West Jet Airline Business Analysis - Assignment Example

West Jet Airline Business Analysis Name Institution Executive Summary This report is about West Jet airline. It analyses the overall growth of this company from the time of its inception to its current stand. The point of interest is the fact that this airline has achieved what many companies have not managed to achieve after decades of years. This report tackles the achievements and some challenges that the airline has faced in its growth. From the information gathered, it shows that the airline has managed to deal with its challenges to achieve even greater heights. The fact that the airline is ranked number in Canada is an indication that the achievements of the airline are quite exceptional (Rosen, 2004). The SWOT analysis has been used to bring out the real picture of how the airline is performing. The entire report revolves around the environment from which this business operates. This is based on the understanding that the environment from which the business operates determines the success of the business. The report also assesses how the company has managed to deal with the overwhelming competition in the industry. This directly relates to the growth record that the airline has exhibited for the short period the airline has been in operation (Flouris & Walker, 2007). Table of Content Executive Summary………………………………………………………………………………2 Introduction ………………………………………………………………………………………4 Content & Analysis……………………………………………………………………………….6 › Company History…………………………………………………………………………6 Competitive Situation……………………………………………………………………6 Business Environment……………………………………………………………………9 Strategic Adaptation…………………………………………………………………….11 Conclusion………………………………………………………………………………………14 References………………………………………………………………………………………15 West Jet Airline Business Analysis Introduction West Jet is a company that has been in operation since 1996. What this airline has achieved within that period leaves a lot to be admired about it. The company has been built upon a cost as its main market positioning strategy. It is quite interesting how the company has managed to bank on the cost strategy even when the business environment is very dynamic. This report seeks to establish the solutions to some of the questions. The report analyses some of this areas of focus that have set apart this particular company. It sheds some light in the effectiveness and how real some of these strategies have worked. This is a comprehensive analysis that touches on key aspects of this company that many investors and other stakeholders may be interested in knowing. The start of West jet company is attributed to the efforts made by four friends namely, Clive Beddoe, Tim Morgan, Donald Bell and Mark Hill. These are the people who bore the vision of this airline. Their desire to excel in the aviation industry drove them to putting together ideas on how best to exploit the opportunities in this sector. They carried out a detail survey on the state of the aviation industry with the aim of establishing some of the unmet needs that they could capitalize upon. Upon carrying out the market research, they embarked on the agenda of developing their airline in Canada. Regardless of the number of difficulties they might have faced, they started realizing the fruits of their investment after only three years. The company had successfully launched the IPO and achieved many other things. The company has continued on the same line through ensuring customer satisfaction. This report dwells on most of these aspects that have enabled this company to experience outstanding performances. At the same time, the report covers the specific market niche that has been the main target of this airline and how it has managed to be profitable through exploitation of this market segment. Content & Analysis Company History and Description: This is one of the oldest Canadian airlines. The airline has undergone tremendous growth from the time it had its first flight. The company started way back in 1996. The first aeroplanes that the airline used at first were second hand and in overall the airline had very few employees. The improvement its operations started progressively in terms of service delivery (Rosen, 2004). One of the company’s milestones was the Initial Public Offer that was made in 1999. The aim of the company was to raise an estimated $25 million. This was instrumental to the company’s capital structure. It was planned that the money raised could finance the expansion of projects of the company. Due to this, the airline was able to add three cities to the airline’s route map. In the company’s progress, changes in the management were quite inevitable. In most of the cases, differences among board members implied a new CEO. In 2000s, the airline continued with its expansion even to international platform. This was after the airline had exploited the local opportunities effectively. By that time, the airline had numerous number of local airline routes. The company’s success has been manifested through expansion of destinations from 3 in 1996 to 71 in 2010 Competitive Situation Industry wise: There is no doubt that the airline industry is one of the most competitive ones in 21st century. One factor that has majorly contributed to this overwhelming competition is the impact of globalization and international trade (Malhotra & Birks, 2006). People travel around the globe for personal and business purposes. Due to this, many investors have ventured in this sector to exploit these great opportunities. There are many airlines that pose stiff competition to West jet in 21st century. One of the competitors to West Jet is Air Canada. This is one of the oldest airlines that have proved to be a stiff competitor. Another airline that has been a challenge to this airline is Western Canada. This is a new comer. The airline has been flying passengers domestically at also lower charges. This has caused West Jet to adjust airfares for most of its local routes. Business Level Strategy: One of the pillars that has enabled this company to remain outstanding in service provision over time has been its market positioning. The company has managed to market the services of the airlines on the platform of cost. The assurance and the overall perception that the airline offers quality services have greatly influenced the growth of the airline. The company has achieved this through service reduction of overall operation costs and service differentiation. The research and development crew in the marketing section are tasked with carrying out appropriate surveys on the performance of the company’s services. The crew gathers information that is used by the various service provision departments in order to re-engineer the various services. This has enabled the company to design the products that are in tandem with the needs of the consumers. This has kept the company this long way. The quality of the services the company offers has made it possible for the company to withstand the stiff competition coming from all angles. It has paved way for the expansion programs that have successfully ushered the company into the current achievements. Corporate Strategy: The growth of the airline over the period has also been associated with its corporate strategy. This includes all alliances and partnerships entered by the company with the intention of enhancing its trade. These alliances have boosted the company’s overall image and reputation not only in Canada, but even in the international market. This has facilitated the company’s venture into the international markets. At the same time, it has also facilitated the company in its diversion of products and service. In essence, the company began these partnership deals in 2006. The first deal involved West Jet and China Airlines. This was the first deal and a major test for the company. This would definitely assess the company’s ability to partner with other service providers in the same industry. It was a major test in relation to how the company would face challenges and how it would eventually overcome them. When this deal was branded a success, the company had confidence to venture into other opportunities of the same nature. In 2008, another partnership deal was struck between West Jet and Oneworld Company. With these achievements, it was very evident that the company was able to perform to its efficiency expectations. The airline became more flexible in terms of scheduling its flights. This is a sign of improved service delivery (Kennedy, 2011). During the same year, another agreement was drawn between the airline and Southwest Airlines. This involved building a distribution and codeshare agreement. When this plan stalled, the company communicated with many other airlines around the globe with the intention of brokering another codeshare agreement. In overall, these partnerships have seen the company strengthen its performance immensely. The airline has now participated in more international partnerships more than any other Canadian airline. Tracing back when the company began and what it has achieved so far, it is clear that the corporate strategy has performed an incredible role. It has strengthened the airlines’ market base not just in Canada, but all over the world. The company has seen its market share grow tremendously to a level where the company competes equally with long-term players in the industry. This is incredible considering the fact that the company has managed to achieve this within a period of less than 20 years. As at now, the airline is ranked number 2 among the local airline services in Canada. Competitive Advantage: The company has managed to penetrate this competitive aviation industry because of its competitive advantage. The effectiveness of the strategies that the company has employed in reducing the costs of operations has been critical in determining the success of the airline in this industry. When the company started its operations, one of its target segments was families that travelled with their children by use of vehicles. The company had carried out a comprehensive survey and realized that the then dominant airline, Canadian airline, had not exploited this segment. The company was tasked with coming up with a strategy that would help accommodate this segment. These families could not afford expensive tickets. The company designed a specific airline whose air tickets were at most $100 per individual. After attracting this segment, the next agenda for the airline was customer satisfaction. The company re-invented customer satisfaction plans. The company has progressed on the service delivery pillar. The company has emerged as one of the best service providers in terms of quality of services offered by the company. Business Environment Legal and Regulatory: There are a number of policies and regulations that are likely to be put in place whose effect on the future way of trading raises concerns. At the same time, there those that have already been put in place that is likely to affect current and demand in some ways. In December 2012, the Transport Minister announced that all airlines are required to include all costs including taxes in the advertised cost of airfares. This means that the amount the clients see on the advert is reflective of all statutory costs required for their travel. The remaining costs can be allowed to be separate if they are incurred on products like beverages and meals for customers. This is likely to reduce the level of demand. This is based on the previous trends. Many people were attracted to some flights with a feeling that their prices are a bit lower only to realize they are not inclusive of taxes and other travel related charges. In such situations, customers have no option, but to pay the outstanding balance. In most cases, cases are deemed to know. Economic: In the next 5 years, the economic situation is projected to move in favour of West jet airline. This is in spite the fact that uncertainties are prone to occurring in any business environment. One of the factors that are projected to go in favour of this airline is the load factor. Considering the outstanding performance in 2012, the company’s load factor is projected to increase in the future. Another economic indicator that is aimed at going in the favour of this company is the issue of exchange rates. The growth of the country’s GDP in the recent past is an indication that it may continue in the future. If this is achieved, the rate of exchange will be under control. Technological factors This airline’s growth is partly associated to the developments in the technology. The company began its operations when technology has advancing. The aviation industry has greatly benefitted from this growth (McDaniel & Gates, 2009). This explains why many different kinds of aircrafts have been designed in the last decade. This has enabled West jet to open more routes and this has culminated into a lot of profits for the company. Looking into the future, the technology is expected to grow further. This will be to the advantage of the airline industry, Social and Global factors: The evolving social trends have gone in the favour of the company. Currently, the desire to venture into international trade has meant that people travel more than they used to. Globalization has made it quite easy for one to travel. The airline has an opportunity of exploiting this growing need to fly to different destinations all over the world. The only thing the airline must be concerned about is aligning itself in manner that will enable it tap into the future opportunities. Strategic Adaptations After all the strategies used by the airline have been discussed, it is good to look at the strategic adaptations that will aid the airline in achieving its strategic goals. Both the business level and corporate level are methodologies that have been adopted. Strategic adaptation focuses on the tools that the organization uses in meeting some of these objectives. There are two critical things that would determine the strategic adaptation. One of them is leadership. Leadership is essential to the success of any project. The main role of leadership is provision of direction. The direction on what to achieve and how to achieve plays a critical role. The leadership helps in mobilization of resources. This ensures that the necessary resources needed for meeting the set targets are put into good use. Another aspect that will determine the airline’s strategic adaptation is information. Information is used to design solutions for every situation the business might be faced with. The adaptation of both business and corporate strategies is also determined by the information the business have. This information can be about anything that relates to the business. This can be competitors, consumers, employees, etc. All this is very important. It determines the course of action to be taken by the business in every situation. SWOT Analysis Good reputation Large market share for Canadian market Good customer satisfaction record Received accreditations & awards Unique brand equity Corporate culture high rise in costs of operation High employee turnover Increased rate of employee dissatisfaction Poor management Increased demand Technology growth Globalization Change in lifestyle Great opportunities in international market Departure of senior managers Projected increase in operation cost Unfavourable aviation laws Advancing competition Conclusion Through the information provided above, I believe the most critical aspects of this airline have been appropriately dealt with. It has come out clearly how the company has developed its niche over time in the Canadian market (Bergman, 2000). The airline’s good performance has portrayed the unique blending of the intellectual resources and the physical resources to design service provision model that challenges the market like this. According to the information compiled in this report, the company has overwhelming opportunities of expanding its growth into the international market. From the findings, it shows that the airline’s strongpoint is its service provision policy and the unique pricing policy. On the other hand, one of the factors that have been pointed out as the greatest threat is the increasing cost of doing business. Unless the airline carefully designs a new cost reduction model, it will be very difficult for the company to maintain its low prices. These are just some of the areas that the airline must consider carefully in order to remain competitive in this market. Other parts of the report have also touched on essential elements of this airline which must be considered as well. Moreover, the airline must strengthen its research and development department to ensure they are well equipped to deal with the dynamic market. References Bergman, B. (2000). West Jet Charts a New Direction. 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