Business Plan for Oblako Airlines - Coursework Example

Individual Business Report Executive Summary The global airline industry can be considered as one of the leading and most competitive sectors. In relation to the current business scenario in Ukraine, it has been widely accepted that the aviation industry in this country provides substantial growth opportunity due to its growing economy. The increasing business performance of the airline service providers in the country has been observed to facilitate in gaining significant growth from the last few years. Therefore, it is a growing opportunity for Oblako Airlines to build its sustainable position in this respective business industry in Ukraine. In this regard, the report intends to delineate an effective business plan for Oblako to successfully establish its own independent airline service. The proposed business plan incorporates a number of effective steps and strategies that can enable the organisation to establish its sustainable position in the competitive industry. The proposed plan outlines major aims and objectives of the venture with respect to the current environment of the Ukrainian airline business industry. In order to facilitate to achieve the desired aims and objectives, the proposed plan also explores the current industry environment through the help of competitor analysis framework. Moreover, it also demonstrates an effective marketing plan along with coherent financial information that has been estimated to help in establishing long-term sustainability of Oblako Airlines in the Ukrainian aviation industry. Table of Contents Executive Summary 2 Chapter 1. 4 1.1 Introduction 4 1.2 Business Aims and Objectives 4 Chapter 2 5 2.1 The Business Environment 5 2.2 Product/Service Description and USP 7 2.3 The Marketing Area 8 Customer Segmentation 8 Chapter 3 9 3.1 Financial Area 9 Conclusion 12 References 13 Chapter 1. 1.1 Introduction Oblako Airlines (Oblako) has positioned itself as one of the major new players in the competitive airline industry of Ukraine. The Ukrainian airline industry is driven by a rising competitive pace as it is witnessed that there are a number of vital competitors operating in and around Ukraine which are from neighbouring countries such as Belarus, Russia, Romania, Moldova, Czech Republic, Hungary and Poland. The competition has raised due to the rising trend of the demographics especially their increasing income level. Therefore, it is highly essential for Oblako to execute a competitive strategy to cope with the rising pace in the Ukrainian airline industry. In terms of legal structure of the venture, it will be a partnership between two individuals wherein the risk and profit would be shared by both of them. 1.2 Business Aims and Objectives The proposed business plan for Oblako would be highly focused on building a strong brand position with the aim of maintaining a competitive pricing strategy. Moreover, providing highest level of airline services along with improving the comfort level of the client would also be considered as the primary aims for Oblako in its business operations. In order to successfully achieve the desired aims, the proposed business plan will include the following set of objectives. To build strong base of premium and business class customers through offering a 50% lower cost of fare as compared to the other competitors To offer quality based airline services and comfort in a half rate as compared to the flight rates provided by the existing airline companies To achieve competitive advantage by providing flight service to the premium and business class customers in a half flight rate with adequate quality of services Chapter 2 2.1 The Business Environment The business environment related to airline industry in Ukraine has been observed to achieve continuous growth due to the rising commercialisation along with increasing income level of the demographics (Aerospace Industries Association of Canada, 2009). In order to gain an adequate understanding regarding the current Ukrainian airline market, the following competitor analysis would provide adequate insight for Oblako to achieve its business objectives. Competitor Analysis (Porter’s Five Forces Model) Bargaining Power of the Buyers: In the context of the recent airline market of Ukraine, there are a number of airline companies with a wide range of services especially for the premium and business class customers. Therefore, the rising number of international airline service providers has led to the increase in the bargaining power of the premium and business class consumers (Aerospace Industries Association of Canada, 2009). Bargaining Power of Suppliers: The airline service providers frequently face a considerably higher level of bargaining power related to their suppliers due to the minimum number of aircraft manufacturing companies. Moreover, the rising price of the aircraft fuel and the availability of a limited number of suppliers can also be a major constraint for Oblako in the Ukrainian market (Aerospace Industries Association of Canada, 2009). Threat of Substitute Products/Services: Threat of substitute products/services for Oblako is relatively low as the company is exclusively focused on a specific segment of airline customers such as premium class and business class. The strategy of keeping a considerably lower price of the targeted group of airline customers would further enable to build a strong market in the respective industry (Ministry of Economic Development and Trade, 2014) Threats of New Entrants: In relation to the rising competitiveness in the Ukrainian airline market, the threat of new airline service companies is high. Although the airline market of Ukraine has increasing threat due to the rising number of global competitors, the strategy of providing quality based flight service to the premium and business class clients with a half flight rate can enable Oblako to build its competitive position (Aerospace Industries Association of Canada, 2009). Competitive Rivalry: In relation to the recent observation, it has been identified that the airline market for the premium and business class clients is significantly dominated by the foreign airline service providers specially Russia, Romania and Czech Republic. Therefore, being a new airline company, it would be a major challenge for Oblako to gather the attention of the local and overseas clients (Ministry of Economic Development and Trade, 2014; Aerospace Industries Association of Canada, 2009). 2.2 Product/Service Description and USP Marketing Mix/ 4Ps Strategy Product: In relation to the product strategy relating to the proposed business plan, the flight services especially for the premium and business class customers would be highly focused on maintaining adequate quality along with flight rate. In order to gain a significant base of customers, the flight services of Oblako would incorporate each aspect that is generally offered by the modern quality airline service providers to their premium and business class clients. Besides, the flight services of Oblako would also incorporate additional values with respect to the comfort along with convenience of each individual customer. The strategy would enable Oblako to gain a major advantage and build sustainable position in the market. Price: The pricing strategy of the airline services for Oblako is one of the central measures. The airline services for the premium and business class customers would be highly focused on maintaining a competitive pricing strategy for each airline service to the customers. In this regard, the company would offer flight services for the premium and business class clients in a 50% lower rate than the similar services provided by the existing competitors in the Ukraine airline industry. The customers would be provided quality based airline services with utmost conformability at the half price in comparison with the pricing strategy of the existing competitors. Place: At the initial stage, the destination routes of Oblako would encompass the neighbouring countries and territories of Ukraine through its both short and long-haul flights. In relation to the domestic operations, the airline service would focus on targeting the urban destinations of Ukraine to gain a significant number of potential clients for premium and business class flight services. After obtaining a strong brand position in the domestic markets, Oblako will also target the long routes across the different overseas nations. Promotion: In the context of promotional strategy of Oblako, the continuous development of brand position would be a central focus which can enable the organisation to build its long-term sustainability. Moreover, the promotional activities would also focus on communicating the exceptional pricing structure of the premium and business class flight services. The flight services of the company would further incorporate social media networks to promote its each flight service which can further increase the capability of Oblako to attain a strong base of target clients. In relation to the unique selling proposition (USP) of the proposed venture, the availability of quality airline service at a discounted price of 50% lower than the market average would be the key factor to draw the attention of the target consumers. 2.3 The Marketing Area Customer Segmentation The marketing strategy related to this proposed plan will be focused on segmenting the overall target market into two major parts namely demographic and psychographic factors. In relation to the demographic factor, the age and income level of the customers will be taken into consideration which can facilitate Oblako to attract a larger customer base for its exceptional range of flight services. Correspondingly, the customers with higher level of income would the central demographic for the company (Hunt & Arnett, 2004). Moreover, the flight services to be offered by the company will be focused on targeting business personnel belonging to different occupational backgrounds. Additionally, the strategy of offering exceptional and quality based airline services in a feasibly lower cost would also facilitate Oblako to follow the rising trends of the customers (Goi, 2009). For the proposed business, the psychographic segmentation will also be conducted through attracting the customers’ perception towards the cost and fare associated with different flight services. Responsively, the strategy of offering 50% lower flight fare for the premium and business class clients would significantly attract the customers from middle income groups which can further improve the business performance of Oblako (Kotler, 2001). Chapter 3 3.1 Financial Area Start-up and Running Costs The start-up cost for Oblako would require a large amount of finance as the airline service business industry incorporates a wide range of activities. In order to meet the capital requirement, the proposed business plan will be financed by both personal investment and loan from a recognised financial institution. The total amount of financial investment has been predicted to be £1,030,000 where £309,000 will be availed from the personal account and the remaining £721,000 will be financed from bank. The following financial assumption depicts the amount to be used in the proposed business plan. Source: (Start-ups, 2014) Predicted Sales for First Three Years With reference to the aforesaid forecasted financial highlights of Oblako, it has been identified that the company would be able to achieve significant profit due to its effective pricing strategy of the airline services. Although it has been identified that Oblako would be able to achieve profit during its start-up year, the company would also be required to render additional working capital in its fourth year of commencement to overcome the chances of losses owing to the declining net profit. With this concern, assistance will be taken from another bank loan to make the business operations financially stable over the long run. Conclusion In relation to the present day context, it has been acknowledged that the Ukrainian airline industry has been experiencing a rapid pace of competition wherein the need for providing high value airline services with the incorporation of a variety of strategic directions by considering competitive pricing and/or delivering quality based services has become paramount. With regard to the pricing strategy of this proposed business plan, it can be stated that lowering flight cost for the premium and business class clients would be a major decision for the management of Oblako to gain potential advantage in the rapidly growing Ukrainian airline industry. References Aerospace Industries Association of Canada, 2009. Ukrainian Aerospace and Aviation Market Overview. General Market Overview. [Online] Available at: http://www.aiac.ca/uploadedFiles/News_and_Events/Calendar_of_Events/Ukrainian%20Aerospace%20Market%20Overview%20June%2010_eng.pdf [Accessed March 23, 2014]. Goi, C. L., 2009. A Review of Marketing Mix: 4Ps or More? International Journal of Marketing Studies, Vol. 1, No.1, pp. 2-15. Hunt, S. D. & Arnett, D. B., 2004. Market Segmentation Strategy, Competitive Advantage, and Public Policy: Grounding Segmentation Strategy in Resource-Advantage Theory. Market Segmentation Strategy, Competitive Advantage, and Public Policy, Vol. 12, No. 1, pp. 7-25. Kotler, P., 2001. Marketing Management, Millennium Edition. Prentice Hall Inc. Ministry of Economic Development and Trade, 2014. Aircraft and Airspace Industry of Ukraine (2007). State Export Support. [Online] Available at: http://www.ukrexport.gov.ua/eng/economy/ukr/203.html [Accessed March 23, 2014]. Start-ups, 2014. How they started. Home. [Online] Available at: http://startups.co.uk/c [Accessed March 23, 2014]. Read More