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Airborne Company Case Study

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Short essay questions
1. What was Airbone’s long term strategy to address low willingness to pay among its target customers?
2. How has (sunk) cost changed over time as the industry expanded?
3. Explain how (relative) marginal costs and total costs determine Airborne’s business priorities.
4. Explain Airborne’s relative cost positions.
5. Provide examples of three businesses (from the MOS book) that faced the same economic issues by Airborne.
Answers:
1. Firstly, Airborne Express chose its customer very selectively and pursued an emphasis on low price strategy. The main target customer for airborne was the high volume, frequent, service; consistent with flexible environment and price is the main competitive defense for attract to the …show more content…

Fourthly, The Airborne maintained low prices, provided tailored services and achieved higher efficiencies and lower cost in order to long run and remain competitive in the market. So, Airborne targeted business customers who shipped frequently and was able to better serve them through repetition and experience including using customization codes to provide tailored service to specific large business accounts. Moreover, Airborne had a high concentration of customers in metropolitan area and a high percentage of afternoon and second day deliveries, permitting it to use ground shipping more often than its competitors and save up to two-thirds the cost of air shipping (Exhibit 8). Finally, Airborne had total control of its airport hub, which is design as per the needs and expand to enclose warehouse space for its business customers. Furthermore, Airborne achieved greater efficiency in its shipping by utilizing 80% of shipping space therefore; Airborne lowered cost not having retail service centers, using independent contractor van services and it was more efficient by picking up and delivering more parcels per stop than FedEx. Hence, Airborne becomes a stronger competitor in the market due to low prices and provided excellent service to the customers.

2. I personally believe that Airborne‘s business strategy is play a vital role for emerging industry. It would take a very large

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