Question

Developing a strategy for your firm is key to being successful in Airline. Your strategy will serve as your firm’s “roadmap” throughout the simulation. This assignment will guide you through the planning process. Be sure to read the case and the section on “The Strategic Management Process” in the Airline manual before you begin. Respond to the following questions to help you in planning your strategy.

Answer 1

The business of airline is really comptetitve due to various factors, the primary being the high variation in the cost of aircraft fuel, the huge cost regular maintenance and depreciation charges of the aircraft, high salary of the pilot, cabin crew and management in charge of the entire opretaion.

For all the above mentioned reasons it is extremely essential to have a pergfect curved out strategy to be successful in the business of airlins else it is almost certain that there is a high chance of huge subtsantial losses and finally the business proceeding to the state of declaring bankrupcy.

During this initial planning all teh essential questions are touched upon like the extected losses of operation in initial years, the break even point of operation and necessary steps of mitigating losses if any unforseen circumstances takes place. This strategy will serve as your firm’s “roadmap” throughout the simulation & guide you through the planning process.

As per Porter airline strategy involves whole set of activities not collection of parts which are as follows: -

1) Market

2) Network

3) Resources.

The various startegy from Market point of view are as follows: -

i) Pricing - The pricing can be mainly of 3 types, first being competitive pricing wherein customer prefers the lowest cost carrier, second being differential pricing wherein carrier shows some differentiaation in its services and charge a comparitively higher price, the thord being niche pricing wherein the carrier establishes itself as a premium service provider for luxury class.

ii) Distribution channel - Distribution channel can be both direct and indirect sales program. Indirect sales program incluedes corporate clients & travel agencies while online sale represent major online portals and distribution channels.

The various startegy from Network point of view are as follows: -

i) Network structure - A network as it sounds can be collection of nodes. In teh airline field it is obviously collection of various airports for landinga and take off. A proper network communication is extremely essential to access a global scale of operation and essential network channels also add to the number of customer attraction of the aircraft carrier.

ii) Partnership & alliance: In teh business of aircraft it is extremely essential to have proper merger and acquisition to survive in times of bad financial conditions.Besides the above this also includes mutual access to various services like air lounge, frequent fyer program and joint marketing sharing and saving cost for all teh carriers.

The various startegy from Resources point of view are as follows: -

i) Brand Image - It takes years to build a good reputation and brand image among teh customers. Once a brand is identified with positive attributes, which includes reliability and quality service of the aircraft at premium cost it is a asset to the airline.

ii) Customer relationship management - In this competitive world with the acquisition of customers being difficult the airline must focus on retaining its existing customer & use this network to rather increase customer base, In todays competitive world customer is the king and making sure teh customer is satisfied will help teh carrier to reach manifolds. Reward systems & frequent flyer program are essential ways to establish customer relationship.

iii) Service level - The service level comprises of various different attrbutes which includes services on groud, like premium lounge access, inflight meals, free gifts, baby carrier facility.

All these are the crucial factors in shaping a strategy for your firm in being successful as a airline.