What is the major advantage of air carriers?
Air carriers hold a major advantage over other modes of transport in terms of speed. As long as costs remain within a reasonable range for the client, airlines can offer much faster movement of goods than any other mode of transport. As a result, airlines hold a competitive advantage for the movement of highly valuable, time sensitive and perishable goods (Coyle, Bardi, Novack, 2004). In addition, air carriers have established a reputation for reliability.
Bumpy roads and train tracks not well maintained cause damage to goods. Cargo is not immune to damage in air transit, but the risks are generally lower. Firms like FedEx have helped to establish a reputation that air transit is not only fast, it is also reliably safe. Airlines are often cost-effective for industries because of their effect on inventory levels. They can move large amounts of goods quickly. That speed and reliability, in turn, allows shippers to better manage their own inventories (Coyle, Bardi, Novack, 2004).
Moving inventory in and out in a timely fashion also simplifies the bookkeeping and insurance processes, keeping the revenue stream flowing. In the international context of today’s economy rapid movement is especially important. While a plane can move goods across the world in one day, a ship might take weeks. This delay has a ripple effect that hurts the overall efficiency of the business. For businesses in which quick turnover is a necessity, the air carrier industry holds a distinct advantage. 9.
The integrated ownership of pipelines was initially used by some oil companies to gain control of oil-producing area. What other reasons can be offered for integrated ownership? Are these reasons valid in today’s business environment? Potentially, integrated ownership can help increase the market power of transportation-related business. Vertical ownership of suppliers and complementary firms can also reduce doubt for the main firm. If relationships are well-defined and predictable the business can engage in more effective planning.
It also enables the firm to control costs in a more hands-on way (Coyle, Bardi, Novack, 2007). Critics of integrated ownership say that it constitutes a monopolistic practice. A more effective argument against the practice might be to dispute the notion that integrated ownership leads to greater efficiency and market power. Research into the effects of integrated ownership is sparse and difficult to evaluate. Some studies show a negligible effect, because the gains this type of ownership creates are offset by losses in other areas.
Others won’t rule out the possibility of gain saying that “the dogmatic insistence that market power cannot result from such integration is unwarranted” (Bhuyan, 2005). Given the mixed data on vertical integration, transportation firms must weigh the risks carefully. The trend in recent years has been away from regulation, but a firm using this type of ownership could easily attract the attention of the Federal Government. The high-profile attempt to break up Microsoft should serve as a warning not to engage in practices that could appear monopolistic.
Integration has a place in today’s business environment. The global economy that is emerging will require the highest possible degree of efficiency. Businesses will have to be flexible to take advantage of the best possible alternatives. For example, contractual integration may be an effective alternative to ownership integration (Bhuyan, 2995). Integration can help accomplish efficiency, but it most be done carefully. In addition, businesses will frequently have to re-evaluate their ownership structure in order to remain competitive.Sample Essay of UkEssays