The Strategic Analysis of Flight Center Service - Case Study Example

Strategic Management Cases study- Flight Center Service Name: Institution: Date: Executive summary This strategic case study primarily focuses on the strategic analysis of Flight Center Limited in terms of the external and internal environment. The case study will assess the strategic objectives of the company and strategic directions by considering the vision, mission and strategic objectives of the organization. The paper will also analyse the broad business strategies that the company pursues through strategic choice analysis. Strategic implementation and strategic implementation issues faced by the company also form part of the strategic case study. The case study will also perform strategy evaluation to assess progress of the company and the realization its of goals. Table of Contents Table of Contents 3 1.0 Introduction 5 2.0 Strategic analysis 5 2.1 External environment analysis 5 2.1.1 General environment 5 2.1.2 Specific environment 6 2. 1. 3. Conclusion 6 2.2 Internal analysis 7 2.2.1 Competitive strengths 7 2.2. 2 SCA (Strengths) 7 2.2. 4. Conclusion 7 2.3 Conclusion 8 3.0 Strategic directions and strategic objectives 8 3.1. Vision 8 3.2. Mission 8 3.3 Strategic objectives 9 3.4 Conclusion 11 4.0 Key broad business-level and international strategies 11 4.1 Ansoff’s product/ market business level strategies 11 4.2 Miles and Snow’s adaptive strategies 12 4.3 Porter’s competitive business level strategies 12 4.4 International strategies 13 4.5. Conclusion 13 5.0 Strategic implementation: General perspective 13 5.1 Any mismatch between environmental turbulence and strategic management focus 13 5.2 Evidence of unrealized, unintended or imposed strategy 14 5.3 Evidence of strategic drift 14 5.4 Evidence of strategic flux 14 5.5 Is transformational change needed? 14 5.6 Evidence of second curve activity 14 5.7 Where do the business level strategies fit on the BCG matrix? 15 5.8 Conclusion 15 6.0 Strategic implementation issues 15 6.1 What are the three most important strategic implementation issues faced by the organization 15 6.2 Volatile economic challenges 15 6.3 Online retail challenges 16 6.4 Value investor challenges 17 6.5 Conclusion 17 7.0 Strategic evaluation 17 7.1 Triple bottom line reporting 17 7. 1. 1 Economic bottom-line 17 7. 1. 2 Social justice bottom line 18 7. 1. 3 Environmental bottom-line 18 7. 2 Conclusion 18 8.0 Conclusion 19 9. 0 References 21 10. 0 Appendix: SWOT Analysis 23 1.0 Introduction This strategic case study endeavours to provide an understanding of the operations of Flight Center Limited in relation to its goals and objectives. Flight Center Limited is Australia’s leading travel agent Company that offers affordable domestic and international flight services in terms of holiday packages, last minute hotel deals, and travel insurance among other services (FLT, 2013). Founded in 1981, the company is the largest Australia-based international travel company that has the largest retail travel outlet in Australia (FLT, 2013). The strategic case study will be engaged in steric analysis, strategic objectives and directions, strategic choice, strategic implementation and strategic evaluation of the company. 2.0 Strategic analysis 2.1 External environment analysis 2.1.1 General environment Flight Center Limited is a business that operates both internationally and domestically any changes in any of these sectors, especially political goodwill and international business treaties that affect the legal, economic and environmental aspects would affect the business in ratio to customer satisfaction (Business View Magazine, 2014). 2.1.2 Specific environment The flight service industry in Australia is characterized by high levels of competition from numerous avenues especially the online techniques of offering flight services to customers (Business View Magazine, 2014). In terms of Porters five forces and the government’s model, the company enjoys supplier power, competitive rivalry and friendly government policies especially in regulations in the industry. Supplier power arises from the fact that the company is major provider of flight services in Australia (FLT, 2013). It enjoys nationwide footprints through its ability to deliver services in large scale, this makes the company stronger in the domestic market and it enjoys the liberty of determining the cost of its services. The company enjoys competitive rivalry considering that it provides quality services at relatively cheaper prices compared to those of its competitors (FLT, 2013). The government of Australia through its aviation policies provides a perfect platform for flight companies to engage in business. Aviation policies in Australia require that flight services to the Australians and foreigners are safe, secure, efficient and environmentally friendly (FLT, 2013). 2. 1. 3. Conclusion The company is putting structures that will ensure high profitability in the future. In addition the company is also controlling its specific environment by focusing of the domestic market and improving on its competitive advantage. 2.2 Internal analysis 2.2.1 Competitive strengths The company is listed at the Australian Stock exchange market and this allows it to use its position in the market to influence decision in the flight industry. As a core competency, the decisions made are influenced by the desire to meet customer, employee, the company and the needs of the government (Business View Magazine, 2014). The company also enjoys efficient management that defines the procedures and strategies towards the realization of company goals (FLT, 2013). 2.2. 2 SCA (Strengths) The company’s competitive position is defined by its competitive advantages. These include geographical diversity that allows it to operate about 2500 stores in eleven countries. The company’s brand is ranked 14th in terms of brand awareness (Business View Magazine, 2014). 2.2. 3. Internal weaknesses Flight Center Limited has to w major weaknesses that define its operations. It still uses the traditional practice of travel services where these services are distributed to actual and potential customers through agents (FLT, 2013). 2.2. 4. Conclusion Flight Center Limited has a relatively high position in the Australian competitive market. This is however affected by the use of traditional methods in marketing its services hence affecting the overall performance of the business. 2.3 Conclusion The operations of the company are affected by the political, environmental and economic factors in the society. The company also enjoys economies of scale in service provision due to low prices for quality services. The use of traditional methods exists as possible weaknesses of the business. 3.0 Strategic directions and strategic objectives 3.1. Vision The vision of Flight Center limited is to be the most exciting travel company in the world through the delivery of amazing experiences to the people, the customers and the partners (FLT, 2013). The ability of the company to engage in different merger activities and development of proper management strategies allows it to offer exciting travel services to different stakeholders around the world. This is considered as a means of ensuring high level of competitive advantage (FLT, 2013) 3.2. Mission The mission is to open up the world to enable personal and professional development. For customers, the company desires to open up the world through the provision of an exciting medium of well-organized and great value travel experience. This will enable the company to offer overwhelming returns to its shareholders (FLT, 2013). 3.3 Strategic objectives Stakeholders Level of importance Demands/needs Shareholders Definitive Dividends Proper management Effective strategies Customers Dominant Effective products and services Affordable services Variety of services Employees Dominant Just salaries and wages Safe and secure working environment Work-life balance Financers Dominant Proper financial management Allocation of financial resources according to need Development of effective budgets Suppliers Dominant Friendly process Quick payment process Payment according to agreed terms and conditions Environment Dominant Use of renewable and safe energy Protection of environmental resources Promotion of the need to conserve environment Advisors Discretionary Decision made based on advisory Government Dominant Act in accordance with the existing regulatory laws Contribute to the economic well-being of the country Unions Dominant Work in accordance with established labour laws Flight Center strategic objectives include: To lay a solid foundation that will ensure proper management and oversight To promote ethical and responsible decision making through its management To safeguard integrity and financial decision making To provide customers with highly valued products and services at affordable prices To provide product and services that promotes good environmental practices The strategic objectives of the business are intended to address and satisfy the demands of the customers, shareholders, employees, the environment, the government and the unions. These strategic objectives are in line with the demands of these stakeholders (Kiridena & Singh, 2008). However, to continue satisfying the dynamic demands of its stakeholders, the management is constantly engaged in developing strategies that could help in improving on the ability of the company to attract more customers and satisfy other stakeholders (Murray et al, 2010). The dynamic nature of stakeholder demands also explains the urge to develop competitive advantage in the market 3.4 Conclusion The company through its vision, mission and strategic objectives is in line with the desire to satisfy stakeholder demands. In addition, it is through the satisfaction these demands that the company can realize an increase in its market share and its competitive advantage. The fact that the company is able to ensure that its customers and employees are satisfied means that there is a high retention capacity of these entities that are considered essential in survival of the company. 4.0 Key broad business-level and international strategies 4.1 Ansoff’s product/ market business level strategies The company is currently expanding its market especially in the Asia-Pacific region through the acquisition of FCM Travel in India (Flight Center Travel Group, 2013). The company is also engaged in market development strategies by providing complementary online and offline products as a way of ensuring that it becomes a leader in the corporate and retail travel market internationally (Flight Center Travel Group, 2013). Diversification of its products and services is also a technique of ensuring product development. The company is currently operating flight shop outlets alongside flight services that it offers. This is based on the desire to ensure slow but steady growth in its market share (Flight Center Travel Group, 2013). 4.2 Miles and Snow’s adaptive strategies The organization’s prospectors are based on its intention to establish a strong network in Asia-pacific region and this explains its acquisition of FCm Travel in India. Flight Center Limited’s analysis strategy is based on its decision to offer online and offline services to its clients especially those in Australia as a way of maintaining its dominance in the Australian market (Flight Center Travel Group, 2013). The organization employs a defender strategy by providing valued services to the leisure travel market. The organization’s reactor strategy in the highly competitive flight services market is its ability to provide services at relatively lower prices compared to those of its competitors (Flight Center Travel Group, 2013). 4.3 Porter’s competitive business level strategies In terms of the differentiation strategy the company offers quality products and services at relatively lower prices. The lower prices also define the company’s cost leadership strategy as a way of gaining the market share (FLT, 2013). The niches are of the company is the provision of flight travel services for leisure and business travellers in different markets considering its competitive nature and the underselling profit levels. Combination allows the company to integrate different strategies as a technique of ensuring that it gains a competitive advantage and realizes an increase in its market share (FLT, 2013). 4.4 International strategies A large percentage of the Australian population travels through air. This has provided the company with a platform off engaging local airline companies in agreements on how to ensue mutual benefits in the provision of customer services (FLT, 2013). Australia is the headquarters of Flight Center Services. The company offers transnational services through different airlines that are involve in direct flights to different destinations and this is considered a competitive advantage (FLT, 2013). Globally the company envisions a global presence through mergers with different companies and governments in Australia, Asia, Africa and the Americas. This will not only increase its market share but also its competitive advantage (FLT, 2013). 4.5. Conclusion The ability of the company to initiate different strategies for the growth of the company in terms of its competitive advantage, market share and global presence is an indication of its dedication towards the retaliation of tits vision, mission and strategic objectives. It is important to note that the decision by the company to merge its initiatives with those of other company’s in different countries is based on the desire to integrate its services on the international platform 5.0 Strategic implementation: General perspective 5.1 Any mismatch between environmental turbulence and strategic management focus Since 1981, the management has been efficient in ensuring complementarity between the strategic management focus and prevailing environmental conditions in the market (FLT, 2013). 5.2 Evidence of unrealized, unintended or imposed strategy The intention by the company to shift all its systems into internet technology failed to work in 2008 due to logistical complications. This led to about 12% fall in the profits of the company (FLT, 2013). 5.3 Evidence of strategic drift The company decided to increase its popularity in Asia-Pacific region and other regions in the world. The company also decided to integrate online services with agent centred services (Johnson, 2005). 5.4 Evidence of strategic flux The decision by the company to expand its presence in the international market was met by complications especially in 1990 when its first attempt to begin operations in the US failed to deliver as expected (Johnson, 2005). 5.5 Is transformational change needed? The use of the Family Village Tribe Model has continues to help the company in addressing challenges of exponential growth. There is need to blend the model with internet technology to ensure 24 hours operations as a way of boosting efficiency (Johnson, 2005). 5.6 Evidence of second curve activity The company is currently riding on a new growth paradigm. This is through the development of its services in different countries according to the prevailing cultural and societal practices (Enz, 2010). 5.7 Where do the business level strategies fit on the BCG matrix? The business fits in the cash cow section of the BCG matrix. This is because its earnings and cash flow are high and stable. In addition, Flight Center Limited is investing to maintain its current level. 5.8 Conclusion Despite the challenges associated with failure to implement part of its strategies the business is currently stable due to better management techniques and the strategies could be improved to increase the popularity of the business at the local and international market. 6.0 Strategic implementation issues 6.1 What are the three most important strategic implementation issues faced by the organization Volatile economic conditions Online retail challenges Value investor challenges 6.2 Volatile economic challenges Unpredictable economic conditions have become a characteristic of the some of the company’s international markets. These fluctuations have been necessitated by among other factors the global financial crisis and unfavourable political situations. Unstable economic conditions have been experienced more acutely in areas where Flight Center has been attempting to experience some form of exponential growth. These include markets such as those in the US and the UK. According to recent report the UK market for instance is on the verge of a possible recession which may deepen the short –term momentum of the business. It is important for the business to analyze the possibility of implementing strategies in economically volatile areas. 6.3 Online retail challenges The retail and service industry in Australia has been facing challenges related to the growing trends of online shopping. Different business enterprises such as Flight Center limited which was initially involved in agent centred techniques of providing services to its customers has been experiencing relative downward trends in its sales (Enz, 2010). There have been calls for government interventions to ensure that there are adequate regulatory measures that will ensure a level playing field for businesses in the same industry. Upon further analysis, it has been realized that the increase in online shopping is attributable to specific sectors in the market. The decision to integrate agent centred and online sales platform has also been facing challenges due to failure by the management to identify the best products and services to provide in these platforms. The management has a responsibility of conducting surveys on how to blend online sales and agent centred sales. It is important for the management of Flight Center Limited to learn more on the potential responses to the possible challenges that are associated with online sales. This will include an analysis on the level of competition and the possibility of misunderstanding their market powers 6.4 Value investor challenges Despite the relatively constant sales, the company is not immune to weak consumer sentiments which are considered to have plagued the Australian retail sector. This means that the relationship between the online sales and agent centred sales (Benckendorff et al, 2014). This has made it complicated for the company especially considering that the older stakeholders, customers, prefer to use agents instead of online platforms (Enz, 2010). This is because the company has to outsource travel to boost the time burden that is presented by online booking and access to services. To navigate these challenges it is important for the transform the business entity from a normal travel agent to a travel retailer, with focus on the promotion of the interests of investors, promotion of brands and the provision of specialized services. 6.5 Conclusion The company also has a responsibility of increasing its focus on domestic business and develop strategies of building international growth and adapt a business model as a way of determining long-term goals and sustainability. 7.0 Strategic evaluation 7.1 Triple bottom line reporting 7. 1. 1 Economic bottom-line The Australian economy and the international economy are increasingly gaining maturity. The company is increasingly gaining from its overseas operations. Despite the gains, the international growth strategy has had varied success. And the company is yet to experience a harmonious growth on the international platform (Benckendorff et al, 2014). The Australian market is still the most profitable compared to those of the international platform. An influx in online operations has polarized the Australian economy necessitating the need to develop more strategies on how to integrate online and agent centred sales. 7. 1. 2 Social justice bottom line The strategies developed by Flight Centre Limited are all geared towards the satisfaction of its employees and customers. These strategies have enabled the company to ensure growth of its staff numbers (Enz, 2010). In addition, the company also has been experiencing growth in its numbers of customers. It is possible that this growth is because of a mix of incentives for members of staff to perform. 7. 1. 3 Environmental bottom-line Government regulations are considered to be essential in the definition of the company’s strategies towards environment. The use of renewable and environmentally friendly materials has been definitive of the strategies that the company has been able to develop. The move towards integrating online business and agent centred business is due to the reduction of the use of paper (Benckendorff et al, 2014). 7. 2 Conclusion The strategies that the company has been able to implement or those that it has failed to implement are largely influenced by the prevailing economic conditions in the market. In addition, social justice factors also affect employee satisfaction and customer attraction. This has also been affected by environmental factors as defined by government laws. 8.0 Conclusion Flight Center Limited is Australia’s leading travel agent company that offers affordable domestic and international flight services in terms of holiday packages, last minute hotel deals, and travel insurance among other services. Flight Center Limited has a relatively high position in the Australian competitive market. This is however affected by the use of traditional methods in marketing its services hence affecting the overall performance of the business. The company through its vision, mission and strategic objectives is in line with the desire to satisfy stakeholder demands. In addition, it is through the satisfaction these demands that the company can realize an increase in its market share and its competitive advantage. The fact that the company is able to ensure that its customers and employees are satisfied means that there is a high retention capacity of these entities that are considered essential in survival of the company. The company has competitive advantages, enormous growth predictions, experienced and effective management and a very strong profit levels.  As the company continues to grow it becomes more complicated for per share estimation to escalate if the rate of growth decelerates.  The company needs to outperform opportunities in the future to ensure that the estimates of value increase. 9. 0 References Benckendorff, P., Sheldon, P. J., & Fesenmaier, D. R. (2014). Tourism information technology. Business View Magazine. (2014). Flight Centre: Still Flying High. Business Research and Insights Retrieved on 04 Nov. 2014 from http://business.nab.com.au/flight-centre-still-flying-high-7848/ Enz, C. A. (2010). Hospitality strategic management: Concepts and cases. Hoboken, N.J: John Wiley & Sons. Flight Centre Limited (FLT). (2013). Financial and Strategic SWOT Analysis Review, Macro Corporation Limited Flight Center Limited (FLT). (2013). Flight Centre Ltd. Fundamental Company Report Including Financial, SWOT, Competitors and Industry Analysis, Market Publishers, Report Database Flight Centre Limited (FLT). (2013), Flight Center Limited: Annual Report. Flight Centre Limited, Level 2, 545 Queen Street Flight Centre Limited (FLT). (2013). Financial Report for the Year Ended 30 June 2012, Flight Centre Limited, Level 2, 545 Queen Street Flight Center Travel Group. (2013). Flight Centre Limited Expands FCm Travel Solutions Network with Key Indian Acquisition. Retrieved on 04 Nov. 2014 from http://www.flightcentrelimited.com/investor-and-media/media-releases/flight-centre-limited-expands-fcm-travel Johnson, M. (2005). Family village tribe: The story of Flight Centre Limited. Milsons Point, N.S.W: Random House Australia. Murray-Webster, R., & Williams, G. (2010). Management of risk: Guidance for practitioners. Norwich, England: The Stationery Office. Kiridena, S & Singh, P. (2008). Strategic Approach to Operations Management. Oxford University Press, Oxford 10. 0 Appendix: SWOT Analysis Strengths 1. Provides variety of flight services 2. Has an established brand in the market 3. Services offered at affordable prices 4. Provides services across the international platform Weaknesses 1. Relatively weak customer service 2. Inability to fully integrate online service with agent centred services Opportunities 1. Opportunities for growth domestically and internationally 2. The company has the opportunity of introducing related products and services Threats 1. Numerous services are available online 2. Rise of travel agencies providing similar services Read More