Keywords
Citation
Willenborg, M. (2006), "Why incumbents struggle to extract value from new strategic options: case of the European airline industry", Strategic Direction, Vol. 22 No. 6. https://doi.org/10.1108/sd.2006.05622fad.007
Publisher
:Emerald Group Publishing Limited
Copyright © 2006, Emerald Group Publishing Limited
Why incumbents struggle to extract value from new strategic options: case of the European airline industry
Why incumbents struggle to extract value from new strategic options: case of the European airline industry
Vlaar P., DeVries P. and Willenborg M. European Management Journal, April 2005 Vol. 23 No. 2, Start Page: 154, No of Pages: 16
Purpose – To investigate why established companies fail to adapt to, and succeed with, new business models. Design/methodology/approach – Discusses discontinuities caused by new technologies and new business models, focuses on the latter, and gives cannibalisation, conventional wisdom, inflexibility, incompetence, overconfidence and resource access as reasons why incumbents do not achieve the same success as new entrants, pointing out that the greater resources of incumbents should lead to success. Combines these factors into a conceptual framework that also includes moderators of substitution, complementarity, autonomy of the new business, leadership strength, entrepreneurial alertness and turbulence. Compares the success of three European low-cost airlines to the failed attempts of three established airlines to compete in the low-cost market. Findings – Pinpoints incumbents’ operational errors as using several aircraft types and continued use of congested airports, and concludes that the incumbents failed to fully accept the new model, did not exhibit the disciplines required by the new model, and attempted to make compromises between current activities and the emerging market. Originality/value – Acknowledges that many new entrants also fail.ISSN: 0263-2373Reference: 34AM666
Keywords: Air transport, Airlines, Emerging markets, Large companies, Price positioning, Pricing policy, Start-ups, Strategic choices