Strategic Management: SARAM Airlines - Case Study Example

INITIAL STRATEGIC PLAN Company 4 Team members: Danay Sarduy - Isis G. Ramirez Introduction SARAM Airlines is a regional air flight which provides air services to cities and towns with small population. It has been in operation for the last four years with reports stating that over 1.2 million customers have used the services from the company. Apparently, an average of 300, 000 customers using Saram’s services per year is actually an extreme figure that at one point it may stretch company’s resources and facilities as well. At the moment, the company is doing fairly well in the stock market while recording an average net profit of between $ 114, 000 and $ 135, 000 per year. However, the fall in profit margin in the last quarter of the year was due to rise in operation expenses from $ 1,998,828 to $ 2,109,810. The reason was barely the economic boom that blew globally. However, some of the plans/objectives that involve improvement of environmental stance have not been fully fixed and this was expected to be done before the end of the quarter. Therefore, a generic strategy perhaps is ought to be adopted. This inevitably will lead to change both in the corporate structure of leadership as well as their responsibilities. Corporate Governance The top down approach will still be the main management style for the company considering the fact that customer service and organizational briefings as concerned. The three main management organs (Senior Management Team, Department Leaders and Staff Level Leaders) will still govern the organization but at larger capacities. However, there will be definite roles played since the company is at the moment enlightened. The expansion especially in terms of global operations of the company will eventually lead to recommendation of addition of other offices/department, for instance, Human resource management department. The chart below represents various executive positions in SARAMA Corporate Governance The company at this point has expanded its corporate responsibilities therefore three executive bodies have been formed to ensure that there is inclusive exercising of responsibilities in the company as far as the strategy is concerned. Roles and Responsibilities President The president codifies a set of standards that will support the board of SARAM Airlines. The president ensures that there is order in focusing in strategic disorganized business in the company. The president also facilitates the development performance metrics that would lead to efficiency in service delivery in the company. The big role of the president is to ensure that tension between Company’s public policy priorities do not compromise the economic development of the company as far as the strategy is concerned. Director of Board/Action Plan/Business and finance The department through the director is responsible for the establishment of evaluation system that will ensure effective use of company’s resources (finance and employees). The department also ensures that there is a blueprint for project prioritization and accomplishment of short-term goals and objectives of the company. The department ensures that all the objectives and operations are met within the budget of the company. Director of Board/Operational, Planning and Development The board reviews the movement of information both within and outside the company (competitors) and develops standard meetings for evaluation. NB: Information is very important when it comes to planning and development of the company. Director of Board/Administration The director’s role is to ensure that all departments in the administration are served with updated job descriptions. The director coordinates various departments in the organization and ensures that they adhere to action plan during strategy implementation. Analysis of Company’s External Environment Analyzing the external environment of the company is very essential as far as success is concerned. In particular, threat and opportunities that result from socio-political, economic and technology are greatly analyzed in this section. PESTEL model therefore is used to analyze the external environment of the company. a) Political Opportunities: The resent increased security in air spaces will give SARAM Airline ability to renovate its operations from regional flight to international flight with fewer risks involved. This ensures that consumer confidence is maintained as well as competitive advantage. Heavy regulations that will enhance compliance in the industry perhaps will protect SARAM Airline Company’s operations. b) Economic Threats: Fluctuation in oil prices and exchange rates as well will probably affect SARAM Airlines directly. There is also decline in consumer spending therefore this will enhance intense competition in the market. Most customers are more likely to reduce the amount of business travel thus making the company vulnerable to high operating costs. c) Environmental Threats: The Company has already expanded in terms of its operations therefore land for expansion perhaps will be a reasonable threat especially when large airplanes are linked to the SARAM Airport Station. Internal Environment Assessment SWOT ANALYSIS OF SARAM AIRLINE Strengths The current corporate structure of the SARAM Airline is very systematic in such a way that various departments are managed by respective board. The president oversees the three main governing bodies and ensures that the responsibilities of these offices are executed with respect to the organization policy. This comes in a strength since whenever there is any laxity in duty execution then the responsible board take care of the issues and in the long run, perhaps it will safe time. Generally, there is decentralization of responsibilities in SARAM Governance. Human Resource Management Department, which is under Director of Administration, has developed an inclusive system of organizational culture therefore employees from any part of the world can work as staff in SARAM Airlines. Despite the fact that SARAM company embrace more bureaucratic style of management especially in deploying external ideas from other Airline Companies in the industry, it also give a significant proportion to X and Y theory of management. For example, some of the workers need to be pushed along in order to work on their responsibilities while others can work without being instructed. Therefore, a strong corporate inclusive culture will motivate each and every employee. In 1st Quarter, SARAM Airlines recorded the highest business index of 104 besides an increase in stock prices by $10.71. This indicates that the total operating expenses of the company are low compared the total revenue to the company. Therefore, the financial performance of the company is well-built thus progression of the strategy would be easier. However, some of the short-term objectives between 1st quarter and 4th quarter inspired the fall of stock price from $ 30.71 to $ 27.97. Weaknesses The current information technology environment is not well facilitated with the latest communication infrastructure. Therefore, monitoring of flights is still a major challenge faced by the operation department especially introduction of the recent international flights. Accountability of monitoring and evaluation system of the company has not been well developed. This poses a big challenge especially when it comes to feedback review and formal assessment mechanism for improvement in the SARAM Airline strategic plan. Mission Statement The Mission statement has not been changed and it states: The company endeavors to fill a role in the growing air-flights, to attain high and advantageous corporate culture by discovering and serving main routes in the region which is currently underserved or inadequately served and when considerable opportunity exists, the company strives to set a new professionalism both within the target market area and global as well. Management Team Objectives: To maintain the reliability of SARAM Airlines at 92.0% and above for the purpose of continuous operation efficiency in the 3 quarters. This was readily achieved since the reliability grew from 92.0% to 92.4% at the end of the 4th Quarter. This is due to smart employees who used the resources (finance and labor) in the company effectively. Strategies Introduce new policy to guide the operation efficiency. Employ new knowledge to the employees. Regular performance review. To enhance helpful discount fares to the customers. This objective was achieved since an indicator (total seats sold) show that in 1st quarter, the total seats sold was 144 while in the 4th quarter the number of seats sold had changed to 266. Strategies Provision of special offers. Checking on the dividend policy such that when the stakeholders reach maximum return, the concentration will be on customer full satisfaction. Increase sales through hiring a sales person To enhance an improved customer services in the new routes. At some point, the objective was achieved but the efficiency was somehow low. Strategies Include free food services in each flight. Introduce on-board magazine. Provide training to employees in order to improve the quality of company’s service. Director of Board/operational planning and development would be responsible for tracking the data. Policies for SARAM Airline Company 1. Human Resource Management policy for Diversity and Equal Employment Opportunity This policy will promote workplace diversity by protecting the interest of both genders in the organization. For instance the cases of sexual harassment are watched over by this policy while affirmative action is maintained for the same as well. 2. Competition policy The policy guides the pricing rule in various destinations especially in the competitive areas of business operations. The policy ought to be transparent such that when it comes to cases like congestion costs and other factors that are price determinants, the policy will tend to limit control pricing. Work cited Hunger, J. David, and Thomas L. Wheelen. Essentials of strategic management. 5th ed. Upper Saddle River, NJ: Prentice Hall, 2011. Print. Read More