Boeing quality control

1. Introduction

The success of any business is determined by the nature of relationship that the company has with its customers and its ability to provide value for money through products and services provided. Although products and services sold by an organization have unique features that make them appealing to the target audience, the purchase decision is greatly influenced by the perceived quality that the customer has towards the products and services being sold. Organizations that focus on the delivery of quality in both products and services tend to do better in the market they operate in and enjoy constant demand for their products.

Customers’ needs and wants are constantly advancing and businesses have to constantly improve their products in order to remain relevant. With advancements in technology, different organizations are incorporating machines in the workplace in a bid to enhance efficiency, improve the speed of production and reduce mistakes caused by human error (Takeuchi & Quelch, 2016). Machines offer an advantage over a human workforce in that they are less prone to making mistakes and only require maintenance. Their ability to improve on quality is higher because the technology used is equipped with software that enables troubleshooting. Since challenges are a common occurrence in the workplace, troubleshooting cuts down on the time taken to identify the origin of common challenges that affect the quality of products and services offered.

Although technology is commonly used to improve the quality of products and services provided by organizations, the incorporation of technology in the workplace could bring about negative outcomes if not well implemented. Take the case for Boeing as an example. Attempts made by the company to launch the Boeing 737 Max have negatively affected the company’s image as well as how customers perceive the quality of services offered by the airline (Isidore, 2020). Boeing 737 Max was launched by the company as the fourth generation of the Boeing 737 planes. The Boeing 737 Max was an improvement from the 737 Next Generation airliners and it was designed with advanced CFM international engines intended to enhance the customer experience during flights.

The Boeing 737 Max was first launched in 2011 and made its maiden flight in 2016 before being awarded the FAA certification the following year. Despite the research and safety precautions taken to ensure that the airliners were safe for travel, the planes were involved in two fatal accidents where 346 passengers lost their lives (Qooling, 2019). It was later discovered that the two planes crashed due to similar engineering problems, causing the public to question the quality of service provided by the airline. It was later discovered that the company had opted to cover up the incident so as to prevent damaging the company identity. The revelation resulted in all Boeing 737 Max planes being grounded across the world (Isidore, 2020). In 2020 however, the company started production with the aim of reintroducing the airliners back to the market after making the necessary changes needed to lower the likelihood of accidents in the future.

Throughout its years of operation, Boeing has established a positive reputation and customers associate its brand with quality and safety. Despite the success of other airliners however, the company image was destroyed by the shortcomings of the 737 Max and also the approach taken by the company when resolving the issues that were raised after two of its planes crashed (Isidore, 2020). Although the company has been authorized to continue manufacturing the 737 Max for future use, launching the planes and convincing customers to try out the new products and services offered has proven difficult. Although every plane in the series will be built in accordance with strict guidelines from the FAA, Boeing has had to adopt different approaches when launching the airliners in order to reassure the target audience of the planes safety and quality of service offered (Little, 2020). Stakeholders can no longer rely on the company’s reputation for having high quality products especially because the airliners had previously been launched in the market but failed to attract the expected customers due to the lack of quality in service and safety. Rather than relying on the company’s reputation for quality, stakeholders are forced to seek out more information before determining if the new product will offer a better quality experience from the one the target audience is already familiar with.

1. As-Is

Products that fail to meet customers’ standards of quality are unable to satisfy their expected needs and wants. Since customer satisfaction is influenced by the quality of the products and their ability to satisfy a specific need, there is the likelihood that customers opt for alternatives in the market when a company fails to live up to its quality standards (Newhouse, 2008).  Concerning Boeing, the two accidents caused the company’s existing and potential customers to question the quality of material and engineering that goes into designing the airliners and this had a negative impact on the company’s reputation for always delivering quality, safe and efficient products and services.

            At present, the company is yet to re-launch the 737 Max as different countries are yet to approve their use to carry passengers. Other than the normal inspections and assessments made before launching a new airliner, the company has to spend more money to hire professional engineers and quality assessors to go over the processes involved when designing the Airliners to check for any issues that may cause the planes to crash like they did in the past (Freeman, 2020). The added scrutiny has had a negative impact on the company brand because the company is forced to constantly validate the quality of its products and service. Although the measures are put in place to protect the passengers who will board the airliners, the added scrutiny has discouraged potential customers from flying using the 737 Max.

The ban on all Boeing 737 Max has had a negative effect on the company’s profits especially because the airliners were unable to bring in the profits and new clients projected. When the company was forced to stop flights using the 737 Max, it was as a result of the company’s poor quality in managing the human, physical and financial factors employed when designing and launching the airliners for commercial use (Isidore, 2020). The company must therefore dedicate a significant amount of resources and time towards rectifying challenges that led to the other planes being grounded and re-launching the new airliners in the market (Laris, 2019). A lot of capital has been allocated for the purpose of marketing the company and the new planes to the public in order to settle any safety concerns that clients may have and also reinstate the positive image that existed before the two planes crashed.

Boeing has also experienced losses in the form of lawsuits filed seeking compensation for the loss experienced after the two crashes. The company also dedicated a significant amount of money to helping those affected by the crashes for compensation and accountability (Isidore, 2020). The amount used combined with the cost of manufacturing the jets that crashed, running tests on the new airliners and the expenses needed to hire professionals to test the quality and safety of the planes is draining funds that have proven difficult to get when the company’s planes are grounded.

The grounded planes have also negatively affected the productivity levels of employees. The final product and its success after launch tend to be motivational for employees and encourage them to come up with different ways to innovate and have a bigger impact in the market (Heizer & Heizer, 2017). When the 737 Max was grounded however, it denied employees any opportunity to innovate or come up with different ways to improve the product. Most of the attention is focused towards doing away with the flaw that caused the accidents and also the inclusion of safety measures on the new planes to be launched as a way to limit crashes in the future (Mayer & Vanderheiden, 2020). Employees are overly engaged in resolving the problem that has already been identified and little effort goes towards coming up with ways to offer better services and also how to go about reclaiming the positive image that was lost.

• To-Be

The approach taken by Boeing could make market re-entry difficult even if the new planes meet the expected standards of quality. A customer’s willingness to try out a new product is influenced by the products actual and perceived quality. The actual quality is delivered through the product’s feature and the role they play in ensuring the product satisfies the need it was set out to achieve (Isidore, 2020). The perceived quality on the other hand is influenced by the customer’s interaction with the company, the product, information about the products and customer testimonials. It is therefore possible for customers to be dissatisfied with a product’s quality especially in cases where the perceived quality differs from the actual product quality.

The company will also facilitate regular training to help employees identify areas that may cause problems and what can be done to resolve issues before they cause too much damage. The training will help make employees more responsible and encourage them to be observant of issues that may affect the quality of the products and services offered (Johnston et al, 2016). Currently, the quality control department assumes the responsibility of ensuring that the planes are safe for travel. While the decision was based off of the two planes that crashed, continued reliance on a quality control department could communicate to other employees that issues regarding safety and promoting quality should be reserved to the quality control department. Boeing must therefore train all its employees to engage in ways that promote quality and the overall safety of both employees and the clients they serve.

1. Possible outcomes

Boeing can rely on its reputation, image and loyal customers to successfully launch the Boeing 737 Max. since the major challenge lies in convincing clients to board the planes, the company must ensure that both the perceived and actual quality are satisfied through the new product introduced (Isidore, 2020). The precautions taken by different countries before allowing the Boeing flights to ferry passengers will greatly assist in rebuilding the trust that clients had placed on the company (. A positive image will help to attract new customers and in so doing, increase popularity for the 737 Max airliners.

For Boeing, the goal should be to resolve any concerns that potential customers may have so as to ease their entry into the market. Other than convincing potential clients that the planes are safe for travel, the launch should also factor in how the company plans to regain its customer’s trust and erase the bad reputation established in the past. Boeing will therefore seek out different ways to reinstate its positive image (Isidore, 2020). The approach will do more to attract customers than publications and court rulings reinstating the safety of the planes as it will target customer’s fears and restrictions directly and find ways to resolve them. Marketing will greatly assist as it will provide the target audience with information about the problems that existed in the old models, the changes introduced and how the new changes will help improve on quality.

1. Conclusion

The concept of quality plays an important role in business as customers use their perceptions of quality to determine what products to purchase. In Boeing’s market, quality is closely tied to safety as a small mistake during flight could result in the death of all passengers on board. During the first launch, the company failed to adhere to its policy on maintaining quality and this led to its 737 Max airliners being grounded. The company has however reevaluated the processes that go into manufacturing the planes to ensure that they are safe and will deliver the quality that customers seek out during flights. Although Boeing is likely to face more challenges when re-launching the 737 Max, its dominance in the market and reputation will play a big role in regaining the passengers trust. The company should however ensure that it maintains the standards of quality achieved to prevent causing more damage to the company brand and identity in the market it operates in.

References

Freeman G, (2020) “More lessons from the Boeing 737 Max: How culture of quality failures led to tragedy” Intelex, retrieved from, https://blog.intelex.com/2020/02/01/more-lessons-  from-the-boeing-737-max-how-culture-of-quality-failures-led-to-tragedy/

Heizer, R. & Heizer, M., 2017, Operations Management: Sustainability and Supply Chain             Management, Pearson. (Global 12th Edition). ISBN-13: 9781292148748

Isidore C, (2020) “Boeing is nearing a long-delayed aprooval for the grounded 737 Max” CNN    Business, retrieved from, https://edition.cnn.com/2020/10/16/business/boeing-737-max-        approval/index.html

Laris M, (2019) “Long before the Max disasters, Boeing had a history of failing to fix safety        problems” The Washington Post, retrieved from,             https://www.washingtonpost.com/local/trafficandcommuting/long-before-the-max-            disasters-boeing-had-a-history-of-failing-to-fix-safety-problems/2019/06/26/b4f5f720-         86ee-11e9-a870-b9c411dc4312_story.html

Little D, (2020) “Quality issues cause Boeing 737 Max inventory glut” McGrawhill, retrieved      from, https://ominthenews.com/quality-issues-cause-boeings-737-max-inventory-glut/

Newhouse, J. (2008). Boeing versus Airbus: The inside story of the greatest international             competition in business. New York: Vintage Books.

Porter, D. J. (2020). Flight failure: Investigating the nuts and bolts of air disasters and aviation   safety. Prometheus Books

Qooling, (2019) “The impact of poor quality on organizations as shown by Boeing” retrieved       from, https://blog.qooling.com/the-impact-of-poor-quality-on-organizations-as-shown-    by-boeing/

Slack, N., Brandon-Jones, A. & Johnston, R., 2016, Operations Management, Pearson, (8th          Edition), ISBN13: 978129209867

Takeuchi H and Quelch J, (2016) “Quality is more than making a good product” Harvard             Business Review

Vanderheiden, E., & Mayer, C.-H. (2020). Mistakes, errors and failures across cultures: Navigating potentials. Cham: Springer.

1. The Pilot Record Database (PRD) is where all the information of the pilot records is stored. It is the place where as a human resource officer I would go obtain all the information about the pilot. The clearing house is managed by the Federal Aviation Administration (FAA). All part 119 certificate holders and fractional ownerships should register with PRD and evaluate all stored data regarding pilots prior to hiring them.
2. The organization responsible for establishing technical standards is the International Civil Aviation Organization (ICAO). They are often referred to as Standards and Recommended Practices (SARPS) and can be found documents known as Annexes to the Treaty Convention on International Civil Aviation. As an engineer for the avionics company this is where I will find the specifications.
3. If the aircraft has been involved in an accident the agency responsible for investigating is the National Transportation Safety Board (NTSB). It is charged with the primary role of investigating, determining the likely cause, and recommending to the FAA ways of preventing future similar occurrences. Furthermore, the FAA also by default investigates all accidents in its jurisdiction, which is the United States.
4. The Occupational Safety and Health Act of 1970 often cited as the OSHA Act offers comprehensive guidelines and regulations on workplace safety and health (Schneid, 2018). It has jurisdiction throughout the United States and related territories. In the absence of an approved state plan guiding workplace safety and health, the laws will be preempted.
5. The National Labor Relations Board (NLRB) does not have any jurisdiction over the airline industry. The airline industry is covered by the Adamson Railway Labor Act. The agency that regulates labor relations in the airline industry is the National Mediation Board (NMB). It also does not have any jurisdiction over the aerospace manufacturing or general aviation in that matter. The NLRB’s role is limited to the private sector employees and the United States Postal Service employees.
6. The agency within the United States government that has the primary responsibility of regulating aviation safety is the Federal Aviation Administration (FAA) (United States, 2017).
7. The Transport Security Administration (TSA) is responsible for day-to-day screening of airline passengers, baggage, and cargo. It falls under the Department of Homeland security and was created in the wake of the September 11 terrorist attacks.
8. The Bureau of Customs and Border Protection (CBP) is the agency that airlines providing international air services to the United States are supposed to transmit crew and passenger manifests before departure. It also falls under the Department of Homeland Security (DHS). The transmission must occur no later than 15 minutes after the aircraft departing the host country. Only appropriate officials can make changes to the manifest after it has been transmitted. The changes they can make only include adding a name and other minor amendments. The manifest transmitted must contain full names of crew and non-crew, date of birth, place of birth, gender, citizenship, permanent address, travel documents, passport information, flight number, and date and time of departure.
9. The open skies agreements accord both countries the right to operate from one point of one country to the other. They can also operate from a third party country. The open skies agreements are responsible for the increased trade and travel witnessed in the world today. The United States has agreements with over 100 countries throughout the world. The US has both bilateral and multilateral open skies agreements such as the 2001 Multilateral Agreement on the Liberalization of International Air Transportation (MALIAT).   

References

Schneid, T. D. (2018). Safety Law: Legal Aspects in Occupational Safety and Health. CRC Press. Print

United States. (2017). STUDENT PILOT GUIDE: Faa-h-8083-27a.1. AVIATION SUPPLIES & ACADE.

Consequences of Human Intervention in Aviation

Human factors play a significant role in the occurrence of events that occur within an organization including accidents and investigations into such occurrences should factor in how human failure contributed. In an organizational setting, the management bears responsibility for ensuring that employees operate in a safe and secure environment. Concerning the accident, the airline is to blame for the incident that led to the loss of life despite the incident being instigated by one of the employees.

As part of the airline’s responsibility, the airline was required to ensure that there is adequate manpower to run the airline. Adequate staffing prevents issues such as overworking and further reduces mistakes brought about by fatigue. On the day of the incident, Ken had only slept for five hours as this was the only time left after his previous shift. The night shift was also overly busy and this kept ken too occupied to even take his assigned break. After the busy shift, Ken was requested to work overtime by the morning shift manager due to a shortage of employees. After four more hours overtime, Ken is directed to drive through the runway, despite not having a permit and this leads up to the accident. The errors made by the Sunshine GHA greatly contributed to the accident. The management failed to hire adequate employees to account for the shortages resulting from poor weather. This was despite evidence that the employees were suffering from symptoms related to fatigue and being overworked.

The accident that occurred is as a result of the human factors instigated by the stakeholders. Duties such as hiring employees and assigning job duties are overseen by the top management. Although there are supervisors assigned to handle employees, the problem arises from the top management as they determine the number of people to hire as well as the corporate culture that determines how activities are undertaken. The airline, sunshine GHA and other stakeholders can therefore identify the role that their mistakes and mistakes made by top management when determining the workforce should therefore be taken into account when determining the events that led to the accidents so as to prevent a repeat of the same.

One recommendation to remedy the situation would be for Sunshine GHA to hire more employees to help deal with the demands brought about by the seasonal weather. Since blocked roads make it difficult for employees to get to work, the organization could arrange with other stakeholders such as Flysmiles Hotels Ltd to house employees during periods where the conditions are too poor to travel. Having employees closer to the airline will ensure that staff stick to their schedules and not force others to work overtime.

Another solution would be for the air traffic control to train its top management on the importance of leading by example. On the morning of the incident, the night supervisor had already left for work while other employees like Ken were forced to do more overtime. The new supervisor asked ken to take on more overtime as he was not aware that the employee had already been overworked and was fatigued. Better leadership will ensure that management assign duties and breaks accordingly to reduce the chance of overworking employees.

Lastly, the management should strive to establish communication between its stakeholders and members of staff. Ken had the experience and knowledge needed to drive on the freeway but was yet to receive a permit from the RCP. This forced the supervisor to direct Ken to drive through and this led to the mix-up with the air traffic control. Better communication will ensure that there is a steady flow of work and an organizational culture that holds each party responsible for whatever incidents occur.

SIMULATION REPORT

Executive Summary

The changes that have occurred in the global market have made a massive shift in the global view of businesses and has led to rapid improvements in the innovation to enable it to sustain itself and have a better competitive advantage (Al BAdi, 2015). It is, therefore, the role of the management team to make the necessary changes to improve it and come up with a better style of gaining a better market share. This is achieved by having better strategies and putting all the operational activities of the business running to enable it to attain better productivity and be more competitive in the market.

            This report gives performance analysis of the Savitar Air (SA) which is a regional airline carrier. Some of the important issues that have been examined in this report if the finance, operations, marketing, and human resource. All these have been put in place to support the vision of the airline and to establish a good strategic plan to be developed and be implemented.

            However, the achievement of better competitive edges needs the employees to unleash their full potentials and also have a better understanding of the advantages and benefits they can achieve through it (Mukerjee, 2016). It was also necessary to have the necessary knowledge concerning the competition that is present in the air industry and the actual competences of the company (Bieger and Wittmer, 2011). There have been challenges in the finance which have significantly resulted in low reliability, decrease in the quality and thus put the airline at higher risk of unsustainability.

            The airline have been put in the better position which was greatly influenced by the new management that came up with better strategies and a good business plan which has facilitated the airline in attaining its vision in reliability, quality and also in leadership. The marketing-focused in achieving better market penetration. The operation of the airlines was limited to regional until the period that the airline can attain better financial stability

             In the end, the airline achieved good improvements in the net profit, quality and also raised the stock price. The airline has therefore attained a better position in the market. The management should, therefore, continue to apply the strategies that have been put in place and also consider entering into the international market when they are in a better position to do so. Upgrading also of the current fleets is also necessary and acquiring more fleet.

Introduction

             It is the aim of all business to have a better competitive advantage in the market. Due to that, factors such as the finance, the human capital, technology, cost, innovation and also in the products delivery has been the key things that have put in the strategies to place the business in the better place (Ionescu and Dumitru, 2015). The motivation of the workers to needs to be highly considered because the success of the chosen strategies depends on the attitude and the role each worker plays to achieve the set goals (Barnett and Weidenfeller, 2016). In the airline industries, evaluation is vital in determining the efficiencies in the operations and also its competencies.

             The changes that have occurred in the airline industries mainly brought in by the increasing technology have made it necessary for businesses to become more innovative and also reduce the cost of their services. This has been greatly influenced by the rising competitions as different airlines are aiming at dominating the market.

            Therefore, the simulation was conducted to manage the operational activities of the Savitar Airline over twelve quarters to improve operational efficiency, human capital, financial structure, and the market share for its growth (Al BAdi, 2015). The organizational vision usually directs the goals and objectives of any organizations. It is for this that the airline seeks to establish itself to become the best airline, better quality, reliable and improve its market share.

            This report will analyze the performance of the Savitar airline which occurs in a very competitive environment and also highlighted the influence of the environment on its business strategies. The report will further determine the performance objectives of SA and will also highlight the vitals strategies that were undertaken to realize its success. The future projection and even the effectiveness of the management team will also be looked into. Finally, the report will give the important lessons learned during the simulation process.

Strategic Vision and Mission

According to Beiger and Wittmer, the vision of the organization is very important in directing the organization and enabling them to move towards the goal. This enables it to attain the necessary profits it needs, and therefore it plays a role in the strategic management process. Involvement of the team members in the setting of the goals usually brings a sense of belonging and self-motivates them because they need the goals to be achieved as they are part of it (Bieger and Wittmer, 2011). It simply enables the organization to attain sustainability in the most important areas such as finance, marketing, human resource, and operation management must be managed well for better outcomes in performance.

            In this regard, Savitar Air’s vision is to become the leading airline in the region by offering the best service in terms of class through provision of highly competitive rates together with safe and reliable service that will be valued by the customers. It was therefore, important for the company to have a vision which was clear and which will act as the center of all the operations the airline. The mission statement gives a link concerning the current organization business activities and the purpose of it. The strategies to put in place can come from the organizational visions and also the findings from the SWOT analysis. This provides for the development of the goals and objectives because it showed the strength, opportunities, threats and the weaknesses of the company (Gürel and Tat, 2017). A focus in this situation is put in on the current strength and opportunities that it has in the market and thus take advantage by use of the strength it has. This placed the organization a better position from the competitors

Environmental Analysis

• SWOT

The Savitar Air’s SWOT analysis in the quarter 1 of the simulation allowed the identification of the SWOT in the appendix 1 which highlighted that the Savitar airlines strength such as having good experience in the industry, offering of services in areas that were less attractive to other airlines, presence of good infrastructure and also having a framework for strategic planning (Jenkins and Williamson, 2015). Opportunities in the market were also present such as chance to increase fleet to allow more revenue to the company, offer of services in new markets foreign and resort as well as entry into new region to explore new routes and presence of flight magazine to promote brand loyalty (Gürel and Tat, 2017). Both the strengths and the opportunities gave the company an advantage as well as indicated better areas to invest in to allow for more revenue into the company.

The SWOT analysis also allowed for the identification of weaknesses that the company had such as less number of aircraft, existence of old aircraft from 1950s, high cost of maintenance less locations served by the airline and low passenger load factor. Threats identified by the SWOT analysis include high degree of competition, lack of brand awareness, low salaries and wages compared to competitors. The identified weakness and threats allowed the company to come up with ways to address the problem (Jenkins and Williamson, 2015). This was aimed to reduces the negative influence to the organization and promote growth.

Porter’s Five Forces

            There was high competitive rivalry, this resulted from presence of other lost cost airlines in the industry which thus resulted in the increased competitions. It was also easy for non-loyal customers to easily switch between airlines with a lot of challenges in exiting the market (Jenkins and Williamson, 2015). The customers also have that power because they are sensitive to the prices being offered by other airlines. There is also threat for substitution as there are also presence of other forms of transport which are less expensive and can provide the same service, in fact, there are also airlines that lower cost below that of high speed train. This is thus increases the chances of substitution.

            There is also rise in the fuel prices with major part of the airline cost going to the staff and labor accounting more than 40% this can lead to lower profitability which is then worsened by the little barriers for new airlines to enter into the market.

The main goal of the SA is to achieve its mission/vision through a well-defined and executed strategic plan to enable it attain the competitive edge in the airline industry. However, to attain this, there must be a good knowledge base and understanding of the nature of the competition in the industry, where they can compete well and their weaknesses (Magretta, 2011). A good understanding of this enables the business to have a good plan in goal attainment.

There was an exploration of more routes in the region which was enabled by the available financial support to acquire fleet. Marketing strategies through necessary promotion were instituted including fare sales, and this was important in enabling the company have a better position in the market share in meeting the individual needs (Jenkins and Williamson, 2015). The Savitar Air Porter’s Five Forces analysis revealed the need for frequent revision of the competitive strategies to facilitate the performance and reduces its high operating cost running at 78.8% during the beginning of the simulation

Corporate Strategy

The airline focused in proper management of the resources such as the finance by ensuring that they are used well for example in the maintenance, wages and acquisition of new products as well as management of the companies returns. It establishes the safe point for business and better strategies for the operation which will have a good effect on the final performance of the organization (Fraj, Martínez and Matute, 2011). It was therefore important for the Savitar airlines to implement important strategies to promote its growth and maintain sustainability.

            The Ansoff Matrix was applied in that the company focused in increases the sales of the existing services, this was done by the Savitar Air through promotions and advertisements. There was also introduction of the cargo services to the market which indicates development of the services offered (Baxter, 2019). There was also a focus in the market development which was done by the airline through introduction of new routes where there was use of the old fleets for short distance and for introduction of new and comfortable fleet. This strategy involves utilization of the available resources which were available in the airline and was effective as the benefits such as increased market penetration, improvement of the available product and development of the market for the services (Baxter, 2019). Savitar Air adopted market penetration through diversification by the introduction of the cargo services and also increasing the fleet and also increasing the number of routes (Hong and Zhang, 2010). This was important for its market.

Performance Objectives

            The main performance objective for the Savitar airline was to provide a service that is flexible, of good speed, quality, dependable and cost effective. This, therefore, required the setting of the SMART goals which gives the employees opportunity to set up competencies, build strong team dynamics and also promote support of the organizational vision to enable the airline attain this.

Marketing

                        The main aim for marketing was to increase the sales and also promote the airline brand together with creating awareness of its operations and services it offers. The strategy for marketing implemented mainly focused on the current market and expansion of the routes to put the organization in a good share of the market (Al BAdi, 2015). The decision to introduce the cargo service was made in the 3rd quarter, and it made a massive increase in the net profit over the remaining nine quarters (Baxter, 2019). The airline also remained in the regional market, and thus it gave it a better position to improve its position in the market and therefore allowed it to improve its market share. The decisions were made due to the fact that making a rapid expansion with the low-profit-margin would put the business at higher risk for collapsing just in case profits were not realized (Fraj, Martínez and Matute, 2011). Important factors such as promotion, fare sales, and reduction of the operation cost where highly considered.

            Savitar Air highly invested in promotions as a market strategy and also opted in use of the online platform. This was agreed upon, and the decision was to partner with popular web and reduces the flight charges by giving discounts. There was a need to rapidly expand the market and make it easier for the clients to get tickets; therefore, the use of popular websites was a good strategy because it had more potential to reach a larger market.

During the simulation from the 1st to the 12th quarters, the fare was increased from 38 cents to 40 cents per mile. Product provision was enhanced through the introduction of the level two snacks in the cabin service. This was introduced as there was room for accommodation without actually causing a change in demand and supply (Mayr and Zins, 2012). Addressing the basic needs of the clients improves satisfaction and also increases the chances of the client to be loyal to the airline. 

There was also an increase in the budget allocation and also for advertisements; this was done to create the demand for the routes which had low passengers load factors. The immediate impact was not realized until the 3rd quarter when the number of flights to different routes, and also there was a decrease in flights in some routes such as 1E2 which in the 3rd quarter has 5 flights but decreased to 4 flights.

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Operations

            A proper and more effective operational and process are important in achieving the performance goals and the overall growth. It also creates a window to gain a competitive advantage (Mukerjee, 2016). Savitar airlines aim to achieve and provide service of high quality, reliable, flexible and also make good profits.

            With the focus to penetrate the market to attain competitive edge, Savitar airlines initially used it 13 TP300 normal aircraft and later leased 4 of TP340. Maintenance was also kept low, and it also catered for other services for the flight. Other costs that was incurred were unavoidable as there was a need to maintain reliability and also considering security was very necessary. In the 4th quarter the airline also upgraded to the fleet by leasing 6 of normal RJ-350E and disposal of 2 owned normal TP-300 this resulted to a massive decrease in the net profit to $33996 but the profit increased in the 5th quarter.

            The company was able to come back to its normal operations by entering into new routes and also the allocation of the more comfortable TP340 and RJ350E on the long routes and the TP300 were allocated to the shorter routes. Flexibility on fuel was also considered on the procurement based on the contract purchases and spot (Baxter, 2019). The scheduling of the routes was also based on the passenger load factor; this reduced unnecessary flights and reduced expenses. The strategies reduced the cost of the operation which was mainly on the fuel, flight operation and maintenance services.

Human resource

            The human resource management is involved in the development of policies, practices and also other activities that can influence the way an employee behaves, performance and also the attitude. Presences of a good relationship between the employee and the human resource management place the organization at a better place for success (Loewenberger, 2013). It worth to note that, employees cannot come up with a good performance where there is no motivation, this can be in the form of rewards, social satisfaction and also satisfying the basic needs before moving to the next need.

            The airline aimed for a well skilled and competent individual who would be able to provide the best service for the company. It invests in the provision of training which it allocated budget and also offering an increase in wages (Loewenberger, 2013). This is part of the human resource, and it acts as the source of motivation to stuff. This promoted the reliability of the airline. Reward and recognitions acted as the most essentials in the human performance that are more likely to be long term solution for the employee’s satisfaction and on the other hand, promotes a more stable approach towards the market

Finance

            The prices of the fare per mile were increased from 38cents to 40 cents and kept constant throughout the 12 quarters. This is in line to provide a low-cost flight to facilitate and improve the market share for the flight this also places the airline a good competitive environment with others (Hamza, Mutala and Antwi, 2015). All businesses aim to have a good profit and attain sustainability which was also the case of Savitar airline. The aim in achieving profitability and realization of the investments done through the returns from investments. If more returns are desired, then there is a need to invest more, this is what the airline simply did.

            Savitar airlines made significant reduction in profit reduction in the profit during the 2nd, 4th, 6th, 7th and 11th quarter and it is mainly linked the cost of leasing of flights however it focused on maximizing the revenues by reducing avoidable cost in the fuel and also in maintenance (Hamza, Mutala and Antwi, 2015). At the initial start of the simulation process, the airline decided to use the available which lead to little net profit, but during the first quarter the company leased 4 normalTP-340 flight, this increased the expense it resulted decreased in the net profit.

            At the beginning of the simulation, the net profit of the airline was low at $5,253, but at the end of the simulation, it has significantly risen and attained a net profit of $255,164 this show rapid shift in profits with the highest percentage growth. The stock price increased from $20.00 to $32.94, earning per share increased from $0.04 to $1.70, and cumulative net profit was at $5,253 and increased to $1,316,842. This growth represents good management of the finances. The financial growth was achieved based on the growth of the net profit figures

Team Collaboration

             The decision-making process in the Savitar airline is deeply guided by the leadership. The servant leadership approach was adopted by the airlines to ensure that all the relevant activities or all the task that is supposed to be were performed within the necessary time (Barnett and Weidenfeller, 2016). Besides, engagement in collaboration was applied in the making decisions and in addressing other necessary functional issues in the company (Nam Nguyen and Mohamed, 2011). It was, therefore, necessary to appreciate the leadership style because of the ability to strengthen collaboration and also to play a huge role in the decision-making skills necessary for each in the team.

Future of Savitar Air

            The airline has a bright future with the current and continued implementation of the good strategies to help its growth. Initially, the airline net profit was low and this limited in the acquisition of resources to help in its operations. Currently, after the implementation of the strategies, the net profit greatly increased, and at certain quarters it became the leader in reliability and delivery of quality services. It is therefore important to note that a reliable airline has a very high demand especially on the issues of cargo services (Mukerjee, 2016). Therefore Savitar Air has bright future expansion and growth. The increase in the finances can also enable it to expand and explore other routes because it has the resources get other fleet and improve and improve on their services to ensure customer satisfaction

            The stock market price increased from $20 to $32.94, and this will highly attract investors and therefore will act as another source of capital. The capital generated can be invested to increases the number of available resources and generally expand the company. This will, therefore, put the company with a greater market share and will enable it to gain a better competitive age. The future for Savitor Air is thus bright.

Important Take Away

• A rapid expansion of an organization can cause negative growth if it is not stable financially; this is noticed in the areas where SA leased flight, and it leads to a massive decrease in net profits.
• The most important thing in giving direction for the attainment of the organizational goal is the vision of the organization. It is the one that directs how things should be done, but it must be supported by the financial, corporate and operational strategies which can be offered in good leadership.
• The human resource is a key function in an organization as it acts as the center for developing policies and addressing matters related to the employee to facilitate the attainment of its goals.
• Investment in the right resource can have a good positive impact on achieving organizational objectives. Better decisions are key to get the best outcomes.
• Investment of training has a positive impact on the reliability and quality of service offers by the employees. Savitar invested in the training of the employees which saw its net profit growth and also an improvement in the reliability making it become the leader during various quarters.

Conclusion

            This study was conducted to determine the effectiveness of strategies in business and to look into the challenges that come out during the decision making that was carried out by the Savitar Air. The aim was to enable the company to meet its goals in service and product delivery. The good leadership team and implementations of the necessary strategies involving finance, marketing and also in corporate made the airline attain better levels and even become a leader in the delivery of quality service and reliability. It also led to an increase in the value of the stock shares and rise in the net profit thus putting proper strategic plans as the solution to achieving organizational goals.

            The success in financial achievements has been marked by the ability to penetrate the market with slight changes in the pricing of the products. It can also be related to the promotions, fare sales and also upgrading the fleet to enhance the client comfort and improve satisfaction. The utilization of the SWOT analysis enabled the company to determine its strength to enable do operations in a highly competitive sector. It also showed the opportunities that were present to enable it to take advantage of and use it to attain its organizational goals.

Recommendations

            The Savitor Air realized a remarkable growth after the implementation of the strategies which therefore shows that the strategies that were employed were effective. However, some recommendations can help the organization attain better success. The first is a review of the strategies, continued reviews of the strategies enables the organization to come up with better strategies or improves the existing ones to enhance effectiveness. Acquisition of their website and proper marketing to enable them to sell more tickets and reduce the third party involvement

             Increase in the budget allocation on the promotion while help in improving the sales and thus profitability. The company should also consider the use of long term aircraft acquisition financing as opposed to the leasing this will increase the asset base and reduces the overhead cost and increase in profit. Continue with staff training to offer better services. Implementation of the performance appraisal system such as the 360-degree feedback for rewarding of employees who have performed well.

References

Al BAdi, K., 2015. The Dimensions of Marketing Mix. Management and Organizational

Studies, Vol. 2 No. 1

Bieger, T. and Wittmer, A., 2011. Airline strategy: From network management to business models. In Aviation Systems (pp. 77-102). Springer, Berlin, Heidelberg.

Barnett, R.C. and Weidenfeller, N.K., 2016. Shared leadership and team performance. Advances in Developing Human Resources, 18(3), pp.334-351.

Baxter, G., 2019. A Strategic Analysis of Cargolux Airlines International Position in the Global Air Cargo Supply Chain Using Porter’s Five Forces Model. Infrastructures, 4(1), p.6.

Fraj, E., Martínez, E. and Matute, J., 2011. Green marketing strategy and the firm's performance: the moderating role of environmental culture. Journal of Strategic Marketing, 19(4), pp.339-355.

Gürel, E. and Tat, M., 2017. SWOT ANALYSIS: A THEORETICAL REVIEW. Journal of International Social Research, 10(51).

Hamza, K., Mutala, Z. and Antwi, S.K., 2015. Cash management practices and financial performance of small and medium enterprises (SMEs) in the Northern region of Ghana. International Journal of Economics, Commerce and Management, 3(7), pp.456-480.

Hong, S. and Zhang, A., 2010. An efficiency study of airlines and air cargo/passenger divisions: a DEA approach. World Review of Intermodal Transportation Research, 3(1-2), pp.137-149.

Ionescu, A. and Dumitru, N.R., 2015. The role of innovation in creating the company’s competitive advantage. Ecoforum Journal, 4(1), p.14.

Jenkins, W. and Williamson, D., 2015. Strategic management and business analysis. Routledge.

Loewenberger, P., 2013. The role of HRD in stimulating, supporting, and sustaining creativity and innovation. Human Resource Development Review, 12(4), pp.422-455.

Magretta, J., 2011. Understanding Michael Porter: The essential guide to competition and strategy. Harvard business press.

Mukerjee, K., 2016. Factors That Contribute Towards Competitive Advantage: A Conceptual Analysis. IUP Journal of Business Strategy, 13(1), pp.26-39.

Mayr, T. and Zins, A.H., 2012. Extensions on the conceptualization of customer perceived value: insights from the airline industry. International Journal of Culture, Tourism and Hospitality Research, 6(4), pp.356-376.

McKechnie, D.S., Grant, J. and Katsioloudes, M., 2008. Positions and positioning: strategy simply stated. Business strategy series, 9(5), pp.224-230.

Nam Nguyen, H. and Mohamed, S., 2011. Leadership behaviors, organizational culture and knowledge management practices: An empirical investigation. Journal of Management Development, 30(2), pp.2

APPENDIX 1: SWOT ANALYSIS

APPENDIX 2: Porter’s five forces analysis

Competitive rivalry

• The levels of the competitive rivalry has become high resulting from low cost airlines
• Barriers of exit are high
• Customers who are not loyal can easily use different airline
• There is intense rivalry in the between the airlines as each one of them tries to achieve the leadership status.

Buyer power           

• Most of the customer are sensitive to fare changes
• The power of the buyer is raised by the presence of the online system for booking

Threat of New Entry

• The barriers that exist for entry of new airlines in the market is low
• Bureaucracy plays a role in establishment of new airlines
• Economies of scale

Threat of Substitution

• Presences of other forms of transport such as the road
• The cost involved in changing to the rail is lower
• The low cost airlines can offer prices which are less even than the fast trains

Supplier power

• The cost of labor and staff can be more than 40% of the total airline cost
• The power of the supplier is enhanced by the presence of Airbus and Bowing
• There is also minimal control over increasing prices of fuel with no substitutes of the oil

Increased Air Traffic

In recent years, the airspace industry has experienced a rapid increase in air traffic. This growth has seen an increment number of people at airports all over the world. Many travelers prefer air transport to other means of transport because it is fast and convenient. Air tickets have become cheaper and this enables travelers on a budget to book a flight without financial constraints. In order to sustain the growing demands of travelers, many airports are forced to construct new airports or increase their infrastructure. This paper will analyze the effects of capacity on National airspace, FAA's plan on ATC systems, impacts of equipment capacity on National Airspace System availability, and recommendation to expand the capacity of airspace.

Capacity has various impacts on the structure of airspace. First, delayed flights. Increased planes in the air, caused by an increased number of passenger lead to delayed flights in an airport. This delay is caused by a large number of planes, which exceed the limit airspace can control at a go. Hence, departing trains have to wait for others to arrive before departing. Statistics show that in 2010, approximately 18% of flights in America and 24% in Europe were delayed by 15 minutes, (Sunil et al, 2016). Second, delays caused by capacity increases the chances of encountering bad weather, and some passengers may fall sick. Also, delay increases congestion in the air space which is not safe.

Federation Aviation Administration (FAA) in cooperation with the airspace users has started programs to study changes in Air traffic Control System (ATC) procedures and travel regulations. Making changes in ATC steps, for instance, airport plans would pose a profound impact on the requirements of ATC (Hecht et al, 2000). Planning for modernization of facilities and equipment is important, and supporting the required research.

Unscheduled equipment outages occur as a result of maintenance activities. Theses outrages pose great impacts to the National Airspace System (NAS) daily. First, equipment outrages lead to reduced airport throughput. This means that the airport network is affected which interferes with data transfer and communication (Jackson & Green, 1998). Also, outrage can lead to flight delays or cancellation. Communication gadgets' failure may lead to delayed flight as attends cannot call out the call out the names of passengers, and also, the flight crew.

In order to expand the capacity of national airspace, stakeholders will need to move and implement new Air Traffic Management (ATM) technologies, while focusing on improving data sharing to collectively adjust airspace instead of using segmented approach (Booker, 2003). The government and other ruling bodies must enforce this with regulatory approaches, or risk losing the economic benefits associated with the aviation industry. Also, dealing with airspace problem will help prevent significant environmental damage caused by planes.

In conclusion, the number of airplane passengers has tremendously increased. People travel around the world using flights because it is the fastest means of transport. However, the number of passengers traveling daily requires that airports work extra hard to provide safety and comfort to passengers. This means that more planes have to fly. The Airspace structure is limited, and cannot accommodate many planes at once. Hence, airplanes have to wait for other planes to land, thus causing delay. Therefore, the stakeholders and the government should expand the airspace capacity to meet the passengers' demand.

References

Brooker, P. (2003). Controller workload, airspace capacity and future systems.

Hecht, M., Handal, J., Demarco, F. (2000). "An Analytical Model for Predicting the Impact of Maintenance

Resource Allocation on National Airspace System Availability", Transportation Research Board Conference Record, January.

Jackson, J. W., & Green, S. M. (1998). Control applications and challenges in air traffic management.

                In Proceedings of the 1998 American Control Conference. ACC (IEEE Cat. No. 98CH36207) (Vol. 3)

Sunil, E., Ellerbroek, J., Hoekstra, J., Vidosavljevic, A., Arntzen, M., Bussink, F., & Nieuwenhuisen, D.

(2016). Analysis of airspace structure and capacity for decentralized separation using fast-time simulations. Journal of Guidance, Control, and Dynamics, 38-51.

                                                            Introduction

                        Emirates airlines are the basic airline that is based in Dubai, United Arab Emirates. According to research, this airline is regarded as being the main subsidiaries of The Emirates Group that is completely owned and governed by the investment corporation of Dubai. As a result of that, it has the ability of operating and managing at least 3, 600 flights per week in several states across 6 continents. The general handling of cargo is ultimately handled by the Emirates SkyCargo. Conversely, the company has the ability of operating mixed fleet of airbuses as well as Boeing wide body aircrafts (Betz, 2010). The importance of that is because it has made it to be regarded as being one of the few airlines that have had the ability of operating an all-wide-body aircraft fleet.

                                                            PESTEL analysis

Political – various airlines can be easily affected by some political changes which the industry is ultimately sensitive with. The main political situations take into account conflicts and other economic conflicts going on in the airline industry. Some of the recent political and economic instability has enabled the company to obtain maximum profit. Since various states have also restricted some regulations, it has enabled the airline to play a key role in realizing the goal of promoting tourism (Mandina & Karisambudzi, 2016).

Economic factors – since Emirates airline is one of the most competitive airlines globally, it has managed to have favorable economic stability. Although several airlines have for years faced crashes and relentless conditions, the Emirates airline has had the ability of striving to maintain better economic situation. This has been enhanced by its better marketing strategies that are used by Dubai in promoting tourism as well as making it look more attractive internationally (Report: Dubai 2008, 2008).

Social factors – the airline is always aware of some of the demographic changes that might be influenced by ages, affluence, regions, as well as the number of employees working with it. This has the ability of impacting the demand for certain products and services. However, the airline’s crew ought to be conscious about all the cultural values of customers so as to offer services that meet the needs of the passengers. The airline requires that equal advantages and chances have been provided to all passengers (Sull et al., 2005).

Technological factors – technological advancement it highly taken into consideration by the airline so as to meet its competitive edge. For instance, the emergence of information technology (IT) and the internet impacts the services the airline offers because of operating and managing integrated technology services. The presence of IT systems has also enabled passengers or users to avail during flight.

Environmental factors – the airline always takes into consideration some of the environmental changes it might encounter. The intermediate weather conditions or climatic conditions have the ability of affecting or influencing its credibility directly. The recyclable cutlery service the airline provides has allowed it to be more attractive to passengers. Also, the eco-friendly gadgets enable the airline to examine actions as well as eliminate problems facing their society (Sull et al., 2005).

Legal factors – some of the government policies established in Pacific areas have the ability of protecting the airline from external factors, particularly environmental and political factors. Any change in these policies has the potential of affecting the revenue as well as the image of the airline. The policies and regulations offered by the government should have the ability of enabling the airline to be cautious in its local and international dealings. The actions and the operations of the airline are ultimately legal and arranged in a manner that will enable passengers to enjoy secure and safe flight. Despite that, legal and political factors are some of the main issues that have the likelihood of increasing the risks to the airline (Mandina & Karisambudzi, 2016).

                                                            SWOT analysis

Strengths

Presence of world class infrastructure enabling strong growth – the company have currently managed to achieve a 10 percent annual growth in ASK (available seat kilometers) for years as well as doubling its size within the last seven years. Other than owning at least 250 aircrafts, it has the ability of ordering more than 20 airlines to cater for the needs of the passengers.

Support from the local government – the company has managed to have a strong banking of their local government.  As a result of that, in the Arab kingdom, the airline has managed to become a symbol of economic turnaround (Betz, 2010). Likewise, since its existing chairman comes from the royal family, it means that the airline has the opportunity of being operationally and financially well positioned in the market.

Sponsorship and branding – taking into consideration the airline’s “Be There” campaign that introduced in partnership with the national geographic channel has ultimately become famous in several social media views. The company has also partnered with Hollywood Star Jennifer Aniston and Boeing in other various promotions. Moreover, the company has also managed to be the leading brand sponsors in various sports (Betz, 2010).

Global alliance – the airline boasts at least twenty codeshare partners as well as more than 150 interline partners globally. Likewise, the interline agreements has the ability of providing convenience to its customers who reaches their various destinations (Abed et al., 2006). 

Weaknesses

The presence of strong corporate culture means that not all approaches and diversification have been successful to the extent of developing innovative generation of a more advanced aviation and airline services. The presence of highly priced tickets offered by the airline has the ability of reducing the profits to be generated as compared to other rivals in the same industry (Abed et al., 2006). Conversely, the decrease in the prices of oil is also regarded as being one of the business paradoxes affecting the airline.

Opportunities

One of its main opportunities is the establishment of the Dubai World Expo 2020. Moreover, the presence of the modern Al Maktoum International airport is one of the factors that assisted the company to unlock its growth. Dubai also been regarded as being a tourism and business hub hence opening some of the untapped markets, for instance, Cuba and Iran.

Threats

Strong competition – the airline is experiencing strong competition from other airlines like Qatar, Turkish airlines, and Etihad. The same competition has also been tremendously increased by the emergence of modern airlines. As a result of that, it means that passenger share has to be shared amongst theses airlines.

Accusations of subsidiary returns by competitors in U.S – the United States airline competitors, for instance, United and American Airlines, and Delta airlines says that the benefits that the company gets from local U.A.E subsidies are as a result of acting as the government owned carrier (Gorgenländer, 2011). Although these issues are yet to be approved, has the ability of restricting the airline from expanding its presence in the United States. Moreover, because the airline’s aircrafts have more passenger seats, it is becomes difficult to fill them all hence affecting its profitability and future growth.

Global terror threats and conflicts – the ongoing conflicts and Middle East’s political instability are the main causes of concern. Since Europe have also been regarded as being the main target for terror attacks has the potential of impacting tourism, Emirate’s business, and subsequently the airline’s day-to-day operating activities  (Abed et al., 2006).            

                                                            Conclusion

            Since the company is also regarded as being one of the leading combined air service provider globally, serving at least 300 airlines in 35 states, its main functions entail catering, managing goods and ground handling, and offering travel services. The vision statement of this airline company entails maintaining international recognition as one of the leading company, in the act of security related services, offering aviation as well as setting a benchmark these services within their industry. Its mission statement also highlights the airline’s commitment towards safeguarding customers, its staff members, and goods against any unlawful interference via training, education, and continuous review. The reason for that is to ensure that its management authority have had the potential of implementing not only international but also other formulated industry practices and standards

                                                            References

Abed, I., Vine, P., Hellyer, P., & Vine, P. (2006). United arab emirates yearbook 2006. London: Trident.

Betz, F. (2010). Creating and managing a technology economy. New Jersey: World Scientific.

Gorgenländer, V. (2011). A Strategic Analysis of the Construction Industry in the United Arab Emirates. Hamburg: Diplomica Verlag GmbH.

Mandina, S. P., & Karisambudzi, J. (2016). Customer Retention Strategies: A Panacea to Reducing Attrition in the Zimbabwean Airline Industry. Journal of Marketing Development & Competitiveness, 10(2), 91–110. Retrieved from http://165.193.178.96/login?url=http%3a%2f%2fsearch.ebscohost.com%2flogin.aspx%3fdirect%3dtrue%26db%3dbth%26AN%3d131724604%26site%3deds-live

Report: Dubai 2008. (2008). Place of publication not identified: Oxford Business Group. Oxford Business Group

Sull, D. N., Ghoshal, S., & Monteiro, F. (2005). The Hub of the World. Business Strategy Review, 16(1), 35–40. https://doi.org/10.1111/j.0955-6419.2005.00350.x

                                                                        SHELL MODEL

Purpose

 The SHELL model is regarded as being one of the conceptual models of the human factors which assist in clarifying the extent of human aviation as well as assisting in understanding the human relationships which exists between environment as well as the human components in the human subsystems or the aviation system (International Asia Conference on Industrial Engineering and Management et al., 2015).

Structure

The Shell model mainly divides various human factors into four broad categories. The main areas of this model consist of liveware, environment, hardware, and software.  The software/liveware interface is mainly used for the purpose of representing the interaction which exists between liveware or people and the soft aspects of some of the tasks for instance documentation, procedures, manuals, and computer software.  The software is mainly used for the purpose of managing information of the task given.

The next component is the interaction which exists between hardware and people, for example, physical structure, equipment, and tools of the UAV. The third element of this model is used for the purpose of representing the personal interactions within the system. This mainly takes into consideration some of the issues such as teamwork, communication, and team interactions. The last component of this structure is mainly used for the purpose of representing the interaction which exists between environment and people. This includes things like weather and lighting extremes (Monica & David, 2009). 

Use of the SHELL model

The SHELL model is mainly used for the purpose of examining some of the analyzing human issues contained in Microsystems. In this case, the SHEL model acts as a framework for collecting information/data dealing with human performance as well as the contributory components mismatched during aviation accident/incident investigation or analysis. Furthermore, the SHELL model is also used for the purpose of understanding some of the systematic human factor relationships with the objective of enhancing safety or reducing errors (Maurizio, 2013).

                                                References

International Asia Conference on Industrial Engineering and Management, In Qi, E., In Su, Q., In Shen, J., In Wu, F., & In Dou, R. (2015). Proceedings of the 5th International Asia Conference on Industrial Engineering and Management Innovation (IEMI2014).

Maurizio, C. (2013). Risk, Security and Organizational Aspects: Informatica & organizzazioni - diretta da M. De Marco. Press FrancoAngeli

Monica Martinussen, David R.(2009).  Hunter Aviation Psychology and Human Factors. CRC Press

AirAsia X - Sustainable International Business

The Company’s Initial Foreign Market Entry Strategy and How It Has Evolved over Time

AirAsia X is currently the sole Long haul corporation whose flying operations are based on the European-Asia Pacific Corridor. Similar to other businesses the company has not achieved its current success without the challenges related to operations and competition (Lee and Carter 2012). AirAsia X designed its business operation strategy with the focus on Long-haul, low-cost airline. The effectiveness of the company’s business strategy is mainly achieved through the use of customized market segmentation by mainly targeting the wider populace that is highly enticed by low-cost flight services. The company’s primary objective is to increase its market share, sustain competitive ability while increasing its revenue generations. The airline is a subordinate of the largest Asia’s Short-haul, affordable or cost leader corporation the AirAsia (Fu, Oum and Zhang 2010). The company’s main foreign entry strategy is cost leadership. In that, the company is guided by the philosophy of saving money for its customers an aspect that has been essential in attracting and retaining consumers. Due to the increased competition that is driven by the well-established airlines in the international business the company undertook the cost leadership approach as a means of differentiating itself from all other companies.

Cost leadership as its entry strategy has categorized the airline as different and favorable both for long and short flight travels. In the contemporary society, consumers are not only becoming sensitive to the provided services but also the cost of these services. AirAsia X upholds the values of quality, affordability as well as travel convenience to its target which makes it more favorable (Fu, Oum and Zhang 2010). The company is able to sustain its affordable pricing approach by ensuring that its operating expenses are minimal. In 2010 the company emerged as the sole and most efficient airline post a restructuring that detached it from AirAsia company’s short-haul operations. This rearrangement meant that the company holds a different management to all its operations, and premises but it continues to utilize the AirAsia brand given that it is popular and well recognized globally (Lee and Carter 2012). The thought behind the strategy is to consistently drive movement for both short and long-haul relationships while sharing their marketing approaches. In addition, the company also focusses on partnerships such as with Malaysia National Carrier (MAS) with the aim of increasing its market share and increasing its competitive capabilities. In timely periods, AirAsia creates a number of modifications in the quest of meeting the changing demands from its consumers and market operations trends by creating new flight destinations, upgrading to meet foreign governments policies as well as economic restructuring by getting rid of flights that have proved to be ineffective.

 Retrieved from https://www.slideshare.net/razlim/entry-strategy-of-air-asia-dubai

The Structure of the Company and How It Integrates Its International Activities into That Structure

AirAsia X operates in Partnership with AirAsia short-haul Corporation despite their separation in July 2010 (Berkhout et al 2010). In that, the company operates on its own but mainly depends on AirAsia’s operation brand, promotions, marketing and website in their symbiotic association that seeks to drive consumer traffic. As an associate, the company mainly benefits from the well-established and accepted brand in the global market. Its associate structure also extends based on its collaboration with large international flight companies such as Virgin, Air Canada among other different shareholders with the objective of acquiring support as well as a partnership with respect to international flights (Adler et al 2014). Through the partnership structure, the company integrates its global operations by utilizing the brands and marketing grounds to gather more consumers and establish itself in different markets effectively without affecting its operations and revenue gains (Wang et al 2016).

Retrieved from https://www.airasia.com/vn/en/inflight-comforts/seat-options.page

Retrieved from https://www.airasia.com/vn/en/inflight-comforts/seat-options.page

References

Adler, N., Fu, X., Oum, T.H. and Yu, C., 2014. Air transport liberalization and airport slot allocation: The case of the Northeast Asian transport market. Transportation Research Part A: Policy and Practice, 62, pp.3-19.

Berkhout, F., Verbong, G., Wieczorek, A.J., Raven, R., Lebel, L. and Bai, X., 2010. Sustainability experiments in Asia: innovations shaping alternative development pathways. Environmental science & policy, 13(4), pp.261-271.

Fu, X., Oum, T.H. and Zhang, A., 2010. Air transport liberalization and its impacts on airline competition and air passenger traffic. Transportation Journal, pp.24-41.

Lee, K., and Carter, S, 2012. Global marketing management: changes, new challenges, and strategies. Oxford, Oxford University Press.

Wang, K., Tsui, K.W.H., Liang, L. and Fu, X., 2016. Entry patterns of low-cost carriers in Hong Kong and implications to the regional market. Journal of Air Transport Management.

Capstone DQ

DQ Set 1

Aircraft manufactures

There are various aircraft manufactures that dominate the market:

Boeing; It is based in US and headquartered in Chicago and its is considered the biggest manufacturer for both military aircrafts and commercial jets

Airbus – it’s based in Europe and headquartered in Toulouse, France and other cities.

Bombardier – it’s based in Canada and ranked among the top three manufacturers of Civil Air Craft in the world.

Sukhoi Holding Company – mini -SWOT analysis

Strengths

It is a reputable brand including the various product lines’ range and uses advanced technology. Its products are high quality and has qualified and experienced workforce

Weaknesses

The major weakness for the firm includes a limited regional focus which means that it serves a limited market whose demands include military products and small jets.

Opportunities

The opportunities available includes the development of high quality small super-jet that can compete with others in the market

Threats

 The market is highly competitive and its shrinkage over the years may hinder the intended control of regional market share since many sales for such jets have been made.

For Sukhoi to develop competitive advantage over other manufacturers, it should be a low-cost provider that is highly differentiated. Differentiation involves providing product with better features than competitors (Coulter, 2013). Low cost will be necessary over the short-term so as to obtain a foothold in the regional market.

The firm should majorly focus on the differentiation strategy since the high competition may make low cost untenable.  Differentiation strategy involves a firm competing through provision of unique product features that will be valued and perceived differently by customers (Coulter, 2013). The Aircraft provided by the firm should have unique features that attract customers.

DQ Set 2

The key success for Toyota can be related to its various functional strategies – product, people and even support processes. The basic idea driving the success is that good products stems from effective thinking. The product success is defined by high quality, value and reliability for the Toyota vehicles. The human resource strategies that place emphasis on training and education which improves the employees skills are vehicles are becoming increasingly complex. The support process success can be seen the unique system of manufacturing that enhances productivity in the factory (Coulter, 2013).

The production system for Toyota is represented by the Miyagi Factory, and the system involves positioning the cars side-by-side on the company’s assembly line. This is different from tip-to-tail method applied in many car factories (Coulter, 2013). This increased productivity by reducing workers movement while a raised platform reduced cost related to heating and cooling.

Camry is deemed to be among the best selling due to great reputation driven by reliability, safety and even durability. While it is true that praising the sporty and innovative nature of the car may look strange, the strategy would help establishing it in the market. The consumers are likely to a have a different definition of sporty car models as long as Camry aligns with their demand.

The reason for launching the Scion Car model by Toyota is to serve the market that cannot afford highly priced models. The strategy was to help the firm compete on the basis of low-cost cars but which is highly reliable and good quality. The low price strategy would assist in increasing the sales by serving customers with low income.

Reference

Coulter, M. K. (2013). Strategic management in action. Upper Saddle River, N.J: Prentice Hall.

The Sinai plane crash

Introduction

The aviation industry has faced many terrorism activities and threats since terrorists attack the planes in order to seek the world’s attention (Thomas, 2008). A number of terrorism activities have happened such as the Sinai plane crash, Somalia plane crash, attacks in the international airport in Brussels, the Paris shooting and bombing among many others. The terrorists target the aviation industry suggesting that it is an attractive target (Price & Forrest, 2012). The attacks are fatal, clear fear amongst the people thus terrorists feel they have achieved even attention from the media (Tahmisoğlu et al, 2009). Therefore this paper will focus on describing the Sinai plane crash and how the incident led to scrutiny of the airports screening processes and security at large.

A Russian metrojet ferrying about 224 people both passengers and crew was reported to have crashed soon after taking off on 31^st October 2015 (Bassiouni, 2016). Both Egyptian and Russian officials confirmed that all people on board were killed. The plane, Airbus A321-200 disappeared 25 minutes after taking off according to what officials reported (Stephanopoulos et al, 2015). The Egyptian transportation manager noted that nothing unusual happened before the plane crashed since the pilot did not report anything abnormal before the crash happened. There were earlier news reported that the pilot had reported some technical problems and wanted an emergency landing. The Egyptian minister however denied these claims suggested that the plane did not experience any technical problem before crashing. The minister confirmed that communication was efficient and normal between the pilot and the tower indicating that everything was fine. The plane is said to have disappeared suddenly without prior warning because communication was normal between the pilot and the tower (Abougabal, 2015).

The Russian embassy in Cairo confirmed that no survivors were reported from the fatal crash. Hours after the crash took place, an Islamic terror group popularly known as ISIS claimed to have been responsible for the plane crash (Abougabal, 2015). Both Egypt and Russia governments did not believe in these claims since the terrorists lack necessary weapons to bring down a plane which is over 20,000 feet above the ground (Abougabal, 2015). The terrorists are known to attack landing or planes which are taking off (Stewart & Mueller, 2013) thus the governments denied the claims since the plane was at very high attitude above the ground. The governments looked at the possibility of a bomb which would have been planted in the plane. The plane crashed shortly before it landed at airport in El-Arish in the northern Sinai spreading the wreckage over long distances. For instance the body of a three old girl was found 5 miles from the scene of the fatal crash (Nora-Ide, 2015).  

Russian security later confirmed that the plane had been brought down by terrorists which confirmed that as an act of terror. Foreign explosives were found on the debris from the plane indicating that terrorists had been involved (Abougabal, 2015). The Russian president said that the culprits would be found and punished for the cowardly act of terror. A bomb is confirmed to have been planted on the plane which split the metrojet on the 31^st October 2015 killing all the people on board (Abougabal, 2015). Pieces of the plane scattered and dispersed over the long distances as a result of the bomb planted by the terrorists. The terror group reported to have bombed the Russian plane because of the Russian air strikes which happened in Syria. In addition, the terror group confirmed to have been responsible for shootings and bombing which happened in Paris killing over 120 people and injuring many others.

The Russian presidents after the terror groups claim said that the Russian air strikes would be intensified since the government had nothing to negotiate with the terror group (Abougabal, 2015). The Russian government supported the Syrian government against the terror groups which the president confirmed they would not withdraw their warplanes as a result of the cowardly terror attack by the Islamic group. The world was however shocked by the Egyptian intelligence as well as the airport security since they could have prevented the crime (Abougabal, 2015). The Egyptian government reported to have fully controlled Sinai yet terrorists were able to bomb the plane killing so many Russian terrorist. This meant a decrease in tourists who toured Egypt since insecurity was vivid since the terrorists attacked at the doorstep of Egypt. The Egypt interior security reported that it intensified security at the airport and that there were no security shortcomings when the fatal crash happened (Abougabal, 2015).

The interior security denied to have detained two airport employees in connection with the crime. After the crash happened, both Russia and Britain said they would suspend the flights to the red sea resort because of insecurity reasons. Egypt would suffer losses from the tourism industry since it has Russia and Britain as their main tourists thus getting much income from the tourism industry (Abougabal, 2015). Confirmation that a bomb had been planted on the plane brought to that decision where Britain and Russia suspended their flights to Egypt. The Egyptian government though denied that indeed traces of a homemade bomb had been found on the debris. However both Britain and Russian governments believed that a bomb had indeed been planted by the terrorists after the Russian FBI announced from the research they carried out (Abougabal, 2015). Security experts suggested that confirmation of a possible bomb would have less impact on most European flights. Security concerns would be raised over the airports beyond Sharm el-Sheikh. It was said that current European standards used to screen luggage and checking people should prove efficient and sufficient in order to prevent such a crime from taking place again.

It was noted that some airports did not have right gadgets for performing x-rays on bags which puts people at risk (Nyampong, 2012). Terrorists are said to target airports thus governments should ensure that intense security measures are put in place in order to note unusual things that would end up causing problems (Ghobrial & Irvin, 2004). Staffs going into restricted areas should be screened since reports suggested that the bomb might have been in the staffs’ luggage since passengers luggage is screened thoroughly. Intense security measures have currently been put in place where all peoples luggage are screened inclusive of the staff. Carrying out thoroughly screening on everybody reduces chances of explosives and other substances getting in the planes (Clapper, 2014). New technology has been indeed put in place in most airports such that any possible explosive is noted before causing harm to the people (Archick, 2011). Some report suggested that passengers would pay some staff at Sharm el-Sheikh in order to bypass the long security queue which is dangerous. All people should be screened thoroughly thus this incident ensured that security measures in most airports were intensified in order to prevent such crimes from taking place again.

Conclusion

From the above discussion it can be evidently concluded that the aviation industry faces challenges terror being one of the major challenges. The Sinai plane crash attack was one of the fatal attacks that the industry has faced, apart from the 11 September attack. The attacks cause deaths to various innocent people thus the aviation industry need to be vigilant in its security in order to prevent such loss of many lives. Currently security measures have been put in place in various airports as one measure of preventing terrorism activities in order to prevent deaths which cause morning to various countries and the world at large.

References

Abougabal, H. (2015). Sinai plane crash dents economic revival. MEED: Middle East Economic Digest, 59(45), 7.

Archick, K. (2011). U.S.-Eu Cooperation Against Terrorism. Current Politics & Economics Of    Europe, 22(3), 519-545.

Bassiouni.C.M (2016) Chronicles of the Egyptian Revolution and its Aftermath: 2011–2016.       Cambridge University Press, 2016

Clapper J. The Perpetual Journey Of Intelligence And Aviation. Vital Speeches Of The Day          [serial online]. December 2014;80(12):387-390. Available from: Academic Search          Premier, Ipswich, MA. Accessed March 19, 2017.

Ghobrial, A., & Irvin, W. A. (2004). Combating Air Terrorism: Some Implications To The           Aviation Industry. Journal Of Air Transportation, 9(3), 67-86.

Nora-Ide, M. (2015, November 2). Irish officials will probe plane crash that left 224 dead. Daily Mail. p. 8.

Nyampong, Y. O. M. (2012). Insuring the Air Transport Industry Against Aviation War and         Terrorism Risks and Allied Perils: Issues and Options in a Post-September 11, 2001 Environment. Dordrecht: Springer.

Price, J., & Forrest, J. (2012). Practical Aviation Security: Predicting and Preventing Future       Threats. Burlington: Elsevier Science.

Stephanopoulos G, Marquardt A. Investigation Into Mysterious Plane Crash. Good Morning        America (ABC) [serial online]. November 2, 2015;:1. Available from: Regional Business    News, Ipswich, MA. Accessed March 19, 2017.

Stewart, M. G., & Mueller, J. (2013). Terrorism Risks and Cost-Benefit Analysis of Aviation       Security. Risk Analysis: An International Journal, 33(5), 893-908. doi:10.1111/j.1539-         6924.2012.01905.x

Tahmisoğlu, M., Özen, C., North Atlantic Treaty Organization., & NATO Advanced Research     Workshop on Transportation Security Measures to Counter Terrorism. (2009).            Transportation security against terrorism. Amsterdam, Netherlands: IOS.

Thomas, A. R. (2008). Aviation security management. Westport, Conn: Praeger Security International.

"The Rise and Demise of PATCO"

The article presents an argument that the primary goal of Professional Air Traffic Controllers Organization (PATCO) strike aimed at addressing the rank-and –file work-related problems specifically through work week reduction and retirement system improvement. it seeks to argue that there was work-file frustration with autocratic form of management and that the FAA managers joined forces with Reagan administration to have PATYCO destroyed without taking into account alternatives that were less radical (Hurd & Kriesky, 1986) .

The PATCO Bargaining Objectives

The analysis by Northrup asserts that the main objective of PATCO’s strike was the determination of wages on a private sector model. However, the article argues that the major objectives of PATCO related to short-work week, wage gains and a better retirement plan. The article narrows the bargaining objectives to shortening of the work-week and improvement of the retirement system, which are supported by the UPI 1981 article which reported the likelihood of the contract to face rejection due to failure to address these main issues (Hurd & Kriesky, 1986).

The Role of FAA Management

The Northrup’s analysis failed to recognize the role of management in the conflict and only attributing it to the poor relationships with the organizations personnel. The article deeps further into the management’s problems which played a role in this strike and highlights issues related to working conditions and the failure of this management to understand the employee organizations’ role. The management practices led to various problems among the employees such as burn out, hypertension and job stress faced by air-controllers. The FAA management failed to accept the legitimacy of PATCO as an employee representative which made the union to respond with a confrontational and aggressive manner (Hurd & Kriesky, 1986).

Internal Dynamics of PATCO

The Northrup’s analysis had failed to clarify the changes that had taken place in PATCO which led to the strike. These changes involved the structure of the organization which saw its enhanced standing with employees. Membership had increased in the years before the strike to 94 percent of those eligible. The plan for the strike had started internally before 1981, which involved adoption of a new policy that required 80 percent of air traffic controllers to vote for any industrial action campaign. Choir boys were selected as activists who could influence rank-and –file and articulate well the positions of PATCO. The internal cohesiveness became so tight that it created a momentum which increased the possibility of a strike. The changes even ensured that no board members would vote for the contract and those who supported it might have been forced into resignation by members (Hurd & Kriesky, 1986).

The Reagan Administration Strategy   

The article argues that Reagan’s administration actions played a role in making reaching a negotiated settlement difficult. It did this through the Department of Transport which entered into a contract with Morgan, Lewis & Bockius law firm that held a non-comprising approach to such labor negotiations. Secondly, J. Lynn Helms was appointed by Reagan as the head of FAA, and he had developed a strong ant-union stand earlier. The Reagan administration also resulted to firing of controllers and remained firm on this strategy while rejecting recommended alternatives that would allow negotiations. The hard-line attitude affected negatively the collective bargaining environment in the country(Hurd & Kriesky, 1986).

Conclusion

The FAA autocratic management led to increased militant nature of PATCO and the union internal activities became narrowly directed towards strike preparation. Reagan administration hard-line encouraged the FAA management stubbornness and these factors made the strike to be inevitable.

References

 Hurd, R., W., Kriesky, J., K., (1986). "The Rise and Demise of PATCO" Reconstructed:

 ILR Review. Sage Publications, Inc.  Vol. 40.1.

Article Review

Introduction

The theme of the article is based on the order of the United States government on airlines on stating their fees more clearly.  The government in the United States in the year 2011 announced new rules on the protection of passengers which are aimed at developing frustrations over the fees that the current airlines offer (Stelin, 2011).  Despite the fact that the rules are not normally based on limited rules set on how many the involved corporations should charge for transporting items such as bags they do not normally necessitate airlines to more closely disclose the fees as well as the advertisements (Stelin, 2011).  The advertisements are required to state the full prices that include the taxation by the government.

The set of rules that were released by the American government additionally necessitate refunding all the luggage fees if their luggage are lost and delays should be reported to consumers which exceed thirty minutes (Stelin, 2011).  The airlines are required to display their stated fees on their websites which involve meals, baggage, canceling and reservations changes.  The fresh rules require that the airlines and all the tickets agents consult passengers while updating baggage charges before as well as after their purchases.  The issue of the rules was expected to raise cancellations of air flight which in turn increased efficiency (Stelin, 2011).   The government was particularly objected at ensuring that the airline's passengers are fully protected.

In summary, the rules set by the government for the airlines were it was trying to deal with the increasing traveler's frustrations. This is mainly based on their pricing of tickets as well as all the hidden fees that were not previously exposed. The objective is mainly to ensure that the consumers are not treated in a manner that is unethical through higher charges. The passengers should be fully aware of all the charges in order to understand fully what they are getting.  The rules can be termed as effective in offering full protection to the passengers.

            Reference

Stelin, S. (2011). U.S. Orders Airlines to State Fees More Clearly. Retrieved from http://www.nytimes.com/2011/04/20/business/20air.html