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Since the deregulation of the airline industry in 1978, Rosenbluth International has faced three significant threats to its profitability: increased competition, price sensitivity of consumers, and the rise of online travel agencies. These challenges led to operational difficulties and market positioning issues. With extra capital, I recommend diversifying by creating a charter service with specialized tours to capture niche markets. Successful players like Rosenbluth often resist changing their business model due to established customer relationships and brand loyalty. As American Express integrates Rosenbluth, a focus on compatibility and cultural alignment will be crucial.
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What were three major threats to Rosenbluth’s profitability since the airline deregulation in 1978? • What problems were caused to Rosenbluth International by these threats? • Which strategy would you recommend that Rosenbluth do with some extra capital: (1) open new travel offices in other cities, or (2) diversify by creating a charter service with its own airplanes and create specialized tours? Please explain your rationales. • What are the major reasons for successful players like Rosenbluth to resist changing their business model when the external environment changes? • On July 15th, 2003, American Express acquired Rosenbluth International (http://www.rosenbluth.com/). How should American Express go about assimilating Rosenbluth into its corporate structure?
