This interactive case analyzes the dilemma that Iberia was facing in the year 2004 due to the entrance of low cost airlines into the Spanish market specifically in Barcelona. The case presents different options that students must evaluate.

It describes the history of the company until 2004 and makes a detailed comparison of the two business models: in network (the model used by Iberia) and the one that the low cost airlines use.

This case is designed for a Competitive Strategy course, especially for MBA. The case mainly serves to analyze the cost advantage, discuss the design of the strategy when the environment’s characteristics change and practice the identification and evaluation of strategic alternatives. It is a case that can be useful as a summary of the first part of the course on Competitive Strategy.

This case study allows for the discussion of the strategies that a company has available to deal with the growth of low cost competitors. In the year 2005 Iberia Airlines saw its market share in Barcelona airport decrease for the fifth consecutive year. The General Manager of the company was assessing whether it was necessary to change strategies: Should they also enter the low cost segment?

The multimedia version of the case helps students carry out the strategic analysis and is a great complement to the written version. The interactive graphs included help the understanding of the key aspects of the sector and of Iberia Airlines. As well as this the videos with the General Manager of Iberia in which he describes the situation of the enterprise and the strategic options they considered at the time give students a very in depth view of Iberia’s situation and their decision making process.