American Airlines Case Study

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American Airlines Case Study

Strategy formulation and implementation are the most critical phases in determining the overall direction of an organization: mostly in the highly competitive market environments. The ability to make precise decisions regarding different business operations is influenced by the capability of the management to envision the future and business trends that are critical for the survival of the firm. Such activities entail branding decisions, marketing decisions, variety decisions, and most importantly the pricing strategies which play a significant impact in a highly competitive market. The American Airline has found itself in such a predicament where the planned strategy on Value Pricing failed as a result of retaliation from other players in the same industry. The purpose of this essay is to analyze the American Airline structure, the reason behind the Value Pricing, and the impact portrayed by the competitors regarding the value pricing strategy.

To begin with, the American Airlines was determined to increase its market share through the implementation of a pricing strategy that would put into consideration the economy class of people. By lowering the fright fees from 500,000 to about 70,000, the company...