strategic leadership and business transformation presentation

7/30/2019 Strategic Leadership and Business Transformation Presentation

1/18

STRATEGIC LEADERSHIP ANDBUSINESS TRANSFORMATION

TEAM MEMBERS

- Justin Maynard

- Ethel Iyaji

- Mark Saunders- Smrthi

- Abdiellah Madi


2/18

WHAT IS STRATEGY?

WHAT IS PROFITABILITY?


3/18

Strategies will be geared towards

- Building up customer trust

- Create customer preferences

- Create sustainable competitive advantage

In order to ensure industry or organisation

survival


4/18

THE AIRLINE

INDUSTRY:

CHALLENGES AND

STRATEGIES


5/18

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


6/18

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


7/18

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


8/18

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


9/18

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


10/18

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)


11/18

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


12/18

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)


13/18

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


14/18

THANK YOU


15/18

OUTLOOK FOR INDUSTRY PROFITABILITY


16/18

Key Drivers for profitability (2013-17)

Rising House hold net worth

Corporate profits

Abating energy prices

Affordable Air fares

Improved Airline financial condition


17/18

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


18/18

strategic leadership and business transformation presentation

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