The Internal Environment | My Assignment Tutor

190.211 – Aviation Strategic Management 1The Internal Environment190.211-Strategic Aviation Management 1The Internal Environment• The internal environment encompasses all ofthe activities and forces within the company’scontrol• Understanding the company’s internalenvironment means understanding its resourcecapabilities, relative cost position, financialpicture, and competitive strengths compared toits rivals190.211-Strategic Aviation Management 2The Internal Environment• People– Skills– Expertise– Attitude– Vision– Creativity– Loyalty– Connections– Customer focus– Morale– Work Ethic– Etc190.211-Strategic Aviation Management 31 2 3190.211 – Aviation Strategic Management 2• Processes– Decision making– Planning– Technology– R & D– Information system– Reservation system– Etc190.211-Strategic Aviation Management 4• Products/services– Uniqueness– Superiority– Performance– Value to the customer– Technology– Leadership– Profit margin– Etc190.211-Strategic Aviation Management 5• Assets and facilities– Cash– IP/Patents– Market share– Contracts– Brand– Customer loyalty– Planes– Buildings– Location– Efficiency– Etc190.211-Strategic Aviation Management 64 5 6190.211 – Aviation Strategic Management 3• Relationships– Government– Access/landing rights– Strategic Airline Alliances– Suppliers– Customers– Media– Financiers– Research organisations– Agents– Etc190.211-Strategic Aviation Management 7• Financial– Cost structure– Break even point– Profitability– Ability to raise capital– Etc190.211-Strategic Aviation Management 8Video: Standard & Poors rate theAirline Industry190.211-Strategic Aviation Management 97 8 9190.211 – Aviation Strategic Management 4Value Chain Analysis• Often called as Porter’s Generic Value Chain Analysis• A tool used to separate the activities, functions, andbusiness processing necessary in running a business• It locates the areas in the company’s process wherecost reductions or improvements can be made to thefinal value• Two activities in the value chain:– Primary activities– Secondary activities (Supporting activities)190.211-Strategic Aviation Management 1011Value Chain Analysis InboundLogisticsOperationsDistributionandOutboundLogisticsSales andMarketingServices ProcurementR&D, Technology and System DevelopmentsAdministration and InfrastructureHuman Resource Management Secondary activities Primary activities190.211-Strategic Aviation ManagementPrimary Activities in The Value Chain• Activities involved in product inputs (i.e.,receiving, storing, etc)InboundLogistics• Activities involved in converting the inboundOperations logistics into a product/service• Activities involved to deliver the finalproduct/service to the final customers (i.e.,warehousing, materials handling, etc)Distributionand OutboundLogistics• The means by which products/services aremade available to the publicSales andMarketing• Activities involved to make the productServices special190.211-Strategic Aviation Management 12101112190.211 – Aviation Strategic Management 5Secondary Activities in The Value ChainProcurement • Activities necessary to purchase the inputs• Activities to improve the product/serviceR&D,Technology andSystemDevelopments• Activities involved in HR functions (i.e.,recruiting, compensation, training,promoting, and terminating employees,etc)HumanResourceManagement• All the management activities (i.e., generaladmin, planning, legal issues, etc)AdministrationandInfrastructure190.211-Strategic Aviation Management 13Primary and Secondary Activities ofAirline Operations• Primary Activities – The process directly involved inproviding air transport service• Secondary or Supporting Activities – The processesinvolved in supporting air transport services190.211-Strategic Aviation Management 14The Value Chain in Airline IndustryInboundLogisticsOperations OutboundLogisticsSales andMarketingServicesProcurementR&D, Technologyand System DevelopmentsHumanResource ManagementAdministration&InfrastructureAdapted from Porter, M. E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press.-Financial Policy -Accounting -Regulatory Compliance -Legal -Community Affairs Pilot TrainingAgentIn-flightBaggage HandlingSafety TrainingTrainingTrainingTrainingYield Analyst Baggage TrackingSystem •Promotion•Advertising•AdvantageProgram•Travel AgentPrograms•Group Sales•Ticket CounterOperations•Gate Operations•Aircraft Operations•On-board Service•Baggage Handling•Ticket Offices•Route Selection,Planning•Passenger ServiceSystem•Yield ManagementSystem (Pricing)•Fuel•Flight Scheduling•Crew Scheduling•Facilities Planning•Aircraft Acquisition•Lost Baggage Service•Complaint Follow-up•Baggage System•Flight Connections•Rental Car andHotel ReservationSystem Information TechnologyCommunicationsProductDevelopment,Market ResearchComputer Reservation System, In-flight System,Flight Scheduling System, Yield Management SystemFlight, Route andTraining190.211-Strategic Aviation Management 15131415190.211 – Aviation Strategic Management 6Strategic Cost Analysis• Derived from the Value Chain Analysis• The major functional areas in the value chainare identified• The costs associated with each functionalarea are calculated and specific costs areassigned to specific activities• It helps identify whether a cost advantageexits at each/any stage of developing ordelivering the product/service190.211-Strategic Aviation Management 16Video: How Ryan Air RevolutionisedAir Travel190.211-Strategic Aviation Management 171617

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