Corporate failure and distress prediction based on the combination of quantitative and qualitative data sources: the case of new - entrant airlines in the United States
Since deregulation in the Unites States most jet operating new-entrant carriers have failed.Theories on competition had been put to the test and reality turned out to be different to thevision. The new-entrant airlines were to challenge the inefficient incumbent carriers andprovide lower fares for the benefit of the public. To begin with they were successful, butwere not able to create sustainable strategy to survive when the incumbents had adjusted tothe new operating environment.The background to the failure predicament is examined in the thesis in considerable detail, inorder to give a fairly good overview of the characteristics of new-entrants and theenvironment they existed in. Much attention is given to the new-entrants' strategy in orderto explore past deficiencies and pave the way for successful alternatives.The European liberalisation is examined in order to contrast it with the US deregulation.The purpose of such contrast is to examine whether the lessons learned in the United Stateswill apply to European new-entrants, both at the present and in the future.The literature on the causes of corporate failure is examined in detail in order to discoversome underlying traits. Success is examined as well in order to identify whether successmirrors failure. In addition, the role of success in causing failure is highlighted.Statistical failure prediction models are explored in order to cast light on the present statusof the failure prediction methodology. That overview explains the foundation for selectingthe Logistic Regression statistical methodology for the thesis.Results of a questionnaire survey performed on new-entrant airlines, is introduced in termsof the dichotomous failure and distress variables. On the grounds of that qualitative surveyand a new-entrant airline quantitative data-base, a number of failure prediction and distressmodels were developed. Finally, the best failure prediction models of these different sourcesare combined in order to examine whether such combination enhances prediction quality.The main conclusion of the thesis is that the combination of quantitative and qualitative datasources for failure and distress prediction of corporations, in this case new-entrant airlines,enhances predictability. Furthermore, the general conclusion is that no single prescriptionexists for success or avoidance of failure due to the dynamism of the corporations and theenvironment they operate in. However, few prerequisites of success and non-failure werefound to be: (i) high relative quality; (ii) dominant market share on routes and airports; (iii)high relative aircraft utilisation; (iv) high relative employee utilisation; (v) controlled growthin terms of maintaining item (ii); low cost in terms of achieving items (iii) and (iv); and (vi)resourceful innovation without going into the extremities.
Year of publication: |
1995-11
|
---|---|
Authors: | Guomundsson, Sveinn Vioar |
Other Persons: | Doganis, R. (contributor) ; Alamdari, Fariba (contributor) |
Publisher: |
Cranfield University |
Saved in:
freely available
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