Class Preview: The Delta Trainer case examines a vertical integration decision by Delta Airlines. We will discuss some of the strategic challenges faced by airlines, and why Delta thinks that vertical integration will address one of these issues.
After a careful analysis of the Delta Trainer case and studying the chapter, answer the following questions:
What is Delta Airlines’ strategic problem?
Why is Delta interested in acquiring the Trainer refinery? In answering this question, please use the following analytic frameworks: (a) Transaction costs (a/k/a vertical market failure), and (b) Strategic sourcing.
What advice would give to Richard Anderson concerning the proposed acquisition? Should Delta acquire Trainer? If the acquisition is made, what management challenges do you expect? If the acquisition is not made, then what should Delta do instead to address its strategic problem?
