Hello, everyone. This is Dr. Zhao. In this video, you will learn "Competition Positioning Part 1, Size and Profitability". Our objective is to understand the competitive landscape of an industry, and see where a company stands. Specifically, we'll answer two questions, such as, where do I stand in an industry in terms of revenue and profit? Second, which companies are my league or cluster that is similar in size, such as revenue and profits? We'll use airlines as an example. Let's first plot the graph of total revenue versus total cost for the US Airlines in year 2019. The dots in red, are US Airlines. We can see that DAL, which is Delta Air Lines, and UAL, which is United Airlines are very close to AAL, which is American Airlines, in size, in terms of total cost and revenue, and so they are comparable and in the same league. Southwest, LUV, is about half of their sizes, and Alaska airlines and others are quite small. In comparison, we also show the Chinese Airlines on the same graph in blue. We can see that the Chinese companies are smaller in size, also with a lower revenue over cost ratio than the US companies. To better say the difference in profitability, we plot a graph of operating income versus total cost for the same companies. Clearly, DAL, Delta Air Lines, UAL, United Airlines, and AAL, American Airlines are in the same league in terms of size. DAL and UAL made a higher operating income than AAL with less cost. LUV, Southwest is smaller in size, but above the regression line, indicating that it is quite profitable comparing to other airlines. Alaska Air and other US airlines are much smaller, and clearly not in the same league as American airlines. As a comparison, the airlines in China, the dots in blue, had a much lower profitability than the US airlines. Last, we compare the airlines on profitability from the angle of operating income versus total assets. We want to see how efficiently these companies were utilizing their assets to make money. Clearly, AAL, American Airlines has the lowest operating income in comparison to DAL, Delta Air Lines, and UAL, United with about the same total assets. In particular, UAL achieved the higher operating income with less assets than American Airlines. LUV, Southwest, has less than a half of American Airlines' assets but achieved an operating income only slightly lower than American Airlines. Implying that Southwest Airlines is very efficient in asset utilization. Finally, in comparison, the airlines in China, the dots in blue, had their asset utilization much less efficient than the US airlines on average. To wrap-up, American Airlines belongs to the league of the largest US airlines. Among them, American Airlines is the least profitable and least efficient in asset utilization. Comparing US versus Chinese airlines, we find that the US airlines are larger in size, higher in profitability, and more efficient in asset utilization.