strategic leadership and business transformation presentation
TRANSCRIPT
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STRATEGIC LEADERSHIP ANDBUSINESS TRANSFORMATION
TEAM MEMBERS
- Justin Maynard
- Ethel Iyaji
- Mark Saunders- Smrthi
- Abdiellah Madi
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WHAT IS STRATEGY?
WHAT IS PROFITABILITY?
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Strategies will be geared towards
- Building up customer trust
- Create customer preferences
- Create sustainable competitive advantage
In order to ensure industry or organisation
survival
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THE AIRLINE
INDUSTRY:
CHALLENGES AND
STRATEGIES
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P
CCCc
COMPETITORS
AIRLINES
COMPETITORSTHREAT OF
SUBSTITUTES
THREAT OF NEW
ENTRANTS
POWER
OF
SUPPLIE
RS
POWER OFCUSTOMER
S
POWER
OF
MARKET
INTERME
DIARIES
POLITICAL/LEGAL ECONOMIC SOCIO-CULTURAL
TECHNOLOGICAL DEMOGRAPHIC ENVIRONMENT
FORCES IN THE AIRLINES ENVIRONMENT
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Critical Financial Issues & Challenges
Cost Controls
Access to Capital Markets
Insurance
Fleet Replacement and Price of New
Aircraft
Industry Losses and InconsistentProfitability
Cost of Funds and Low yield on
Surplus Funds
Taxation
Ownership Issues
Productivity and Labour reform
World Economy
Irrational Pricing and predatory
action by major carriers
Over-Capacity
Cash Flow and ability to self-finance
Debt/Equity Ratios
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Newoperating
environment Bankruptcyand closing
down
Generic vs.Airline
business plan
Flexiblestrategic plan
(key)
Regulation vs.Liberalization vs.
Deregulation
Rising costs(fuel, labour,maintenance,
security)New generation
airlines vs.legacies (tiers)
Restructuringand Excessive
capacity
Competition(transport andtechnology)
Customer(target, and
loyalty)
Organizationaldesign and
Internalchallenges
Strategy
Duplication
AVIATION CHALLENGES IN THE 21ST CENTURY
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Staff relations and new types of employees
(Generation Y)
Legacy system dependencies
Lack of compromise
Air carrier ownership and control
Sustainability of air carriers and safeguards
Physical and environmental constraints Air transport and the global trade mechanism
Consumer protection and passenger rights
Impact of technology (aircraft, e-commerce,
CRSs and GDSs, Internet) on liberalization
process
Future approaches to regulatory reform
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Understand reality of change and become
flexible Revitalize strategy
LCC, LC/HV, Virtual carriers
Customer focus (ask what they want)
Eliminate duplication
Organizational accountability
Staff relations into strength Updating of airline systems
Build partnerships (alliances, interactive
marketing)
Act decisively
Diversify the business (core and non-core)
AVIATION STRATEGIES FOR 21ST CENTURY
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Airlines inventing new ways to reduce future
costs and spending of capital
Increased efficiency
Dependent upon aviation (links local, national
and international economies)
Airlines must take control of business issuesand work in partnership (first time in history)
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THREAT OF NEW
ENTRANT- DEREGULATED /
LIBERALIZED
ENVIRONMENT
- FREEDOM OF ENTRY /
EXIT
- AVAILABILITY OF
AIRCRAFT, ETC.
- COMPETING FORGROWTH, MARKET
SHARE, ETC.
RIVALRY AMONG
EXISTING AIRLINES
THREAT OF
SUBSTITUTES
- TELECOMMUNICATIONS
- VIDEO-CONFERENCING
- HIGH SPEED RAIL ROADS
BARGAINING POWER
OF SUPPLIERS
- SUPPLIERCONCENTRATION
BARGAINING POWER
OF BUYERS
- SUBSTITUTE PRODUCTS- PRICE SENSITIVITY
- BUYER INFORMATION
ADAPTED FROM COMPETITIVE
STRATEGY BY PORTER, M.E.
FIVE FORCES AFFECTING AIRLINE INDUSTRY PROFITABILITY
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Solid airline business plan
Flexibility
Diversity
Leadership Steady and moderate growth strategies with
a long-term vision
Effective cost cutting strategies - Reduce
cost structures, eliminate inefficiencies and
increase productivity to the greatest extent
possible (e.g., technological applications) Reasonable capital requirements
ACHIEVING SUCCESS
Ensure that available tonne-km remain
congruent with demand (route / network
realignment / optimization)
Shift capacity to take advantage of routes
and markets where depressed currency will
significantly increase value-for-money
opportunities for leisure travel
Improve balance sheets and credit ratings
(prudent capital planning)
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Develop strategies to counter continuing pressure
on yields (avoid price wars) Carefully evaluate new partnerships and alliances
Respond to consumer needs
Create an environment that enhances labour and
management relationships and cooperation
Engage in effective lobbying efforts to influence
critical government policies, laws, regulations andtaxes
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THANK YOU
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OUTLOOK FOR INDUSTRY PROFITABILITY
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Key Drivers for profitability (2013-17)
Rising House hold net worth
Corporate profits
Abating energy prices
Affordable Air fares
Improved Airline financial condition
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Profitability can be achieved across the economic cycle 2013-17 by
Consolidation
Pricing power through elimination of duplicative capacity Unbundling as a new and ancillary revenue source
Global joint venture agreements
Earning a return on invested capital
Fuel Costs
Fuel-efficient aircraftsAcquisition of oil refineries
Effective way to counter the impact of fluctuating fuel prices
Mergers
Pricing Rationalization
Capacity Discipline
Technology
Technologically advanced Aircrafts
Effective utilization of E-Commerce
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