Analyzing Etihad Airways Using Nadler and Tushmans Model - Case Study Example

Analyzing an organization using Nadler & Tushman’s Model: Etihad Airways Name of the Student: Name of the Instructor: Name of the course: Code of the course: Submission date: Table of Contents Table of Contents 2 Introduction 3 The Nadler and Tushman Congruence Model 4 Environment, strategy, tasks, formal system and key individuals at Etihad airways 5 Desired outputs and their achievement 7 Strategy at Etihad airways 8 Interaction of transformation processes and strategy to produce output 10 Identification of issues that Etihad airways should address 11 Aspects of Etihad airways which are difficult to understand 12 Conclusion 13 Works cited 15 Analyzing an organization using Nadler & Tushman’s Model: Etihad Airways Introduction In a generic sense, the Nadler and Tushman Congruence Model is a comprehensive model which specifies the inputs, throughputs as well as outputs which are aimed at ensuring effectiveness at the organizational level. The core foundation of this model is that effectiveness is far from being a function of the extent to which an institution succeeds in reflecting qualities of an ideal profile but rather is dependent of the match between the attributes and the environmental conditions of an organization. Thus, organizations are only capable of achieving effectiveness if at all their functioning is consistent, without strain and efficiently organized (Cameron, 4). This is a key undertaking of the management in any organization which according to Nadler and Tushman (35) has the primary task of making the organizations to achieve effective operation. The Nadler and Tushman Congruence Model has received extensive utility at Etihad Airways which is the flag carrier of the United Arab Emirates (UAE). This airline is based in Abu Dhabi and was established through a Royal decree in July, 2003 and proceeded to commence its operations in November, 2003 (Etihad Airways Website, 1). Against this backdrop, this paper will be aimed at utilizing the Nadler and Tushman Congruence Model in order to have a more comprehensive understanding of the inputs, strategy, the transformation process, the feedback as well as the outputs. This analysis will be geared towards answering some specific questions for instance, the desired outputs and whether these outputs have been achieved. Additionally, with strategy being at the center of the inputs in the model under utility, this paper will seek to answer the questions on whether the strategy at Etihad airways in line with organization’s environmental inputs, whether the transformation processes are well aligned with your organization’s strategy as well as how they interact to produce the outputs. Moreover, the paper will seek to answer the question on whether there is anything that might identify issues that Etihad airways should address. Lastly, this analysis will explore whether there are some aspects of how this organization works that you have difficulty in understanding. Nonetheless, it is imperative to outline the comprehensive framework of the Nadler and Tushman Congruence Model which will be central in the subsequent analysis. The Nadler and Tushman Congruence Model Figure 1.0: Nadler and Tushman Congruence Model Source: Noolan, Julie (29) Environment, strategy, tasks, formal system and key individuals at Etihad airways In regard to the environment (categorized under inputs in the Nadler and Tushman Congruence Model), Mercer Delta Consulting, LLC (3) determined that every institution exists within- and is under the influence of a larger environment. At Etihad Airways, the environment of this organization comprises of competition from other airlines both domestic and international, for instance, Emirates airways and Fly Dubai amongst others. Another aspect of the environment is the socio-economic forces which influence the choice of the consumers for a particular airline. This is best epitomized whereby increased economic constraints in the recent past have seen the consumers exhibit greater preference of low cost airlines like Fly Dubai. Additionally, the operations of Etihad airways are also under direct influence of the existing legal constraints both at the domestic as well as the international spectrum. These include legal constraints on compliance with environmental policies and taxation among others. Other aspects which characterize the environment of Etihad airlines include influence from suppliers, labour unions, governmental and regulatory bodies as well as the special interest groups like the environmental bodies. All these constitute the environment under which the operations of this airline are founded. In regard to the tasks, this term is generically used in this analysis to describe the rudimentary and intrinsic undertakings engaged in by an institution, its people and its units aimed at furthering the strategy of the organization (Mercer Delta Consulting, LLC, 6). At Etihad airways, the primary task undertaken is offering quality carrier service in terms of human transportation as well as cargo delivery. Additionally, this airline undertakes the task of reflecting the best of Arabian hospitality; cultured, warm, considerate and generous as well as improving Abu Dhabi’s prestige as a center of hospitality between East and West. On the other hand, this airline, its units and its people supports the promotion of the domestic culture of the UAE and the wider globe through sponsoring cultural and sporting activities which are coherent with its core values of team spirit, hospitality and uniting the world. Lastly, Etihad airways has anchored its activities on sustainable development which is at the center of its corporate social responsibility (CSR) and sustainability strategy. This latter task is best epitomized whereby in the effort to create jobs and wealth for the local communities, this organization increased the number of its employees by 18% in 2012 (Etihad airways website, 1). In regard to the formal systems, these can be perceived to comprise of the structures, processes and overall systems which are created by each organization aimed at grouping the people and the work they undertake as well as coordinating their diverse activities in specific ways designed towards achieving the strategic objectives of the organization (Mercer Delta Consulting, LLC, 7). At Etihad airways, the formal systems include a Board of Directors under the chairmanship of HH Sheikh Hamed bin Zayed Al Nahyan (Etihad airways website, 1). This formal structure is mandated with the role of overseeing the operations of the organization in different regions, solving any apparent problems and making fundamental decisions informing the operations of this airline. Additionally, Etihad airlines has a formal organization for the employees. In this case, the employees have the capability of expressing their views, sharing their experiences as well as motivating each other towards achieving the overall goals of the company. On the other hand, the people at Etihad airways have the capability of formally interacting in various platforms of the organization which brings them together. These include the social networks like Linkedin where they can find upcoming events, new career opportunities as well as get to know their fellow employees. Lastly, this organization has some key individuals who are central in making key decisions which impact on the effectiveness of this company. Apart from the board of directors under the chairmanship of HH Sheikh Hamed bin Zayed Al Nahyan previously mentioned, this organization is also led by James Hogan who is the former CEO of Gulf Air. Hogan was appointed as president and chief executive officer of this airline on 10th September, 2006. The president together with the BOD have jointly overseen the rapid growth of this national airline in the UAE to the capacity of serving 87 passenger and cargo destinations in the Middle East, Asia, Europe, Africa, North America and Australia and operating a fleet of 66 modern and environmentally friendly aircrafts (Etihad Airways Website, 1). Desired outputs and their achievement In a generic sense, outputs can be perceived as what is produced by an organization, its performance as well as its effectiveness (Nadler and Tushman, 40). In the case of Etihad airways, the key outcomes have been expanding its operations to other regions outside the UAE towards attaining the goal of being a truly 21st century global airline which is challenging and transforming the conventions which are already established of airline hospitality (Etihad Airways Website, 1). Additionally, this organization desired to increase its cargo and passengers capacity in order to command a significant market share in the highly competitive aviation industry in the contemporary world. Both of these outputs have been achieved. This is best epitomized whereby through the utility of diverse strategies, this organization has been able to increase its presence practically in every region of the world. Additionally, increased investment by the shareholders has seen the Etihad airlines increasing its cargo and passenger capacity primarily through acquiring new aircrafts and development of supporting infrastructure. This has seen the achievement of output at the total system, unit as well as at the individual level. Strategy at Etihad airways In the Nadler and Tushman Congruence Model, strategy has been niched as the boundary component between the environment and the organization. In a commercial institution like Etihad airways, strategy is central in defining the products or services of the organization, the consumer markets as well as the plan of the institution to effectively compete with other organizations in the same territory (Gruchman, 5). The key strategy adopted by Etihad airways which will be explored in this section is strategic alliance. In regard to the question in regard to whether the strategy is in line with the organization’s environmental inputs, it is plausible to infer that it is. This is best epitomized by the fit with the environmental input of increased competition in aviation industry both in the domestic as well as in the international level previously mentioned. In this case, the strategy of strategic alliance has been core in addressing this issue and eventually culminating in the desired output of increasing the presence and market share of this company in different regions of the world. The above strategy is best exemplified by the strategic alliance between Etihad airways and Virgin Australia whereby in May, 2013, it was projected that Etihad airways could more than double its stake at Virgin Australia with the latter airline being a strategically fundamental airline partner (Trenwith, 1). Away from this increased investment at Virgin Australia, Etihad airways is also credited of having alliances supported by investments in Aer Lingus of Ireland, Air Berlin, Air Seychelles, jet Airways of India among others (Bartholomeusz, 1). This epitomizes that the strategy is in line with the organization’s environmental inputs like increased competition as well as socio-economic forces. Additionally, through strategic alliance with other organizations, Etihad airways has registered 24% improvement in carbon emission per passenger kilometer since 2006 (Etihad airways Website, 1). This is in line with the organization’s environmental inputs like governmental and regulatory bodies as well as special interest groups. In regard to the question on whether the transformation processes primed at Etihad airways (the key tasks, the formal organization, the informal organization, and the key individuals) are all aligned well with the organization’s strategy, it is plausible to infer that they are all aligned. This is best epitomized whereby the key individuals like the CEO and the BOD who comprise the formal organization of this company are central to supporting and negotiating the strategic alliance strategy. This is epitomized whereby Hogan (CEO) expressed his opinion of preferring bigger Virgin Australia shareholding and engaged in negotiations to acquire Virgin Group shares (Bartholomeusz, 1). Additionally, the key tasks like sustainable development which is at the center of its corporate social responsibility (CSR) and sustainability Etihad airways is also aligned with the strategic alliance strategy primed at the airline. This is whereby the task of minimizing the amount of carbon emission by the company has to a large extent been informed through strategic alliances with other organizations which are committed to environmental conservation around the globe. Lastly, the informal organizations can be perceived to encompass a pattern of processes, political relationships and practices which embody beliefs, values as well as accepted behavioral norms of individuals who work in a given institution (Mercer Delta Consulting, LLC, 7). The informal organizations have also been aligned with the strategic alliance strategy at Etihad airways. This is best epitomized whereby through sponsoring and forging strategic alliances with sporting institution like Manchester City since May, 2009, this has seen the stadium of this club being renamed Etihad stadium and spreads the beliefs and values of the informal organization at Etihad airways founded on ‘union’. Interaction of transformation processes and strategy to produce output In the case of the key formal organizations and key individuals, their support, commitment and involvement in strategic alliances has seen increased spread and growth of Etihad airways to diverse parts of the globe which is the ultimate output. Additionally, key tasks by Etihad airlines, its units and its people in supporting the promotion of the domestic culture of the UAE and the wider globe through sponsoring cultural and sporting activities which are coherent with its core values of team spirit, hospitality and uniting the world, for instance, sponsoring and forging strategic alliances Manchester City has greatly helped in producing the output of increased cargo and passenger capacity in Europe due to increased acceptability of this airline in this region. Identification of issues that Etihad airways should address After evaluating the organization’s outputs at the organizational, group, and individual levels, there are several things that might identify issues that the organization should address. Firstly, through the evaluation of the organizational output in terms of the strategic alliances which it has managed to forge in the recent years, the financial performance of the new alliances is something that might identify issues that the organization should address. It is imperative to note that just like other organizations, the rationale behind forming strategic alliances in the aviation industry is often founded on the expectation of accumulating financial rewards in form of profit maximization, elevated revenues as well as cost minimization. Thus, the inherent value of any alliance is based on its capacity and ability to generate the aforementioned benefits, either through elevating the level of dominance in the market which is already in existence or opening up the level of access to new markets which has experienced limited exploitation in the past (Jangkrajarng, 50). Nonetheless, some of the partners which Etihad airways has formed strategic alliances with have in the recent past been experiencing diverse challenges which jeopardize the capacity of Etihad airways of deriving the above benefits. This is best epitomized by Air Berlin which has been termed as ‘the loss-making German carrier’ which is in part owned by Etihad airways which has been confronted by a myriad of challenges in the recent past. In actual sense, Air Berlin has been revealed of not having reported a profit since 2007 (McGinley, 1). In this case, the poor performance of some of the allies of Etihad airlines points to a fundamental issue which needs to be addressed by this organization. This is founded on the fact that their continued poor performance will mean reduced or non-existent benefits which Etihad might derive from the alliance, for instance, profit maximization. It can even go to the extent of negatively affecting the reputation of Etihad airlines in a particular region due to poor performance in terms of profitability and services which can be detrimental to the Etihad airways desired output of increasing its market share in different parts of the globe. In this case, the financial performance and declining reputation of certain core partners might identify issues that the organization should address. Additionally, the decline in cargo and passenger capacity in a given region which is contrary to the desired organizational output can also identify issues that Etihad airways should address. These include issues like increasing competition in that region, deteriorating reputation of the airline as well as the probability of declining service quality in that specific region. This necessitates the institution of key strategic approach of addressing these issues which might be unearthed by the decline in cargo and passenger capacity. Aspects of Etihad airways which are difficult to understand This is the last section which will be explored in this analysis. It is worth noting that there are no many aspects of the operations of this company which have proved problematic to understand. Nonetheless, there is the aspect of the management structure of this organization. This is based on the fact that apart being headquartered in Abu Dhabi, this company has different branches which are presumably autonomous in different parts of the world based on the global interests of this company. In this case, it is difficult to understand whether the management system of this organization is centralized or decentralized in terms of decision making and other managerial functions. In this case, the key resources which can be accessed to aid in this analysis include the annual reports of the company including its various branches as well as the minutes of the AGM meetings. The other thing which was difficult to understand is the monitoring and evaluation mechanisms primed at Etihad airways aimed at assessing the relevance and viability of different strategies formulated and implemented in this company. This is founded on the fact it is not very clear from the company’s website about how it assesses the value or lack of it which it derives from forging alliances with different strategic partners. The resources which can be accessed to aid in this analysis include the annual reports of different strategic partners which evidence the financial performance and market expansion among other aspects. Conclusion It is apparent from the preceding analysis that the Nadler and Tushman Congruence Model is a key model which specifies the inputs, throughputs as well as outputs which are aimed at ensuring effectiveness in organizations. Through the utility of this model, it has been possible to understand the environment of Etihad airways which includes the socio-economic factors, government and regulatory bodies, special interest groups and competitors among others. Additionally, it has been central in the identification of the key tasks in this organization which are offering quality carrier service in terms of human transportation as well as cargo delivery as well as sustainable development and spread of the Abu Dhabi culture among others. Moreover, the key individuals at Etihad airways who include the CEO and the BOD have been revealed through this model as well as the formal organization. Further, this analysis has explored one key strategy at Etihad airways which is strategic alliance which has been evidenced to be in line with the organization’s environmental inputs. On the other hand, the transformation processes like key individuals and tasks as well as formal and informal organizations have been found to be aligned with the organizations strategy which has been supported by an analysis of how they interact to produce the aforementioned outputs. Additionally, the decline of the cargo and passengers’ capacity in given regions as well as the performance of the key allies of Etihad airways have been revealed to be key things which might identify issues that the organization should address. Lastly, some of the aspects of Etihad airways which are difficult to understand include its management structure as well as the monitoring and evaluation mechanisms primed at the organization. The resources which can be accessed to aid in this analysis include annual financial reports of Etihad airways and its partners as well as the minutes of the AGM meetings. Works cited Bartholomeusz, Stephen. ‘A watchful Etihad reinforces its Australia strategy’. 28th June, 2013. Web. 4th July, 2013. (http://www.businessspectator.com.au/article/2013/6/28/asx/watchful-etihad-reinforces-its-australia-strategy). Cameron, Kim. ‘Organizational Effectiveness: Its Demise and Re-emergence through Positive Organizational Scholarship’. Handbook of Management Theory: The Process of Theory Development. Ed. Michael A. Hitt and Ken G. Smith. London: Oxford University Press, 2005. Print. Etihad Airways Website. 2013. Web. 4th July, 2013. (http://www.etihad.com) Gruchman, Grzegorz. ‘Bridges over Troubled Water: The True Nature of an Enterprise’. May, 2011. Web. 4th July, 2013. (http://www.bptrends.com/publicationfiles/05-03-2011-ART-Bridges%20over%20Troubled%20Water--Gruchman-Final.pdf). Jangkrajarng, Varattaya. Empirical studies on strategic alliances in the airline industry. Diss. Hitotsubashi University, 2011. Print. McGinley, Shane. ‘Air Berlin facing “huge challenges”, says new CEO’. 7th January, 2013. Web. 4th July, 2013. (http://www.arabianbusiness.com/airberlin-facing-huge-challenges-says-new-ceo-484736.html) Mercer Delta Consulting, LLC. ‘The Congruence Model: A Roadmap for Understanding Organizational Performance’. 2003. Web. 4th July, 2013. (http://ldt.stanford.edu/~gwarman/Files/Congruence_Model.pdf). Nadler, David and Tushman, Michael. A model for diagnosing organizational behavior. Organizational Dynamics, Autumn (1980): 35-51. Noolan, Julie. ‘Diagnostic models: an introduction’. 2004. Web. 4th July, 2013. (http://donblake.com/module3/DiagnosticModels.pdf). Trenwith, Courtney. ‘Etihad could double stake in Virgin Australia’. 9th May, 2013. Web. 4th July, 2013. (http://www.arabianbusiness.com/etihad-could-double-stake-in-virgin-australia-501040.html). Read More