Qatar Airways - Strategic Position, External Environment, Strategic Choices - Case Study Example

STRATEGIC PLANNING by Student’s Name Course Name + Code City and State Professor Date Executive summary There is a global increase in demand for travel. Subsequent to the evident reformation in lifestyles, the airline industry faces extensive pressure from the populace. This is because of the need to travel in style. There is notably increased competition between Airways organizations as they seek to meet the rising demands of the populace. The Qatar Airways is one of the most fast growing Airways today, a basic reason as to why this paper will focus on this airline. Following its re-launch in 1997 from being a private organization to a state organization, this airline has notably developed and is still considered to be growing. Starting from owning one aircraft that enabled this organization to commence its operations, the Qatar Airways currently owns a number of fleets. This has also led to an expansion of the organization’s services and routes, a fact that has notably enabled this organization to survive in the competitive market of airline services by enhancing its ability to meet consumer demands and needs. Effective operation of the Qatar Airways lies with its management. Decisions made and implemented by the Qatar management can be considered the vital component that has led to the organization’s development over the years. Decisions on what strategic plans to implement as well as assessing the organization’s position are important in gearing an organization towards meeting its objectives and ensuring consumer satisfaction. Essentially, strategic management encompasses the plans, choices, as well as steps taken by management for the benefit of the organization. This paper seeks to look at the strategic management structure of Qatar Airways, assess its historical development to the present, evaluate the strategic plans being implemented in the organization, as well as assess the potential and choices of the airline and the implications that these managerial decisions have on the airline industry as a whole. This will be achieved by looking at the contemporary internal and external factors affecting the airway. Table of Content Executive summary 2 1.0 Introduction 4 2.0 The Organization 5 3.0 Strategic Position 6 3.1 Qatar Airways Current External Strategic Position 7 3.2 Qatar Airways Current Internal Strategic Position 8 4.0 Strategic Choices 9 4.1 Implications of the Organization’s Existing Choices 10 5.0 External Environment of Qatar Airways 10 6.0 Analysis of the Organization 12 6.1 Strengths 12 6.2 Current Competence 13 6.3 Current Challenges 13 8.0 Conclusion 14 Reference List 16 1.0 Introduction Strategic management refers to an all-inclusive assortment of ongoing actions and developments within an organization. This is a managerial framework used to harmonize and ally the organization’s resources as well activities to the mission and vision of the organization. This denotes an overall plan by management, which helps in identifying the relevant decisions and actions (David 2005). Strategic management actions help to convert fixed procedures to structures that offer performance response in line with the decisions made as well as to allow the management to review its decisions in relation to the changes in the market. Additionally, it involves some basic continuing procedures; analysis, decision making and action. In strategic management, analysis entails considering the environment in which the organization wants to operate. This will bring about the need to make appropriate decisions and follow on them in the action plan (David 2005). Strategic management overly constitutes strategic potential, position as well as choice. These basic aspects contribute in a major way to the life cycle of an organization participating in the airline industry. Strategic potential entails the available opportunities an organization has at present in the industry it seeks to venture into. Additionally, the strategic position is usually utilized by the managerial officials to access the organization’s capabilities. This is in line with the strategic choices since; the strategies to be implemented are normally aligned with the current state of the organization. The Qatar Airways operates in the airline business. Thus, it is essential to assess the industry and implement appropriate strategies that would affect its operational performance. By making outstanding managerial decisions, the organization can progress in this field without fail (David 2005). Additionally, strategic management within an organization enables the management to identify the reasons leading to out-performance of others. This aspect of the strategic management enables an organization to withstand changes and competition in the market. For instance, Qatar Airways is able to compete with other airlines because of its strategic management plans. The airline is seeking to collaborate with other players in the airline industry, a factor that has and will enable it to remain competitive. Over the years, the Qatar Airways has ostensibly developed competitive strategies through its management. These have enabled it to outdo its competition and led to it being considered the airline of the day in 2011 (Dess et al. 2005; Qatar Airways 2013) In strategic management, it is important for the organization to establish effective strategies that will challenge its competition and at times make it difficult for them to do as your organization is doing (Dess et al. 2005). Strategic planning entails a managerial action. It signifies an organization’s blueprint for the activities it sets out to perform. Strategic plans signify a managerial document that is incorporated in the organizational communication about the goals and managerial activities designed to steer the organization towards effective operations. It encompasses the decisions to establish organizational priorities, direct the resources of the organization as well as enhance effective operations. Strategic planning has notably been considered a managerial tool that enables managers to ascertain good relations between the workers and other stakeholders by making certain that they are all working towards a particular goal. It also can be considered as a managerial action of providing direction for the organization. Strategic planning provides a guide for managers by highlighting a clear way of conducting organizational functions. In a way, this planning helps in identifying the position of the organization, its clients, as well as the objectives and goals of the organization (Bryson 2000). 2.0 The Organization Qatar Airways was established in 1993 and began its operations in January 1994. Akbar Al Baker is currently managing this organization. This is a state held organization. This Airway operates in Qatar and has its Airway headquarters in Doha, which functions as a hub. Doha seemingly provides a connection of more than a hundred global destinations. This is made possible by the organization’s extensive fleet of aircrafts. This Airway has extended its services to a number of regions including Africa and the Middle East. It is because of these extensive services that the Qatar Airways was identified to be the Airline of the day in 2011 during the Skytrax Global Airline Awards. Currently, this Airline offers employment to over 20, 000 individuals. Recent developments within this organization indicate that the Qatar Airway will seek to be part of the One World Alliance this year as well as sponsor the chemise for the FC Barcelona football association (Qatar Airways n.d). Historically, Qatar Airways began its operations with a wet-leased Boeing 767-200ER originally from the Kuwait Airways. Prior to becoming a state organization, a regal family possessed the Qatar Airways. Following the change in ownership in 1997, the organization acquired an Airbus A300-600 craft, and this marked the start of growth for the organization. Qatar Airways has come to own various aircrafts, which have enabled the organization to expand its flight routes. This saw to the instigation of fresh destinations including Brussels, Venice as well Sao Paulo, among others. In relation to its growth, the organization sought to acquire the Spanish carrier in 2012. However, this acquisition was not fulfilled as Qatar management pulled out of the negotiations, a move that led to the closure of the carrier services. Recently this year, 2013, the Airline instigated a European Customer Service in Poland, Wroclaw. This was a major step in enhancing its services while exploring new markets (Qatar Aiways n.d). 3.0 Strategic Position This denotes the general anticipated objectives as well as advancement to a specific state of affairs. Strategic position is like a guideline towards the overall growth of the organization. It constitutes three major features; the external setting, an organization’s strategic potential and moral values as well as authority of the stakeholders (Less 2008). Qatar Airways appears to have had an effective strategic position. This is evidenced by the decisions made by the state authority in 1997 to make this the leading international airline by way of providing customers with the utmost standards of service and quality. The strategic position provided the airline with a vision and enabled its management to design ways of achieving the same. Under the headship of Akbar Al Baker, Qatar Airways has been able to achieve milestones. For instance, it has secured the title of being the airline of the year twice as well as acquired additional aircrafts. This has enabled the organization to provide its staff with a distinct plan for the organization. This has made the organization’s intentions apparent and straightforward for the employees enabling them to harness the resources and efforts to achieve this goal (Lees 2008). 3.1 Qatar Airways Current External Strategic Position Contemporarily, Qatar Airways seems to poses a large market share in the airline industry. This can be attributed to the effective consideration by management of its external strategic position. The external setting of an organization plays an essential role in the formulation of strategic plans. Factors like the politics of the region, technology, competition and the economy influence the way an organization formulates its development strategies. Subsequent to massive growth experienced in the organization, various players seem to come up to try to face off this organization (Qatar Airways 2013). However, the CEO, Akbar Al Baker acknowledges that the organization is prepared to face the rising challenges from its competitors. He has established a number of external strategies that will enable the organization to achieve this. First is the strategy to acquire new aircrafts with regard to the competition of other airlines. Competition is a vital aspect to consider while seeking to expand organizational operations. In this case, Qatar airways, in trying to out face its competition in the global market is seeking to acquire additional aircrafts which would enable it to compete fairly (Ibid). Following the rising consumer demands and advanced lifestyles of the populace, Qatar Airways is seeking to acquire the Dream liners, a new set of aircrafts that is set to accommodate the rising number of consumers as well as replace the Airbuses (Qatar Airways 2013). Additionally, the decision to collaborate with other players in the airline industry, joining forces with other organizations offers the airline added advantage in the market. This is an external strategy in that, by forming affiliations, Qatar airways stand a better opportunity of competing with already established global airlines like the American Express and Virgin Atlantic. The CEO, Akbar Al Baker has made plans to join operations with the Oneworld Alliance. This external strategy will enable the Qatar Airline to compete effectively globally. Considering that the Qatar Airways intends to become the leading international airline, the external strategy is a step towards attaining this. With this, the organization stands to expand. This will lead to the need to add flight destinations. Additional flight destinations are in line with the external consideration in which the organization is operating. Seeing this as a developing market, Qatar Airways seeks to grow with it. The management assessment of the future trends can be said to have contributed towards the expansion of the organization. External strategies need not focus on the regional developments but should also target the global environment to which the organization seeks to be part of and leading in (Qatar Airways 2013). 3.2 Qatar Airways Current Internal Strategic Position Aside from the external considerations, it is also vital to consider the internal settings of the organization. In this respect, Qatar Airways has sought to include three additional weekly flights to Kuala Lumpur which is an attempt to effect customer services as well as a step towards becoming a global airline. This is a managerial bid to expand the organization. Adding flights is an internal affair of the organization. This can be achieved even without considering external factors like the competition and market performance. Decisions to offer more flights to customers strengthens an organization’s corporate image in that, customers are attracted to its services as it provides them with efficient ways of travelling at varied time spans. With the improvements in the social welfare of the Qatar populace, the airline faces a challenge in trying to offer quality services. Akbar Al Baker has thus developed internal strategies that would enable the organization to meet these demands. Flights to Kuala Lumpur and Dar Es Salaam, Tanzania have been set to operate twice in a day, an aspect that will enable the organization to increase its weekly operations thus, enhancing its income and eventually enabling it to reach its global goal of being the leading airline. This has enabled the airline to increase its services and operation frequency. In addition to this, the organization has developed other strategies that would operate within the Gulf to cater for the regional populace as well. There are additional flight services to Muscat as well as other established routes, which the airline operates. In total, the airline will be able to offer its consumers with accessible round the clock services (Qatar Airways 2013). Moreover, upgrading services by hiking the customer capacity is another internal strategy that the organization seeks to implement. With a vision to grow globally, Qatar Airways seeks to offer its customers with a wide array of choice for flights. Considering the increasing demand for flying services, the CEO, Akbar Al Baker acknowledges that the organization has sought to acquire additional aircrafts, which would seek to empower the organization to meet this vision effectively. This internal strategy relates to the addition of flights per week for consumers. In that, by upgrading its services, the organization seeks to offer competitive services to its clients as compared to those of its competitors as well as venture into new routes that would increase the number of customers using its services. Furthermore, it will offer customers with an opportunity to identify the flights they want; freedom to choose when to travel and how to travel. Considering that the flights will be operated through the day, people will have a choice that suits their time as well as ensure that they are able to select how to travel, that is deciding on the business class or first class mode. Overly, the Qatar Airways will be sure to meet the market demands and achieve its goals at the same time (Qatar Airways 2013; Kaur 2004). Qatar Airways has created varied affiliations. A strategy that has enabled it to provide consumers with world class travel standards and unique opportunities. It has business agreements with the Virgin Atlantic, American Express, and BMI, Mayfair Intercontinental London as well as other six organizations. It also seeks to collaborate with the Oneworld Alliance. These basic partnerships offer unique customer services. For instance, due to its joint venture with the Privilege Club, associates flying to Japan Nippon Airways stand an opportunity to gain flyer miles that would enable them to utilize it on Qatar Airways. Additionally, through its joint ventures, Qatar Airways has been able to offer its customers adequate entertainment while travelling. The Showtime Arabia signed an accord with the airline enabling it to provide these services to clients travelling especially to the Middle East, Europe, and North Africa (Qatar Airways 2013). 4.0 Strategic Choices This denotes the management decisions, which influence the organization’s strategic plan. This usually entails considering the external factors and trying to align them with the organization’s overall plan. Strategic choices constitute authenticity, believability, communicability, as well as deliverability. Essentially, in making strategic choices for the organization, a manager needs to consider the clarity of the information relating to the organization’s objectives. For example, Akbar Al Baker presents a clear image of the plans he has for Qatar Airways. He has a vision to make the airline the best international airline. This vision has been passed on to the workforce who is also working towards the same goal. Evidenced by the quality services the cabin crew offers to the customers and the unique opportunities provided by the airline (Grünig 2005). Formulating believable choices entails making choices that can be related to the overall plan of the organization. Qatar Airways, from its original re-launch, this airline was set to be preeminent in the international market. This vision has been implemented through the notable growth of the airline. This makes the strategic choice seem believable for the organization and its consumers. Akbar Al Baker in his bid to make Qatar Airways the best airline internationally, has signed different affiliations, improved the services of the airline, as well as developed the hub networks (Strategic choice, 2012, par 23). Additionally, the strategic choices made should be communicable and deliverable. In this, the plans sort by the organization should be made accessible to the relevant people required to execute it. Qatar Airways seems to have achieved these requirements effectively. The cabin crew and staff implement the organization’s strategic choice by ensuring that they deliver effective and competitive services to their customers (Strategic choice 2012). 4.1 Implications of the Organization’s Existing Choices The current strategic choices of Qatar Airways seem to have varied implications on the organization. Firstly, operating with a general goal of making the airline the best in the international market presents the workforce with an objective to perform accordingly. The strategic choice to be an international airline presents Qatar Airways with a challenge of competing with other established airlines like the Emirates Airways. This implies that, the organization needs to assess its competency in achieving this objective. In line with this, Qatar Airways will enable the opening up of the Arabian airline market to the global arena. Through the varied business affiliations and partnerships, Qatar Airways under the leadership of Akbar Al Baker will enhance global relations between the region and other areas. This will help to minimize the stereotypes (Qatar airways n.d). 5.0 External Environment of Qatar Airways External factors play a key role in influencing the way airlines carry out their operations. In a way, these factors tend to shape the organizational strategies and plans. Factors like the economy, regulatory bodies, as well as the market are normally considered to be paramount contributing factors to the growth and expansion of any organization. Subsequent to the economic regression after the incidents of 9/11, the airline industry was faced with a number of challenges in trying to win consumer trust back in their services. The airline industry generally experienced a decrease in clientele. This was because of the global fear of flying in the general populace. Nevertheless, Qatar Airways envisaged a general market growth. According to the Boeing Economic Overview, despite the effects of the 9/11, the airline industry stands to develop. These predictions are in line with the perceived augmentation of international trade, which is expected to impact on oil production by enhancing its trade and production and eventually enabling the airline industry to keep developing (Lees 2008). Accordingly, another major factor is the regulatory measures by the International Air Transport Association (IATA). This regulatory body affects the airline of Qatar by overseeing uniform competition in the industry. In spite of having internal measures to guide its operations, Qatar Airways also is directed by the rules of the International body. The International body ensures that the airline is protected. Moreover, it handles the rising issues in the market as pertaining to cost of flying (Orr 2008). Considering that Qatar Airways seeks to be a global organization, it is vital for it to assess the varied financial states of the regions it seeks to venture into and thus, be able to offer the customers appropriate charges. The IATA normally takes this responsibility and provides Qatar Airways with relevant assistance for determining favorable air charges as well as ensuring fair competition in the airline industry. This helps the organization to maintain its competitiveness. In the recent past, following major conventions on air fare by the IATA; the Qatar Airline was able to enhance its services to Europe by abolishing the traditional tariffs and implementing new policies that have opened up the market (Grünig 2005; Qatar airways n.d). Market study is another common aspect of the external environment. It entails consumer’s view, rivalry with other organizations in the market as well the necessity to offer outstanding services. There seems to be an increase in the use of new technology in different airlines. This aspect has contributed to increased competition and rivalry as airlines implement computers to enable consumers to access data on flights and reservations. The growth of new hubs and spoke networks is a market analysis concept that indicates the expansion of competition. Qatar Airways has improved its hub in Doha. This has enabled the organization to enhance its services and remain competitive (Orr 2008). 6.0 Analysis of the Organization Qatar Airways appears to be fairing well in the airline industries. Numerous factors seem to contribute to this. In analyzing the organization, it is vital to consider the strengths, weaknesses, challenges as well the organization’s competence. This is because; these factors of the industry contribute majorly to the existence and continued growth or at times perceived failures of any organization within its choice of industrial operations. 6.1 Strengths Qatar Airways has a number of aspects that contribute to its strengths, first is its comprehensive marketing strategy, which seeks to build a strong brand identity. According to Qatar Airways, the organization has a consistent growth plan (Kaur 2004). The airline has developed website pages, which have enabled it to facilitate online services. Aside from this, the airline hub provides duty free shopping for the customers. This helps to ease their need for relevant utilities. Inclusively, the airline has an outstanding marketing and advertising strategy. From its exterior décor to the internal affairs, the aircrafts have the organization’s logo designed on them and provides its customers with unique cabin services. The cabin crew of Qatar Airways was recognized as the best in the airline industry. This is probably due to its diversity in selecting crewmembers from different nationalities (Grünig 2005). Secondly is the exceptional standard of services to customers. Qatar Airways in collaboration with other organizations has been able to provide exclusive services to its customers. For instance, flying clients are able to enjoy unique entertainment from local to international television stations. Additionally, the airline offers a wide range of music selections for its clients. Moreover, the organization provides distinct discounts and opportunities. For example, customers can acquire flying miles if they are associates of organizations that have partnered with the airline. Essentially, the airline also offers an extensive choice of flights to customers. This is because of its wide array of fleet acquisitions. There is increased service provision for customers flying to different regions of the globe. The airline has added flight operations to various routes of operation, thus, enabling customers to access travelling services at their convenience (Kaur 2004). Winning various awards is also one of the exceptional standard of services to customers that has contributed to the strengths of this airline. Qatar Airways has had the privilege of being considered the best airline in two years consecutively. According to the Skytrax Global Airline Awards, Qatar Airways was noted to be the best provider of airline services. This award of the World Best Airline in two years successively contributes to the branding of this organization as the best service provider (Kaur 2004). 6.2 Current Competence Contemporarily, Qatar Airways exhibits fast growth. This is evidenced by the increase in purchase of flights. This has led to the increase in flight routes globally, a fact that has enabled the organization to expand its customer capacity. Being a new player in the airline industry, Qatar Airways acts as the face of Qatar region. This is seen in the use of the state symbols like the Arabian Oryx and colors. Thus, the airline is responsible for representing the image and culture of the Arab society. This helps in creating awareness to the global market and minimizes stereotypes about the region. This organization also has opportunities for signing joint ventures. Being new in the airline industry, Qatar Airways presents a lucrative opportunity for the existing airlines who are seeking to expand their reach. By this, the airline has varied chances of collaborating with others to enlarge its market niche. For instance, collaborating with the American Express has enabled it to open up to the American market (Bryson 1995; Brown 2000). 6.3 Current Challenges Besides having varied strong aspect, Qatar Airways faces numerous challenges. For example, the unpredictability of the airline industry as a whole can pose challenges to this airline. This is evidenced by the 9/11 incident which led to the scarcity of oil and created fear among the customers. This led to a decrease in the demand for flying services. Consequently, it increased the fuel prices and jeopardized airline operations. New competitors into the industry also pose a major challenge. Considering that this airline is still developing from being a regional airline to international levels, it faces the challenge of competing with other developing airlines that also seek to be bigger players in the market. For instance, the Etihad Airline, which is also developing poses a challenge for Qatar Airways (Kaur 2004). 6.4 Weaknesses Qatar Airways is unknown in the international platform because it is new. This tends to weaken the organization, as it will require extensive planning and strategizing to create and enhance its awareness. Having to compete with other established and globally recognized organizations put this airline at a disadvantage. This is because; other organizations have already gained a traffic advantage. For example, the Emirates Airways has an advantage over Qatar Airways in terms of traffic rights. This is probably because the former has been in the industry for a considerable long time as compared to the latter. Moreover, the aspect of using an animal logo contributes to the major weaknesses of this organization. Whilst the Arabian Oryx may hold some relevant meaning for the people in the Gulf region, it may not have any significance to the internal market. Considering that most of the marketing and advertising paraphernalia used by the organization utilize this logo, customers who are unaware of the airline might not recognize the airline just from the logo (Brown 2000). In most cases, people tend to choose what they are familiar with and thus might ignore the Qatar airline services if only presented by the organization’s paraphernalia which has only the logo. 7.0 Strategic Potential Qatar stands a great opportunity would ensure its attainment of the goal to be the best airline globally. Qatar presently has a lucrative strategic potential. This is because of its freshness in the market. Being a new organization, Qatar airlines presents varied opportunities for the expansion of other airlines. It presents a viable market for forming collaborations with other airlines seeking to venture into the Gulf region. Qatar airways should thus pursue a strategy to affiliate its services with other organizations. This is because; these collaborations will enable it to expand its reach in the global market. For instance, considering that most customers are not familiar with the organization’s logo, by forming affiliations with other organizations, the airline stands an opportunity to market itself and logo to the global customers. 8.0 Conclusion Subsequent to the increase in demand for travel services and the enhanced lifestyles of people, the demand for airline services is high. Qatar Airways, which is considered a fast growing airline in the industry stands amidst all this. After being a private organization over a period, Qatar Airways was re-launched in 1997 and became a state owned organization. This presented the airline with the need to make major changes in its operations. Starting with a few aircrafts, the organization has ostensibly developed to a globally recognized airline. It has been identified to be the airline of the year in 2011 and 2012, with its cabin crew recognized as the best in the industry. Contributing to this growth is the organization’s strategic management plans and choices. Following the re-launch of this airline, the managerial objective was to make this the best international airline. This vision has been communicated effectively to the workforce and has seemingly worked tirelessly over the years to attain these standards. The CEO, Akbar Al Baker, has directed the airline to this by signing a number of joint ventures as well as acquiring new aircrafts that will ensure delivery of unique services to the customers. The organization faces a number of issues from the external environment. For instance, the economic condition of the state of Arabia, regulatory measures of the airline industry and the market contributes majorly to the operations of the airline. Among the factors that have enabled this organization to grow is the exceptional service it offers to its customers. Qatar Airways has collaborated with other organizations like the Showtime Arabia, which offers unique entertainment, as well as the American Express, which has enabled the airline to open up its region and access other markets. However, numerous challenges tend to affect these operations. For example, the use of the Arabian Oryx as the organizational logo presents a challenge for the growth of the organization. This symbol might be applicable to the region and may be comprehended by the customers within the region. However, it poses a challenge for the global market, which might find it confusing and may even fail to recognize the airline. Overly, it is important to ensure that the strategic plans and choices of the organization are Authentic, Believable, Communicable, and Deliverable. 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