Strategic analysis and evaluation of Norwegian Air Shuttle ASA

Kai Yung Vårbo & Guttorm Lindseth

Student thesis: Master thesis

Abstract

During the recent decade, Norwegian Air Shuttle ASA (NAS) has managed to become a highly successful company, and is today the third largest European low-cost carrier and the second largest airline in Scandinavia. However, we believe that prior success is no guarantee for future success, as NAS is part of a highly dynamic industry characterized by low profit margins, fierce competition, unpredictable events, and emerging challenges which continuously keep changing the competitive environment. The main purpose of this master thesis is to conduct a thorough strategic analysis and evaluation of NAS, aimed at providing a number of strategic options which might help the company secure its position as a leading European low-cost carrier in the future. This paper is highly pragmatic in nature and based on an inductive case study research approach, which is largely reflected by the broad range of sources utilized, the generic theories and frameworks applied as well as in the distinct set of scenarios developed. The thesis primarily consists of three main parts, Company overview, Strategic analysis and Scenario planning. The first part, Company overview, intends to give the reader a descriptive overview of NAS‟ history, business strategy, competitors, and financial performance. The second part, Strategic analysis, involves an extensive examination of NAS at a macro-environmental, micro-economical and company level. Finally the last part, Scenario planning, utilizes consolidated information and key findings from the two preceding parts in order to construct four distinct, yet plausible future scenarios of the Scandinavian airline industry. In this way, NAS is better prepared to handle unforeseen events, thus ready to undertake selected strategic actions if these plausible scenarios should occur. As a result, the main findings in the paper are highly scenario specific. In relation to the first scenario, Enemy at the gates, NAS should pursue the following key strategic options; increase its brand focus, enter a strategic alliance, and adapt its planned long-haul operations. In regards to the second scenario, Survival of the fittest, NAS should develop a pure LCC business model, exploit the high price sensitivity and improve its liquidity. Further, in the third scenario, Network heaven, NAS could either optimize its current LCC business model, or pursue a hybrid business model with several ticket classes. In addition, the company should aim to strengthen its leisure travelers‟ loyalty. Finally, in the last scenario, High-speed train utopia, NAS should pursue long-haul low-cost operations, improve its travel convenience, and adapt its route network accordingly.

EducationsMSc in International Business, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2011
Number of pages138