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Essay / Research Paper Abstract
This 6 page paper looks at the competitive advantages that American Airlines gained from their SABRE system. The paper starts by considering the implementing and advantages such as cost advantage and differentiation though first mover advantage and the different uses of the technology. The system was also one that allowed American Airlines to dominate the industry for a period, the paper outlines how and why this occurred creating an also monopoly for a while. The paper ends with consideration of why and how this dominant leadership was lost and other airlines were able to start competing more effectively. The bibliography cites 6 sources.
Page Count:
6 pages (~225 words per page)
File: TS14_TEsabre.rtf
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Unformatted sample text from the term paper:
1991). The aim was to develop an integrated solution that could act as the core of the company operations. This would mean that there a first mover advantage and the
ability to develop operating systems that would more efficient than competitors. The initial investment would be heavy, but the long term payback would also facilitate the gaining of the cost
advantage. The system was built on gradually, each development building on the last. The system started as an internal system that stabilised and created efficiency in internal operations. In 1976
the system was rolled out for the use of travel agents. The move in 1976 was a competitive move before it was needed, as deregulation of the industry did not
occur until 1978. It may also be argued that the development of SABRE and the reactions of United Airlines and the development of their IT system APOLLO created a computer
war between the two companies. Therefore, there was an ongoing commitment meaning that to withdraw could have been to loose competitive advantages. Porter argued that there are two sources
of competitive advantage, cost leadership and product differentiation (Porter, 1980). With this system there was the ability to gain both. With the initial marketing and attention paid to the system
there was an impression given of a forwards looking company which was investing in itself. The level of this cost advantage and value in the longer term is difficult
to assess. The problem is that there is no comparator for the value that was added to the company. The ten years following the role out to the travel agents
saw a large revenue created by SABRE, the conservative estimates place the net contribution that the system made towards the company at $900 million between 1976 and 1986. This would
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