MGT801 Critical Issues In Management

MGT801 Critical Issues In Management

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MGT801 Critical Issues In Management

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MGT801 Critical Issues In Management

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Course Code: MGT801
University: Nelson Marlborough Institute Of Technology

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Country: New Zealand

Question:

Case Study: Air New Zealand
Air New Zealand took birth under the name of Tasman Empire Airways Limited (TEAL)  on 26th April 1940. It amazingly expanded the size, scope and the extent of its international network from Australia and the Pacific to Asia, the USA, the UK and Europe. In April 1961, it became fully owned by the New Zealand Government.  It also operates international transport services and engineering, airport and cargo services. Air New Zealand is a public company  
In March 1999, Air New Zealand became a full member of the Star Alliance group which is known as the world’s largest global alliance by providing valuable network and loyalty benefits to customers. It also operates international transport services and engineering, airport and cargo services consolidating strong ties with airlines at a bilateral level. 
”Putting customers first” is the motto of Air New Zealand by dramatically changing the in-house businesses”. With the ever-changing environment, the airline rebranded its businesses to offer more competitive low-cost travel and hassle-free booking rules by using e-booking which subsequently encourages more people to travel more often, while improving efficiency and emission ratings. Air New Zealand remains committed to delivering a unique experience to its precious internal and external customers. The term ‘internal customers’ refers to valued employees who are offered an efficient workplace where they can be committed to providing quality service to their customers.
Purpose:
This report will analyse the key critical and strategic issues by understanding the external environmental factors which deeply affect the growth of the organization. The report will also suggest recommendations to advise the company on their strategic plan, highlighting the benefits and risks associated with their present strategic plan.
Task:
Describe the challenges and identify and critically examine the reaction.

Answer:

Air New Zealand
The company in discussion, Air New Zealand commenced its journey on the 26th of April, in the year 1990. The company was initially known as the Tasman Empire Airways Limited (TEAL). The company is known to have depicted a huge growth in the size and the scope of the company. The growth of the company is evident in the expanse of the international network that is covered by the flights of the company. The company has expanded from Australia and the Pacific areas to Asia, USA, UK and Europe. The company acquired the status of being fully owned by the New Zealand Government in the year 1961. Air New Zealand is known to be a public company that deals with the airport and the cargo services, the engineering as well as the transport services.
Air New Zealand was incorporated within the list of the members of the Star Alliance group in the month of March in the year 1999. The Star Alliance group is known to be one of the largest global alliances that are functional within the world. The company in discussion is known to be extending to the clientele of the organization with the needed loyalty benefits and the proper network services that are valuable to the concerned clientele. The company has been dealing with the airport and the cargo services, the engineering as well as the transport services all over the world. this has helped the organization to maintain consolidated and strong ties with the other airlines on the bilateral levels.
The motto of the company is “putting customers first”. The company aims to achieve the motto by implementing the dramatic changes in the in-house businesses of the company. The company, in order to keep up with the environment that has been constantly changing has implemented the various changes within the businesses. The company has implemented the low-cost travelling as well as the booking rules that are hassle-free in order to deal with the competitive advantage within the company. The booking rules that are hassle-free uses the various techniques like the booking the tickets over the internet. This might help in providing the clientele of the organization with the necessary encouragement to travel more. This in turn might result in the improvement of the emission ratings and the efficiency of the airlines. The company in discussion, Air New Zealand, demonstrates the commitment towards the delivery of unique experiences towards the clientele of the organization, both internal as well as external. The employees of the organization who have been offering services towards the betterment of the overall performance of the company (1).
This report aims to analyse the key critical and the strategic issues by putting forth an understanding of the external environmental factors that affect the growth of the organization majorly. The report proceeds to suggest recommendations on the strategic plan of the company by highlighting the several benefits and the risks that are associated with the current strategic plan (2).
Strategic Analysis
The environmental scanning and the SWOT analysis that was invented by Albert Humphrey are known to be helpful in spotting both the external and the internal factors which might harm and even hinder the overall performance of the business organization in discussion, Air New Zealand. It might also affect the current as well as the forthcoming scenarios which might have an effect on the industry.
Critical External Factors (SWOT Factors)
The SWOT analysis of the company in discussion, Air New Zealand is as follows.

Strengths

The company in discussion, Air New Zealand is known to be one of the major airline services within the country and was rated as one the ten major airlines within the area by Skytrax. The airline in discussion is also known to have been awarded the title of being the best airline service. The company is known to have designed various routes of air travel that have been specialised in the design to promote the trade within the given territories of the concerned country. These new trades are known for the promotion of the marketing activities within the country (Zhu & Gong, 2016). The airline company in discussion, Air New Zealand is known for being the sole airlines to have circumnavigated the entire world. the organizational structure of the given company is also known to have been organized as well as properly balanced.

Weaknesses

The major weaknesses of the organization lie in the fact that the brand awareness of the company as well as the number of the destinations that are covered by the concerned organization are low as compared to the other global giants in the aviation industry. the company also faces a high level of competition within the concerned market. Thus, the market share of the company is low and the operations of the company are limited (Çiftçi & ?evkli, 2015). The products that are sold by the concerned company in discussion, Air New Zealand depict a gap range. This might lead to the areas within the company that might enable the competitors to gain a foothold within the concerned market. The profitability ratio of the concerned company as well as the percentage of the net contribution of the company towards the economy of the country are observed to be lower than the average level within the airline industry (Flouris & Oswald, 2016).

Opportunities

The company might face a number of opportunities. The company in discussion, Air New Zealand might face the opportunities through the formation of the alliance with the Australian airline magnate, Qantas Airlines (Ying, 2017). This alliance might help the airline company in discussion, Air New Zealand to strengthen the position of the company in the given market.

Threats

The threats that are faced by the organization in discussion, Air New Zealand are related majorly to the air accidents that have occurred in the past decade (Eriksson & Steenhuis, 2015). The major reasons for the air accidents are the factors that related to the inaccuracy in the technical matters within the air vehicles of the company.
Critical External Factors (PESTEL Factors)
First issue – the Political Factor
The government of the country has very low control over the decisions of the company in discussion, Air New Zealand, despite the fact that it owns almost 51 percent of the total shares and even has a large influence on the company. this is due to the fact that the government does not regulate the business decisions of the company. the withdrawal of the services of the company from the regions of Kaitaia, Kapitu, Whakat?ne, Taup? and Westport have led to the increase in the distress of the customers in those areas. The company is known for the display of adamancy in the matters related to the independent acts on the part of the company. The management of the company declares the fact that the lack of commercial independence might damage the interests of the shareholders in a serious manner. According to Hamilton and Webster, (2015) the industry, therefore, has to deal with the heavy regulation, the policies, the taxes and the regulations in the various foreign markets.
Second issue – the Economic Factor
Air New Zealand dwells in a comparatively gloomy environment as the economic factor have a direct adverse effect. However, the airline industry is known to be capital-intensive and is highly exposed to the volatile changes in the environment. The carbon footprint of travel by air remains a huge challenge. The carbon footprint is considered to be a wicked problem for the industry leading to the price hikes. This might result in downsizing of the demand for travel.
Air New Zealand considers the investment in fleet upgradation to be crucial for improvement in fuel efficiency, thereby making it the most fuel-efficient fleet in the world.  The other major issue that affected the airline was the rupture of the fuel pipeline at Ruakaka that disrupted the international services. Air New Zealand had cut down services to maintain the balance between the profitability, the increase in the fuel costs and keeping the fares affordable to the customers.
Third issue – the Social Factor
Air New Zealand is affected by the social factor due to the lifestyle trends and the wealth distribution. The changes of the preferences of the clientele of the business class and that of the economy class are different from one another. Air New Zealand focuses on the varied demands for the services. (3)
The key purpose that attempts to underlie the sustainability framework of Air New Zealand is the supercharging of the success of New Zealand in social, environmental and economic factors. This reveals that Air New Zealand has been implementing measures for embedding sustainability within the business that contributes to a positive change in a consequent manner (4).
Fourth issue – the Technological Factor
Air New Zealand is strongly affected by technology since the major business function of the company is majorly dependant on technology. The innovation in technology would immensely benefit Air New Zealand in the improvement of the services such as rapid implementation of the online booking, the check in support, the competitive low-fares, the more availability of seats, and other such feature that facilitated the dramatic transformation of the organization (5). However, lack of the maintenance verification, the engine issues on the Boeing 787 Dreamliner aircrafts, and mainly the turbine blades of Rolls-Royce Trent 1000 engines. This resulted in the disruption of the travel plans of many people, with the cancellations and the delays of the long-haul flights of Air New Zealand for a longer duration of time. The replacement of the engines had been expensive and difficult. Air New Zealand has, in an attempt to take remedial measures, leased two Airbus aircraft from a renowned charter company of Europe (6).
Fifth issue – the Legal Factor
Air New Zealand has always defined ways and means to survive and offer more and more attractive services to its population and gain competitive advantage. This might lead to better co-ordination of the check-in and the handling at the airports resulting in shortening of the connection times, overall journey times, and increase of the onward flights for both international and domestic flights. However as opined by management guru Peter Drucker, “Culture eats strategy for lunch”. The case in discussion depicts a scenario wherein culture has been cited as a critical factor. The senior management level was involved in serious clashes. This resulted in a swift divorce from the Virgin due to the fierce competition on the issue between launching the low-cost arm Tigerair Australia on trans-Tasman flights by Virgin as well as the introduction of two new trans-Tasman routes. These routes resulted in 15 percent increase in the seat capacity on all the routes. The leadership approach of Air New Zealand is stylist. The leadership style is immaculate, meticulous and methodical. The company likes to work alone. The company has a fast-moving consumer goods background and attempts to create a differentiation point.
Sixth issue – Environmental analysis
The company in discussion, Air New Zealand, might need to deal with the specialized emphasis on the protection of the environmental factors of the country wherein the company had been featuring. This might help in the matters that are related to the adverse effects of the operational activities of the concerned company in discussion. The concerned company in discussion, Air New Zealand is also known for the introduction of the carbon offset program. This might help in the matters that are related to the minimalization of the air pollution that is caused in the concerned country (Grant, 2016). The airline company in discussion, Air New Zealand is also known for the active contribution that is extended towards the Air New Zealand Environment Trust.
Recommendations
The concerned company in discussion, Air New Zealand, is advised to look into the matters that pertain to the environmental pollution towards the air and the water pollutions within concerned territories of the country. The company is also advised to follow the laws and the regulations that are followed within the concerned country. The rivalry in the legal matters might be prevented with the application of the 5 p’s model proposed by Mintzberg in terms of the Plan, the Ploy, the Pattern, the Position and the Perspective wherein the execution and the innovation must be in regards to the culture of both the airlines.
References
Zhu, S., & Gong, X. (2016). A SWOT Analysis of General Aviation Industry Development in Shandong Province.
Flouris, T. G., & Oswald, S. L. (2016). Designing and executing strategy in aviation management. Routledge.
Çiftçi, M. E., & ?evkli, M. (2015). A new hub and spoke system proposal: A case study for Turkey’s aviation industry. Journal of Air Transport Management, 47, 190-198.
Ying, Z. H. U. (2017). A SWOT Analysis of Aviation Logistics Developed in Zhengzhou Aviation Economic Comprehensive Experimental Zone. Journal of North China University of Water Resources and Electric Power (Social Science Edition), 3, 011.
Eriksson, S., & Steenhuis, H. J. (Eds.). (2015). The global commercial aviation industry. Routledge.
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.

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