Term Paper on "United Airlines"

Term Paper 7 pages (2508 words) Sources: 10

[EXCERPT] . . . .

information technology help a company in competing with its rivals. It focuses on United Airlines and discusses its performance in the field of competition. The paper also discusses Porter's model of five forces according to the situation of the company and the industry. The paper also emphasizes on various systems and their applicability on the company. In the end, the paper focuses on the systems development life cycle and business continuity planning and the application of these phenomena on the company.

People, Information and Information Technology in Competition

All the companies want to develop a competitive edge over their competitors. United Airlines also has the goal to get ahead of its competitors. To achieve its goal, United Airlines had to increase its performance. Human resource has an unmatchable impact on the performance of a business entity. Therefore, United Airlines (UAL) started managing its employees in a way that they started giving their best. (Mazzeo, 2003)

United Airlines, after its merger with continental airlines, employs 87000 full time employees. In order to get the best out of the employees, United Airlines has introduced a very flexible way and routine of working. In addition to that, the values of the employees are also respected and not interfered with. Moreover, the employees are also given regular bonuses based on their exceptional performance. As a result, the employees are determined to perform in order to provide the organization with the necessary competitive edge they need. (Mazzeo, 2003) (Entrekin & Scott-Ladd, 2013)

Apart from that, the use and flow of information has also become very important for the success of every company nowadays. United Airlines also relies on the flow of information in order to ensure that it's ahead of its competitors in the race. Previously, the companies had to choose between transferring richer information or larger number of customers to whom information was supplied. The internet has solved this problem and now quality information can be given to many customers. (Xu & Quaddus, 2013)

United Airlines relies on the smooth transfer of information related to flight information and rates. In this way, customers are able to compare between UAL and its competitors. The information is easily available on the internet. In addition, UAL also obtains and uses the information about its competitors so that it knows the standards it is competing with. The information about competitors is used in improving performance and delivering the best to the customers. (Xu & Quaddus, 2013)

Lastly, UAL also uses information systems in order to differentiate its services from others. Nowadays, online travel agencies have become quite popular. UAL has targeted these online agencies in order to inform the people about the services it offers. This keeps a check on the competitors as the people always have an option to carry out a comparison between UAL and its competitors. (Xu & Quaddus, 2013)

In addition to that, improved information technology leads to better performance. The company can then use better information systems to create barriers to entry for new competitors. As the company's performance will boost, the company will have a better reputation among the customers and it will be able to employ different strategies to drive competition away. Therefore, a better information technology approach will help UAL significantly. (Xu & Quaddus, 2013)

Five Force Model

Micheal Porter's five force model takes five force into account that affect the competition around an organization. The first one is the enmity amongst competitors. The competition for UAL is very high. UAL has to concentrate on non-cost aspects of its service. Southwest Airlines was able to beat UAL easily because of the friendly environment it created on deck. (Miller & Dess, 1993)

The second force affecting the competition is the entry of new competitors. This force has remained relatively lower as the entry to the airline industry requires heavy investment and not all the investors are able to enter the market. In addition, the new entrants will immediately face issues such as lack of customer loyalty and strong competitors. (Miller & Dess, 1993)

Threats from substitutes is the third force defined by Micheal Porter. This force is moderate for UAL as there are alternate ways of travelling. American populace have a general fear of flying after the calamity known as 9/11. Therefore a trend away is seen after that incident. Rail and road travel have also enjoyed more customers due to lower gasoline prices. On the other hand, air travel has the strengths of being faster and far-reaching. (Miller & Dess, 1993)

The force of supplier bargaining power remains moderate for UAL. As UAL has decided to reduce the number of new aircrafts bought from 67-24, the suppliers are relatively stressed to improve their processes and cut their costs. The companies have also turned to the federal government for bailouts. Therefore, the government enjoys a significant bargaining power as it now assumes the place of a temporary supplier. On the other hand, the labor union has also threatened to strike if the demands are not met. So, overall the supply side bargaining power remains moderate. (Miller & Dess, 1993)

The last force affect the competition is bargaining power of the demand side. This force is quite high on UAL. As UAL has announced that it will react positively to every demand that the customers put forth, it has to face a relatively high demand side bargain. (Miller & Dess, 1993)

Supply Chain, Customer Relationship and ERP Systems

United Airline is focusing nowadays to reduce the ownership and storage of the inventory. To get successful, the company must have the right amount of inventory at the right time at the right cost. UAL currently has a greater proportion of operator owned supplies. However, UAL analyzed and found out that the costs of managing, maintaining and warehousing materials is greater than the cost of materials. Therefore, United Airlines is concentrating on switching from operator owned supplies to third party owned supplies so that the warehousing and other maintenance costs are cut. In order to achieve that, the UAL should have better relations with third party suppliers. Sharing of information and introduction of new information technology in the supply chain management will lead to better results. (Lochab, 2010)

Customer relationship is very important in an industry with severe competition. As a result, United Airlines has also taken steps in order to improve its customer relationships. United Airlines have identified a segment of high value customers who are frequent travelers and users. These customers get benefits and incentives as they are regular users of the airline. In addition, the UAL has also started the 'make amends' program in which it looks into the complaints of the customers and tries to solve it proactively. (Boland, Morrison & O'Neill, 2002)

Enterprise Resource Planning (ERP) system is a way of integrating the resources and business plans. United Airlines previously relied on manual system for ERP. It then faced the need to computerize its system. Blackline was chosen as its vendor. The SaaS model of ERP system was chosen due to less IT resources. The data from the current ERP system and some ledgers was provided to Blackline. This relieved UAL from its exhausting manual ERP system. (Van Decker, 2009)

Database Management System and Data Warehousing System

United Airlines has a huge customer base. All of the data is integrated into a database management system which contains all pieces of necessary information about the customers. Relevant parts of the database is available to all the users and employees. Therefore, UAL uses a high availability framework. Using this framework, the customers can access the information about tickets and rates whereas the employees can enter the respective customer data into the system. IBM has provided UAL with the required Database management system. (Stone, Bond & Foss, 2004)

To store such enormous amounts of data, UAL needed a lot of storage capacity. In addition, UAL also needed a data warehouse so that current and historical data both can be made accessible. The current data warehouse of UAL can hold up to six terabytes and it also integrates smart features such as business intelligence to analyze trends and give accurate predictions so that the airline can work efficiently. (Stone, Bond & Foss, 2004)

Agent-based Technology

Agent-based technology makes use of intelligent agents that carry out different jobs. These jobs would otherwise be done by human beings. These agents are thoughts and behaviors put into software and therefore programmed to behave in a desired way. United Airlines can also make use of the agent-based technology by using agents to support its operations. The structure of airlines is changing rapidly with people checking and booking tickets online. This requires a strong network. The use of agents to predict booking and managing schedules as well. Therefore, agent-based technology can be used by United Airlines. (Kim, 2014)

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