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96 Strategic Planning in the Airport Industry ment of the multimodal Rickenbacker Global Logistics Park on land adjacent to Rickenbacker International Airport. Vertical Integration. A vertical integration strategy may involve either forward integration, wherein airport operators seek increased control of user-support functions, or backward inte- gration, wherein airport operators seek control of suppliers. An example of a vertical integration strategy would be Capital Region International Airport's (Lansing, Michigan) booking engine.89 Horizontal Integration. A horizontal integration strategy involves an airport combining with other organizations in the same industry. An example of this strategy is The Port Authority of New York and New Jersey's acquisition of the lease for Stewart International Airport in New- burgh, New York. Joint Venture or Alliance. A joint venture or alliance strategy provides for some of the bene- fits of collaboration without the transfer of ownership or operational control. An example of this strategy is Vancouver Airport Services, the consulting practice of the Vancouver Interna- tional Airport Authority, which manages an expanding network of 18 airports on three con- tinents and provides specialized consulting services to clients worldwide. Turnaround or Retrenchment. An airport operator pursuing a turnaround or retrenchment strategy usually focuses on cost reduction or asset reduction in an attempt to regain financial strength. The operator of Lambert-St. Louis International Airport pursued this strategy after American Airlines dismantled its mainline hub operation at the airport in 2003, following the airline's completion of its merger with Trans World Airlines. Divestiture or Liquidation. This strategy involves the sale or closure of an airport or part of an airport. This strategy is not commonly pursued because, particularly in the case of liquida- tion, it may be difficult to implement rapidly if the airport receives FAA grants. By completing Worksheet 7.03, "What Are Your Organization's Grand Strategies?" members of the planning team will be able to do the following: Determine which grand strategy or grand strategies are appropriate for the organization by determining where the organization fits on the grand strategy matrix presented in Exhibit 7-2. An organization's grand strategies are typically a function of market growth and competitive positioning. The text accompanying Worksheet 7.03 discusses appropriate strategies for air- ports that fall within each quadrant of the matrix. Explain the strategies that the organization will adopt to guide its long-term business objec- tives and why these strategies were selected. Determine the appropriate grand strategy or strategies for an organization by completing Worksheet 7.03, "What Are Your Organization's Grand Strategies?" 7.4 Setting Long-Term Objectives Long-term objectives are statements of the results that an organization seeks to achieve over a specified period of time (typically 3 to 5 years). Long-term objectives should address the orga- nization's strategic issues. Airport strategic plans typically include long-term objectives for the following areas: Financial Responsibility or Performance. This includes profitability and productivity (82 percent of respondents to the online survey have these types of long-term objectives in their strategic plans). 89 See (accessed May 29, 2009).

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Identifying Strategic Issues, Strategies, and Long-Term Objectives 97 Rapid Market Growth 1. Concentrated Growth e.g., DFW 1. Reformulation of concentrated growth (Using market or product development) 2. Horizontal integration e.g., PANYNJ 2. Vertical integration e.g., LAN 3. Divesture or liquidation 3. Concentric diversification e.g., LCK Strong Competitive I II Weak Competitive Position Position IV III 1. Concentric diversification 1. Turnaround or retrenchment e.g., STL 2. Joint ventures or alliances e.g., YVR 2. Concentric diversification 3. Divesture or liquidation Slow Market Growth Notes: DFW = Dallas/Fort Worth International Airport LAN = Capital Region International Airport (Lansing, MI) LCK = Rickenbacker International Airport (Columbus, OH) PANYNJ = Port Authority of New York and New Jersey YVR = Vancouver International Airport STL = Lambert-St. Louis International Airport 2005 The McGraw-Hill Companies, Inc. All rights reserved. Source: John A. Pearce and Richard B. Robinson, Strategic Management: Formulation Implementation and Control, 9th ed. (New York: McGraw Hill, 2005). Exhibit 7-2. Grand strategy matrix. Human Resources. This includes employee relations, training and diversity, and organiza- tional structure. Technology. This includes goals for technology implementation, such as improving productivity. Public Responsibility. This includes regional economic development; environmental programs and practices; and outreach to communities, regional businesses, and government agencies. Safety and Security. This includes both airside and landside enhancements. Customer Service. This includes customer service delivery and customer research (40 percent of respondents to the online survey have these types of long-term objectives in their strategic plans) Airport Operations and Access. This includes facilities maintenance, parking, and ground transportation options (21 percent of respondents to the online survey included these types of long-term objectives in their strategic plans). Airport Development. This includes capital development programs. Competitive Positioning of Core Business. This includes brand image, efforts to expand user and customer bases, and growth of air service options (domestic, international, cargo). Growth of Non-Core Business. This includes non-aeronautical revenue development oppor- tunities, both airside and landside. The type and number of long-term objectives selected will vary by airport. According to the results of the online survey, most airport strategic plans currently include four or five long-term objectives. Members of the planning team should jointly complete Worksheet 7.04, "Setting Long-Term Objectives," for each long-term objective selected. In completing the worksheet, the planning team will do the following:

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98 Strategic Planning in the Airport Industry Specify and explain the strategic issues that the long-term objective will address Describe the long-term objective, how the long-term objective addresses the strategic issues, and the challenges that might arise in implementing the long-term objective (as well as strate- gies for overcoming those challenges) Critique the long-term objective against the qualities of a successful long-term objective Set an organization's long-term objectives by completing Worksheet 7.04, "Setting Long-term Objectives."