Establishing and Implementing Strategy | My Assignment Tutor

190.211 – Aviation Strategic Management 1Establishing and ImplementingStrategy190.211-Strategic Aviation Management 1SWOT Analysis• SWOT Analysis – A strategic analysis tool summarisingthe key issues arising from an assessment of anorganisation’s internal and external environments• A clear understanding of the findings of SWOTAnalysis assists the management to formulatestrategies (or strategic responses)190.211-Strategic Aviation Management 2SWOT Analysis for Southwest AirlinesExternal Environment -Threats• Terrorist attacks• Low demand for services due to a recession• Competition – another airline could enterinto the LCC markets and take away fromSouthwest’s market shareExternal Environment –Opportunities• Leverage low-cost strategy and expand as aninternational airline• Enter new business ventures – adding frillsto their current business model• Vertical integrationInternal Environment – Strengths• Low-discount costs compared tocompetitors• One type of aircraft, Boeing 737, cuts downcrew training and maintenance expenses• High levels of customer and employeesatisfactoryInternal Environment – Weaknesses• High employee costs• Dependent on few suppliers – Boeing• Flat structure – decentralised decisionmakingSWOTAnalysis190.211-Strategic Aviation Management 3Adapted from Fuller, M. (2010). Strategic Analysis of Southwest Airlines. USA: Saint Francis Xavier University1 2 3190.211 – Aviation Strategic Management 2How to Perform a SWOT AnalysisPossible analysis includes;• Review of past performance, previous strategies andprevious successes and failures• Monitoring of KPIs• Market Research• Staff reports, feedback and brainstorming• Expert opinion• Public opinion• Environmental scanning190.211-Strategic Aviation Management 4• Watching and monitoring competitors• Employ consultants• Academic research and industry reports• Role playing and game theory• Identify and assess the impact of known megatrends• Study internal resources and capabilities• Study pressure points and bottlenecks• Benchmark190.211-Strategic Aviation Management 5Formulating Strategy Under Uncertainty• Unknown cause or effect• Unknown mechanism by which something happens• Unknown probability of something occurring• Unknown impact• Unknown timing• Unpredicted event190.211-Strategic Aviation Management 64 5 6190.211 – Aviation Strategic Management 3Uncertainties in The Aviation IndustryExamples;• Changes in aviation regulations policy• Unforeseeable or volatile economic conditions• Unseasonal air travel pattern/demand• Unexpected events (e.g. terrorist attack, earthquake)• Increased airline competition on routes or markets• Labour disputes and strikes• Air accidents and incidents• Price increases or exchange rate movements190.211-Strategic Aviation Management 7Strategies to Deal with Uncertainty• More information, analysis or understanding• Timing … wait for trends or more clarity to emerge• Scenario planning or contingency planning• Maintain resources for several strategies• Maintain flexible resources• Spread risk (diversify markets or industries etc)190.211-Strategic Aviation Management 8• Rapid decision making and fast information systems• Let the leaders go first (second-but-better strategy)• Dip toe in the water strategy (trial or experiment)• Gain size (insulation)• Insurance (eg hedging)190.211-Strategic Aviation Management 97 8 9190.211 – Aviation Strategic Management 4Corporate Growth StrategiesIntensive GrowthStrategies• MarketPenetration• MarketDevelopment• ProductDevelopmentIntegrativeGrowth Strategies• HorizontalIntegration• VerticalIntegrationConcentrationGrowth Strategies• Single BusinessActivitiesDiversificationGrowth Strategies• RelatedDiversification(Horizontal ,Concentric,Joints ventures,Strategicalliances)• UnrelatedDiversification190.211-Strategic Aviation Management 10Intensive Growth StrategiesMarket Penetration – An organisation remains in thesame market but tries to attract more customers Techniques: more advertising or employ moresales forcese.g. Air New Zealand “Grabseat” or discountedfares in low travel season190.211-Strategic Aviation Management 11Market Development – To develop a new market in theexisting market or expand to other places Technique: attract different customers in theexisting market, or expand the business activities toother arease.g. SIA established Scoot to attract price-sensitivetravellers; AirAsia X expanded to Australian market190.211-Strategic Aviation Management 12101112190.211 – Aviation Strategic Management 5Product Development – To launch a new product in theexisting market Technique: launch a complementary product, orless expensive product, or more upscale version ofexisting producte.g. Air New Zealand “Skycouch Seat”; AirAsia X lie-flatseat on its long-haul flights190.211-Strategic Aviation Management 13Integrative Growth StrategiesHorizontal Integration – To purchase competing firms Aims: eliminate competition, gain greater marketshare, achieve sustainable competitive advantage Major drawback: anti-trust law (avoid themonopoly-type situation) Techniques: Merger, Acquisition, Buyout, Shareswap190.211-Strategic Aviation Management 14Vertical Integration – Backward or forward integration Techniques: gain control of inputs or suppliers(backward), outputs or distributors (forward), or acombinatione.g. Hong Kong Airlines owns a travel company sellingtravel packages to air travellers190.211-Strategic Aviation Management 15131415190.211 – Aviation Strategic Management 6Concentration Growth Strategies• Concentration Growth Strategies – To concentrate onthe primary line of business. Grow and remain in thesame industry.In nature, doing single business activitiese.g. aircraft & engine manufacturers190.211-Strategic Aviation Management 16Diversification Growth StrategiesDiversificationGrowth StrategyRelatedDiversificationHorizontal Concentric JointventuresStrategicalliancesUnrelatedDiversification190.211-Strategic Aviation Management 17Related Diversification – An organisation expands intoanother industry, but one that is similar to that of itscore product Create some kind of strategic fit, create synergy Horizontal or Concentric Joint Ventures & Strategic AlliancesUnrelated Diversification – An organisation expands toa totally unrelated or different industry No strategic fit, no synergy190.211-Strategic Aviation Management 18161718190.211 – Aviation Strategic Management 7Related Diversification• Horizontal Diversification – An organisation expands itsoperations by producing or providing a new,completely different product/service in a differentindustry for the same class of peoplee.g. Airlines enter the hotel business; airlines enter thetravel agent business• Concentric Diversification – An organisation expands itsoperations by producing the same product/service for acompletely different class of peoplee.g. FSCs establish LCCs – SIA & Tiger Airways (2004),Scoot (2011); Korean Air & Jin Air (2008); AirAsia &AirAsia X (2007)190.211-Strategic Aviation Management 19• Joint Ventures – Two or more organisationspool resources together to undertake amutually beneficially project Benefits: share costs, resources,technologye.g. CFM International – GE Aviation (US),Snecma (FR) producing CFM56 engine190.211-Strategic Aviation Management 20Unrelated Diversification StrategiesOften this strategy called as Defensive DiversificationReasons to diversify into unrelated business: Avoid adverse environmental issues in the industry =>to improve the organisation’s prospect Spread the risks => if the organisation is in astructurally unattractive or low-profit industrye.g. HNA group expands its businesses activitiesto different industries: airlines, air cargo, seacontainer, hotel, airport, seaport, property, etc190.211-Strategic Aviation Management 21192021190.211 – Aviation Strategic Management 8No Growth Strategies• Retrenchment & Turnaround – Cut back the operationsSell off assetsCut costsCore business onlyHarvestNiche190.211-Strategic Aviation Management 22Internationalisation Strategies• International Strategies – To expand operationsoutside existing country boundariese.g. International diversification provides theorganisation an opportunity to drive down costs byexpanding to other countries Benefits: advantage of economies of scale, greaterreturn on R&D cost190.211-Strategic Aviation Management 23How do you “Give Effect” to a Strategy• Product/service design and development• Pricing• Promotion• Distribution/availability of yourservice/product• Sourcing and resourcing24222324190.211 – Aviation Strategic Management 9• Shifting resources within theorganisation• Adding or subtracting resources to/fromthe organisation• Investing in people, production, systems,technology etc.• Changing attitudes, rewards, processes,systems, workflows etc25• Focus• Timing2627Strategies and their contributing factorsthat you might be able to see in a good ad?• Desired image• Positioning strategy• Segmentation strategy• Target market• Assessment of the market’s needs• Advertiser’s “problems”• Competitive strategy252627190.211 – Aviation Strategic Management 1028• The advertisers assessment of theircompetitive advantage• The USP• Service attributes and benefits• Campaign theme• Special offers• Emotional appeals• Research findings29• The scale of the advertiser’s budget• The ad agency• Trends• Changes to strategy• The purchase decision makingprocess30Where Do You Look to See TheseThings?• The logo• Positioning statement• Emotive words in the text• Photos and pictures• Colour• Size of the ad282930190.211 – Aviation Strategic Management 1131• Layout of the ad• Benefits or words or phrases highlighted• Position of the ad in the media• Media used• The “story” told• Sound190.211-Strategic Aviation Management 323132

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