airlines Holdings must appraise the industry in which it operates, its competitors, and its various operational aspects, and thereby formulate the most effective strategies. However, given that the airline cannot deploy all proposed strategies simultaneously, there is a need to establish which strategic option is most feasible. In this paper, three strategies are proposed and prioritized. The relevant strategic management tool is then applied with the intention of selecting the most ideal of the three strategies identified. Thereafter, the best practices that would inform the implementation and evaluation of the selected strategy are highlighted.

Alternative Strategy Generation

Following an assessment of the business-level, corporate-level, and global strategy, as well as evaluation of results from the internal factor analysis and external factor analysis, a total of three strategies were identified as viable for United Airlines Holdings:

i. Embrace a cost leadership strategy
ii. Get into strategic partnerships
iii. Expand into untapped markets

A cost leadership strategy is one of Porter's generic strategies. According to Godfrey (2015), this strategy can be perceived as the deliberate attempt by an enterprise to "project itself as the cheapest manufacturer or provider of a particular product or commodity in a competition" (p. 174). In the case of United Airlines Holdings, this strategy could be deployed in two primary ways. First, the airline could seek to minimize its costs significantly while ensuring that the prices it charges for various services — essentially passenger travel and cargo hauling — reflect average industry prices.

Alternatively, United Airlines Holdings could seek to charge prices lower than the industry average, with the goal of increasing its market share. In the former scenario, the objective would be to increase profit (revenues less expenses). A blended approach could also be implemented, whereby United Airlines slashes its costs in order to offer services at prices significantly lower than average industry prices.

There are various strategic partnerships the airline could pursue, including — but not limited to — marketing partnerships and technology partnerships. Marketing partnerships could involve United Airlines Holdings and related companies (such as a tour and travel services firm) assisting each other in finding customers — that is, each company refers its clients to the other. This could benefit United Airlines Holdings through a wider customer base.

Technology partnerships, on the other hand, could help the airline rein in its costs. For instance, the company could partner with a technology firm for the exclusive use of that company's technology (e.g., computer systems) in exchange for discounts or free repair and maintenance services.

There are a number of markets that largely remain untapped despite presenting great opportunities for airlines. A notable example is East Africa, a region deemed a fast-growing tourism and economic hub. This positions the region within the sights of global investors and tourists alike. It is also important to note that the region — especially Kenya — has relatively well-developed infrastructure from both technological and financial perspectives. This particular East African country could therefore be considered a strategic launching pad for the rest of the region, and eventually the entire continent.

In choosing among the strategies highlighted above, a number of cultural and organizational factors must be considered. Those identified as being most crucial are:

i. Organizational structure
ii. Organizational mission and vision
iii. Organizational culture
iv. Organizational diversity

Organizational structure concerns the coordination and allocation of duties and functions across the entire organization, and in most cases can be represented visually. According to Brondoni (2018), organizations typically adopt one of several structures, including hierarchical, functional, flat, or divisional structures. In the case of United Airlines Holdings, it was established that the airline operates under a hierarchical structure. This means the airline has a clearly established chain of command from the top — where the CEO serves as the most senior executive — down to officers running various business units. As Amason (2011) notes, organizational structure is a crucial consideration in strategy formulation and implementation, since "the structure of an organization influences the capability of an organization to reconfigure its operations and to make quick responses through flexible decision making structures" (p. 131).

United Airlines Holdings is committed to the promotion of employee dignity through the establishment and advancement of an inclusive work environment, ensuring that employees are empowered to meet and exceed customer needs (United Airlines Holdings, 2022). The airline's vision involves finding solutions that are effective and innovative in the advancement of its operational agenda (United Airlines Holdings, 2022). According to Morden (2006), an enterprise's vision and mission are often the key directors of organizational strategy, since the building blocks of strategy are the goals and purpose of an organization — which are clarified by the organizational mission and vision.

Organizational culture can be defined as the aggregation of values, principles, and beliefs that can be ascribed to organizational members (Kotler and Lane, 2019). One outstanding aspect of United Airlines Holdings' organizational culture is innovation — that is, the readiness and pace at which the organization embraces change and new ways of doing things. Employees are encouraged to develop and share creative and innovative solutions. In a study examining the relationship between organizational culture and strategy, Janicijevic (2012) found that "organizational culture influences the strategy formulation by determining the gathering of information, perception and interpretation" (p. 127). The author further established that strategy implementation can be facilitated or disabled through the legitimization process, which is itself influenced by organizational culture.

According to Wilkinson and Kannan (2013), organizational diversity refers to the extent to which diversity is embraced in the workforce — encompassing a wide range of individual differences between employees in relation to religion, ethnic origin, race, gender, and other characteristics. An assessment of United Airlines Holdings' workforce reveals areas where the organization falls short in its embrace of diversity, particularly with respect to gender diversity, as its top managerial team appears to be largely male-dominated. The organization also performs poorly in terms of racial diversity. Wheelen, Hunger, Hoffman, and Bamford (2018) point out that organizations with a highly diverse workforce often benefit in the formulation and implementation of superior strategies owing to the diverse perspectives that inform those processes. More specifically, the authors note that "assembling a diverse workforce usually contributes to a global company's ability to meet its key business objectives" (p. 210).

Strategy Prioritization and Selection

In choosing among the alternative strategies highlighted above, the various organizational and cultural factors identified were taken into consideration. Additional considerations included how each strategy would enhance the airline's competitive advantage going forward and how it would contribute to the airline's long-term performance. The table below summarizes the prioritization process and offers a rationale for each ranking.

For strategy selection, the appropriate tool is the Quantitative Strategic Planning Matrix (QSPM). Harrison and John (2013) point out that the QSPM helps the user identify which strategic option is most feasible by systematically evaluating competing alternatives against weighted internal and external factors. The most feasible strategy will be prioritized over the other two alternatives. The development of the QSPM below followed a total of six steps.

Following the QSPM analysis above, it is clear that the most attractive strategy is the embrace of a cost leadership strategy, which received a sum total attractiveness score of 5.14. The next most attractive strategy was expanding into untapped markets, with a sum total attractiveness score of 4.46. Strategic partnerships ranked last with a sum total attractiveness score of 4.29. It therefore follows that the most feasible strategic option for United Airlines Holdings is the embrace of a cost leadership strategy, and this is the strategy that should be prioritized.

Conclusion

In the final analysis, this analysis clearly demonstrates that of the three strategies proposed, the most ideal strategy is the embrace of a cost leadership strategy. The Quantitative Strategic Planning Matrix (QSPM) was instrumental in this determination. Following an assessment of the internal and external environments of United Airlines Holdings and the subsequent weighing of each strategic factor's pros and cons, this tool identified the cost leadership strategy as the most relatively attractive option.

It should be noted, however, that deploying this strategy could present significant challenges. To remain competitive, United Airlines Holdings must minimize costs at all levels while ensuring that the quality of services offered to customers is not negatively impacted. By definition, success with a cost leadership strategy requires that United Airlines Holdings offer services of acceptable quality at prices lower than those charged by other players in the industry. Achieving this balance is demanding but achievable. In the end, effective deployment of this strategy will earn United Airlines Holdings a greater share of the market and enhance its ability to compete more effectively in an increasingly competitive business environment.

References

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Brondoni, S. M. (2018). Competitive Business Management: A Global Perspective. Taylor & Francis.

Godfrey, R. (2015). Strategic Management: A Critical Introduction. New York: Routledge.

Harrison, J. S. & John, C. (2013). Foundations in Strategic Management. Cengage Learning.

Janicijevic, N. (2012). Organizational structure and strategy. Ekonomica Preduzeca, 60(3–4), 127–139.

Kotler, P. T. & Lane, K. (2019). Marketing Management. Pearson.

Morden, T. (2006). Principles of Strategic Management. Routledge.

Neumann, M. (2021). Leadership in the Context of Strategic Management. GRIN Verlag.

United Airlines Holdings. (2022). Form 10-K.

Wheelen, T., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2018). Concepts in Strategic Management and Business Policy. Pearson Education.

Wilkinson, T. J. & Kannan, V. R. (2013). Strategic Management in the 21st Century. ABC-CLIO.