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When United and Continental merged, the new combined company pushed ahead of Delta to become the biggest carrier in the airline industry. This after Delta assumed the position from rival American two years ago. Another rival, Southwest, is poised to increase its size in a proposed acquisition of Air Tran. The industry is becoming less crowded and more competitive. United-Continental CEO Jeff Smisek plans to be successful through business basics, i.e., a strong company culture and quality customer service. For now, Smisek must set about ensuring that the company can deliver.

QUESTIONS:

M1. All of the major competitors in the airline industry offer the same product. What is the United-Continental competitive advantage? How does this advantage compare to that of other carriers? Is the United-Continental advantage sustainable?

M2. With respect to rivals, what condition exists in the airline industry? Analyze the attractiveness of this industry using Porter’s Five Forces Model. What is your assessment? What is the outlook for the new United-Continental merged company?

M3. Read through the interview with CEO Smisek. What is the business-level strategy for United-Continental? Upon what do you base your response?

M4. Would you characterize Smisek as a strategic leader? If so, why? If not, what should he be doing?

SOURCE: D. Reed, “United Is Merged: CEO Smisek Is Ready to Take on the World,” USA Today (Retrievable online at http://www.usatoday.com/money/industries/travel/2010-10-01-unitedceo_CV_N.htm)

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