1.

Introduction

1. 1. General Introduction
Attaining and maintaining a sustainable competitive advantage is increasingly dependent
on knowledge assets and as result, organizations need to assess and understand how
knowledge of the environment they are operating best contributes it to its organizational
performance (Lee & Yang, 2000). Application of this framework will facilitate business
model innovation necessary for sustainable competitive advantage in the new business
environment characterized by dynamic, discontinuous and radical pace of change
(Yogesh M. 2000).

Business organizations are coming to view knowledge as their most valuable and
strategic resource, and bringing that knowledge to bear on problems and opportunities as
their most important capability. They are realizing that to remain competitive they must
explicitly manage their intellectual resources and capabilities (Holsapple and Whinston,
1996).
Therefore, judgments about what strategy to pursue should ideally be grounded in a
probing assessment of a company's external environment and internal situation. Unless a
company's strategy is well-matched to the full range of external and internal situational
considerations, its suitability is suspect.

1.2. Overview of the UK Air Industry and the Low-Cost carriers

An airline provides air transport services for passengers or freight. Airlines lease or own
their aircraft with which to supply these services and may form partnerships or alliances
with other airlines for reasons of mutual benefit (Rigas Doganis, 2001). The pattern of
ownership has gone from government owned or supported to independent, for-profit
public companies (Rigas Doganis, 2001).

1
Aviation is a fast growing sector of the economy in UK. It is associated with a number of
social and economic benefits and a range of environmentally damaging consequences. It
is also associated with a significant and growing contribution to the global inventory of
greenhouse gases which are thought to be implicated in climate change (Airports Policy
Consortium, 1999).
The current state of airline industry is in disruption by different attacks on the industry.
The incident of WTC (September 11, 2001) had serious and lasting repercussion on the
airline industries, in terms of the economic securities and services through the
perceptions of travelers in respect to the safety and the security of airlines themselves.
In times of profit, airlines lease new generations of airplanes and upgrade services in
response to higher demand (Lawton, T., 2002).

The deregulation of the industry in Europe encouraged a newfound vigor in a relatively

staid industry (MDS Transmodal 2000). These governments dictated airfares, route
networks, and other operational requirements for each airline.
Since deregulation, airlines have been largely free to negotiate their own operating
arrangements with different airports, enter and exit routes easily, and to levy airfares and
supply flights according to market demand; the entry barriers for new airlines are lower
in a deregulated market (European Low Fares Airline Association, 2005).
These dynamics prompted the emergence of a multitude of price-based competitors,
together with a fundamental restructuring of most existing airline companies and a
consolidation of the airline industry.
The consolidation was symbolized, at first, by a wave of mergers and acquisitions, and
second, by the emergence of competing global alliance groups (European Low Fares
Airline Association, 2005). These two phenomena are interrelated, with the largest
survivors of the UK airline industry consolidation spearheading the formation of global
alliance clusters. This has produced far greater competition than before deregulation in
most markets, and average fares tend to drop 20% or more (Lawton, T., 2002).
The added competition, together with pricing freedom, means that new entrants often
take market share with highly reduced rates that, to a limited degree, full service airlines

2
must match. This is a major constraint on profitability for established carriers, which tend
to have a higher cost base.
As a result, profitability in a deregulated market is uneven for most airlines. Airlines
assign prices to their services in an attempt to maximize profitability. The pricing of
airline tickets has become increasingly complicated over the years and is now largely
determined by computerized yield management systems (also known as revenue
management- the process of understanding, anticipating and reacting to consumer
behavior in order to maximize revenue or profits). (Rigas Doganis, 2001).

Most airlines use differentiated pricing, a form of price discrimination, (- when sales of
identical goods or services are transacted at different prices from the same provider) in
order to sell air services at varying prices simultaneously to different segments. Factors
influencing the price include the days remaining until departure, the current booked load
factor, the forecast of total demand by price point, competitive pricing in force, and
variations by day of week of departure and by time of day (Rigas Doganis, 2001).
Carriers often accomplish this by dividing each cabin of the aircraft (first, business and
economy) into a number of travel classes for pricing purposes

These forces have caused some major airlines to go out of business, in addition to most of
the poorly established new entrants (Freiberg, K., and Freiberg, J., 2001). The lack of
profitability and continuing government subsidies are justified with the argument that
positive externalities, such as higher growth due to global mobility, outweigh
microeconomic losses (Freiberg, K., and Freiberg, J., 2001). A historically high level of
government intervention in the airline industry can be seen as part of a wider political
consensus on strategic forms of transport, such as highways and railways, both of which
are also publicly funded (Budge, I. et al., 2003).

The UK airline industry underwent a major competitive shake up with the advent of full
European airline liberalization, a wide array of new airline start-ups emerged within the
European Union, many of them competing on price with established carriers. (Lawton T.,
2002).

3
Besides, the Civil Aviation Authority claimed that the introduction of the new
Emperors of the Sky tended to stimulate the new air traffic without important handicaps
to the operations of incumbents. For example, when EasyJet and Debonair started
operations on the London-Barcelona route, the number of passengers increased by a
staggering 32% in the first year alone; and this compared with growth of 7% in the
previous year. These figures tended to prove that the introduction of the low-cost carriers
onto domestic and international routes generally led to serious market stimulation (CAA,
2003). Analysis of the 1992-1996 period shows that every player in the air transport
chain is far more profitable than the airlines, which collect and pass through fees and
revenues to them from ticket sales. While airlines as a whole earned 6% return on capital
employed (2-3.5% less than the cost of capital), airports earned 10%, catering companies
10-13%, handling companies 11-14%, aircraft lessors 15%, aircraft manufacturers 16%,
and global distribution companies more than 30%. (Doganis, 2001)

Airline fuel is untaxed however due to a series of treaties existing between countries, but
recently, air transport has been accused of contributing to global warming through the
high carbon emissions of aircraft (CAA, 2003). Although the airline industry accounts for
a relatively low percentage of emissions, this is growing rapidly due to the expansion of
the low-cost carriers' operations. There has been discussion of the possibility of
imposing additional taxes on airline tickets or on aviation fuel, something which would
particularly impact low-cost carriers' more price-sensitive customer bases and could
severely impair their business model (Environmental News Services, Sep, 3 2003).

Thus, nowadays, the UK airline industry tends to consolidate by strategic divisions of

airlines. Moreover, there is one main difference between the airlines at the moment and
those in the past in the UK. Although most of the major companies are well established,
there is now a growth of low-cost alternatives.
A low-cost carrier (also known as a no-frills carrier) is an airline that offers generally low
fares in exchange for eliminating many traditional passenger services. The term
originated within the airline industry referring to airlines with a low - or lower - operating
cost structure than their competitors (Lawton T., 2002).

4
Low-cost carriers pose a serious threat to traditional "full service" airlines, since the high
cost structure of full-service carriers prevents them from competing effectively on price -
the most important factor among most consumers when selecting a carrier (Lawton T.,
2002).
For holiday destinations, low cost airlines also compete with seat-only charter sales.
However, the inflexibility of charters (particularly as regards length of stay) makes them
unpopular with many travelers (Lawton T., 2002).
The key factors moving costs for the airlines are fleet structure, route network and
company policies on remuneration and work rules (Seristö and Verpsäläinen 1997).
These factors establish the total cost differences between airlines and the primary ways in
which an airline company can cut its costs relative to competitors and develop its relative
competitiveness. These cost reduction techniques are essential elements of the low-cost
airline business model.
Thus, their goal is not only to win market share from traditional scheduled airlines but to
create actually new market segments. And this is possible by attracting people away from
other means of transport (train, boat) or in other ways by encouraging people who rarely
or usually never fly (Lawton T., 2002).
As the number of low-cost carriers has grown, these airlines have begun to compete with
one another in addition to the traditional carriers.

1.3. Purpose and Objectives of the Dissertation:

This dissertation is aimed at a thorough understanding of the forces that impact on an
organization, particularly those that can be harnessed to provide competitive advantage. It
deals with the emergence of low-cost carriers in UK.
It is aimed to examine and analyze the use of knowledge as a resource based view for
business strategy and as applicable in the Porter’s diamond model to the strategy of the
organization by examining the performance of low a cost budget airline and focusing on
the strategies that make low fares possible specifically on how an organization identifies,
assesses and exploits its competencies, and translates these into new processes, products
and services, with levels of competitive rivalry in the industry. The Diamond model
explains a process for the need of managing knowledge in order to achieve a quantum

5
change in business strategy as this is particularly important in businesses as firms
recognizes the need for different strategic approaches in the markets they operate.
The research begins with an overview of business strategy and its current focus on
organizational resources and capabilities. It links this resource-based view of strategy to a
knowledge-based view where knowledge is considered the most important strategic
resource.
Building on this view, it presents a framework that aim to relate the knowledge strategic
management in business to their competitive advantage, and raises implications for
competing via knowledge - as knowledge (internally and externally) is also changing the
way firms compete with their businesses, where opportunities to create value are shifting
from managing tangible assets to managing knowledge based strategies. This shifting
competitive landscape is being driven by the speed of the competition in the environment
they operate.

To this end, by attempting to establish and relate the link between knowledge based view
as a resource for competitive advantage and organizational competencies with the
applicability of the Porter’s diamond model on the strategy of the low cost budget airline
in the UK, this research results will establish the validity and depict the impact of
Knowledge based view processes on organizational performance and analyze the model
as applicable to the competitive advantage of the industry focusing on the performance of
low a cost budget airline in their business environment and the strategies that make low
fares possible with very high levels of forces and competitive rivalry in the industry.
Based on these result, the research would develop a knowledge management strategy
from the firm’s business operations and organizations would be able to better align
resources for maximum benefits

6
2. LITERATURE REVIEW

2. 0. Introduction and Prescription

The objective of this chapter is to show and describe the varied literature and explain, in
an objective approach, the consequence of the literature as part of the resources for the
research. Basically, the literature review includes sources, which are relevant to the
research problem; it defines the problem in terms of previous search and thus shows how
the piece of work of the authors of a specific part of an academic subject, in the
management or strategic sector is primordial to assess, discuss and to lead to the
development of the dissertation on what has been found out about the general context.

The aim of the literature is not only to write the summaries, the theories and findings of
another author’s piece of works, besides, to highlights the major components that will be
used to understand and assess the context that is surely as important as the research
question and to ensure the coherence of the chosen literature with the findings of the
research.

2. 1. Knowledge
Today, knowledge is considered the most strategically important resource and learning
the most strategically important capability for business organizations. Business
organizations are coming to view knowledge as their most valuable and strategic
resource, and bringing that knowledge to bear on problems and opportunities as their
most important capability. They are realizing that to remain competitive they must
explicitly manage their intellectual resources and capabilities (Dyer, 2000).

Technical and organizational initiatives, when aligned and integrated, can provide a
comprehensive infrastructure to support knowledge management processes. But while the
appropriate infrastructure can enhance an organization's ability to create and exploit
knowledge, it does not insure that the organization is making the best investment of its
resources or that it is managing the right knowledge in the right way.

7
How should an organization determine which efforts are appropriate, or which
knowledge should be managed and developed? An organization's strategic context helps
to identify knowledge management initiatives that support its purpose or mission,
strengthen its competitive position, and create shareholder value. Intuitively, it makes
sense that the firm that knows more about its customers, products, technologies, markets
and their linkages should perform better (J. B.Quinn, P.Anderson, and S. Finkelstein,
1996).

Before discussing knowledge management, a brief description is given about the

Knowledge and its distinction with data and information in the context of information
systems.
Data are collection of facts, measurements and statistics whereas Information is defined
as organized or processed data that are timely (i.e., inference from the data are drawn
within the time frame of applicability) and accurate (i.e., with reference to original data)
(Hussain F. et al, 2004).
Knowledge is information that is contextual, relevant and actionable (Hussain F. et al,
2004). The implication is that knowledge has strong experimental and reflective elements
that distinguish it from information in a given context (Dyer, 2000).
While data, information and knowledge can all be viewed as assets of an organization,
knowledge provides higher level of meaning about data and information. It conveys
meaning and hence tends to be much more valuable (KM news archive, 2000).
Knowledge is still valuable or reusable after lapse of time and has historical relevance,
while the value of information tends to decline with time without preservation of the
context in which it was acquired. Over time, information accumulates while knowledge
evolves (KM news archive, 2000).

Another foundation of knowledge infrastructure is devising, implementing and

integrating an effective strategy. The real point of knowledge management strategy is to
create an environment for leveraging the organization’s intellectual property into a
collaborative platform, making this knowledge actionable (Holsapple and Whinston,
1996 & Zack, 1999).

8
According to Clarke (1998), forming a knowledge strategy is straightforward. The first
step is to develop sophisticated scenarios for current and future competitive
environments. The next step is to describe ideal successful companies with respect to the
future scenarios. A vital characteristic of this step is evaluation of the advantages and
base knowledge required in these successful organizations. Following the identifications
of the knowledge needed at successful firm, the next step is to identify the individuals
within the firm who have the knowledge required or the capability to acquire that
knowledge.
It is important to identify external knowledge sources to help determine and understand
current and future customers, suppliers and markets. The source of intellectual capital
may not reside within the organization but can be leveraged elsewhere. These steps are
for the organization to model its efforts on those of a conceptually company. The
business strategy for such an ideal company would include a plan in acquiring and
maintaining the necessary knowledge. Once the knowledge strategy is in place, the
strategy is set. It is then time to develop the system (Clarke, 1998).

Zack (1999) suggested that knowledge assets should be analyzed in relation to their
support of business strategy. This makes intuitive sense in that knowledge management
has strategic value.
Knowledge has also been classified as advantaged knowledge, which can be described as
the knowledge that can provide competitive advantage; base knowledge as knowledge
that is integral to an organization, providing it with short-term advantages (best
practices); and trivial knowledge as knowledge that has no major impact on the
organization (Clarke, 1998).
Intellectual capital is another term for knowledge about which Ulrich (1998) defines
intellectual capital as the competence of an individual and the commitment of the
individual to contribute to the organization’s goals. Besides this, other classification of
knowledge is tacit knowledge and explicit knowledge. Tacit knowledge is the cumulative
store of experiences, insights, expertise, know-how, trade secrets, understanding and
learning. It is also referred to as embedded knowledge and is unstructured and intangible
and thus hard to codify. Explicit knowledge is the policies, procedural guides, reports,

9
strategies etc of the enterprise that has been codified and can be distributed to others
without interpersonal interactions (Ulrich, 1998).

2. 2. Knowledge Management and organizational performance

Transaction-costs paid attention to the question of knowledge as knowledge is arguably
the most important resource that firms possess, a strategic source of monopoly rent
(Penrose, 1959; Winter, 1987).

The knowledge-based view of the firm suggests that the primary rationale for the firm is
the creation and application of knowledge (Demsetz, 1991; Grant, 1996; Spender, 1996a,
b). Bierly and Chakrabarty (1996) conclude that organizational performance differences
between firms are a result of their different knowledge bases and differing capabilities in
developing and deploying knowledge. Thus the management of organizational
knowledge could be thought of as the preeminent dynamic capability of the firm and the
main driver of all other competencies and capabilities (Lei et al., 1996).

According to Roberts (1998), the knowledge-based view of the firm postulates that
knowledge is the only resource that provides sustainable competitive advantage, and
therefore, the firm’s attention and decision making should focus primarily on knowledge
and the competitive capabilities derived from it (Leonard-Barton, 1995; Shariq, 1997).
So knowledge management should be actively incorporated into the organizational
knowledge strategy.

Knowledge management is fundamentally the management of corporate knowledge and

intellectual assets that can improve a range of organizational performance characteristics
and add value by enabling an enterprise to act more intelligently (Gupta et al., 2000).
Knowledge Management is a process that helps organizations identify, select, organize,
disseminate and transfer important information and expertise that are a part of the
organizational memory that typically resides within an organization in an unstructured
manner. This enables effective and efficient problem solving, dynamic learning, strategic
planning and decision making. Knowledge management focuses on identifying

10
knowledge, explicating it in a way so that it can be shared in a formal manner, and thus
reusing it (Gupta et al., 2000).

In recent years knowledge management in the firm has been paid increasingly more
attention (Chase, 1997a, b; Shariq, 1997). The different ways of generating and
transferring knowledge across different levels has been widely analyzed (Badaracco,
1991; Nonaka, 2000; Sanchez and Heene, 1997).
As Chase (1997b) states: whilst organizations recognize the importance of creating,
managing and transferring knowledge, so far they have been unable to translate this
competitive need into organizational strategies.
In broad terms, two major types of knowledge management could be identified:
operational knowledge management and strategic knowledge management (Tissen et al.,
1998). On the one hand, the main concern of operational knowledge management is to
connect people to the system being used for the distribution and transfer of knowledge.
On the other hand, strategic knowledge management is a process that links organizational
knowledge with:
 the design of organizational structures that foster knowledge
 business strategy; and
 the development of knowledge workers.

Barth (2000) explains that; knowledge management enables the communication of

knowledge from one person to another so that it can be used by the other person and the
domains in which knowledge concepts are leveraged in organization through knowledge
initiatives like:
♦ sharing knowledge and best practices
♦ Encouraging responsibility for sharing knowledge
♦ Capturing and reusing best practices
♦ Embedding knowledge in products, services and processes
♦ producing knowledge as a product
♦ driving knowledge generation for innovation

11
♦ mapping networks of experts
♦ building and mining customer knowledge bases
♦ understanding and measuring the value of knowledge
♦ Leveraging intellectual assets.

Knowledge management acts as the art of performing knowledge actions such as

organizing, blocking, filtering, storing gathering, sharing, disseminating and using
knowledge objects such as data, information, experiences, evaluations, insights, wisdom
and initiatives. In general terms it is the performance of knowledge actions on knowledge
objects (Sivan, 2001).

Another strategic view about knowledge management given by Malhotra Y. (1998) says
that knowledge management caters to the critical issues of organizational adaptation,
survival and competence in face of increasingly discontinuous environmental change.
Essentially it embodies the organizational processes that seek synergistic combination of
data and information processing capacity of information technologies and the creative
and innovative capacity of human beings (Malhotra Y., 1998). This view considers the
synergy between technological and behavioural issues. The need for synergy of
technological and human capabilities is based on the distinction between the old world of
businesses and the new world of businesses. Within this view, the former is characterized
by predictable environments in which focus is on prediction and optimization based
efficiencies. This is the world of competence based on information as the strategic assets
and the emphasis is on controlling the behaviour of organizational agents towards
fulfillment of pre-specified organizational goals and objectives.

Knowledge management is necessary for companies because what worked yesterday may
or may not work tomorrow because market needs are changing rapidly. The same holds
for assumptions about the optimal organization structure, the control and coordination
systems, the motivation and incentive schemes (Barth, S. 2000). To remain aligned with
the dynamically changing needs of the business environment, organizations need to
continuously assess their internal theories of business for ongoing effectiveness.

12
Knowledge management involves a strategic commitment to improving the
organization’s effectiveness, as well as to improving its opportunity enhancement. The
goal of knowledge management as a process is to improve the organization’s ability to
execute its core processes more efficiently (Davenport et al. 1998).
Davenport et al. (1998) describes four broad objectives of knowledge management
systems in practice:

♦ create knowledge repository

♦ improve knowledge assets

♦ enhance the knowledge environment

♦ manage knowledge as an asset

The key to knowledge management is capturing intellectual assets for the tangible
benefits for the organization. As such, imperatives of knowledge management are to:

♦ transform knowledge to add value to the processes and operations of the

business

♦ leverage knowledge strategic to business to accelerate growth and innovation

♦ Use knowledge to provide a competitive advantage for the business

(Frappaolo, 1998)

Knowledge management consists of four basic functions: externalization, internalization,

intermediation and cognition (Frappaolo, 1998):

Externalization is capturing knowledge in an external repository and organizing it

by some framework in an effort to discover similar knowledge. Technologies that
support externalization are imaging systems, databases, workflow technologies,
document management systems using clustering techniques, etc.

13
 Internalization is the process of identifying knowledge, usually explicit, relevant
to a particular user’s needs. It involves mapping a particular problem, situation, or
a point of interest against the body of knowledge already captured through
externalization.

Intermediation is similar to the brokering process for matching a knowledge

seeker with the best source of knowledge (usually tacit) by tracking the
experience and interest of individuals and groups of individuals. Some
technologies that facilitate these processes are groupware, intranets, and workflow
and document management systems.

Cognition applies the knowledge exchanged preceding three processes. This is

probably the knowledge management component that is most difficult to automate
because it relies on human cognition to recognize where and how knowledge can
be used.

One such conceptualization is proposed in the form of a sense-making

of knowledge management for new business environments. Application
of this framework will facilitate business model innovation necessary
for sustainable competitive advantage in the new business
environment characterized by dynamic, discontinuous and radical pace
of change (Yogesh M. 1998).

Sound planning, savvy marketing, high-quality products and services, attention to

customers, the efficient structuring of work, and the thoughtful management of an
organization's resources is not diminished in importance by the acknowledgement that
knowledge is critical to success and needs to be managed. However, when a business
faces competitors that perform well on those other dimensions, the difference between
success and failure may well turn on how effectively it manages its knowledge
(Davenport et al, 1998). Knowledge management success factors may be links to
economic performance or industry value; a technical and organizational infrastructure; a
standard, flexible knowledge structure; a knowledge-friendly culture; a clear purpose and

14
language; a change in motivational practices; multiple channels for knowledge transfer
and senior management support (Davenport et al., 1998).

2. 2. 1. Knowledge as a Strategic resource

What is it about knowledge that makes the advantage sustainable?
Knowledge, especially context-specific, tacit knowledge embedded in complex
organizational routines and developed from experience, tends to be unique and difficult
to imitate. And unlike many traditional resources, it is not easily purchased in the
marketplace in a ready-to-use form. To acquire similar knowledge, competitors have to
engage in similar experiences. However, acquiring knowledge through experience takes
time, and competitors are limited in how much they can accelerate their learning merely
through greater investment (W. Cohen, and D. Leventhal, 1990).

Knowledge-based competitive advantage is also sustainable because the more a firm

already knows, the more it can learn (W. Cohen, and D. Leventhal, 1990). Learning
opportunities for an organization that already has a knowledge advantage may be more
valuable than for competitors having similar learning opportunities but starting off
knowing less (D. K. Goldstein and M. H. Zack, 1989).
Sustainability may also come from an organization already knowing something that
uniquely complements newly acquired knowledge, providing opportunity for knowledge
synergy not available to its competitors. New knowledge is integrated with existing
knowledge to develop unique insights and create even more valuable knowledge.
Organizations should therefore seek areas of learning and experimentation that can
potentially add value to their existing knowledge via synergistic combination (W. Cohen,
and D. Leventhal, 1990).

Sustainability of a knowledge advantage, then, comes from knowing more about some
things than competitors, combined with the time constraints faced by competitors in
acquiring similar knowledge, regardless of how much they invest to catch up. These
represent what economists call increasing returns (Romer, op. cit.; D. J. Teece, 1998).
Unlike traditional physical goods that are consumed as they are used, providing

15
decreasing returns over time, knowledge provides increasing returns as it is used. The
more it is used, the more valuable it becomes, creating a self-reinforcing cycle. If an
organization can identify areas where its knowledge leads the competition, and if that
unique knowledge can be applied profitably in the marketplace, it can represent a
powerful and sustainable competitive advantage (Romer, op. cit.; D. J. Teece, 1998).

Long lead time explains the attraction of strategic alliances and other forms of external
ventures as potentially quicker means for gaining access to knowledge. It also explains
why the strategic threat from technological discontinuity tends to come from firms
outside of or peripheral to an industry (J. M. Utterback, 1994). New entrants often enjoy
a knowledge base different than that of incumbents, and which can be applied to the
products and services of the industry under attack. This has been especially evident in
industries where analog products are giving way to digital equivalents.

While having unique access to valuable resources is one way to create competitive
advantage, in some cases either this may not be possible, or competitors may imitate or
develop substitutes for those resources. Companies having superior knowledge, however,
are able to coordinate and combine their traditional resources and capabilities in new and
distinctive ways, providing more value for their customers than can their competitors
(Teece, G. Pisano and A. Shuen, 1997). That is, by having superior intellectual resources,
an organization can understand how to exploit and develop their traditional resources
better than competitors, even if some or all of those traditional resources are not unique.
Therefore, knowledge can be considered the most important strategic resource, and the
ability to acquire, integrate, store, share and apply it the most important capability for
building and sustaining competitive advantage (R. M. Grant, 1996). The broadest value
proposition, then, for engaging in knowledge management is that it can enhance the
organization’s fundamental ability to compete. Resources and capabilities can be thought
of as a platform from which the firm derives various products for various markets (R. M.
Grant, 1996). Leveraging these resources and capabilities across many markets and
products, rather than targeting specific products for specific markets, becomes the
strategic driver. While products and markets may come and go, resources and capabilities

16
are more enduring. Therefore, a resource-based strategy provides a more long-term view
than the traditional approach, and one more robust in uncertain and dynamic competitive
environments. Competitive advantage based on resources and capabilities therefore is
potentially more sustainable than that based solely on product and market positioning.

Systematically mapping, categorizing and benchmarking organizational knowledge not

only can help make knowledge more accessible throughout an organization, but by using
a knowledge map to prioritize and focus its learning experiences, an organization can
create greater leverage for its learning efforts. It can combine its learning experiences into
a "critical learning mass" around particular strategic areas of knowledge (R. M. Grant,
1996).

This long learning lead-time or "knowledge friction" highlights the importance of

benchmarking and evaluating the strengths, weaknesses, opportunities and threats of an
organization's current knowledge platform and position, as this knowledge provides the
primary opportunity (and constraint) from which to compete and grow over the near-to-
intermediate term. This must, in turn, be balanced against the organization's long term
plans for developing its knowledge platform (R. M. Grant, 1996).

2. 3. The interdependency between strategic management and strategic

knowledge management
The manner in which a business strategy was formulated some years back, no longer
applies. This to a great extent has been attributed to a shift in strategic importance of
information and knowledge. The shifting winds from change in today’s business
environment where the market place is increasingly competitive and the rate of
innovation is rising, which has made organizations realize that knowledge is their key
asset (Snyman R. & Kruger J., 2004).

Firm's critical resources may span firm boundaries and may be embedded in interfirm
resources and routines. Scholars in the strategy field are concerned fundamentally with

17
explaining differential firm performance (Rumelt, Schendel, & Teece, 1991). As strategy
scholars have searched for sources of competitive advantage, two prominent views have
emerged regarding the sources of supernormal returns. The first-the industry structure
view-associated with Porter (1980), suggests that supernormal returns are primarily a
function of a firm's membership in an industry with favorable structural characteristics
(e.g., relative bargaining power, barriers to entry, and so on). Consequently, many
researchers have focused on the industry as the relevant unit of analysis. The second
resource-based view of the firm-argues that differential firm performance is
fundamentally due to firm heterogeneity rather than industry structure (Barney, 1991;
Rumelt, 1984, 1991; Wernerfelt, 1984). Firms that are able to accumulate resources and
capabilities that are rare, valuable, non-substitutable, and difficult to imitate will achieve
a competitive advantage over competing firms (Barney, 1991; Dierickx & Cool, 1989;
Rumelt, 1984). Thus, extant resource-based view theory views the firm as the primary
unit of analysis (Singh, H., & Zollo, M. 1997). These two perspectives have contributed
greatly to the understanding of how firms achieve above-normal returns.

Proponents of the RBV have emphasized that competitive advantage results from those
resources and capabilities that are owned and controlled by a single firm. Consequently,
the search for competitive advantage has focused on those resources that are housed
within the firm. Competing firms purchase standardized inputs that cannot be sources of
advantage, because these inputs (factors) are either readily available to all competing
firms or the cost of acquiring them is approximately equal to the economic value they
create (Barney, 1986). However, a firm's critical resources may extend beyond firm
boundaries. Recent studies suggest that productivity gains in the value chain are possible
when trading partners are willing to make relation-specific investments and combine
resources in unique ways (Asanuma, 1989; Dyer, 1996a). This indicates that firms who
combine resources in unique ways may realize an advantage over competing firms who
are unable or unwilling to do so. Thus, idiosyncratic interfirm linkages may be a source
of competitive advantage. This analysis suggests that a firm's critical resources may span
firm boundaries and may be embedded in interfirm routines and processes.

18
Drucker (1993) rightly point out that the most valuable asset of the 21st century
organizations are its Knowledge and Knowledge workers. Within this context, the ability
of organizations to exploit their intangible asset has become far more decisive than their
ability to invest and manage their physical assets.
In order for organizations to be successful in exploiting their knowledge assets, an
appropriate fit between the organization mission and objectives and its knowledge
management should be found. This means that the goals and strategies of knowledge
management should be reflective of the organization (Kim et al, 2003).

Tiwana (2000) rightfully states that knowledge drives strategy and strategy drives
knowledge management. Tiwana (2000) goes even further and emphasizes that without a
clearly articulated link between knowledge management and business strategy the system
will deliver zilch. Furthermore, organizations need to ensure that their knowledge
strategy and knowledge program is consistent with the corporate ambitions, and that the
techniques, technologies, resources, roles, skills and culture are aligned with and support
the business objectives (Bater, 1999). When such alignment between the knowledge
management strategy and business strategy is clearly established, the system is moving in
a direction that that holds promise for long lasting competitive advantage.

In essence there is no generic model incorporating knowledge strategy formulation within

business strategy formulation process. Unfortunately, this leads to business managers still
considering knowledge management as being separate from business strategy formulation
leading to inability to align knowledge management goals with corporate goals.
This inability to formulate a generic model depicting knowledge management’s
relationship to the business strategy formulation processes can be attributed to: -

 The inability to recognize knowledge as a corporate resource

 The difference in opinion/viewpoints with regard to the business strategy
formulation process and
 The difference in opinion with regard to strategic knowledge management.
(Snyman R. & Kruger J., 2004).

19
2. 4. KM Competition Analysis -- Knowledge Management Strategic
Planning is the key to competitive advantage.

Strategy is making trade-offs in competing. The essence of strategy is choosing what not
to do. Without trade-offs, there would be no need for choice and thus no need for
strategy. Any good idea could and would be quickly imitated. Again, performance
would once again depend wholly on operational effectiveness. Competitive strategy
is about being different. It means deliberately choosing a different set of activities to
deliver a unique mix of value.
Three economic goals guide the strategic direction of most business organizations namely
survival through growth and profitability (Porter, 1980). In order to be able to survive,
grow and be profitable, any profit seeking organization must seek a competitive
advantage. Porter (1980) further explain that businesses strive to achieve a competitive
advantage by competing in one way or the other, namely by being a Low cost producer of
goods and services or by differentiation of a product or services.

For any organization, multiple and improving methods of operational cost are required to
be able to understand this issue. Sanchez, R., Heene, A. (1996) argued that managing
costs as a knowledge based resource is at the heart of every successful company and that
four related cost truisms apply universally to every business situation:
 The first one, over the long term, it is essential to be a lower cost supplier,
 The second one is to maintain a competitive position; the inflation-adjusted costs
of producing and supplying any product or service must continuously decrease,
 The third one, the true cost and profit of each product or service and every
customer segment must always be transparent,
 The last one, a company should focus on cash flow as much as on profit
generation.

Porter’s approach is that every market can be studied as a relation between itself, new
entrants, buyers, suppliers, competitors and that of substitutes (Porter, 1998). Porter’s

20
diamond model prompted the outline of the key processes highlighting the primary tasks
involved in a competitive advantage. Porter (1985) encouraged organizations to compete
on one specific basis rather than trying to be superior in all areas. Porter (1998) wrote: If
a business is to attain a competitive advantage, it must make a choice about the type of
competitive advantage it seeks to attain and the scope within which it will attain it. Being
'all things to all people' is a recipe for strategic mediocrity and below-average
performance; because it often means that a business has no competitive advantage at all."

The diagram below uses Porter's perspective to develop knowledge needs for KM-SP.
Porter suggested that organizations could seek competitive advantage through
differentiated products, services, or marketing programs, or they could compete by being
the low-cost producer. These observations are reflected in the knowledge supplied from
the analysis of KM-SP. He also suggested their scope of target markets could be defined
broadly or narrowly. Organizations could, therefore, adopt one of four competitive
strategies: cost leadership across a broad range of market segments, cost leadership
focusing on narrowly targeted market segments, differentiation of products or services
across a broad range of market segments, or differentiation focusing on narrowly targeted
market segments. Porter presents a way to think about the creation of value and how it is
divided among existing and potential industry participants. He highlights the fact that
competition is more than just rivalry with existing competitors and Knowledge
Management offers the best way to take advantage of identifying and analyzing for both
the development and implementation of strategy.

21
 Fig 1; Source: James A. (HBR, 1999)

To the extent that an organization uses Knowledge Management Strategic Planning to

apply analytically and intuitively derived knowledge toward the development of its
vision, mission, objectives, strategies, and resource allocation decisions, many of those
pitfalls will be avoided.

According to Porter (1998), a business has to understand the dynamics of its industries
and markets and manage its knowledge for new business environments in order to
compete effectively in the marketplace. This assumes that managers distinguish their
services and products from those of their competitors in the same industry by providing
distinctive levels of service, product or high quality such that the customer is prepared to
pay a premium price. A company can outperform rivals only if it can establish a
difference that it can preserve. It must deliver greater value to customers or create
comparable value at a lower cost, or do both.
Although the resulting operational improvements have often been dramatic, many
organizations have been frustrated by their inability to translate those gains into
sustainable profitability. Companies must be flexible to respond rapidly to competitive
and market changes. They must benchmark continuously to achieve best practice. They
must outsource aggressively to gain efficiencies. And they must nurture a few core
competencies in the race to stay ahead of rivals; (this is classified as being creative of the

22
organization from its environment for the purpose of its competitive advantage) (Snyman
R. & Kruger J., 2004).

2. 5. Critical analysis
However, many initiatives being undertaken to develop and exploit organizational
knowledge are not explicitly linked to or framed by the organization’s business strategy.
In fact, most knowledge management initiatives are viewed primarily as information
systems projects. While many managers intuitively believe that strategic advantage can
come from knowing more than competitors, they are unable to explicitly articulate the
link between knowledge and strategy (Kotzer, 2001).

Knowledge has been theorized as being elementary form of organization in the

knowledge management Literature. A reductionism view of knowledge explains that
knowledge is an extension from data and information. As opposed to this image of
knowledge in businesses it is what is inherent in practices and concepts employed and
invented to denote such practices (Kotzer, 2001). As a consequence, knowledge is always
indeterminate and fluid because it is immanent in a multiplicity of undertakings and
changing language games. In addition, data and information only represent a subset of
what is called knowledge. This procession and fluid view of knowledge represents an
epistemological break with reductionism views of knowledge and enables for new
perspective on how knowledge is managed as an intangible resource in organizations
strategies (Pedersen, M.K. & Larsen, M.H. 2001).

Knowledge is neither solely practice, nor concepts, but what emerges in-between the
seeing and the saying – the operation and its conceptual framework. As a consequence,
knowledge management theory has not been able to solve the inconsistencies between the
learning organization theory and strategic management theory. For instance knowledge
RBV of firm conceptualizes the notion of knowledge on the basis of a realist
epistemology postulating that knowledge is an entity per se that can be treated like some
tangible (Alvesson, 2001; Tsoukas, 1998). We can thus talk of knowledge in RVB as an
assemblage of practice/concept.

23
Knowledge management remains rather conceptually crude. In the mainstream
knowledge management literature, one can talk about a degree zero definition of
knowledge wherein knowledge is the intelligent use of information that in turn is based
on the elementary forms of knowledge, namely data (Alvesson, 2001).

Critics of knowledge management offer a more elaborated and subtle theoretical

framework for the analysis of knowledge as organizational resource. Tsoukas (1998)
write: knowledge management in strategy is primarily the dynamic process of turning an
unreflected practice into a reflective one by elucidating the rules guiding the activities of
the practice, by helping give a particular shape to collective understandings and by
facilitating the emergence of heuristic knowledge. Knowledge is here what is primarily
being used by organizations in the course of action.
Critics to Porter’s model, caution that formal strategic planning is inflexible and gives an
illusion of control that leads to futile attempts at determinism rather than more effective
approaches such as contingency planning. Such strategic planning typically yields
merely incremental adjustments, even during times of turbulence in the industry or
market, when fundamental changes in strategy would be more appropriate and effective
(Miller, 2000). While enjoying much popularity, in no small part because it was perhaps
the first attempt to apply solid economic thinking to strategic management in a practical
and understandable way, Porter's model has come under criticism (Marwick, A.D. 2001).
The main argument is that the model addresses the profitability of industries rather than
individual firms, and therefore does not help particular firms to identify (been creative)
and leverage unique and therefore sustainable advantages. Its underlying economic
theory assumes that the characteristics of particular firms, per se, do not matter with
regard to profit performance (K. R. Connor, 1991). Rather it is the overall pattern of
relationships among firms in the industry that makes the difference. If the industry as a
whole is structured properly (i.e., with sufficient barriers and other impediments to
competition), then all firms should realize excess returns.

24
Porter’s ideas became more and more subject of critique under the impression of the
developing Internet economy during the last decade. Critics point out that economic
conditions have changed fundamentally since that time. The rise of the various e-business
applications has strongly influenced nearly all industries (Downes L & Recklies D.,
2001). Porter’s theories were based on the economic situation in the eighties. This period
is characterized by strong competition, cyclical developments and relatively stable
market structures (James A., 1999).
Downes’ arguments are convincing. In fact, digitalization and deregulation have become
powerful forces during the last years, but Porter's models rarely take them into
consideration. Today’s markets are highly influenced by technological progress,
especially in information technology. Therefore, it is not advisable – if not to say
impossible – to develop a strategy solely on the basis of Porters models (Downes L &
Recklies D., 2001). For instance, the airline industry is considered as being highly
competitive with the use of various technology and internet economy, digitalization, and
deregulation for the offer of services to customers, low cost strategy etc. As Adeboye
(1996) calls dependence on cheap factors the low road to competitiveness, which
according to Porter is the most travelled road.
The industries structure is constantly being revolutionized by innovation that indicates
the model being of limited value since it represents no more than snapshots of a moving
picture (Downes L & Recklies D., 2001).

In the second half of the last century, the pace of new techniques quickened considerably:
we have seen different models for business strategy like; zero-based budgeting, strategic
information systems, downsizing, systems thinking, benchmarking etc and now
knowledge management in business strategy. These have sometimes been called
management fads and fashions, but it would be wrong to assume that, for that reason,
they all lacked effectiveness when applied in organizations. Some, however, have been
disastrous (Pedersen, M.K. & Larsen, M.H. 2001).

Jenkins (1997) reports Cameron, a researcher in organizational behaviour, as saying that,

downsizing is the most pervasive yet unsuccessful change effort in the business world.

25
Some techniques fail, or at least are dropped from the repertoire, because they are
Utopian in character: organizations are told that the technique must be applied throughout
the organization for the full benefits to be achieved. This was the case with business
process re-engineering (BPR), but businesses quickly realized that the costs of carrying
out BPR throughout the organization would be crippling and, because they attempted to
apply the technique to only part of the company, the results were less than satisfactory -
in fact, two thirds of BPR efforts are said to have failed (Hall, et al., 1994). Knowledge
management also shows signs of being offered as a Utopian ideal and the results are
likely to be similar (Nonaka, I. 1991).

A thoughtful paper argues that; knowledge is an ambiguous, unspecific and dynamic

phenomenon, intrinsically related to meaning, understanding and process, and therefore
difficult to manage and knowledge management is as likely, if not more so, to operate as
a practice of managing people or information than as a practice attuned towards
facilitating knowledge creation (Alvesson & Karreman, 2001).

26
3. Research Methodology

3.0. Introduction
This chapter is devoted to the research methodology, which is used for the piece of work.
The purpose of this part is, on one hand to, explained and discus why the author selected
the method used among other methods and its appropriate to comprehend and fulfil the
objective of this thesis. And on the other hand, define and determine the various methods
used to collect the information and data.

3.1. The Pivotal Aspect of the Research Question:

Building up an objective for research consists of the elaboration of a question or an issue
where the researcher will figure out and find out the reality. It is a matter of making a
question, linking, articulating or asking for theoretical, methodological or empirical
objects (Bryman, A and Burgess, R.G. 1994). Theoretical objects can be concepts (the
notion of collection representation, the change, the knowledge or collective knowledge,
cognitive schemes…), explaining or descriptive models of phenomena or theories.

In that case the research question: - How does organization harnesses its acquired
Knowledge with its Strategic Planning to apply analytically and intuitively derived
knowledge toward the development of its vision, mission, objectives, strategies, and
resource allocation decisions to avoid many of the pitfalls? These questions should enable
the reader to understand the relevance and the aim of the research.

The research will investigate what is happening in the UK airline industry by using a
range of techniques and skills that is available and will examine the application of
concepts or theories (which was deeply developed in the literature review), issued in the
field of the airline industry.

27
3.2. Methods and Sources Used
This research would adopt a qualitative research method, utilizing a semi-structured (with
complete determination of the topics to be covered) interview format to collect,
summarize, analyze and interpret information as provided by the participants' verbal
responses to open-ended questions.
Qualitative research describes the action within a few specific setting and invites rather
than tries to control the possibility of a rich array of variables (A. Holliday, 2002).
The research method is adopted because Qualitative techniques are a relatively objective
in-depth research instrument which is a process of investigation, systematic,
methodological and also increases knowledge (A. Holliday, 2002). The method
concentrates on words and observations to express reality and attempts to describe people
in natural situations unlike the quantitative method which grown out of strong
considerable trust in numbers that represent opinions or concepts (Coldwell, 1990). This
would allow the participants to raise various issues which the evaluator did not anticipate
and which might be critical to the investigation. The method would also allow the
participants to express their feelings and offer their perspectives in their own words, e.g.
participants will provide anecdotes that illustrate a particular point-of-view. These
anecdotes can be very powerful and persuasive when analyzing and reporting findings.
This is in direct contrast to quantitative methods in which respondents may answer only
the questions which are included on the survey and, when the questions are close-ended,
respondents must select an answer from a list of possible answers. In sum, the strength of
qualitative method is that it is best for exploratory and descriptive analyses which stress
the importance of context, setting, and subjects' frames of reference (Marshall &
Rossman, 1994).

Another key advantage to choosing qualitative data collection for the study is that
participants often are interviewed and observed in their natural settings; thus, they can
more conveniently participate, making them to be more accurately answer questions
about their settings, and the researcher gets a firsthand look at the settings as the
participants describe them.

28
While Marshall, C. and Rossman, G.B. (1989) criticized quantitative methods because
they often overlooked inductive analysis, Gutman, J. (1991) notes that the quantitative
researchers and theorists use negative results from individual studies to modify
hypotheses. More distinctive to analytic induction, on the other hand, is redefining what
is studied so that exceptions are excluded. This delimiting of the phenomenon also
delimits how widely a hypothesis can be applied. In the inductive rather than deductive
analysis of data collected, reasoning is involved, with analysis of experimentally isolated
instances with which definitions of terms would be considered hypotheses that are to be
tested allowing for modification of concepts and relationships between concepts that
might occur throughout the process of doing research, with the goal of most accurately
representing the reality of the situation (Gutman, J. 1991).

Qualitative research is characterized by the use of small samples but in Quantitative

methods it is attempted to use a sample that reflects the population adequately. This
implies that representatives of the results in accordance with the subject of investigation
not the research population, is what counts when investigating (Calder and Tybout,
1987). As required for the study, careful target group selection and classified sample is
needed to make sure all possible views and opinions of respondents may be expressed.
In this sense, the validity and quality of qualitative research is not determined by how
many respondents say something but by what is being said and how it is being said in the
search for an in-depth insight into the subjects; which would reflects the power of words
and images of the participants and offering respondents a creative setting that let them
express their ideas in a manner that appeals more directly to the imagination. (Coldwell,
1990).

The method facilitates data collection and data analysis simultaneously. Data gathering
methods seems more natural with the ability to look at change processes over time and
the ability to adjust to new issues and ideas as they emerge which contribute to theory
generation, than quantitative method which also provide a wide coverage of the range of
situation due to the population size but tends to be rather inflexible and artificial because
they focus on what is or what has been recently. This would make quantitative inflexible

29
for the researcher to infer what changes and actions should take place during the research,
thereby, makes quantitative method to be considered ineffective for the research in
understanding the significance that people attach to the actions which makes it more of
unhelpful in generating hypothesis.

Qualitative method offers an insight into questions that address the way people think
about a certain subject and why they think that, it does not answer questions like how
many people share a certain opinion (Gordon and Langmaid, 1988). This insight would
be gained in the study through a process consisting of analysis and meaningful
integration of views expressed by respondents. Hence, in-depth insight provided is
flexible, small-scale and exploratory and the results obtained are concrete, real-life like
and full of ideas (Spiggle, 1994).

Qualitative research is said to be naturalistic i.e, its goal is to understand behaviour in a

natural setting, understanding a phenomenon from the perspective of the research
participant and the meanings people give to their experience (William, M.K, 2002). The
research attempts to do this by using so-called naturalistic methods - interviewing,
ethnography, participant and observation. Each of this technique seeks to understand the
perspective of the research participant within the context of the study. This means that the
researcher is concerned with asking broad questions that allow the respondent to answer
in their own words. These techniques allow the researcher to try to qualify the
perticipants understanding during the research process through further probing questions.
In addition, a technique like observation during the interview will allow the researcher to
observe people within natural settings - particularly those involved in the field of study.

The study approach would also give the opportunity to locate the study within particular
settings which provide opportunities for exploring possible variables and set manageable
boundaries within the period of time allocated for the research with the conviction that
what is important to look for emerged (A. Holliday, 2002). Utilizing these would enable
the researcher to gain empathic understanding of social phenomena; facilitates
recognition of subjective aspects of human behavior and experiences, and to develop

30
insights into experiences that are meaningful, reasonable and normal to those concerned
(Bryman, A and Burgess, R.G. 1994).

According to Ritchie and Lewis, (2004), it is important to understand that there is no

single accepted way of doing qualitative research. Indeed, how researchers carry it out
depends upon a range of factors including; their belief about the nature of the social
world and what can be known about it (Ontology), experience in the field of research and
goal of the research. This imbibed the way the interview questions were designed and
invokes direct investigations which involve direct contact; an explanation of what people
mean by and understand by or what sort of social values underlies the meanings and
attitudes.

Basically, two major types of data sources would be used to build up the thesis:
Primary data: The overall argumentation was carried out thanks to the primary data.
Primary data that would be collected by the author via namely information held by the
company and the face to face interviews conducted. The core subject and the answers to
the central issue could be found with difficulty elsewhere than in precise and detailed
interview to be conducted. Since the structure and the general issues of the dissertation
seemed to be via qualitative research method, it is therefore evident that the primary data
would be used with generosity and fundamentally while elaborating the piece of work.
Ten interviews are expected to be carried out between February and March 2006 and are
expected bring general ideas and opinions on the subject matter. The interviewees come
from the airline industry sector.

3.2.1. Aspects of Qualitative Research Interviews

Face to face interviews technique of the qualitative with a General interview guide
approach would be completed by the interviewer, worked directly with the respondent
based on their responses. Unlike with surveys in quantitative method which have the
disadvantage of requiring considerable time in organizing, conducting, and transcribing
the interviews, as well as analyzing the data (Warren, M. and Cragg, A. 1991); With this,
the interviewer would have the opportunity to probe or ask follow up questions which

31
seeks to describe and reflect the meanings of central themes in the subjects of study. The
main task of the interview technique is to understand the meaning of what the
interviewees say, as qualitative research interview seeks to cover both factual and a
meaning level, though it is usually more difficult to interview on a meaning level.
(Warren, M., 1991). Interview technique also aims at getting the insight into a
participant’s experiences which would allow the interviewer to pursue in-depth
information around the topic.
General interview guide approach is intended to ensure that the same general areas of
information are collected from each interviewee in order to remain as open and adaptable
as possible to the interviewee’s nature and priorities; during the interview the interviewer
“goes with the flow”; this provides more focus than the conversational interview
approach, and allows a degree of freedom and adaptability in getting the information
from the interviewee. The same open-ended questions are asked to all interviewees as it
would facilitate faster interviews that can be more easily analyzed and compared.
The researcher would have adopted Telephone Interview technique because it enables
researcher to gather information rapidly but some people often dislike the intrusion of a
call and Telephone interviews need to be relatively short and people feel imposed upon
(Berlamino, C. 1992).

Observations of users, in a range of situations are useful in constructing a user

perspective (Berlamino, C. 1992). Observation would be obtrusive (i.e., the user knows
that he/she is being observed) (Ball, M.S. and Smith, 1992). Information gathered through
observations during the interviews would be used to describe participant' activities in
terms of what they know, how they acquire it, how long they spend doing it, and
problems they encounter.

Secondary data: Meticulous research and the sorting out of the literature (books,
articles, reports and surveys conducted by other people) would be made in order to fit as
closely as possible to the research question. A difference must be noticed while
approaching the review of literature and the rest of the argumentation, namely the last
part of the thesis. The literature review aims to provide the theoretical bedrock of the

32
thesis, which is used to develop an insight into the aim of the research. Then, the accent
will be put on the account of the methods required to gather the data in the dissertation.

The purpose of the literature review is to put the subject matter into its context and to
look through the topic in a theoretical way. Basically, the secondary data can be broken
down into four categories:
The specialized magazines and articles (Journal of Knowledge Management, Harvard
Business Review…),
The books with topics referring to either low-cost/traditional carriers or theories on
strategies and economic issues
The Internet (daily news …),
The annual reports and information held by the companies

3.3. Procedure

The research would be carried out in a low cost airline organization (Liverpool branch) in
the U.K. According to Holliday A (2002) Sampling is a technique, which enables the
investigator to draw conclusions about all holders of a particular job by studying the
performance of a selected group or sample. The target group for this study is the
employees of the Liverpool branch of the selected airline industry. This sample is used as
a result of easy accessibility to the organization with a target group from various
departments of the branch. This is as a result of the identical nature of effective structure
of the organization as a whole. The convenience sampling technique would be chosen for
the selection of participants. The convenience samples, indicates the individuals, who are
readily available to participate in the course of study (Saunders et al., 2005). According
to Galloway (2000) the convenience sampling method has a high tendency of bias and to
reduce the incidence of bias, a target group of 15 personnel would be chosen as a result of
uniformity of operation in all the branches of the airline.

33
The interview questions would be developed by the author and administered to the target
group of the airline company. The questions would be designed in an easy to read booklet
format which contains questions covering mainly the study areas.
A pre-test administration of the interview would be conducted so that respondents are
highly encouraged to ask questions about the purpose of the research and to make sure
that the meanings of the questions included in the interview questions were absolutely
clear, thus, they can more conveniently participate, making them to be more accurately
answer questions about their settings, and the researcher gets a firsthand look at the
settings as the participants describe them and to assert that very few doubts are reported
during the interview.

The interview question would be accompanied by a covering letter, introducing the

interviewer for access to the organization, also indicating the purpose of the interview
and its benefit to the organization.
To discuss in more detail some concerns regarding the sample of firms. Fifteen key
officers of the branch office in Liverpool are to be interviewed. It could be argued that
not all staffs will take part in the interview. On the other hand, it could not be said that
some staffs will not participate in this study because they do not fully understand these
concepts but due to restructuring, time pressure or business policy of the organization. In
this case, external validity and internal validity conditions would be met, so that the
selected sample is useful to analyze knowledge management and the resource based view
of the firm for their competitive advantage in the dynamic market in the UK airline
industry.
External validity condition demands that the sample must be representative of the
population. Internal validity condition demands appropriate sources of information
(Bryman, A and Burgess, R.G. 1994). None of the respondents would be coerced to
participate in the research for the proper approval for the respondents. The airline
company would be assured of confidentiality and the data gathered from the interview
will be confidential, also the identity of the participants will be protected as it is required
by the airline company. This indicates that interviews will be conducted anonymously
with no name of any staff nor the organization mentioned.

34
Less structured interview would be conducted with selected personnel in the company to
produce quantifiable insights into the strategic forces of the organization. Complex terms,
ambiguous questions and double negative questions were avoided in the design of the
questions (Saunders, 2005).

Studies and Conclusions would be made about the competitive advantage of the low cost
airline and its leadership strategies in the U.K which is based on strong correlation
between economics, social and cultural and technological contexts. Undoubtedly links
between the Resource- based view of the firm for the knowledge management and
Organizational competencies are concepts that attract great levels of attention both from
academics and practitioners. In this sense respondents are expected to show great interest
in the interview of this empirical research.

The case Study Analysis/approach involves selection of a typical case (No-frills airline in
this case) within the study area and using the above named suitable methods and
techniques to make a comprehensive analysis of the competitive advantage situation in
question. These would also allow for in-depth interviews to be undertaken. This helps to
gain more insight into structure and process, formulate suitable hypotheses, in order to
develop suitable research designs and it provide more detail, explanation and beefing up
of the qualitative findings, and help ascertain feasibility of planned studies. These are
usually undertaken where analysts/researchers have previously studied the situation: for
alertness and sensitivity to inconsistencies; for notes on omissions and problems for
clarification (A. Holliday, 2002). They facilitate collection of in-depth data not otherwise
known; advancing deeply into personality structure of target groups (through interviewer
guided and discussion based approach) (Bryman, A and Burgess, R.G. 1994). Participant
Observation would be noted through attempted close attachment to study areas, either as
complete participant: wholly concealed identity, interacting with them as naturally as
possible; and conscious systematic sharing of activities and interests, with trust, freedom,
openness, ensuring rapport, meaning and learning language and symbols.

The research begins with an overview of business strategy and its current focus on
organizational resources and capabilities. It links the resource-based view of strategy to a

35
knowledge-based view where knowledge is considered the most important strategic
resource. This is aimed at a thorough understanding of the forces that impact on an
organization, particularly those that can be harnessed to provide competitive advantage.
The research method also takes the key measurements into consideration: -
 The projective techniques would accomplish the research method in order to
enhance the productivity of the qualitative approach. The projective technique is
used in qualitative method to facilitate a deeper exploration of the respondent’s
attitudes towards the concept (Alan Wilson, 2003). This allow the respondent to
express their knowledge into the particular concept, as such would gather rich,
and quality data.
Hence, the data analysis provides the core of the thesis and then the answer to the
interview questions by adopting the inductive analysis approach. Consequently the main
issue will be developed and then presented in the findings.
Finally, the last major part deals with the presentation of data and analysis, as well as
some implications of the research findings or recommendations.

3.5. Criticism and Limitations of the Methods:

Among the most cited criticisms of qualitative research are the presumed lack of
reliability and validity of its findings (Kirk & Miller, 1986), criteria which are generally
regarded as the cornerstone of any research. In regard to this research, critics question the
ability of qualitative research to replicate observations (reliability) or to obtain correct
answers or correct impressions of the phenomenon under study (validity). Indeed, as a
result of the relative freedom and lack of structure and flexibility characteristic of
qualitative research methods it is easy to question validity and reliability in their
traditional sense (Kirk and Miller, 1986; warren, 1991; Warren and Cragg, 1991).
Other criticisms concern the reactive effects of the observer's or the interviewer's
presence on the situation being studied and selective perception or bias on the part of the
researcher (warren, 1991).

36
Also of concern has been the researcher's inability to observe all factors that might
influence the situation under study. Due to the subjective nature of data collection,
interpretation, and analysis in the research, there appear to be more ethical dilemmas and
concerns with confidentiality associated with this method than with quantitative research.
This thesis is actually characterized by the inexistence of all the employees within the
branch for multiple interviews. In this context, documentary researches together with five
interviews conducted have been carried out to build up this thesis. However it is perhaps
the major drawback of the thesis. There is too much literature on it, the most difficult
thing is to sort it out and keep up the most representative and coherent sources. Of course,
it requires considerable expertise to select the appropriate research design in relation to a
specific research question and the analysis and interpretation of the results requires
research experience (Berlamino, 1992; Marshall and Rossman, 1989). Such a subject
tends to be more descriptive by its approach than analytical and in that case, interview
questions did not rely on the predefined questions for many reasons:

It is really difficult nowadays to predict what will go on the next months or next years
concerning low-cost airlines and their future development, and what is valid today
(alliances between firms, creation or bankruptcy of airlines, eventual monopoly…) will
not be automatically valid tomorrow, considering the fact that the air industry is an
unstable sector and is coming through a period of mutation.
The researcher would have liked to meet a person in charge of the development of the
No-frills airline, one of the major low-cost airlines in Europe. Unfortunately, the offices
of these airlines are located abroad and it is really difficult to contact these people.

Considering the research duration; it is observed that there is a limited time available to
carry out the research. This limits my research to only the Liverpool branch of the low
cost airline and its competitive advantage in the UK.

37
4. DATA PRESENTATION AND ANALYSIS

4.0. Introduction
This section presents the analysis and the results from the field of study at Guide with
respect to the forces that drives the competitive environment. The results are structured
using categories generated from the analysis of the observed data.

4.1. Analysis of U.K. Airline Industry: Competitive Fringe

Liberalization of the airline industry was justified on the grounds that competition
encourages the efficient provision of airline services, with carriers offering good-quality
services at the lowest possible cost and price. It was with this objective in mind that the
U.K. had two objectives for the U.K airline industry: deregulating and liberalizing
national markets.

Moreover, a more liberal approach to fares has been established, with the removal of all
restrictions on low fares. These pieces of legislation have together facilitated the
proliferation of low-cost carriers, thus ensuring greater competition within the industry
and cheaper flights for the consumer.

The right of landing slots at international airports is also an established principle within
the European Union. This therefore consolidates full exercise of the freedom of the air.
The British Department of Transport argued that European Union liberalization measures
have promoted and increased competition and served to open up an assortment of new
opportunities for European Union airlines. As for the British Civil Aviation Authority,
the legislations have contributed significantly to the increased levels of competition in
Europe. The dominance of and the emergence of low-cost carriers proposing a low fare
alternative has transformed the U.K sky; price competition is growing, and competition
on international routes is increasing.

38
The concept of state aid is much wider than the notion of “subsidy”. It is a more inclusive
term and can involve tax concessions, state guarantees and state participation in industry,
as well as simple financial assistance.
As gathered during the interview, its objectives are usually driven more by social
concerns than by market forces. For instance, state aid can involve money to improve the
social redundancies resulting from corporate or industry restructuring.
State aid can also be employed in cases of perceived market failure. This is particularly
relevant to air transport, as airlines perform functions analogous to utility companies.
Some carriers receive government subsidies to provide services for remote regions of
their countries where passenger numbers are low but where the government is obliged to
ensure a transport link. The logic behind this form of subsidy is often flawed as regional
carriers can frequently provide a service to such regions without public support. In
general, as with most subsidies, state aid tends to distort the market. The air industry is a
very good example of this issue.
The study revealed that several airlines were benefiting from state intervention, often
direct operating aids or aids aimed at improving the airline’s financial structure. Within
this study, this has the added benefit of enabling these companies to compete in what has
become an increasingly global business.
In response to these findings, it allows the development of the activities of the low cost
carriers, which respond to the consumers’ evident expectations while ensuring fair
competition conditions for all airline companies.
All carriers must know the offered possibilities and only real competition guarantees the
consumers’ rights. The decision favours regional development and lead to an increased
development of the low-cost companies
Its conclusions, released in the interview, that the No frill airline were driven by
principles of competition, rather than the notion of national prestige.

39
4.2. Analysis of the Porter’s model
4.2.0. Introduction
The issue that arose from the application of the Porter diamond theory to the strategy of
the No frill Airline in this research is the appropriateness of the model for identifying
sources of competitive advantage and its dependent to resource-based view of the firm. In
order to evaluate the situation (an external diagnosis) the model considers the different
market actors and the pressures that they put on the sector. The model explains a process
for the need of managing knowledge in order to achieve a quantum change in business
strategy and identifying sources of industry competitive advantage in the market against
sources of their operations, as firms recognizes the need for different strategic approaches
in the markets they operate. No attempt was made to test the Porter’s model. Instead, the
theory is accepted as representing a desirable benchmark condition and the structure and
the performance of the Low Cost Budget Airline was evaluated in terms of this pre-
determined prescription.
The model specifies that the controllable variables that determine the competitiveness of
the firms of an industry are allocated in the market environment. The customer
requirements and competitive pressures faced by firms are held to be the principal reason
for offshore success, through continuous innovation of factors and synergistic linkages
with related industries. The role of the Government in the Porter’s model acts as a
catalyst and challenger, it encourages or even pushes the airline industry to raise their
aspirations and move to higher levels of competitive performance
Similar stimulation and learning processes achieved by the firm (the No frill airline) from
their environment and through their activities are considered to be sources of competitive
advantage.

4.2.1. Entry Barriers:

A threat of new entrants into an industry depends largely on barriers to entry. Porter
(1998) identifies six major barriers to entry:

40
 • Economies of scale, or decline in unit costs of the product, which force the entrant
to enter on a large scale and risk a strong reaction from firms already in the
industry, or accepting a disadvantage of costs if entering on a small scale.
• Product differentiation, or brand identification and customer loyalty.
• Capital requirements for entry; the investment of large capital, after all, presents a
significant risk.
• Switching costs, or the cost the buyer has to absorb to switch from one supplier to
another.
• Access to distribution channels in which new entrants have to establish their
distribution in a market with established distribution channels to secure a space
for their product.
• Cost disadvantages independent of scale, whereby established companies already
have product technology, access to raw materials, favorable sites, advantages in
the form of government subsidies, and experience.

New entrants can also expect a barrier in the form of government policy through
regulations and licensing. New firms can expect retaliation from existing companies and
also face changing barriers related to technology, strategic planning within the industry,
and manpower and expertise problems. The entry deterring price or the existence of a
prevailing price structure presents an additional challenge to a firm entering an
established industry. The model is already taking shape. It is actually simple to subscribe
to it. Therefore the low-cost airline gets nearer the start-up development model.

4.2.2. The products of substitution:

Substitute products are the natural result of industry competition, but they place a limit on
profitability within the industry. A substitute product involves the search for a product
that can do the same function as the product the industry already produces (Porter 1998).
It performs the same functions for really good value for money. The air industry saw the
arrival of the low-cost airline and other means of transports: car, boat, etc. The cost
change of the means of transport is really worth diverting customers which does really
develop customer loyalty. The customers think in terms of arriving at a place with a high
propensity to change.

41
4.2.3. Competitive Intensity:
Rivalries naturally develop between companies competing in the same market.
Competitors use means such as advertising, introducing new products, more attractive
customer service and warranties, and price competition to enhance their standing and
market share in a specific industry. To Porter (1998), the intensity of this rivalry is the
result of factors like equally balanced companies, slow growth within an industry, high
fixed costs, lack of product differentiation, overcapacity and price-cutting, diverse
competitors, high-stakes investment, and the high risk of industry exit. There are also
market entry barriers. For instance, the air landscape has become more complex with the
uninterrupted entry of new entrants: Tour operators are launching as well into low-cost
companies by using a large customer network. The industry is dominated by dynamic
conditions and it is direct competition that impels firms to work for increases in
productivity and innovations.

4.2.4. Bargaining Power of Suppliers:

Suppliers have a great deal of influence over an industry as they affect price increases
and product quality. A supplier group exerts even more power over an industry if it is
dominated by a few companies, there are no substitute products, the industry is not an
important consumer for the suppliers, their product is essential to the industry, the
supplier differs costs, and forward integration potential of the supplier group exists.
These factors are generally out of the control of the industry or company but strategy can
alter the power of suppliers. It must be underlined that the transfer cost of suppliers is
high which involves certain dependence for the firms. The airplanes influence the flight
quality; these are in-dissociable products and there are no replacement products.

4.2.5. Bargaining Power of Customers:

The buyer's power is significant in that buyers can force prices down, demand higher
quality products or services, and, in essence, play competitors against one another, all
resulting in potential loss of industry profits. Buyers exercise more power when they are
large-volume buyers, the product is a significant aspect of the buyer's costs or purchases,
the products are standard within an industry, there are few changing or switching costs,

42
the buyers earn low profits, potential for backward integration of the buyer group exists,
the product is not essential to the buyer's product, and the buyer has full disclosure about
supply, demand, prices, and costs. The bargaining position of buyers changes with time
and industry's competitive strategy. For instance, the Internet, Leisure: the customers
have complete information; there is a freedom of the access to information. They can
therefore compare prices and boycott certain airline companies. However, the customers
can find replacement products. The low-cost phenomenon is reflected in the creation of
new customers (member’s concept) with attractive prices.

4.3. Understanding the Strengths of the airline company

After the market were deregulated, grabbing excess capacity caused by aggressive
expansion and depressed demand when aircraft and staff became available at bargain
prices, by slashing fares and paying staff above industry wages. The low cost systems,
combined with high customer satisfaction, have produced exceptional profit margins and
growth.
While a manager was responding to the area of what they considered to be the strength of
the low-cost airline, it is nowadays primordial to understand what drives the success of
low-cost competitors. He expressed that in the airline industry the company enjoys
specific cost advantages
 Lower input costs (e.g. cheaper labour, higher productivity, use of outsourcing),
 Cheaper product design (such as elimination of first-class seats, seat assignments
and food),
 Cheaper process design (e.g. simplified and quicker boarding, disembarking and
aircraft turn-rounds, improved utilization of airport, equipment and personnel).
 Embarking on expansion programs,
 Introducing more efficient planes,
 Undertaking acquisitions to rationalize excessive costs 27
On the revenue side, they have:

43
  Built up large hub-and-spoke networks, creating economies of scale to dominate
certain regions,
 Introduced frequent-flyer programmes to reward loyal customers,
 Developed yield management systems to match the fares of low-costs rivals on
some seats without diminishing total revenue.
All aimed at a target customer segment that value a reduced-price service.

Low-cost competition is not necessarily a threat in itself: it is only about an assessment of

the extent of the challenge by evaluating both the sustainability of their success and the
room for expansion in the existing market. Based on the cost advantages in the short-
haul, high-traffic markets, the low-cost carrier is cautious about operating lower-traffic
routes, where utilization advantages may be difficult to exploit.

4.4. Case Study Analysis

4.4.1 Statistical analysis of some of the interview questions
This section is designed to set out the explanatory analysis of the data gathered from the
research. The sample group consists of employees involving some personnel working in
Liverpool branch office of the airline company. The respondents fall in the position
bracket given in the table below and responded to the questions as structured in the table
below.

4.4.1.1. TABLE of analysis

POSITION NUMBER OF
RESPONDENTS
Managers 4
Senior personnel 4
Junior staff 2
TOTAL 10

44
The table above shows the position bracket of the ten respondents, which is about those
involved in the activities of the airline company
4.4.1.2. Interview Questions evaluation
Do you think it requires Yes: - 10 No: - 0
acquiring knowledge from the
environments or learning from
events for the firm to succeed
among its rivals?

Do you think that the

competitive fringe of the
environment/industry facilitates Yes: - 10 No: - 0
efficient provisional of services
that drives the competition?

Do you think disseminating Yes: - 10 No: - 0

acquired knowledge facilitates
the organization success?

Can one relate the Yes: - 10 No: - 0

success/pitfalls of the company
to the market operations?

Does the tailored strategy of the

Yes: - 10 No: - 0
organization really integrate
with the cooperate culture?

Do you see the mode of

Yes: - 7 No: - 3
operation as a low-cost carrier
to customers as a treat to the
market?

Can one relate the advantage of

Yes: - 10 No: - 0

45
the low production cost of the
airline to experience effects
which enable economies of
scale?

Do you find the mode of

operation of the organization as Yes: - 7 No: - 3
a treat to employee career?

Does the mode of

communication system between
the company and the customers Yes: - 10 No: - 0
contribute to the success of
operation in the market?

4.4.1.3. Analysis of the Table

The question evaluation table reveals the statistical responses from the respondents
interviewed. These findings reflect the effectiveness of knowledge acquisition of the
airline company towards its mode of operation in the market. There are positive insights
about acquiring knowledge and learning from the nature of the environment.

Eight of the respondents relate the advantage of the low production cost of the airline to
experience effects which enable economies of scale. While acknowledging the words of
an interviewee, to maintain its position in the face of this competition, the pricing
response of the low-cost company proposes prices only in accordance with the stock
while making some changes on the pricing scales (within the framework of their “Size

46
and Shape” plan) and continue proposing prices that match their customer segmentation
according to:
Behavioural criteria involving conditions of pricing application (sale in advance,
different prices for one-way or return tickets, overnight on Saturday or Sunday on the
spot,
Stock criteria,
Customer typology (young, couple, families, senior citizens).
The implementation of introductory low prices
A modification of the pricing structure aiming to simplify some principles of
segmentation (the prices resulting from this segmentation)
These there by made eight of the respondents to go agree with the context, but two
disagreed that it does not applied to them in one way or the other.
Three economic goals guide the strategic direction of most business organizations,
namely survival through growth and profitability” (Porter, 1980). In order to be able to
survive, grow and be profitable, any profit seeking organization must seek a competitive
advantage. Porter (1980) further explain that businesses strive to achieve a competitive
advantage by competing in one way or the other, namely by being a Low cost producer of
goods and services or by differentiation of a product or services. For any organization,
multiple and improving methods of operational cost are required to be able to understand
this issue. Gupta and Govindarajan, V. (2001) also argued that managing costs as a
knowledge based resource is at the heart of every successful company and that four
related cost truisms apply universally to every business situation:
 The first one, over the long term, it is essential to be a lower cost supplier,
 The second one is to maintain a competitive position; the inflation-adjusted costs
of producing and supplying any product or service must continuously decrease,
 The third one, the true cost and profit of each product or service and every
customer segment must always be transparent,
 The last one, a company should focus on cash flow as much as on profit
generation.
Critics to Porter analysis, caution that formal strategic planning is inflexible and gives an
illusion of control that leads to futile attempts at determinism rather than more effective

47
approaches such as contingency planning. Such strategic planning typically yields
merely incremental adjustments, even during times of turbulence in the industry or
market, when fundamental changes in strategy would be more appropriate and effective
(Miller, 2000).

All the interviewee rated the communication systems of organization to be good stressing
the importance of the use of internet for ticket purchasing and other activities such as fast
access to reaching the customers. According to Alvesson M. (2001), technology plays a
key role in the trend towards knowledge strategic planning. Today, information
technologies support knowledge management and broad sharing of information and are
good examples of effective knowledge management tools. The bargaining position of
buyers changes with time and industry's competitive strategy. Acknowledging an
interviewee (The branch Business analyst), for instance, the Internet, Leisure: the
customers have complete information; there is a freedom of the access to information.
They can therefore compare prices and boycott certain airline companies. However, the
customers can find replacement products. The low-cost phenomenon is reflected in the
creation of new customers (member’s concept) with attractive prices. However, it is
essential for a company to maintain its commercial specificity and, in particular, its
ability to identify and to target a business customer and then keep a coherent model,
which valorizes its offer:
The density of the network (frequency, transfers, time slots),
The fluidity of the processing (the dedicated products (lounge for instance),
The management of the customer relationships (loyalty program, etc…),
The multiplicity of channels of distribution

While responding to the effects of the environment forces on the mode of operation of the
company, all the interviewee agreed with the context, stressing that in order to maintain a
sustainable competitive advantage in a market where services offered by the various
actors are basically similar, the low cost airline chose to lead a cost dominating strategy
facing the necessity of bringing down the gap of the costs with the characteristics of their
models

48
Cost of catering,
Gain of airplanes fuselage to shorten the turn-round,
Optimization of the density of the airplanes and the flight crew,
Drop of the costs on the ground,
Drop of the structural costs,
The allocation of resources is considered to ensure or to restore the profitability. Quoting
an interviewee, "Today's Airbus order underpins our future growth and we expect to
increase capacity in 2007 by 15%," "We remain focused on improving execution and
delivery of results by revenue enhancement, network development and cost reduction.
For instance, specific alliances concerning subcontracts are carried out to “fuel” the hubs
with external help in order to maintain the necessary density which is susceptible to offer
the global service expected by the customer. If all options are exercised, the order would
more than double the carrier's current fleet of 122 aircraft. As argued by Clarke, (1998),
it is important to identify external knowledge sources to help determine and understand
current and future customers, suppliers and markets. The source of intellectual capital
may not reside within the organization but can be leveraged elsewhere. These step is for
the organization to model its efforts on those of a conceptually company. This finding
strongly attributes the fact that it requires acquiring knowledge from the environments or
learning from events for the firm to succeed among its rivals and facilitates efficient
provisional of services that drives the competition. This is also analyzed to have a strong
contribution to the fact that the environment forces really have effects on the mode of
operation.

While responding to dissemination of acquired knowledge across the company, the

interviewee strongly agreed with the motion of the argument, expressing that the
company relies on their staff in order to grow. An Innovating Human Resource Policy on
staff motivation has revealed itself as a pivotal factor of success. The company model
seems to be more constraining in terms of working time and required flexibility. Barth
(2000) explains that; knowledge management enables the communication of knowledge
from one person to another so that it can be used by the other person and the domains in

49
which knowledge concepts are leveraged in organization through knowledge initiatives
like:
♦ sharing knowledge and best practices
♦ Encouraging responsibility for sharing knowledge
♦ Capturing and reusing best practices
♦ Embedding knowledge in products, services and processes
♦ producing knowledge as a product
♦ driving knowledge generation for innovation
♦ mapping networks of experts
♦ building and mining customer knowledge bases
♦ understanding and measuring the value of knowledge
♦ Leveraging intellectual assets.
The organization of the work is founded on the versatility of the staff. Each stockholder
has multiple tasks to do and various responsibilities as a real Chief Executive Officer.
They have to manage the costs, the people, adapt and react quickly to the market
environment which in turn requires distributing their acquired knowledge across. But in
responding to the treat of the mode of operation to staff career, three of the interviewee
believes there’s a treat to employee career while working towards the marketing target of
the company. The remuneration system is composed of an important variable part
indexed on the quality of the service and the gross trading profit. For instance, the
remuneration of each employee includes a variable part. This bonus represents
approximately 10% of a pilot’s income and 35% of a flight attendant’s income. This
system incites people to work more and seems to reduce absenteeism but in a situation
where an employee doesn’t make the company target, they believe that such employee is
at stake with the job at the end of the day.

Data gathered from the integration between the company tailored strategy and cooperate
culture depicts the coalition between the argument. The interviewee expressed that the
resources base-view of the firm requires a good fit between the organization’s culture and
its knowledge management initiatives which aligns its approach with its existing culture.

50
Alvesson (2001) argues that special attention should be given to contextual dimensions of
organization that is:

• Building a strong culture to adopt and support the acquired resources

• Defining effective strategies for using all knowledge resources efficiently
• Using information technologies for developing knowledge management systems

This depicts that the organization Knowledge infrastructure is built on these dimensions.
The organization’s knowledge management strategy cannot be successful unless the
organization has developed a trusting knowledge culture that emphasizes the role and
value of knowledge in day-to-day business decisions and enterprises. An interviewee
stated: the airline company rapid gate turnaround, allows frequent departures and greater
use of aircraft, which is essential to its high-convenience, low-cost positioning. But how
do they achieve it? Part of the answer lies in the company's well-paid gate and ground
crews, whose productivity in turnarounds is enhanced by flexible union rules.

4.4.2 Developing a Tailored Strategy: how the airline company

harnesses its knowledge to a tailored strategy
After having strengthened their overall position, how they harness their knowledge to a
tailored strategy is the next challenge so as to develop basic strategies tailored to market
conditions. Acknowledging the statement of the interviewee, the choice depends on their
own capabilities, the importance, forces and the characteristics of the market and the
focus of the threat. The branch manager stated that the tailored strategies involve:
• Head-on competition which involves matching prices and using aggressive
marketing tactics, taking into account the impact on the remaining operations the
availability of other profitable opportunities and the risk of strengthening products
and also being aware that large-scale withdrawal may reduce customer loyalty.
These serves as prevention to competitors from establishing a foothold in the
market, limit the growth and encourage it to avoid future competition. The key
here is restructuring the cost base.

51
 • In a coexistence strategy, the traditional players cede parts of its market to the
low-cost competitors; while avoiding losses associated with intense competition.
This option is attractive where a large premium segment exists, although the risk
is that the low-cost operator will begin chasing a larger share of the market.
Joining forces involves the competitors withdrawing from its uncompetitive
routes and entering into a marketing/service agreement with its low-cost
competitor; whereby the former operates the connecting and premium routes and
the latter serves the low-fare/leisure markets.
This option brings attractive benefits to both sides, although the risk is again that one
may grow at the expense of other operators. This may keep new competitors out of
the market by reducing fares while cutting costs enough to maintain profits and Key
resources can be cornered.

4.5. The Different Strategies Led by the Low-Cost Airline

4.5.1. The Strategies Related to Product:
To gain a position of leader, the low cost airline has:
• Production costs lower than the other actors of the market due to experience
effects which enable economies of scale,
• Better known and a stronger image,
• Powerful communication which uses an existing mark,
• A certain ability to influence the policy of the market and behaviour of the
competitors
As argued by Zack (1999), to conquer a dominant position on a market and preserve it,
the leader must:
• Dispose of penetration anteriority on the market,
• Have been the first to adopt the considered product, a penetration strategy rather
than a skimming one,
• Possess financial, technological or commercial resources superior to those of the
competitors

52
These characteristics help the low cost airline to establish its position as a leader on the
market.

4.5.2. The Competitive Strategies:

In a market where services offered by the various actors are basically similar, the low
cost airline chose to lead a cost dominating strategy. According to Roberts (1998), the
knowledge-based view of the firm postulates that knowledge is the only resource that
provides sustainable competitive advantage, and therefore, the firm’s attention and
decision making should focus primarily on knowledge and the competitive capabilities
derived from it (Leonard-Barton, 1995; Shariq, 1997). So knowledge management
should be actively incorporated into the organizational knowledge strategy. This strategy
position can be resumed to a primordial goal: the minimization of its costs. To keep up
this competitive advantage, the firm controls direct costs of conception, marketing and
distribution, as well as bureaucratic or financial costs. Those economies of cost have the
reform repercussions on prices as stated by an interviewee. Besides, it is gathered that
this strategy allows the company, without increasing its margins, to propose competitive
prices.

4.5.3. Taxes and Insurance:

Concerning the insurance and the taxes of flying, the low-cost company are not allowed
to make savings. However, landing into secondary airports enables them to pay much
lower airport taxes than on big hubs. As revealed by an interviewee, the cost per seat of
the company is as a result relatively diminished and using new technologies of
communication also diminishes many functioning costs: the Internet. Actually, the sale of
the flight tickets is done on line: direct selling. This shows that there is no commission to
intermediaries any longer, such as travel agencies.
Moreover the low-cost company saves by respecting two rules:
1. More seats in every airplane: the reduction of space between the rows, and the
suppression of first and business classes allow the low-cost companies to increase the
capacity of their aircraft (120% more than the major companies). Hence the
seat/kilometer cost is necessarily lower.

53
11. A more intensive use of airplanes: this particularity is directly linked to secondary
airports and to the organization avoiding the hubs. There are fewer take-offs and landing
on the runways, as well as less waiting at the end of the runway. The time saved is thus
significant; the airplanes fly 20 to 30% longer than the airplanes of the traditional
companies.

4.5.4. The Strategies of Development:

The company adopts a strategy of growth (either by integration or by diversification).
Thus they can grow in the air industry market. This strategy is possible thanks to market
penetration: the insertion into a current given market (development of products). From an
interviewee it is gathered that the low-cost company operates on the compounds of global
demand in order to increase the size of the global market by increasing the frequency of
use or by finding out new uses. According to Davenport et al, (1998) Sound planning,
savvy marketing, high-quality products and services, attention to customers, the efficient
structuring of work, and the thoughtful management of an organization's resources is not
diminished in importance by the acknowledgement that knowledge is critical to success
and needs to be managed. However, when a business faces competitors that perform well
on those other dimensions, the difference between success and failure may well turn on
how effectively it manages its knowledge. The company increases their market share by
diverting the consumers from the competing products. However, internal growth also
implies a strategy of market extension with:
i. Aims to conquer new consumer segments (namely business class),
ii. Growth by integration in order to grow among the subsidiaries,
iii. Strategy of horizontal integration in order to reinforce its competitive position by
neutralizing certain competitors (e.g. buying out of other airlines, former subsidiary of a
traditional Airway)

4.5.5. The Management Strategies:

The management policy of the company aims to be innovating and young.
The company relies on their staff in order to grow. An Innovating Human Resource
Policy on staff motivation has revealed itself as a pivotal factor of success. The company

54
model could seem to be more constraining in terms of working time and required
flexibility. The hierarchy is composed of the following axes:
• A flat structure: their structures are light and their organization is flat. Hence, the
company’s management is placed at three or four stages from the most modest
employees. If Taylorism reduced employees considerably, the company prefers to
reduce the size of the managerial staff.
• Participative management methods: the organization of the work is founded on
the versatility of the staff. Each stockholder has multiple tasks to do and various
responsibilities as a real Chief Executive Officer. They have to manage the costs,
the people, adapt and react quickly to the market environment. Even the manager
can carry out banal tasks. Each stockholder in the company must give their best
but it is quite worthwhile since the company promises very quick career
evolution.
• A policy of high participation in the company’s profits: the remuneration system
is composed of an important variable part indexed on the quality of the service
and the gross trading profit. For instance, the remuneration of each employee
includes a variable part. This bonus represents approximately 10% of a pilot’s
income and 35% of a flight attendant’s income. This system incites people to
work more and seems to reduce absenteeism.
• Powerful corporate culture: the company also attaches importance to the
atmosphere at work and the integration in the company: “casual day” every day,
“grill parties” every weekend and big parties twice a year. The relationship
between staff is natural and simple too. This also enables the dissemination of
Knowledge across the organization from top level to lower level.
• The consequences: a working day is composed of around eighteen hours to make
achieve such work. Tele-working remains essential even though structures
welcome employees. Actually, the organization is free; there is no constraining
schedule, no waste of time in transport. Information is given as quickly as
possible thanks to the suppression of useless paper and the use of the Internet.
However staff turnover is very low; they are satisfied with their jobs and consider
themselves privileged people.

55
4.5.6. The Marketing Strategies:
4.5.6.1. The Target:
The company aim at customers who wish to lower their transport expenses or at
customers looking for low fares, (major competitive advantage).
Usually, this type of discount offer develops the market by 5% and draws a new type of
customer without competing directly with the traditional companies.
The company has certainly attracted customers from their traditional competitors, but
they have created a heavy traffic of induction (creation of a new market). Actually, a
huge part of the customers (business and leisure) prefer nowadays the plane rather than
terrestrial means of transport (principally the car) to cover short distances. Hence the
company does not compete with the traditional airlines but with terrestrial transport.
There is a large use of direct selling mainly by Internet for its bookings (10% via call
centers and 90% via the Internet) with axes on its distribution on the Internet and uses all
ways. There is no printing of flight tickets with the introduction of the principle of the
electronic ticket (e-ticket), reducing the ticketing costs. The company does not number
the seats, which rules out the need to edit boarding cards. This type of commercialization
aims to suppress two kinds of costs:
• The commission to travel agencies (8%),
• The transaction taxes linked to the booking system (3.5 % for each booking).

4.5.7. The price policy:

A manager stated that offering fares far lower than the competitors (from 30 to 60%
cheaper), company manages to show in terms of income per seat/kilometre, high incomes
thanks to high occupancy rate between destinations which correspond to a high demand
and on which the company offers very frequent flights with excellent punctuality. The
resource-based view of the firm-argues that differential firm performance is
fundamentally due to firm heterogeneity rather than industry structure (Barney, 1991;
Rumelt, 1984, 1991; Wernerfelt, 1984). Firms that are able to accumulate resources and
capabilities that are rare, valuable, non-substitutable, and difficult to imitate will achieve
a competitive advantage over competing firms (Barney, 1991; Dierickx & Cool, 1989;

56
Rumelt, 1984). Therefore, by limiting their offer principally to the use of mono-class
shuttle from airports that are not overcrowded and by suppressing transfer constraints,
they can offer low fares without restrictions. For instance interviewee cited that their
fares are based on a unique principle, favouring simplified access to the offer: only one-
way flight tickets are sold, and an exclusive fare is offered for a given flight at T time.
(At T+1 time, this fare will be re-evaluated. Such a low fare is possible thanks to:
• Unique fares: no customer segmentation, a unique price for a given flight at a T
time,
• Low fares,
• No fare restrictions,
• No compensation for the flight tickets: no reimbursement and the slightest
modification (name of passenger, date) leads to additional costs. Hence the
passengers are not encouraged to make flight ticket modifications and this induces
saving as regards after-sales service,

4.5.8. Higher Utilization Rate of the Airplanes:

The utilization time of an airplane of the company is high due to quicker turn-round time.
It is mainly for 2 reasons:
• Firstly, the low-cost carrier is not constrained by the functioning of a “hub”. In
traditional companies, and in order to maximize the short transfer opportunities
that offer customers a minimum journey time, the timetable of arrivals and
departures are synchronized on landing and take-off slots. Considering that the
time of a flight differs from one route to another, this implies the airplanes
waiting for a more or less long time at the end of the route to come back on the
hub in the same slots. This phenomenon makes the time of the airplane utilization
drop. Therefore the low-cost companies do not encounter those problems.
• However, there are other reasons explaining how the airplanes can turnaround
more quickly. The use of secondary airports, a minimum time for cleaning linked
to the low level of catering, to quicker boarding (no numbered seats) and to staff
that share company profits directly and a gain of productivity. On average, the
airplanes from the company fly daily 30% more than those from traditional

57
 companies. The overall costs, fixed yearly, such as equipment depreciation or the
cost of leasing, the maintenance and the insurance are actually relatively low as
regards the kilometer/seat ratio.

4.5.9. The Use of Secondary Airports:

The priority given to the use of secondary airports is a source of great saving. The
charges of these airports are actually lower. The possibility of bargaining with these
airports is far more possible than with the main airports due to the traffic generated by the
opening of lines on these stops. In some cases, the airports subsidize the companies on
their own to attract them more easily.
These infrastructural airport costs are even lower as these transporters do not propose a
lounge for their customers.

4.5.10. The Implementation of Simplified Yield Management:

The low-cost company, like traditional companies, use the yield management system to
maximize their generated profits per flight; however, this system is extremely simplified
by the nature of the product, one-way, point-to-point and single class) as stated by a
manager The strategy consists in proposing the lowest price at the opening of booking for
a flight and then making the prices go up progressively as soon as the time of departure
approaches or the company has sold all the tickets at a given price.
However, some introductory prices are not available at certain peak activity levels.
For instance, the company proposes slightly different prices between the weekend and
during the week. This process ensures for the company a unit income far higher than the
basic price.

The success/pitfalls of the “low-cost” model, the important growth, the regular
appearance of the company on this segment of the market, make the study ask:
How does the organization harness its Knowledge Management Strategic Planning to
apply analytically and intuitively derived knowledge toward the development of its
vision, mission, objectives, strategies, and resource allocation decisions to avoid many of
the pitfalls?

58
The Studies foresee such a conquest of the market as the strategy which involves a whole
system of activities, not a collection of parts. Its competitive advantage comes from the
way its activities fit and reinforce one another as discussed in the next section.

59
5.0. Discussion and explanation of results
The trend of the cult of cost reduction is due to two present factors: the market
deregulation and industry liberalization that have amplified the competitive pressure on
the firms, reducing the margin for error and making the “cult of cost reduction” essential.
Through this, it is observed that, three economic models exist in the market
• The first is built on the basis of a structured network around one or more transfer
points: “the hubs”. Its efficiency is based on its ability to offer a global service to
their customers and enable them to travel all over the world with a minimum
journey time. It works on the differentiated fare and optimized ways which need
the implementation of the alliances between the traditional companies,
• The second consists of a development of a low-cost approach: the development of
a “point-to-point “ network, structured and organized basis and proposing low
fare regular flights without complementary provisions of services,
• The third rests on the concept of “charter flights”: the chartering of airplane on a
determined date and route, with low fares.

Underpinning the analysis of the environment and market assumes that it requires
acquiring knowledge from the events as this assumption is important because strategy is
about future actions.

In order to effectively manage the resources acquired by the organization (i.e. its
knowledge from the market), Alvesson (2001) argues that special attention should be
given to contextual dimensions of organization that is:

• Building a strong culture to adopt and support the acquired resources

• Defining effective strategies for using all knowledge resources efficiently
• Using information technologies for developing knowledge management systems

Results revealed that effective management of the resources base-view of the firm
requires a good fit between the organization’s culture and its knowledge management
initiatives which aligns its approach with its existing culture; which depicts that the
organization Knowledge infrastructure is built on these dimensions. The organization’s

60
knowledge management strategy cannot be successful unless the organization has
developed a trusting knowledge culture that emphasizes the role and value of knowledge
in day-to-day business decisions and enterprises. For instance the airline company rapid
gate turnaround, allows frequent departures and greater use of aircraft, which is essential
to its high-convenience, low-cost positioning. But how do they achieve it? Part of the
answer lies in the company's well-paid gate and ground crews, whose productivity in
turnarounds is enhanced by flexible union rules. But the bigger part of the answer lies in
how they perform other activities. With no meals, no seat assignment, and no interline
baggage transfers, avoids having to perform activities that slow down other airlines. It
selects airports and routes to avoid congestion that introduces delays, strict limits on the
type and length of routes make standardized aircraft possible: every aircraft is a Boeing
737.

In contrast, the company tailors all its activities to deliver low-cost, convenient service on
its particular type of route which offers short-haul, low-cost, point-to-point service
between midsize cities and secondary airports in large cities. The departures and low
fares attract price sensitive customers who otherwise would travel by bus or car, and
convenience-oriented travelers who would choose a full-service airline on other routes.
The managers describe strategic positioning in terms of their customers: serving price-
and convenience-sensitive travelers," for example. But the essence of the strategy is in
the activities-choosing to perform activities differently or to perform different activities
than rivals. Through these innovations and knowledge creations, they recognized this
opportunity by occasionally bidding aggressively on complex, novel or unpredictable
opportunities realizing a double benefit over its competitors, first by investing in its
strategic knowledge platform and second, by learning enough about the particular client
to competitively and profitably price for future opportunities with the same client.

The culture is geared towards rewarding innovation, learning, experimentation, scrutiny

and reflection which is conducive to more effective knowledge creation, transfer, and
use.

The Organization culture has several components with regard to knowledge:

61
  Employees have a positive orientation to knowledge, that is, employees are bright,
intellectually curious, willing and free to explore and also executives encourages
their knowledge creation and use.
 Employees does not inhibited in sharing knowledge, that is, they feel that they are
not alienated or resentful of the company and don't fear that sharing knowledge
will cost them their jobs.

The analysis revealed that the following strategies for successful knowledge management
implementations via resource based view of the firm for strategic plans methodology
follows seven steps as argued by:

1. Identifying the problem. The knowledge segments should be identified.

2. Preparing for change. This refers to change in terms of business efforts,

especially in how the business is operated.

3. Creating the team. The implementation of the resources created by teams

charged with and responsible for implementing a pilot project

4. Mapping out the knowledge created/acquired from the market. Identify what the
knowledge is, where it is, who has it, and who needs it. Once the knowledge map
is clear, define and prioritize the key feature and identify appropriate technologies
that can be used to implement the knowledge management system.

5. Creating a feedback mechanism. to indicate management how the system is

used and should report any difficulties.

6. Defining the building blocks for a knowledge management system. These

consist of a knowledge repository, knowledge contribution and collection
processes, knowledge retrieval systems, a knowledge directory and content
management.

7. Integrating existing information systems to contribute and capture knowledge in

an appropriate format.

62
Technology plays a key role in the trend towards knowledge strategic planning. Today,
information technologies support knowledge management and broad sharing of
information and are good examples of effective knowledge management tools (Alvesson
M. 2001).

Here the use of the internet is discussed. For instance, the organization adopts large use
of direct selling mainly by Internet for its bookings (90% via the Internet) with axes on its
distribution on the Internet which does not only serve as a fastest way of reaching their
customers but also helps in reducing the ticketing costs and the aims to suppress two
kinds of costs:

i. The commission to travel agencies (8%),

ii. The transaction taxes linked to the booking system (3.5 % for each booking).

When facilitating knowledge management initiatives, an information technology

environment such as internets is utilized to establish actions such as information creation,
information seeking, and information interpretation successfully in the environments.
Quelch and Klein (1996) suggested a multi-perspective view of internet, a technology
that helps in creating an effective knowledge management environment, which are:

 Information perspective,
 Awareness perspective
 and Communication perspective.

Technology thus affects the interaction between information and knowledge acquired in
today’s organizations by increasing the consumer’s access to information and the
opportunities for producers to reach a larger audience. Information plays an important
role as a catalyst for reflection and an information perspective on the internet thus highly
relevant for work that requires knowledge (Quelch, J.A. and Klein, L.R. 1996).

It therefore shows that, from a communication perspective, organization can act upon
new understanding; thereby transforming their resources based view knowledge to
organizational benefit.

63
5.1. Conclusions and Recommendations for Future Research

The purpose of this study is to analyze knowledge strategies with a case study in the UK
airline industry. By focusing on the resource-based view of the firm, the knowledge
acquired by the firm and the OL from events, the state-of-the-art/operation in the UK
airline industry is analyzed.

While organizations inherently provides some geographically unique knowledge that

allows them to exploit opportunities that exist in local resource and/or output markets, the
competitive advantage of the organization lies to a great extent in its ability to identify
and transfer strategic knowledge between its geographically dispersed and diverse
locations (Bartlett and Ghoshal, 1999; Gupta and Govindarajan, 2001).
The current changes (deregulation and liberalization) in the competitive environment
provide unique forces to examine how the organization harnesses its acquired knowledge
and transfer it to a developed strategy.
First the corporation learns how to exploit its specific resources in the markets. Second,
the corporation never forgets that the source of a long-term competitive advantage is
focused on the variety of skills and diversity of knowledge which can benefit from
international fertilization, because knowledge exploration and exploitation activities are
closely related with the concepts of synergies, interdependences and interactive
organizational learning.

From analyzing the case studies, it appears that many of the linkages in the Porter model
are indeed discussed, formally part of the model. These discussions are to a large extent
descriptive: the links are there, with their process characteristic.
According to McCormick, certain anomalies could only be explained by other contextual
variables, outside the collective efficiency framework (McCormick 1999). These
frameworks were researched by given more attention to external linkages, and more
concern with knowledge flows. There are however also “hidden resources” that allow for
a lot of leverage but that face significant frictions (in the physical and transaction cost

64
sense). Making these hidden resources surface will require an effort that is like “plowing
the sea” (Fairbanks and Lindsay 1997)

Focusing on the study, the research qualitatively determined the existence of different
organizational strategies led by the company in the way UK airline firm acquires, creates,
apply, distribute and transfer their knowledge, that is, different organizational knowledge
strategies.

The following conclusions were drawn from the research:

• Firms make a series of decisions regarding the balance between internal and
external situations and conditions which is based on learning, incremental or
radical learning, speed, and the breadth of their organizational knowledge base.
So these strategic decisions configure a firm’s knowledge strategy and thus,
influence its sustained competitive advantage.
• The results show that knowledge strategies influence organizational performance.
So the configuration of the knowledge strategy becomes a strategic element in the
organizational performance puzzle.

This research assumes that organizations can gain several benefits from implementing
knowledge management strategies. Tactically they can reduce loss of intellectual capital
due to people leaving the company, reduce costs by decreasing and achieving economies
of scale in obtaining information from external providers, reduce redundancy of
knowledge based activities, increase productivity by making knowledge available more
quickly and easily and increase employee satisfaction by enabling greater personal
development and empowerment for the best reason and the need to gain a competitive
advantage in the marketplace (Russo, M.V. and Fouts, P.A. 1997).

Future research should focus on the analysis of knowledge strategies in organizations.

Future research could study the links between the field of knowledge management and
the field of intellectual capital emphasizing the strategic importance of measuring and
reporting intellectual capital – a concept that grasps those valuable organizational

65
knowledge-based resources that contribute to value creation but do not appear on the
traditional financial report. Additionally, more empirical research on organizational
knowledge measurement is needed in particular.

66
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Yogesh M., Ph.D. (2000), Knowledge Management & New Organization Forms: A
Framework for Business Model Innovation; Published in the Information Resources
Management Journal, Special Millennium issue on Knowledge Management & New
Organization Forms

Zack, M.H. (1999). “Developing A Knowledge Strategy”. California Management

Review. Vol. 41, No. 3.

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 APPENDICES

APPENDIX A: Summary of the interview questions

Interview questions

What is the situation of Airline industry nowadays?

What are finally the advantages of the environment to the success of low-cost airline?

Can one relate the success/pitfalls of the company to the market operations?

What criticism can be formulated concerning the low-cost carriers?

Is the airline company only profitable thanks to fit between the trade and the
environment?

Can you associate the tailored strategy of the organization to the organization culture?

How does the organization harness its knowledge for competitive advantage?

Do you think it requires acquiring knowledge from the environments or learning from
events for the firm to succed among its rivals?

How does the environment act upon the adapting organization?

Do you think that the environment forces really have effects on the mode of operation?

Do you think that the competitive fringe of the environment/industry faciitates efficient
provisional of services that drives the competition?

What structures are being adapted?

What are the mechanisms of adaptation?

What of its interaction with the environment does the organization maintain beyond
organization structure?

How are different hypotheses about adaptive processes to be compared?

Why the need to focus on knowledge creativity from the market?

How do you disseminate the acquired knowledge across the organization?

Do you think sharing disseminating acquired knowledge facilitates the organization

success?

74
How are the organization skills integrated with the procedures and the strategy
development?

What are the barriers to entry considered by the organization in the market?

What do you considered to be part of the strength of the low-cost airline?

How can you relate the use of technology to the success/pitfalls of the firm?

APPENDIX B: Covered Letter

Liverpool Hope University, Hope Park Liverpool

Hope Management and Business School

EXAMINIG THE IMPACT OF KNOWLEDGE MANAGEMENT - STRATEGIC

PLANNING ON THE STRATEGY OF A LOW COST BUDGET AIRLINE IN U.K

The Branch manager,

I humbly request for your permission to conduct my research in your reputable

organization. This interview forms part of my research for my dissertation in M.A.
Business Management.
The research tries to identify impacts of acquiring knowledge for strategic planning and
demonstrates several fundamental approaches enhancing the success of the
implementation and I believe it would offer the organization a framework for
understanding strategy concepts while illustrating how they can derive business results
from Knowledge Management.

Your contributions will be anonymous and your responses are confidential and will
be used for this research only.

Thanking you in anticipation of your favourable consideration of my request.

BABAJIDE AJIBADE
STUDENT ID: - 04000346
MA BUSINESS MANAGEMENT STUDENT
HOPE MANAGEMNET & BUSINESS CENTRE
LIVERPOOL HOPE UNIVERSITY.

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 List of tables

POSITION NUMBER OF
RESPONDENTS
Managers 4
Senior personnel 4
Junior staff 2
TOTAL 10

Do you think it requires Yes: - 10 No: - 0

acquiring knowledge from the
environments or learning from
events for the firm to succeed
among its rivals?

Do u think that the competitive

fringe of the
environment/industry facilitates Yes: - 10 No: - 0
efficient provisional of services
that drives the competition?

Do you think disseminating Yes: - 10 No: - 0

acquired knowledge facilitates
the organization success?

Can one relate the Yes: - 10 No: - 0

success/pitfalls of the company
to the market operations?

Does the tailored strategy of the

Yes: - 10 No: - 0
organization really integrate
with the cooperate culture?

Do you see the mode of

Yes: - 7 No: - 3

76
operation as a low-cost carrier
to customers as a treat to the
market?

Can one relate the advantage of Yes: - 10 No: -0

the low production cost of the
airline to experience effects
which enable economies of
scale?

Do you find the mode of

operation of the organization as Yes: - 7 No: - 3
a treat to employee career?

Does the mode of

communication system between
the company and the customers Yes: - 10 No: - 0
contribute to the success of
operation in the market?

List of figures

77
Fig 1; Source: Porter (HBR, 2001)

78