Stuck in the Middle Revisited: The Case of the Airline Industry

Abstract

When Porter (1 980) introduced his typology of business strategies, he used Laker Airways' as an example to illustrate the danger of being stuck in the middle between the two basic types of competitive advantage, namely low cost and differentiation. However, the changing nature of competitive pressure in many business sectors and the accompanying need to perform well simultaneously in several aspects of operations performance, have eventually lead Porter (1 990) to revisit his early idea. When presenting Porter's generic competitive strategies, most strategy textbooks now offer a new choice, namely the "integrated cost leadershiptdifferentiation" strategy (Coulter, 2002;Hitt, Ireland, & Hoskisson, 2003), or the "best-cost provider" strategy (Thompson & Strickland, 2001). Given this background, the purpose of this theoretical paper is to build upon the strategic management and operations strategy literature to develop a conceptual framework that will subsequently be used to explore the extent that airline companies successfully pursue the best-cost provider (or integrated cost leadershiptdifferentiation) strategy, and how they manage to resolve the trade-off between low-cost and differentiation. We aim at revisiting the "stuck in the middle" prescription by demonstrating that a number of aviation strategic options exist between the ''traditional'' and "lowcost" model.

Environmental sustainability orientation, competitive strategy and financial performance

“…The integrated strategy introduced by Dostaler and Flouris () as integrated cost and differentiation strategy creates value by optimising the trade‐off between product quality and cost. The integrated strategy permits firms to adapt more easily to macroeconomic conditions (Moir & Lohmann, ).…”

A quantitative means of comparing competitive advantage among airlines with heterogeneous business models: Analysis of U.S. airlines

“…The 'JetBlue Experience' offers a differentiated product at a cost-effective price (JetBlue Airways Corporation, 2014). Dostaler and Flouris (2006) hypothesised that hybridisation could be considered an integrated cost leadership and differentiation strategy.…”

“…Airline business model convergence has raised questions regarding the possible existence of an integrated cost leadership/differentiation strategy (see Figure 1). Flouris (2006) Integrated cost leadership/differentiation strategy Porter's (1985) CA literature considers the risks associated with being 'stuck in the middle' and identifies Laker Airways as the classic example. Dostaler and Flouris (2006) leadership/differentiation strategy' in an airline context, or put more simply, the 'best cost-provider'.…”

“…For example, JetBlue, an airline identified by academics as presenting a 'hybrid' business model proposition (Doustaler and Flouris, 2006), maintains a mission to offer a differentiated product at a cost-effective price. Their pursuit of an integrated strategy suggests that an airline can compete both regarding product and cost.…”

“…The paper also considers the hypothesised integrated cost leadership and differentiation strategy (integrated strategy), developing a technique by which the results can be applied to the 'airline realised business strategies' model. This model was originally conceived by Doustaler and Flouris (2006), enabling the identification of successful integrated strategies.…”