Management of Denver International Airport
Management of Denver International Airport

Management of Denver International Airport

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  • Pages: 5 (2358 words)
  • Published: November 13, 2018
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In the current business environment that is dynamic and competitive, value creation has become a fundamental aim of every successful business. The emergence of the knowledge based economy has brought with it the quest to find new ways of maintaining the competitive advantage of organizations and industries. Successful businesses are increasingly recognizing just how instrumental value creation has become in spurring organizational growth and performance. Creating value for an organization’s clients, workers and investors, as well as other stakeholders that impact on the business both directly and indirectly has been and will remain the key priority to business owners. There is a need to understand an organization’s drivers to creating value in order to enable managers to focus the company’s talent and capital on the growth opportunities that are most profitable. For instance, if its customers value quality products, then those skills and processes that make it possible to produce quality products will be most valued by the organization.

Value creation in an organization has so many benefits i.e. when value is created to customers; it enables a company to sell more goods and services to the customers thus improving organizational performance. In addition, creating value for shareholders via increasing prices of stocks, leads to insured availability of capital investment in the future. According to Favaro (1998), traditional methods of assessing the performance of an organization are no longer adequate in this competitive knowledge based economy. Value creation in organizations is increasingly being driven by the intangible assets in companies such as people, knowledge, innovation and competencies among others.

Even if drivers of value creation vary from one organizatio

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n to the other, some of the main types of intangible assets are innovation, technology, management capabilities, brand value, the relationship between an organization and is major stakeholders such clients, employees, community, suppliers, investors etc. corporate strategy helps to connect value creation to these intangible assets. Take note that, investments (i.e. research and development and training of employees etc.) aimed at enhancing intangible assets leads to indirect benefits rather than direct ones. Therefore, a company that is focused on creating value will have to adopt lasting views and align its resources towards achieving that goal (Favaro, 1998).

This project was aimed at analyzing creation of value at Denver International Airport in the light of its organizational competencies, knowledge resources, company processes and performance, employees, customers, investors, suppliers, regulators and community. To achieve the above aim, our group designed an analytical framework to help us in the value creation analysis. As will be discussed in the report, the framework we developed was instrumental in helping us analyze value creation at DIA.

Project Objectives

a)Develop an analytical framework that will create value for all the stakeholders of the Denver International Airport.

b)Analyze value creation at Denver International Airport

Problem Statement

In the current competitive business environment, value creation has become a fundamental aim of every business that aspires to succeed. Denver International Airport was ranked the 11th-busiest airport worldwide by passenger traffic having 20,608,318 passengers (Denver, 2011). Like in any other competitive business, the airport is also facing stiff competition from its close competitor airport

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such as Dallas International Airport, and Los Angeles International Airport. Through value creation for all it stakeholders, Denver International Airport will not only be able to achieve sustainable growth and profitability, but it will also have competitive advantage over its competitors.

Companies that have put Value Creation First

According to Favaro (1998), Lloyds Bank and the Coca Cola Company are some of the key companies that have invested on value creation in the past decade as a driver for their organizational growth and the results have been amazing. For instance, in the 1980s when Roberto Goizueta, the CEO of Coca Cola company at that time took office, the company was viewed as doing okay but a bit struggling, in a home market that was increasingly getting mature by the day. Though it had an increase in yearly revenue growth of 14% over the last decade, its profitability had been reduced significantly, when compare to its competitors. The decision made by its CEO at the global management conference marked the path towards the beaming success the company enjoys up to date. The organization decided to prioritize value creation, and since then the results have remarkable; as at 1997, the Coca Cola Company had nearly doubled its shares in the market to about 50% as well as almost tripling its return on equity just below 60%. These results have also been reiterated by Favaro (1998). Examples of value creation strategies which the company undertook include; increasing their investment on marketing, rapid expansion of new dometic markets as well as reducing participation on businesses dealing with non- beverages. The Company refers to its lucrative growth prospects as infinite, even as Doug Ivester, who is the successor to Roberto, continues to follow in his footsteps by putting value creation first above everything else.

Another company, Lloyds TSB, which was formerly known as Lloyd Bank has also invested in value creation. As at 1983, when Brian Pitman, became its Chief Executive Officer, the bank was the smallest among the four UK clearing banks at that time. At a board meeting with the Bank’s senior management, the CEO decided to put value creation in the company foremost. Just like in the case of Coca Cola, this marked the transformation of the Bank. Since that time, the bank has tripled its return on equity to more than 40% as per the 1997 records. In addition, the bank has emerged to be the biggest and quickest growing banks in the United Kingdom, if not globally (Favaro, 1998). The value creation strategies which were undertaken by the bank include; heavy investment on mortgage services and retail insurance and discriminatory participation in corporate banking among others. Currently, the bank is confident of its capability to maintain its profitable growth, and this has led to the bank declaring that after every three years, it will be doubling its value of shareholders. Only very few companies in the whole world have managed to achieve that goal for instance the Coca Cola Company. The above companies are examples of the most profitable, leading and fastest growing companies globally, because they decided to put

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