BH6006 Strategic Management

BH6006 Strategic Management

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BH6006 Strategic Management

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BH6006 Strategic Management

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Course Code: BH6006
University: Kingston University

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Country: United Kingdom

Question:
Describe the Strategic Management For the Aviation Industry.
 

Answer:
All across the globe, there are many multinational firms that are expanding their business in various parts of the world. There are many factors that need to be considered by the company in the process of change. In aviation industry there are many companies expanding their business into new routes. These expansions have greater impact on the business operations and functions. Finding new routes that could be valuable for the company needs to be found out by evaluating various operational factors (Lawton, 2017). The expansion should only be made after analysing the environment as well as the competencies it has. Tiger scoot is one such company that is expanding its business in European region. It is a low budget Airlines. London is the city having large numbers of people from Asia and other parts of the world. Scoot is going to expand in London market by starting a direct flight services from Singapore to London. This plane will fly from Singapore to Gatwick airport in London. They might also select the alternative route that is elaborated in the later part of the report. This provides an excellent opportunity for Tiger Scoot to expand its business in London.
This report evaluates the external environment of London as well as its competencies for grabbing the opportunities in this market. It also analyse the value chain of Scoot as well as the competencies that its competitors have. The competencies that will be required by Scoot to tackle the competencies of their competitors as well as that of new incumbents have also been showcased. Report also analyses the impact of Scoot’s expansion on its parent company Singapore Airlines. At last the recommendation for the entry strategy has been provided.
Value chain of Scoot
Value chain analysis is an effective model for understanding the impact of the company’s operations. This model provides details about internal activities and processes of an organisation (Holloway, 2017). The value chain analysis of scoot is as follows:

Primary activities

Analysis

Strength/Weakness

Inbound logistics

The inbound logistics operations are complex that also includes timely delivery of fleets. This company is known for its fast passenger services.

Strength

Outbound logistics

Outbound logistics of the company is also complex but the company derives its value in the primary operations through effective handling of the customer’s luggage, facilities planning, passenger service system, flight scheduling, yield management system etc.

Strength

Operations

The scope of operation can be vast as company currently operates in 18 destinations. Its competitive advantage in operations is by providing enhanced security for customers, fast ticket booking system, online booking as well as other services.

Strength

Services

Scoot provides its customers with loyalty cards that add values to their services. This helps in attracting new customers and at the same time retains the old consumers. There provide services for particular class in the society hence may lag to attract the larger part in the market. Their service quality is also relatively poor than its rivals.

Weakness

Marketing and sales

Scoot takes use of various types of marketing communication mediums so as to have direct interaction with their customers. They utilises marketing mix like TV advertisements, Social media, public relations, events and experiences, direct marketing as well as sales promotions.

Strength

Support activities

Analysis

Strength/Weakness

Procurement

The whole procurement process of scoot is followed with strict compliances of rules and regulations. Most of them are automated. These standards have ensured that they keep themselves apart from various fraudulent activities that might keep them away from any kinds of uncertainties that might have negative effect on the Scoot.

Strength

Technology management

In-flight systems, baggage tracking system, computer reservation system, yield management system, flight scheduling system etc. are used within the organisation (Ramón-Rodríguez, Moreno-Izquierdo and Perles-Ribes, 2011).

Strength

Human resource management

They have provided best of trainings for all their crew members. Special trainings regarding safety have been given. But on the other hand they give comparatively lower salaries to their employees as compared to their rivals.

Weakness

Infrastructure

There is still a huge need to invest in the infrastructure of the company. This is because the new markets like London are having the services providers with excellent infrastructure. They need to follow regulations that are made by government of UK so as to avoid any compliance.

Weakness

Competencies of Scoot
Scoot is one of the biggest low fare airlines company in Singapore. In spite of having so many rivals in the industry, this company has done well in the market (Kleymann and Seristö, 2017). Scoot has huge amount of quality resources which makes them capable of grabbing opportunities in different parts of the world. Some of the competencies of Scoot are as follows:

Operations: While performing their operations, they utilises best of resources. They capitalises on their strengths for performing various types of operations. The use of advanced technologies along with best practices makes them different from their competitors. They have worked hard for improving the security of their passengers (Pearson and Merkert, 2014). Their online ticket booking system is highly advanced which makes the ticketing process easier and faster.
Technology management: They are using the best and most advanced technologies for their different processes. They have different kinds of technology systems for different processes. For example Yield management system, In-flight systems, computer reservation system, baggage tracking system, flight scheduling system (DaSilva and Trkman, 2014). These customised systems streamline the operations as well as increases the effectiveness of the activities. The changes of failures get reduced by the use of such technology. They also take feedbacks from their customers with the help of technological tools such as Apps, websites and social media.
Procurement: Their procurement activities add value to their services. Their procurement process is strictly guided by strict rules and regulations. This ensures that lesser numbers of mistakes arise in the business process. At the same time it enables company to prohibit any kinds of frauds in the business operations (Li, Granados and Netessine, 2014). They put their efforts to enhance their service quality so as to give their clients with best of experience.
Low fare services: They provide their services at lowest of cost in the Singapore market. This helps them in attracting large number of potential customers towards their services. Since the destinations to which this company flies has large number of people in the middle class. This gives them with an advantage over their rivals as most of the companies in the industry provide luxury services.

This company utilises their competencies in a strategic form so as to gain competitive advantages over their rivals. The first and the most basic thing that it utilises is its resources especially the ones that are related with technology (Evans, Stonehouse and Campbell, 2012). The use of technology in the process not only brings effectiveness in their process but at the same time it reduces the overall cost of operations. They provide rigorous trainings to their employees for improving their skill set. These skills are utilised by the company for improving the quality of services they are delivering to their customers. Their standardisation of the operational procedures have helped them in maintaining quality which gives them edge over most of their rivals. Their management system along with the technology has fastened the process and hence clients can easily get what they want. Such speed in services helps them in managing their resources according to the demands. This also empowers effective utilisation of resources which is highly essential in the need for sustainability in the modern day firm. This gives them advantage in the longer time frame. Effective utilisation of resources helps in cost saving which plays an essential role in giving them competitive advantage over their rivals. Singapore market is technologically advanced and most of people in the country are connected to mobile technology (David Mc, 2013). In such an environment companies facilities like online booking and online query resolving mechanism helps them in reaching to larger number of customers. This also improves their marketing campaign which gives them competitive advantage over most of their rivals.
Macro environment analysis of London
For any expansion process, the first and the most basic requirements of the companies are to understand the environment that is present in front of them. It is essential that company understands the external environment they are facing (Francis, Humphreys and Aicken, 2017). There are many factors that influence the external environment of London. Some of them are as follows:

Political: UK government has taken many steps so as to improve the airlines infrastructure in the country. This will benefit Scoot in managing their operations in the city. Decisions such as Brexit will have impact on the routes of the flights as well as on the taxes (Wen and Yeh, 2017). There is an increase in the political ties between the Asian countries and England. This has increased the number of travellers among the cities. Apart from this there is strong commitment between the British government and Government of Singapore for promoting cultural exchange (Wensveen, 2018). Along with this UK is attracting huge number of students from Asia as they have big Universities. This makes the political environment suitable for Scoot to go for new destination London.
Economic: UK is a strong economy and hence can support the business of airlines firms having different nature. London has people from different income group. This provides them with huge opportunities to increase their global customer base. In the last few years the economy of UK has also seen a downfall especially after recession of 2009. There is also an increase in the inflation hence generating estimated profits could be a challenge for the company (Dobruszkes, 2013). The performance of the companies in the industry suggests that the market is much more stable than many other countries.
Society: Society of London comprises of people from different age group. Tiger scoot needs to segment their customers based on various variables. This will play an essential role in the defining their different processes. With the increase in the tourism activities, the number of traveller both into London and from London has increased. The higher per-capita income will help the company as they prefer to travel by air transports. In London there are many students studying from different parts of the world. These students prefer to travel from the low cost airlines. London being the capital of England attracts higher number of customers from Asian region (Sedlá?ková and Lokaj, 2017). People come here to live the experience of the historic and colonial culture. Apart from this the labour force of UK is highly skilled which provides company with an opportunity to increase their human resource capital.
Technological: London is a technologically advanced market and the mobile technology has reached to remote areas in UK. This is an excellent opportunity to the low cost airlines firms as technology helps the in reducing the cost of operations. With the advancements in the technology like IoT, Scoot also needs to apply them in their business process. This will help the firm in connecting to the larger numbers of people in the industry (Albers, et. al. 2017). People of UK are highly active on the social media platforms which can be used by Scoot to place their marketing campaigns. This will help in attracting larger set of customers towards their business.
Legal: The aviation policies by government is favouring low cost airlines but at the same time Scoot needs to ensure that they are following all the rules and regulation so as to protect themselves from any kind of legal compliances (Graham, 2013). The consumer laws are very powerful within the country hence Scoot also needs to follow all these laws in order to avoid any legal problems.
Environment: UK has been very strict on the issues related to environment (Akamavi, et. al. 2015). Carbon emission and the increasing fuel prices is matter of challenge for the companies like Scoot. In the years to come there will be scarcity of aviation fuel hence utilisation of resources must be done on the priority basis.

Specifications of fight to London
It has been seen in the above section that London attracts large numbers of people. Scoot also plans to open a flight root in the nation. This flight will be from Singapore major airport Changi to Gatwick. This airport of London will help the company to have access of the western part of the country. This is because of the fact that most of the Asian people in London lives in the western part of the country. It is also the second most business airport to London. Since this company is also operational in India hence it can also have stoppage in Amritsar. Amritsar will also be a good destination for the company as it is near to Delhi which is the capital city. Apart from Amritsar they can also choose Chennai in India as a stoppage. Chennai is a metropolitan city and can be easily reached from any other parts of India. This would be beneficial for the company as large number of Indians lives in UK. The stoppage flights can be beneficial for the company as the planes that Scoot has most of them cannot fly to such huge distances. Only some of them can fly to such long distances hence Scoot can choose this alternative route for this process. Along with this Scoot can also purchase new and advanced flights that can directly fly to such a long distance (Murphy, 2017). It will have certain effect on the pricing of the services but with the help of strategies such as cost cutting they can manage their flights between these two cities.
Singapore Airlines which is a parent company of the Scoot will also be going to get affected by this expansion. This is due to the fact that a Singapore airline is the major airlines company that flies on this route (Roll, 2015). They have a direct flight to the Heathrow airport which is the biggest airport in London carrying highest number of passengers. This will not only effect the business operations of the parent company but will also affect their revenue. On the other hand it will benefit the Singapore Airlines as they will have a subsidiary company operating on the same route. This will extend their reach in the market as well as it will help in satisfying more number of customers. On the larger note it will also help in increasing the profit margin of Singapore airlines. This is because Singapore airlines can provide services to clients who want lower cost services.
Strengths of top three budget airlines in UK
There are many local airlines operational in UK. The top 3 airlines with their competencies are as follows:

com Limited: It is a British Low-cost airline with fourth largest scheduled airline in UK. This company with the help of its sister companies are providing holiday packages that gives accommodation and travelling to 47 cities. This company has highly skilled employees base with more than 4000 employees. There is continues increase in the number of travellers choosing Jet2.com as their service providers.
Monarch: This is the fifth biggest airlines company in UK and provides services at lower cost. There major competency is that it provides innovative kinds of services to its customers. This company has been fast in adapting towards the situations. They have an excellent fleet size and huge shareholder base. They have all the types of planes in their fleet from big to small which they utilise as per their requirements on various routes.
Flybe: This Company is largest independent regional airline in Europe. It offers its operations in more than 15 countries over 210 routes. This company has a huge market base. It is a member of European Regions Airline Association and is listed in London Stock Exchange. Excellent fleet size and higher revenue are the key competencies of the company (Flybe, 2018). They have a big strategic alliance with many airline providers which helps them in connecting many destinations. They did it by signing franchise agreement with local and International players.

In order to compete with these top 3 airlines company’s strength Scoot needs to focus on their personal capabilities. The first and the most basic thing that it can utilise are its resources. This company has large market base and big brand name in the market. With their marketing campaigns they can reach deep into the market of UK. Scoot is having experience of larger part in Asia hence it can easily make strategies in more developed nation.
With the expanding infrastructure in UK, there is a chance that large number of new players can also come in the market. These incumbents can be of different types small, big over mediums. There are many investors in the UK market. All these investors provide an effective platform for the new companies to come in the industry (Alderighi, et. al. 2012). The external and internal environment in the UK aviation market has also empowered new players to come in the industry and ensuring success.
Scoot needs to do strategic planning for effectively competing against the incumbents. The challenge is bigger for the organisations as the nature of the incumbents are harder to analyse. Scoot can use its experience in understanding the nature of business and at the same time can use its resources so as to lower down the prices. This company has huge technological base which is not easier for the incumbents to avail (Klophaus, Conrady and Fichert, 2012). The data which they have gathered in various researches can be used by Scoot for designing its strategy that gives them competitive advantage over their rivals. Incumbents will have lesser operational data for understanding the behaviour of the market. With the use of advanced system it is possible that they bring effectiveness in their processes. This will help them in managing their operations at the same time reducing the number of errors in providing services.
Scoot will be recognised in London as there are many people living in London who want services at lower fare. In the starting phase it will face problems because there are many big firms operational in London. It is their marketing campaign especially the digital marketing campaign that will help them in making their name in the industry. There are several parameters on which they will have to compete with the market giants for creating its name. In this process they can take help of their parent company.
Scoot has an experience of working in the Asian market and hence they understand their consumer behaviour effectively (Daft and Albers, 2012). For attracting the customers in UK they will have to make plans that are according to the purchasing behaviour of local customers. In order to understand the consumer behaviour first of all the company will have to conduct a thorough market research. The type of services that Scoot is providing, it can easily attract the customers especially the ones that are from Asia. For the people that prefer to travel by economy class, it is an excellent option.
Mode of Entry
In UK’s aviation market, there are many ways through which companies can enter. The selection of entry mode must be done as per the requirements of the company and the speed with which they want to extend their reach in the market. The mode of entry can be an approach using which company will initiate its business in the country.
Scoot has its major part of operations in the Asian region hence UK will be slightly different kind of market. There will be change in the culture with which the company is familiar to work with. This new market will be challenge for the company especially to establish its name in the market and ensuring success (Alamdari and Fagan, 2017). The best method to enter into the European market will be strategic Alliance.
In this entry mode company makes strategic alliance with the local players so as to establish its business in the country. The strategic alliance is generally made between the companies having same nature of business. There are many companies operational in UK which has low cost airlines structure. Scoot can make strategic alliance with any of these companies so as to establish them in the market (Granados, Gupta and Kauffman, 2012). Both the companies can utilise each other’s competencies so as to ensure their success in the market.
Strategic alliance is also beneficial for Scoot as they do not have to spend a lot all alone. There will be support from the strategic partners in terms of technology, finance, human resource. One of the biggest benefits of Strategic alliance is that it helps in maintain the quality of services by applying the best practices from each other (Belobaba, Odoni and Barnhart, 2015). Strategic alliance also helps the company’s employees to learn new things and gain various skills.
Another major benefit of using strategic alliance as a mode of entry is that even when the losses are faced in the initial stages or in the long term, the burden of loss will not be alone on Scoot. This will not disturb there business in other parts of the world. Once the company understands about the consumer behaviour in the market and the have greater knowledge about the nature of the market, they can easily come out of this alliance and can run their business all alone (Homsombat, Lei and Fu, 2014). The only problem with the strategic alliance is that both the companies will have to understand each other’s culture and then then work as a partner to achieve their common goals.
Conclusion
From the above based report it can be concluded the Scoot is one of the best low fare airlines company in Singapore. The value chain analysis of Scoot suggests that there internal environment is good and most of them acts as strength for the company. Pricing, Procurement, technology management and operations are some of the key competencies which this company has and they can utilise it against their competitive rivals so as to gain competitive advantage over them. The external environment of London is favouring company in its expansion plan. Top three low fare airline companies UK have various kinds of competencies and there is a strong chance for incumbents to come into the industry. This is a challenge for the company and needs a strong strategic planning so as to compete with these incumbents. Strategic alliance can be the best mode of entry that Scoot can use for entering into the market of UK.   
References
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Alamdari, F. and Fagan, S., (2017) Impact of the adherence to the original low-cost model on the profitability of low-cost airlines. In Low Cost Carriers (pp. 73-88). Routledge.
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DaSilva, C.M. and Trkman, P., (2014) Business model: What it is and what it is not. Long range planning, 47(6), pp.379-389.
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Dobruszkes, F., (2013) The geography of European low-cost airline networks: a contemporary analysis. Journal of Transport Geography, 28, pp.75-88.
Evans, N., Stonehouse, G. and Campbell, D., (2012) Strategic management for travel and tourism. Taylor & Francis.
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Graham, A., (2013) Understanding the low cost carrier and airport relationship: A critical analysis of the salient issues. Tourism Management, 36, pp.66-76.
Granados, N., Gupta, A. and Kauffman, R.J., (2012) Online and offline demand and price elasticities: Evidence from the air travel industry. Information Systems Research, 23(1), pp.164-181.
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Li, J., Granados, N. and Netessine, S., (2014) Are consumers strategic? Structural estimation from the air-travel industry. Management Science, 60(9), pp.2114-2137.
Murphy, D. (2017) Low-cost carrier Scoot aims to double fleet size in five years [online] Available at: https://www.cnbc.com/2017/07/25/low-cost-carrier-scoot-aims-to-double-fleet-size-in-five-years.html. [Accessed On 22nd August 2018]
Pearson, J. and Merkert, R., (2014) Airlines-within-airlines: A business model moving East. Journal of Air Transport Management, 38, pp.21-26.
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This writer is great, finished very fast and the essay was perfect. Writer goes out of her way to meet your assignment needs!
Writer: Amanda B.
08/10/2021
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