Impact of Economic Crisis on Tourism: Literature Review

Impact of Economic Crisis on Tourism Literature ReviewLiterature go over on how economic crises affect tourismHospitality manufacturing affected by crises such as the economical one theses days.Customers buying decisionPower influenced when they want to bl oddity by crisis or financial aspects.Affect on arrivals, expenditures, number of nights stayed, playscript due to a crisis (economic and financial)?Explain law of supply and take on, and give a modelling related to hotels or tourism if possible.The impact of crises, particularly economic crises, on the tourism and hospitality industries is illustrated sharply by Watkins (2002), who details how the depressed economy of the linked States fol subalterning the dot com crash led to a rapid decline in the American long haul public transportation system, with noteworthy implications for the US tourism and hotel industries. In addition, not only did the weak economy in 2000 and 2001 create issues in the pains, hardly the attacks on the 11th September 2001 dramatically decreased endure across the country. However, Watkins (2002) demonstrates that this as well as led to customers exercising undischargeder powerfulness when making their buying decision, with mevery companies choosing note class options for business travel, and tourers utilise the power of the Internet to look for the emitest air travel legal injurys. In addition, the economic and terrorist crises actually benefitted US little personify carriers, allowing Southwest Airlines to reach a unfavourable mass of avails, and hence take on the major flag airlines such as American Airlines and Delta.Indeed, the evidence indicates that during a significant economic crisis, the tourism industry shrinks, but changing consumer preferences tend to belittle the impact of this shrinking, and allow some sectors to grow. Looking at the current economic crisis, Cla victimisation et al (2007) report that many travel executives argon confident that th e industry as a whole will survive the current recession, and even emerge stronger, and with higher(prenominal) net profits than before forecasted. This is further supported by Taylor (2008), who reports that whilst sales of traditional holidays in the UK country fell by a quarter over the summer of 2008, with many predicting a further 12 per cent fall over the summer of 2009, this reduction in capacity will provide future benefits to the industry. In particular, the reduction is evaluate to result in an six or seven percent increase in prices in 2009, which will help the surviving agencies and operators to boost their profits and catch their operations.However, whilst widely go around national or international crises, such as the one occurring at the moment, offer opportunities for some theatres in the industry localised crises can suck in a devastating impact on arrivals, expenditures, and volume in the local argona. The Economist (2003) details the impact of the outbreak of severe acute respiratory syndrome, SARS, on the economy of Hong Kong where it was most concentrated. In Hong Kong at the height of the outbreak, hotel occupancy fell by almost 80 per cent and the two of import passenger airlines chinaware peaceful and Draganair, lost much than 60 per cent of their traffic. Restaurants and hotels in the city also saw almost no economic activity, and retail prices continued their travel which were initiated by the Asian financial crisis in the late 1990s (The Economist, 2003).The Asian financial crisis itself was a significant one, and had a major negative impact on tourism across the industry, particularly amongst Asian airlines which lost many of their business class passengers. However, in this case the economic crisis created a fall in hold which acted as a catalyst for a significant change to the supply side of the industry (Sadi and Henderson, 2000). In particular, the Asian airlines recognised the wishing for high levels of adaptabilit y in their supply of services, including the need to be flexible around blasts in case of falls in revenue. The supply side pressures led to an increasing denotation and consolidation of the various strategic alliances in the industry, as well as make-upal reorganisation and the adoption of upstart technologies. These changes allowed the most successful players in the industry to live the crisis and gave them the potential to emerge from it in a stronger situation (Sadi and Henderson, 2000).Indeed, even major crises can provide a boom for some tourist activities in the vicinity where the crisis occurs. This can be seen in Pearces (2001) analysis of the nurture of the New Zealand tourist industry during the 1990s, which was strongly affected by the Asian economic crisis. As a result of this crisis, only the most resilient hotels, airlines and other tourist offerings were able to thrive, hence creating an industry able to rapidly adapt to changing tourist tastes and marketpla ce conditions. This led to New Zealand developing one of the most diverse and complex tourism industries in the region, giving it significant appeal to a wide range of tourists (Pearce, 2001). Finally, whilst the tourism industry can be strongly damaged by economic crises, it can also reap the benefits of events which occur as a reaction to said crises, or from attempts to resolve them. This is demonstrated by Bue-Said (2008) who cl vexs that the victory of Barack Obama in the US presidential election will tend to be of significant benefit to the tourism industry in the United States not only will Obamas proposed rescue package for the US economy stimulate tourism, but as the first African American President of the United States, Obama may well be a tourist attraction himself.ReferencesBue-Said, J. L. (2008) Black clouds could be lifting. impress hebdomadally 14th November 2008, p. 26.Cla employ, J. Baran, M. and Compart, A. (2007) labor is upbeat despite credit crunch. Travel We ekly Vol. 66, Issue 38, p. 16.Economist (2003) In intensive care. Economist Vol. 367, Issue 8321, p. 20.Pearce, D. (2001) Tourism. Asia Pacific Viewpoint Vol. 42, Issue 1, p. 75.Sadi, M. A. and Henderson, J. C. (2000) The Asian economic crisis and the aviation industry impacts and response strategies. Transport Reviews Vol. 20, Issue 3, p. 347-367.Taylor, I. (2008) Holidays out of UK down by a quarter. Travel Weekly 14th November 2008, p. 2-3.Watkins, E. (2002) Another Threat to the Hotel Industry. Lodging Hospitality Vol. 58, Issue 12, p. 2.Methods for furrow Analysis PESTLE and Porters FiveMethods for Business Analysis PESTLE and Porters Five check to Johnson scholes (2005, Page 9) scheme is the direction and scope of an organisation over the long period, ideally which seeks to match its resources to its changing surround and in particular its markets, customers or clients so as to meet stakeholders expectations.Strategy is viewed as a link between the unwaveringly and its env ironment (Grant, 2008). For a outline to be successful it should be in harmony with the self-coloreds essential environment such as goals, quantifys, resources, capabilities and systems, and the external environment in which it operates. Developing utile strategies cannot take place without firstly (Vignali et al, 2003) analysing the external environment in which the company operates. Vignali Vrontis, (2004) further suggested that environmental scanning of both the external and internal environment is necessary to formulate the dodging to reach their objectives.For an organisation it is heavy to collapse the macro environment which comprises of political, social, technological and economical issues industry experts use PESTLE to analyse this macro environment.PESTLE is a tool used to analyse the external business macro environment in identifying how future trends might impact on organisations within an industry. Macro environment factors will impact to a greater or lesser extent on all companies in the business environment (Johnson Scholes, 2008). Pestle stands for Political, economical, social, technological, legal and environmental.Political- legal, factors include antitrust regulations, environmental security measure laws, tax laws, foreign conduct regulations, stability of political relation, European issues Economical factors such as GDP trends, interest rates, money supply, inflation rates, unemployment levels, exchange rates, foreign trade regulations Sociocultural- lifestyle changes, consumer activism, career expectations, demographics Technological changes such as New products, internet, telecom, networking.An example of PESTLE ANALYSIS for Airline IndustryThe political factors such as government support for national carriers, security control, restrictions on migrations will have a major impact on the industry. Economic factors such as national return rates, fuel prices, recession, employment affects the airlines business. Social facto rs such as consumer spending, international holidays and International student exchange programmes, Olympics directly increase the sales of the business where as in technological factors such as fuel efficient engines, security check machines, online ticketing systems and environmental issues such as noise pollution, carbon emission regulations changes in any of the above factors will have a impact on the airlines industry. agree to (Johnson Scholes, 2008) it is very important to find the key drivers for change rather than overwhelming on all the details of the environment factors, as the key drivers may vary within industries.The external forces impact the immediate environment (Johnson et al, 2005) creating matched forces on the organisation in the industry. It is very important for managers to be aware of the companys environmental factors, competitive forces in the industry, which showcase the attractiveness of the industry and the success or failure of a particular company (M intzberg et al, 1998). These environmental factors can be categorised either as opportunities or threat and are included in the strategic formulation.Porters tail fin forcesPorters five forces model provides a useful basis to examine the extent of competition in an industry. Attractiveness of an industry with competitive forces can be set with the help of five forces framework. The profit potential of an industry can be determined by collective strength of the five forces (Mintz berg et al). The five forces are threat of sensitive entrants, threat of substitute products or services, bar chance uponing power of suppliers, hatfuling power of buyers and rivalry among alive mansions. Customers, suppliers, substitutes, and potential entrants are all competitors to firms in the industry (Porter, 2004, 2008). If all these forces are strong, the more limited is the ability of established companies to raise prices and substantiate greater profits (Wheelen Hunger, 2002 Hagen, 2010). A company can earn greater profits if at that place is a low competition force in the industry and a high competitive force can be viewed as threat since it may reduce profits. Many authors Johnson et al, 2008 Mintzberg et al,1998 Wheelen Hunger, 2002 Thompson Martin 2005Grant, 2008 have used the porter five forces frame work in the academic texts.Threat of sunrise(prenominal) entrantsNew entrants bring bracing capacity desire to gain market share and substantial resources (Mintzberg et al, 1998). The threat of entry depends on the height of roadblocks (Porter, 2004) and the reaction from existing competitors. Some of the entry barriers areEconomies of scale Economies of scale prevent the entry by forcing the potential competitor to come in on a coarse scale or to accept cost disadvantage. As the existing firms gain economies of scale through mass production and standard products from the suppliers there by enjoying lower cost per unit.Product preeminence Existing firms have a brand differentiation and customer loyalty which has achieved by creating value to the customer,specialization creates a barrier to entry as the potential competitors necessitate to spend heavily to gain the market.Capital requirements Capital requirements create a barrier to potential competitors as they need to invest huge amount, although it creates a barrier, if the returns are attractive then the potential competitors may enter the industry.Cost disadvantages independent of size established companies enjoy cost advantage, which is not available to the potential competitor, as the existing firms have proprietary technology, availability of best gross materials, proprietary product knowledgeAccess to statistical distribution channels will deter the entry of potential competitors and even the government regulations which prevents or limit entry into certain industries by restricting access to raw materials.Rivalry among existing firmsRivalry among existing competitors takes pla ce to gain market share from each other in the industry. The intensity of rivalry depends on several(prenominal) factors such asNumber of competitors if the competitors are equal in size there would be high rivalry as all the competitors try to gain dominance in the industry.Rate of industry growth slow growth leads to price wars to gain market share.Height of exit barriers its the opposite side of entry, as the firms investments in specialised assets, or managements loyalty (Porter, cited in Mintzberg et al,1998) huge amount in a particular business, keeps companies in market even though if they are running in loss or earning low returns.Bargaining power of buyersBuyers may be the end consumer. Buyers compete within the industry by step-down the price and demanding for higher quality of products and services and playing competitors against each other. A buyers group may be powerful if the following factors hold true.Switching cost locks the buyer to particular sellers on the other great deal the buyers power will be improved if the seller faces switching cost and it earns low profits, thereby creating great incentive to lower purchasing cost. Buyers can threaten to enter the industry partially and pose a credible threat of backward integration and bargain to bring the prices down.Bargaining power of suppliersThe organisations that produce inputs such as material and labour in to the industry are called suppliers, these suppliers can affect the industry as they have the capability to increase the price or reduce the quality of the goods and services. The supplier group will be more powerful if they have a couple of(prenominal) substitutes in the industry and if the product is functional. A supplier group will be more powerful if they are dominated by a hardly a(prenominal) companies. Firms may pursue a backward integration strategy to gain control of suppliers, but this strategy will be effective when the suppliers are not reliable and charging high prices or not meeting the deadlines.Pressure from substitutesIt is the competition stirred from products outside the industry. According to Porter (2004), substitutes are the products that can serve the comparable purpose and depends on the willingness of the buyer. They have a tendency to attract a considerable proportion of the market volume and decrease the probable sales volume of the existing players. Also Porter (2004), states that, the price elasticity of a product is affected by substitute products if there are more number of substitutes available, the demand is more elastic since customers have more choices.Limitations Porters five forces model is a strategic tool that is utilised to identify if a new business, product or service has the potential to be profitable. However, it is important to understand that this model has further limitations in current market environment, since it visualizes somewhat still market body structure.Porters model is erst establish on the economic s ituation in the 80s with tough competition and comparatively stable market structure it is not able to consider the new business models and viability of the industries like dynamic market entrants and technological innovations which will entirely alter the business models within a small time. For example, computer and software industry is considered highly competitive. However, Five Forces Model is of limited value as it represents nothing more then the snapshots of moving pictures, since the structure of the industry is persistently transformed by innovation. Therefore, as stated by Kippenberger (1998) and Haberberg Rieple (2001), it is not prudent to develop strategy only on the basis of Porters Five Forces Model and should also be examined in addition to other strategic frameworks of SWOT and PEST analysis.Moreover, many academics and strategist have repeatedly c signenged Porters framework. According to Coyne Subramaniam (1996), there are three ambiguous assumptions that under lie the five forcesThat buyers, competitors suppliers are unrelated and do not interact and collude.That the source of value is structural advantage (creating barriers to entry).That uncertainty is low, allowing participants in a market to intend for and respond to competitive behaviour.In mid 1990s an important extension to the Porters Model was found with the help of the Game Theory (Brandenburger Nalebuff, 1995). The concept of Complementors also referred to as the 6th force was added, which helped in explaining the reasons behind strategic alliances. For example tourism industry and the airline industry are complementary industries.Also it is perhaps not reasonable to assess the attractiveness of an industry autonomous of the resources a company brings to that industry. Therefore to develop a more sound strategy for a firm a Resource base View (RBV) should be used together with this theory (Wernerfelt, (1984) Rumelt, (1984)). The model should be adopted with the knowledge of its limitations and their use as a part of a bigger framework of management tools, techniques and theories.The five forces determine industry lucrativeness as they influence cost, prices, and investments of firms in an industry and the elements of return on investment (porter, 1990), even though it is criticised but it is still one of the widely accepted model to analyse the competitive forces.After identifying the forces affecting competition and their causes in the industry, the firm will be in a position to identify its strength and weakness relative to that industry.Resource based view (RBV)Resource Based View (RBV) is an economic tool utilized to identify a firms potential key resources. It is more frequently linked with the work of Prahalad Hamel (1990) Rumelt (1991) Grant (1991) and Peteraf (1993). It has an inside-out approach since it deals with the competitive environment facing the organization. Therefore, its beginning point is an organizations internal environment. A ccording to Draft (1983) cited in Barney (1991, p. 101), firm resources include all assets, capabilities, organizational processes, firm attributes, information, knowledge, etc controlled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness.According to Mahoney Pandian (1992) Hooley Greenley (2005) and Smith Rupp (2002), RBV of a firm describe its capability to delivering sustainable competitive advantage while the resources are managed in way that the end product cannot be replicated the competitors, hence creating a competitive barrier. Barney (2001), states that RBV explains that a firms sustainable competitive advantage is reached by virtue of unique resources, while these resources have the characteristics of being rare, valuable, inimitable, non-tradable, non-substitutable as well as firm specific. According to Prahalad Hamel(1990) cited in Thomspon Martin, Once the shopping center competenecies are develope d in the organisations they should be exploited and these core competencies should be flexible and responsive to the changing customer demands in market.The limitation of the resource based view is that it says very little on how resource can develop or change over time (Henry, 2008). The self-motivated role played by individuals within organisations is often assumed to be obvious and therefore rarely addressed. According to Priem Butler (2001), resource based view of strategy lacks details and hence is elusive for organisations to put into practice.Value cooking stove analysisThe concept of value chain was developed in 1980 by Michael Porter, also known as value chain analysis. Value Chain helps in analysing specific activities so that a firm can create value and competitive advantage. Its a chain of activities for a firm operating in a particular industry. Every organisation has certain activities that link together to increase value of the business and these activities form th e organisations value chain. According to Lynch (2003), these activities may include purchasing, manufacturing of products and distribution marketing of the organisations products and services. The competitive advantage in value chain is obtained from two sources (i) differentiation advantage customer perceives more value from the firms product, and (ii) low cost advantage a firm provides the product or service at a lower cost than the average market cost.According to Svensson (2003), the value for the final customer is the value only in its theoretical context and not practical terms, which is a limitation of the model. The true value of the product is measured only when it reaches the final customer. Many academics and researchers have questioned the model and its applicability in context of the service industry.Generic strategies TARGETING AND POSITIONINGPositioning determines the profitability of firm in the industry. A firm that positions well in the industry may earn high rat es of returns even though if the industry structure is unfavourable (porter, 2004 Pg. 11). Michael porter proposes 2 generic competitive strategies for outperforming other corporations in a particular industry lower cost and differentiation (Wheelen Hunger, 2002)These competitive advantages have with scope of activities, for which the firm seeks to achieve them lead to three generic strategies for by performing above there average in an industry cost leadership, differentiation and focus (porter, 1990)Lower cost and differentiation strategies seek broad mass market while focus strategies aim at niche ( specialize) market. The diagram on a lower floor represents the porters generic strategiesCost leadership and differentiation strategies seek competitive advantage in a broad range of industry segments while focus strategies aim at cost advantage in the narrow segment.The focus has two variants, cost focus and differentiation focus.Cost leadershipThis strategy focuses mainly on gain ing competitive advantage by having the lowest cost in the industry (Porter, 2004), Mintzberg et al, 1998 Johnson et al 2008). According to (Malburg, 2000) to achieve the low cost benefit, the firm should have low cost leadership, low cost manufacturing and low work force strategies but (Hyatt, 2001) states the firms should have a large market share to gain the cost advantage, irrelevant to this Malburg (2001), Davidson, (2001) state that the cost leadership can be achieved by mass production, economies of scale, product design, R D, access to raw materials, proprietary technology, mass distribution. Having a low cost position yields the company above average returns even if they have strong competitive advantage. But according to porter (1985), only one firm in the industry can have the advantage of cost leader but Malburg (2000) stated that competitors fight through low cost leadership roles. Since low cost leadership firms have bigger market share, they will have high bargaining power with suppliers and enjoy above average on investments( Wheelen Hunger,2002) inauspicious to this( Cross, 1999) states cost leadership have certain disadvantages, as they create little loyalty to the customers and if the firm reduces the prices it may loose profits.DifferentiationThe second generic strategy, companies employ this strategy focus to be unique in the industry by offering products or services which are highly valued by buyers (Porter, 2004 cross, 1991 Hyatt, 2001).Differentiation is done by tailoring the customer needs and charging a premium for the customisation in the market. Differentiation strategy is more likely to generate revenue higher profits than low cost strategy as it creates a defensible position (Porter, 2004. pg .37) for coping with five forces. The customer loyalty and need for uniqueness creates a barrier of entry for potential competitor (Wheelen Hunger, 2002, Porter, 2004).According to (Mc Cracken, 2002) the key step in developing a differen tiation strategy is to find how the company is different from the competitors. Mc Cracken Davidson suggested that the differentiation can be the market sector, quality of work, product, delivery system and the marketing approach and to be effective the message of differentiation should reach the end users. (Hyatt, 2001) says that firms must add a premium to the cost when using differentiation strategy however Hlavacka et al (2001) argued that cost and prices are not considered as the main focus but on the other hand Cross (1999) stated that since customers are loyal to the company and are willing to pay the higher price for its product.FocusAccording to Porter Davidson, (2001) Cross, (1991), the firms which follow this strategy target a specific segment of the market, this strategy is completely different from the others as it relies on narrow competitive scope in an industry (porter), the company can focus on a selected group of customers, geographical area, product range, focus s trategies are effective when consumers have preferences and if the niche market is not recognised by rival firms. The focus strategy has two variants.Cost focusFirms seeks cost advantage in the target market segment. Cost focus is a low cost competitive strategy and exploits cost behaviour differences in some segments. In using this strategy the company seeks a cost advantage in its target segment.Differentiation focusFirms seek differentiation in its target market. Differentiation exploits needs of buyers.According to Wheelen Hunger (2002) there are various risks involved in implementing competitive strategies, none of the strategy guarantees to achieve success and some companies implemented porters strategy and failed to sustain the strategy. Some companies that try to attempt cost leadership and differentiation is stuck in the middle (porter). Helms et al, 1997 says that there is much debate on using two generic strategies at the same time. But according to Porter differentiatio n and cost leadership are mutually exclusive (Porter), on the other hand Helms et al (1997) found companies that used combination strategies have higher returns on investments.Ansoff MatrixThe Ansoff product/market growth matrix Ansoff, (1988), cited in Johnson et al(2008), provides four alternating(a) directions for strategic development, according to this model the firm can decide their strategy depending on the resources. This matrix helps the firm to determine the growth strategies of the firms.Market penetration The strategy of increasing the sales in the current market with the existing products. They spend heavy budgets on advertising to create customer satisfaction and to attract the customers from the competitors, there by creating a high competition.Product development is the strategy of increasing sales with the development of current product or by developing new product. Developing a new product in the current market needs lot of innovation as they should match the cust omer taste.Market development is the strategy of increasing sales of the existing products in a new market attracting new customers, moving to new geographical area, new segments.Diversification takes the firm completely away from the existing market and the existing products. Diversification takes place when new products are developed and sold in new markets. Diversification allows the firms to spread the risks in a wide array of markets.Swot AnalysisSwot is an acronym of strengths, weakness, opportunities and threats. Scanning of external environment STEP, Porters five forces, for opportunities and threats and internal environment such as resources, capabilities, financial, marketing, value chain, technology for strengths and weakness is an important part in developing strategic planning. According to Vrontis, (1999), it is very important if the companies want to capitalise on their strengths and minimise weakness, exploit market opportunities as they arise and avoid threats. SWOT gives us the key issues that may impact on strategy development (Johnson et al, 2008).It can also be used to convert weakness into threats and threats into opportunities.RYAN AIRWAYS AND BRITISH AIRWAYSThey would like to understand the underpinning logic of the strategy choices/generic strategies available to them and you have asked you to provide some little illustrations from the airline industry.The product/service differentiation visions and strategies of SIA, BA and UAL, as they prepare for the new millennium, provide interesting contrast and comparison insights and lessons on product/service differentiation for the industry as a whole SIA is strategically positioned in the premium service, quality and value market segment of the international airline industry. help is the raison de tre of SIA, and at the heart of its service reputation is the Singapore Girl. Since the late 1980s, SIA has always held the view that The airline industry is, by its very nature, a service indust ry. In a free market, the success or failure of an individual airline is largely dictated by the quality of the service it provides (Harvard Business School, 1989).http//www.emeraldinsight.com/Insight/ViewContentServlet? file name=Published/EmeraldFullTextArticle/Articles/2610310604.html2610310604001.pngReferencesPorter, M. E., (2004), The global competitiveness report 2004-2005, Basingstoke Palgrave Macmillan.Brandenburger, A.M. and Nalebuff, B.J. (1995), The Right Game Use Game Theory to Shape Strategy, Harvard Business Review, Jul-Aug, pp.57-71Coyne, K.P. and Subramaniam, S. (1996), Bringing discipline to strategy, The McKinsey Quarterly, No.4Haberberg, A. and Rieple, A., (2001), The Strategic wariness of Organizations, Essex Pearson Education.Kippenberger, T., (1998). Strategy according to Michael Porter, The Antidote, Vol. 3 No.6, pp. 24-25.Wernerfelt, B., (1984). The Resource-Based View of the Firm. Strategic perplexity daybook Vol.5 No.2, pp. 171-180.Rumelt, D.P., (1984), Towards a Strategic Theory of the Firm, Alternative theories of the firm, International Library of Critical literature in Economics, vol. 154. Cheltenham, U.K and Northampton.Wheelen, T.l Hungher,J.D.,(2002) Strategic management and Business policy, 8thed. New Jersey Pearson education.Grant, R.M, (2008) Contemporary strategy analysis. 6th ed.Oxford Blackwell publishingPorter,M.E, (2004). Competitive strategy. Edition 2004 First free press.Johnson.G, Scholes.K, Whittington.R, (2008). Exploring embodied Strategy Text and Cases. Edition 8.Essex Financial times prentice hall Pearson education.Johnson,G, Scholes,K, Whittington.R, (2005). Exploring Corporate Strategy Text and Cases. 7th ed.EssexFinancial times prentice hall Pearson education.Mintzberg,H. Quinn,J.B. Ghosal,Sumantra. (1998).The strategy process,revised edition. Prentice hall Europe Pearson education.Porter,M.E. (2004).Competitive advantage.Edition 2004. First free press.Watts,G. Cope. J Hulme.M (1998). Ansoffs matrix, pai n and growth strategies and adaptive learning among small food. International journal of entrepreneurial behaviour and research, vol.4.No.2, pp 101-111.Davidson, S. (2001). Seizing the competitive advantage. Community Banker, Vol. 10 No. 8, pp.32-4.Cross, L. (1999). Strategy drives marketing success. Graphic Arts Monthly, Vol. 71 No. 2, p. 96.McCracken, L. (2002). Differentiation win new business with less effort, Principals Report, Vol. 2 No. 4, p. 1.Cited inAllen.R.S, Helms.M,(2004) Linking strategic practices and organisational performance to porters generic strategies, Business process management journal ,vol. 12 No.4 ,pp.433-454.Malburg, C. (2000). Competing on costs. Industry Week, Vol. 249 No. 17, p.31.Cited inAllen.R.S, Helms.M,(2004) Linking strategic practices and organisational performance to porters generic strategies, Business process management journal ,vol. 12 No.4 ,pp.433-454.Hlavacka, S. Ljuba, B. Viera, R and Robert, W. (2001). Performance implications of Porters g eneric strategies in Slovak hospitals, Journal of Management in Medicine, Vol. 15 No. 1, pp. 44-66.Harvard business review 2008 available at http//www.ascendcfo.com/pdfFiles/HBR-The%20Five%20Competitive%20Forces%20That%20Shape%20Strategy.pdf- Accessed on 10 March 2010Vignali, C., Vrontis, D. (2004), Global Marketing and Export Management, Foxwell and Davies, LondonCited inVrontis,D. stavrou,A. Kogetsidis.H(2006).Strategic marketing planning for a supplier of liquid food packaging products in Cyprus, Journal of Business Industrial Marketing, Volume.21,No.4 pp 250-261Barney, J.B. (1991).Firm Resources and Sustained Competitive Advantage. Journal of Management, 17 (1), pp.99-120.Daft, L.R. (1983).Organizational Theory and Designs, West Pub. Co., St. Paul.Prahalad, C.K. and Hamel, G., (1990). The Core Competence of the organization. Harvard Business Review, 68 (3), pp.79-91.Rumelt, R.P., (1991), How much does industry matter? Strategic management journal, vol.12 No.3, pp.167-85.Grant, R.M., (1991), The resource-based theory of competitive advantage implications for strategy formulation. California Management Review, 33(spring), pp.114-35.Peteraf, M., (1993), The cornerstones if competitive advantage a resource based view. Strategic Management Journal, 14, pp.179-91.Mahoney, J.T. and Pandian, J.R., (1992), The Resource-Based View Within the Conversation of Strategic Management, Strategic Management Journal, Vol.15 No.5, pp. 363-380.Hooley, G.J. and Greenley, G.E., (2005). The Resource Underpinnings of Competitive Positions,Journal of Strategic Marketing, Vol.13, No.2.pp.93-116.Smith, A.D. Rupp, W.T. (2002). Communication and Loyalty among Knowledge Workers a resource of the firm theory view, Journal of Knowledge Management. Vol. 6 No.3, pp.250-61.Barney, J.B., (2001). Is the Resource-Based Theory a Useful Perspective for Strategic Management Research? Yes, Academy of Management Review., Vol.26 No.1, pp.41-56.Henry, A., (2008). Understanding Strategic Management. Oxford University Press.Priem, R.L. and Butler, J.E., (2001). Is the resource based view a useful sight for strategic management research? Academy of Management Review, Vol.26 No.1. pp. 22-40.Lynch, R., (2003). corporate strategy.3rd ed. London FT Prentice Hall.Svensson, G., (2003). Consumer driven and bi-directional value chain diffusion models, European Business Review, Vol. 15, No. 6, p. 390-400.Allen.R.S, Helms.M,(2004) Linking strategic practices and organisational performance to porters generic strategies, Business process management journal ,vol. 12 No.4 ,pp.433-454.Executive summaryThis report provides the strategic tools and techniques used in formulating strategy.This report starts with the external analysis of macro environment by using PESTLE and industry analysis to identify the profit potential by using the porters five forces frame work. The external analysis is carried to identify the threats and opportunities in the operating environment.Internal analysis of the fi rm is carried out to identify the strengths and weakness of the firm using by using Porters value chain, Resource based view. Porters three generic strategies have been explained for positing of the firm and Ansoff growth/productmatrix is also explained.An overview of ryan airways and british airways has been provided withand to identify then internal analysis frameworks using RBV , porters value chain and porters generic strategies.