Leadership and Management of Strategic Change of Qatar Airways - Assignment Example

Leadership and Management of Strategic Change of Qatar Airways College: Introduction Strategy management refersto “the systematic analysis of the factors associated with customers and competitors (the external environment) and the organization itself (the internal environment) to provide the basis for maintaining optimum management practices primarily to achieve better alignment of corporate policies and strategic priorities”. It involves identifying the organizational responses to changes in the business environment, by evaluating strengths & weaknesses of the organization and opportunities & threats in the environment, so as to maintain sustainability and competitive advantage, to achieve organizational objective (Fuggetta, 2012, p.25). On the other hand, strategic leadership refers to the strategic usage of organizational resources be it human resources, technological resources or financial resources so that an organization can build and create capacity and value in unstable environment, in keeping with organizational vision & mission. Strategic management is more of goal oriented while strategic leadership is development oriented (Wootton, Horne and Wootton, 2010, p.89).Strategic change refers to a restructuring of an organization’s business or marketing plan that is typically performed in order to achieve an important objective such as making shifts in a corporation’s policies, target market, mission or organizational structure. This research paper is going to explore leadership and management of strategic change of Qatar Airways by emphasizing on the company’s business structure, business model and its environment. 2) Background to change Change can happen anywhere at any time because it is usually an uninvited guest in many situations. This makes strategic change management a tough job for the top management in any organization. The most important factor driving organizations to change is the uncertainty persisting in the economic sector, worldwide. Another important factor is the turbulences in the market because current markets are very much vulnerable for changes and the global markets are susceptible to frequent changes. Another major cause for changes is the rise in the expectations, needs and demands of the customers. They always look for better products with better benefits for better life. Consequently, the rate of entry of new comers is quiet high a factor that increases the competitiveness in corresponding fields (Wootton, Horne and Wootton, 2010, p.89). This insists organizations to come up with more competitive products so as to fully achieve the competitive advantage. The business tie-ups and acquisitions also will lead to changes in the strategy of both organizations. Budget pressures will induce changes in companies. Alterations in the vision and mission of the organization will also lead to changes in the organization’s strategy. All the PESTEL factors, i.e. political, economic, socio-cultural, technological, environmental and legal factors have impact on bringing about a change in the strategy of organization. Coming up on new markets, loss of markets, changing the management especially senior management, directors, CEO etc will also bring about potential changes in the strategy, because it is designed by the top managers of an organization. The leadership and management of strategic change for Qatar Airways can be grouped into four major components namely the strategic analysis, strategic planning, change management, and strategic implementation (business transformation). The primary goal for application of good leadership and management of strategic change for Qatar Airways has been to define the company’s objectives or target, the markets it should be competing in, the kind of activities that should be involved in to deliver its services, and how it can get competitive advantages compared to its business rivals. Management and leadership of strategic change in Qatar Airways has also defined the resources (skills, assets, finance, relationships, technical competence, facilities) are required in order to for the company to compete effectively, the external environmental factors and how they affect its ability to compete as well as the values and expectations of the stakeholders. 3) Background information of Qatar Airways Qatar Airways is among the market leaders in the transport industry in the Middle East (Fuggetta, 2012, p.38). The company was re-launched in1997 and since then it had been experiencing staggering growth in passenger numbers and in the fleet size (Oxford Business Group, 2007, p. 56). The airline launched its first low cost carrier in the year 1994, and since then it has been relaunched with an expansive strategy of international carrier under the instructions of The Emir, his highness Sheikh Hamad Bin Khalifa Al Thani (Fuggetta, 2012, p.32). The company started from far with only four aircrafts in 1997, a number that continued to increase and by 2005 the company had a fleet size of 42 and their target is to triple this number by the start of 2015. Qatar Airways has been able to create a global network of destinations thanks to its code-share alliances and partners with other corporates. The growth of Qatar Airways is seen to be increasing globally and its expansion doubling every year (Oxford Business Group, 2007, p. 56). 4) Qatar Airways Market Share and Growth   Qatar Airways launched its first low cost carrier in 1994 though it was relaunched with an expansive strategy of international carrier under the instructions of The Emir, his highness Sheikh Hamad Bin Khalifa Al Thani in the year 1997 (Fuggetta, 2012, p.38). The company’s growth is seen to growing tremendously all over the world with its expansion doubling every year because of the good management strategy of Mr Akbar Al Baker who has been the CEO for a long time. 50% of the company is owned by the government, with the other shares being owned by different private individuals among them the CEO Mr Akbar Al Baker who has made the company to stand out as one of the most prominent airline that has won several awards (Fojt, 2006, p.86). 5) Organizational Structure and Business Model of Qatar Airways Qatar Airways has a flat organizational structure that has allowed the company to enjoy less overhead costs since only few managers exist because it have fewer level of management. Having a flat organizational structure accrue numerous benefits to the airliner such as making the decision making process quick, have a faster and clear mode of communication as well as have better productivity at work as subordinates are free from strict and close supervision/control (In Prastacos, In Wang and In Soderquist, 2012, p.53). The company uses a very dynamic business model that is based on labor cost economies, toothless workforce (labor force is not unionized), strategic distance, opportunistic strategies, well positioned hub as well as extensive marketing and branding. Qatar Airways takes advantage of cheap labor relatively cheap labor available in the country so as to reduce its overhead costs and instead use the large profits in marketing its brand. In addition, the company is able to minimize its operation cost by applying a flat business model that is simple and requires fewer senior personnel. Under fleet cost economies, it clear that the company has been focusing on how it can expand and increase its fleet size in the past one decade. Increase in the number of flights has led to an automatic decrease in unit cost, a factor that has given the company an upper hand in competing with its business rivals. Under strategic distance, Qatar Air ways has made numerous alliances with leading international airliners thus being able to enjoy numerous benefits that it would not have obtained if it had operated on its own. However, the main challenge brought about by these partnerships is the fact that the cost of compliance and alliance membership is a bit high. Under opportunistic strategies, Qatar Airways is always ready to tap into new market segments and is proactive in doing so since any existing market gap is hunted and filled immediately with price differentiation being the company’s strong point (Oxford Business Group, 2007, p. 63). In addition, Qatar Airways is said to be among the most active companies in branding and marketing their names. The company makes its presence strong all over the world by engaging in extensive advertisements, practicing corporates social responsibility (CSR) by participating in environmental initiatives, forming a foundation for raising funds for the needy and the most important through sponsorships of various sports and events like football. The company has been socially responsible in many ways among them being reducing carbon emissions. 6) The Turbulence (nuances and complexities) Qatar Airways started to flourish rapidly a decade after its launching in 1994 with the technological advancement and the economic impact having a greater influence on the organization. Fluctuating prices in basic resources and pay scale of the income group had a major impact in the change of the airline specification to attract the target audience to survive in the economic shift (Fojt, 2006, p.86). According to Degree of turbulence, Qatar Airways has complexity by which the organization is affected based on the change in macro environment (Fojt, 2006, p.86). 7) Purpose and Culture   a) Mission The company has a very brief but clear and strong mission statement that quotes “Excellence in everything that we do.” For the company to accomplish the objectives of the mission statement, the airlines ensures the high end safety and security norms as well as focusing on rendering 5 star services with well-trained staffs who are also trained towards organization culture awareness (O’Connell, 2011, pp.342). b) Vision  The vision statement of Qatar Airways is “To become a world class carrier and cargo service provider with global reach” (O’Connell, 2011, pp.342). For the company to defend the statement, it focuses on three main factors namely quality of the product, reliability of the product, and excellent network reach with 122 aircrafts increasingly serving over 6 continents and 120 destinations. c) Objectives  The key objective of Qatar Airways is to magnify the brand awareness globally whilst increasing the knowledge of airline products through their safety, security, customer service, comfort and convenience by providing luxury service to the customer. The organization’s goals are to be achieved by focusing on innovation and creativity. d) Strategic purpose Qatar Airways stands firm on the purpose to deliver excellence in everything they do meaning that the organization focuses on the needs of their customers and constantly exceeds expectation of the clients flying with them and allied with them to serve better (Hazime, 2011, pp.259). Qatar Airways considers hopes and imaginings of the customers hence fly with the hopes and dreams of satisfying its customers. e) Key factor of success The key factors that drive the organization to be successful in the market include having strategic capabilities of acquiring new ventures, its corporate social responsibility as well as drive towards avoiding the depletion of resources, as well as the well-organized corporate governance structure that are people oriented and matrix hierarchy. f) Strategic links The company works closely with their alliances and links in order to be the leading airline in the global market (O’Connell, 2011, pp.343). Presently, it holds the treaties with Rolls-Royce for the manufacture and of their fleet engines, while their alliance with Qtel, a technology company is meant for improving the marketing and sales profit contribution through selling tickets and monitoring sales. Being a state owned company, the company has a strong government connection that enables it to get financial resources, subsidies, as well as the land with low taxes and rental charges. This relief enables the company to focus on its internal environment and the requirements of their customers thus enabling it to emerge as the leading brand. Sources show that the company has very low operating and maintenance costs. 8) Product Life cycle Qatar Airways is a well-flourished Airliner, and it is persistent in the maturity stage with no declination seen in near future due to its innovation and sustained market penetration strategy. The company will continue to flourish now and in the future because there are no close competitors who offer services that match the specifications of those offered by Qatar Airways. 9) Qatar Airways Resources Tangible and Intangible resources   In such a competitive industry, it is important for airlines to gain competitive advantage over their competitors (Oxford Business Group, 2013, p.105). Qatar Airways is fervent to a certain amount of sheerness in terms of dealings and operations, a factor that holds down the competitive advantages of the company over their rivals. Nonetheless, being a smart player in the business climate the organization can imitate strategic orders and approaches using its resources effectively (Wootton, Horne and Wootton, 2010, p.93). a) Financial resources Global economic recession saw the airline industry profits drop significantly, however, in 2010 the strongest expansion was seen in developing economies and Middle eastern airlines experienced the largest growth overall as stated in IATA annual report, 2011 (Oshri, Kotlarsky and Willcocks, 2014, p.49). The company is well funded by the government since the state’s government has 50% share equity. Though the company does not disclose financial figures to the public, the company’s CEO has been quoted say that the group made a net profit 7.5 billion USD for the year until March 2012. b) Physical Resources   Over the decades Qatar airways has expanded its business globally by opening their headquarters and office establishments in the geographic locations where the resource capabilities and accessibilities are high (Oxford Business Group, 2013, p.108). The company’s headquarters are at Doha and it connects to more than 100 destinations globally using spokes and hub links. The company also has a premium-classed terminal that is based at the Doha terminal that eases their operations and daily activities significantly. c) Human resource   The human resource management of Qatar Airways are predominant in the airline industry, every staff that are recruited are trained and taught the culture and values of the organization (Oshri, Kotlarsky and Willcocks, 2014, p.50). Having competent staff is the main reason why the company was awarded by Skytrax as the airline that was providing the best inflight services in 2011 and 2012 consecutively. Experienced employees and matrix hierarchy culture has kept the organization on the top of its substitute classes, promisingly providing the best human skills and customer service skills to their customer whilst carrying the companies pride with a full fledge training. d) Technological Resources Qatar airways have acquired both Airbus and Boeing aircraft’s, which are world leaders in their respective industry and a firm leader of safety and technology providing world-class fleets and machineries (Oxford Business Group, 2013, p.110). Rolls Royce on the other hand is a leading engine equipment brand that has made Qatar Airways to standout in the airline market for management procedures and consumer safety. Qatar Airways has been awarded the best flight service and the innovative approach awards for the safety and security, inflight technological experience, ease of access to the bookings as well as the reservations facilities audited and surveyed by the Skytrax (Oshri, Kotlarsky and Willcocks, 2014, p.80). e) Brand Visibility Qatar Airways has a greater brand visibility in the global market because of its innovative approach of product, superior customer service skills both inflight and ground operation (Oshri, Kotlarsky and Willcocks, 2014, p.117). The company also has an excellent service equality approach, maintained survey processes that help them to get live feedbacks from the consumers, and reforming their product to serve their people better than the sectorial competitors (O’Connell, 2011, pp.346). 10) Capabilities of Qatar Airways Being a State owned carrier Qatar Airways has its own unique resource capabilities that contributes in their business expansion geographically and expansion in their fleet counts to connect the world efficiently (Oshri, Kotlarsky and Willcocks, 2014, p.118). With regard to land, Qatar Airways headquarters occupy the biggest resource capability that implies the push on competitors to have minimal accessibility to the land and space leaving them to attract only minimal number of target audience. By fousing on the financial capabilities of the company, Qatar Airways has huge back up considering the fact that it is owned half by the government and half by private investors. The company incurs lower rent and place costs as well as the maintenance cost. The company also has a stronger brand compared to its domestic competitors. 11) Sectorial Analysis a) Bargaining Power of suppliers Boeing, Airbus, AJWalter and RollsRoyce are the main dominants of the airline industry in the Middle East that have bargaining power. The bargaining power of suppliers has always been on the positive power over the Qatar airways even though the derby based Rolls-Royce also plays a major role with regard to supplying raw materials to Qatar Airways (O’Connell, 2011, pp.343). Being the only supplier makes Rolls-Royce to have a greater bargaining power over the airliner. b) Bargaining Power of Buyers   The bargaining power of the buyers in the aviation industry remains unchanged, as there are price fluctuations between the airlines leaving a wide opportunity for the buyers. Nevertheless, Qatar Airways has a unique product differentiation that makes the company stands out as the priority of most consumers even though its closest rival, The Emirates provide a similar product, but with different service techniques. This makes buyers to have minimal power over the company. c) Intensity of Rivalry among Competitors   Qatar Airways being a base airline from the Middle East has two close competitors namely Etihad and The Emirates (Bookbinder, 2013, p.79). Customers’ expectations and change in mindset prevail as the product varies from best to typical category because similar product of the firm creates a strong threshold to the rivalries in airline industry. Increase in number of traffic, new forms of alliances across boundaries and Qatar Airways should provide both safety and security to compete with the rivalries located in the similar location (Bookbinder, 2013, p.83). d) Competitor analysis Strategic competitor Qatar Airways is one of the fastest growing airlines in the world, which is equally owned by the government of Qatar and private stakeholders (Oxford Business Group, 2013, p.113). The main business rival of the company is The Fly Emirates, a company that is fully owned by the state and it has been into existence for more than 25 years and it has a huge network hub. As per the year 2013, Qatar Airways had 120 flights and it was covering 70 destinations throughout the world with The Emirates on the other hand having 162 flights and covering 129 destinations in 72 countries. This means that Qatar Airways main competitive advantage was its flexibility to enter new market (destinations) that Emirates overlook. Though Qatar Airways is a fast growing airline company, it still lags behind Emirates with regard to networking and connectivity. Qatar Airways has grown to be a major competitor because of its rapid expansion and growth globally. This giant airline company has placed its strategic hands into numerous emerging countries in order to create its new network in niche market segment and upcoming route, which Emirates has blindfolded (Oxford Business Group, 2013, p.117). 12) Strategic analysis of Qatar Airways The Macro (External) Environment  a) Political Factors    Qatar Airways surfacing success has been affected by political issues and government norms in the past few years (Fuggetta, 2012, p.38). One of the political issues that affected the airline include a deal conflict with European airlines whereby European airlines used winging tactics as the airline was feared for its fleets manufacturing and safety regulators. According to the report that was released back then by the company’s CEO, the two main factors that were affecting the company’s alliance with the European airlines included issues of Indirect Taxes announced by the European Airlines and political barricade to deny the taxation procedures. Other political situations that have affected the company include wars and terrorism with terrorists’ activities. For example, after US 9/11 terror attack, many countries like Lebanon, UK, and Qatar made the regions unattractive for tourists and business travelers thus reduced the passengers traffic (Fuggetta, 2012, p.41). In addition, the political instability also made it hard for airline companies to form alliances. b) Economic factors Having modern airports and facilities supported with recent technology to meet customers’ requirements is one of the factors that determine success of any airline company. Qatar for instance has been investing in developing modern airports so as to enhance economy, reducing depends on oil revenues by moving into new sector (tourism), increasing tourists’ number and thereby driving profits to airline firms (Falcone, 2010, p.118). Globally, alliance is considered as the key factor of many airlines companies success as it reduces operation costs. Other economic factors that have been affecting the company include increase in the international trade, GDP and globalization. According to the recent rate of GDP statistics about the Middle East, there was a 3.6% rise in the passenger traffic. Qatar Airways has been also been coping with the changing prices of resources as a result of introduction of new resource price policies. c) Social factors Some of the social factors that have been affecting the company include the increasing global population improvement of the tourism industry as well as increase in number of learned people who travel a lot. Qatar’s population has been significantly increasing over the past one decade because the country is multicultural and more people are migrating into the country to seek job and business opportunities. The increase in number of immigrants translates to an increase in the company’s profit since those expatriates will have travel to their homeland sometime (Falcone, 2010, p.118). d) Technological factors Introduction of new sophisticated technologies have affected the airline both positively and negatively. For instance, introduction of the teleconferencing technology reduced the need for face-to-face business meetings and conversations, a factor that affects the number of business travelers and ultimately the sales of business tickets. Nonetheless, e-booking system and other technological advancement make reservation easier and relatively cheap since both for the customers and the company. For instance, with the e-booking option, airline companies do not need to print tickets. Other technological factors that have impacted the company’s positively include the strategic partnership between Qatar Airways and “Qtel” that helped the company in developing aviation’s groundwork as well as advancement of Global distribution system which plays essential role in contributing the service to Qatar Airways as the revenue generating feeds (Plunkett, 2008, p.119). 13) Internal (Micro) Environment (SWOT analysis) a) Strengths Some of the main strengths of the company include the fact that Qatar Airways is a member of the Arab alliance commonly known as Arab Air Carriers Organization whose main aim is to promote cooperation and safety standards among Arab airlines (Arab Air). Being among the very first airline companies to offer online booking service and offering long-haul flights, such as from US to Qatar can also be termed as key strengths of the company. In addition, Qatar Airways is among the a few airline companies that offer self-check-in service for customers in Qatar and it also provide its employees with training, rewards and performance programs, thus reducing labor costs and increasing employees ‘loyalty (People). Other strengths of the Qatar Airways that cannot be overlooked include having a strong brand name, remaining consistent and getting a FIVE STAR RATING. The company is among the a few airlines in the world that have been ranked “Five Star” by Skytrax, which is an independent aviation industry-monitoring agency (Falcone, 2010, p.118). Skytrax has also named Qatar Airways’ cabin crews as “Best in the Middle East” a number of times and ranked them among the top five best crews in the world. Skytrax ranks airline companies as a result of surveying more than 12 million passengers worldwide. Qatar Airways has also won other awards like the TTG Travel Awards 2009 - Airline of the year, which was recognition of their world-class service and commitment to offer only the best to over 80 destinations worldwide. Moreover, the company has a large number of fleets and plans are under way to increase its flights and alliances with other global airline giants. b) Weaknesses Some of the weaknesses that limit the expansion of the company include the high operation costs because of huge investment on buying aircrafts and implementing new technologies. Charging relatively higher ticket prices compared to other airliners like British Airways and American companies, being a young company that has now been there for almost two decades thus not being very experienced as well as Arabization whereby many people believe that the airline is Arab based because of their Logo. Being a national carrier is another weakness since most parastatals in Qatar do not last and do well for long because they are abused by the government (Plunkett, 2008, p.119). c) Opportunities The growing incomes per capita in Qatar as well as population increase are some of the key opportunities for the company. A steady increase in the number of tourists in the Middle East as statistics from the World Travel & Tourism Council shows can be termed as an opportunity as well. Other important factors that are likely to increase the company’s opportunities include the constant growth in the number of internet users in Qatar and worldwide, aviation events like the Dubai Air Show that promotes Middle East airlines, the company’s good reputation in Middle East, Europe and other regions, as well as formation of strategic alliances with world leading airline conglomerates. d) Threats The main threats facing the company include the facts that it is situated in a politically unstable region that has been faced by challenges of terrorism in the past few years and the relative increase of insurance and aviation security costs, which raise operational costs of airlines. The increase of the fuel prices that results to an increase in the operational costs is also another key threat to the success of the airliner (Marques, Dhiman and Holt, 2012, p.78). Intense completion in the airline industry is another major threat facing the company since some of the rivals are continuing to reduce flight charges with new entrants joining the industry. Moreover, the airline industry is said to be very volatile, a situation that is created by changes in fuel prices, technology or emergence of epidemic and natural disasters. In conclusion, Qatar Airways is among the leading airline corporates in the Middle East and it was re-launched in1997. Since its re-launching, the company has been experiencing incredible growth with respect to passenger numbers and in fleet size. It was re-launched with an expansive strategy of international carrier and since then it has been experiencing a constant growth in the past one decade. The company has a flat organization structure that enables it to keep overhead costs as low as possible because the structure does not require many senior personnel. It also applies a very dynamic business model that is based on factors like labor cost economies, toothless workforce (labor force is not unionized), strategic distance, opportunistic strategies, well positioned hub as well as extensive Marketing/Branding. The main strengths of the company include the fact that it has a strong and renowned brand, being among the very first airline companies to offer online booking service and offering long-haul flights, such as from US to Qatar can also be termed as key strengths of the company. High operation costs because of huge investment on buying aircrafts and implementing new technologies among others are some of the key weaknesses of the company. The growing incomes per capita in Qatar as well as population increase are some of the key opportunities for the company. Intense competition in the airline industry and location of the company in a politically unstable region that has been faced by challenges of terrorism are some of the threats facing the company. Bibliography Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Top of Form Top of Form Top of Form Falcone, P., 2010, 101 sample write-ups for documenting employee performance problems: A guide to progressive discipline & termination, American Management Association/Society for Human Resource Management, New York. Fojt, M., 2006, The airline industry, Emerald Group Pub. Bradford, England. Fuggetta, R., 2012, Brand advocates: Turning enthusiastic customers into a powerful marketing force, Wiley, Hoboken, N.J. In Prastacos, G. P., In Wang, F., & In Soderquist, K. 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