Kuwait Airways: The Dual Treatment - Essay Example

?Running head:  Kuwait Airways: The Dual Treatment Kuwait Airways: The Dual Treatment Insert         Insert Grade Insert 5 December 2011  Kuwait Airways: The Dual Treatment Introduction Kuwait Airways (KAC) is a national airline owned by the government of Kuwait. The company was established in 1954, and for about 50 years, KAC enjoyed monopoly of the market in the country (Kuwait Airways, N.d). Nevertheless, the situation and advantages of this monopoly have been changing in recent time, as the government has embarked on deregulation of aviation industry, which in turn has led to entry of new players in the market. As a result, the competition has been heightened and former markets controlled by KAC have been ‘raided’ by the increasing private companies. The market niche for KAC has mainly involved wealthy and corporate clients, unlike new emerging companies focusing on lower-end market in the country. Being a government-owned company, KAC is faced with numerous challenges that affect its operation and progress in the new challenging business environment. Many of the problems of the company emanate from government bureaucracy structures (Kuwait Airways, N.d). Due to this, the company has to operate under difficult conditions, ranging from inadequate funds and resources, increased operating costs, and fierce competition from competitors. Moreover, the company faces issues with workers’ labor unions, since it has addressed employees’ issues in inappropriate way, interference of the government officials in the operation of the company, and political patronage that negatively affect the operations of the company. The company envisions competing appropriately in the market, especially considering the number of competitors is increasing. As a result, the company has to resolve some of the identified issues. In order to address the issues, the company is faced with numerous options, ranging from privatization, restructuring, and streamlining operations, changing management, diverse business opportunities indifferent market niche, and eliminating government interference. Problem definition: major and minor As highlighted in the above introductory part, KAC is faced with numerous major and minor problems. Major problems have to do with increasing competition in the market, which the company cannot respond to adequately. In addition, the government bureaucratic structures that the company has to operate within constitute threats to the company, especially in regard to accomplishing its goals. Another major problem the company has to deal with includes government officials’ interference and exploitation of the company at the expense of its success. Lastly, inadequate budget that the company has to operate with affects the activities and expansion goals of the company (Kuwait Airways, N.d). On the other hand, minor problems in the company may include employee compensation, acquisition of new markets, diversification of opportunities, increased costs of fuels, poor working conditions in the company, and large number of workforce in the company. Available alternative solutions Different alternatives are available that can results into transformation of KAC. First, the company can opt for privatization, although this remains a sensitive issue, given the likely impact on the employment opportunities for locals. Local employment remains one of the political ‘hot’ issues the government would want to deal with sensitively. Another available alternative for the company is to undertake and facilitate drastic organizational restructuring where non-performing units that are redundant should be eliminated. In line with this restructuring, the company should aim at enhancing lean organization structure that has systems that perform effectively and achieve results in the most efficient way. Another available alternative is to carry out organizational management change where the aim should be to equip the company with appropriate, competent, and experienced managerial manpower. In this way, the company will be able to utilize resourceful skills possessed by these managers. The current management team at KAC seems to be done through political patronage; hence, experience, knowledge, and expertise are likely to be bypassed. Therefore, the company should move away from political influence in selection and employment of management team and move towards competitive employment process. Another viable alternative KAC can adopt is to be transformed into a more commercial agency with characteristics of ‘serious’ market players. In this way, the company should gradually remove the ‘cap’ of social agency aimed at serving the society. Given that competition is increasing and alternative airlines are today present in the country, society’s needs can be performed and fulfilled by competitive firms. In line to commercializing the KAC, there should be limited government involvement, regulation, and manipulation. The best alternative and justification for the choice The above constitute different alternatives KAC can choose from. However, the most appropriate envisioned alternative is for the company to initiate and undertake organizational restructuring and long-term planning (Burke and Cooper, 2000). By this, the company will be able to increase its competitiveness in the market. Restructuring envisioned at the company should include creating an effective marketing department with experienced manpower to undertake fierce marketing activities in the increasing competitive environment (McLean, 2005). Another area to be accorded restructuring involves establishing strategic planning team that has capacity, support, and all what it takes to formulate and implement strategic achievable goals for the company. As the dynamics in the business environment continue to be complex, there is an urgent call for the company to operate within clear and accurate strategic plan framework (Wagner, Wagner, and Hollenbeck, 2009). Moreover, the workforce and job specialization in the company need sustainable overhaul with possible streamline of roles, including encouraging the aged to retire early and employing young energetic workforce. For effective organizational restructuring to be effective, there is need to have the right management team in place. As a result, there should be an overhaul of the ‘politically’ selected and employed team and be replaced with competent professionals. The government can be of great help in this area by enacting a legislative Act that outlines stringent measures and qualification terms for those to be employed in the agency. Lastly, envisioned organizational restructuring at KAC should reflect more of ‘hybrid’ system in that, key aspects of private marketing winning strategies are outsourced and integrated with overall public goals and expectations of the various stakeholders in the company. Stakeholders Analysis The main stakeholders of KAC include the shareholders, employees, customers, and the government, each of whom is affected by the decisions the airline makes. From the above analysis, it has been established that the problems identified tend to affect service delivery, leading to loss of competitiveness of the firm in the market. The proposed restructuring will enhance the company’s financial performance, which is the main aim of then shareholders. Generally, a firm should be geared towards satisfying the expectations of its shareholders, who are also its owners. In this case, although KAC is not a profit-making company per se, the proposed restructuring will eliminate redundancy and enhance cost cutting by adopting a lean structure, thus leading to improved profitability and a possibility of dividends for shareholders. The restructuring will also enhance recruitment process, with only the competent employees being hired. In this way, KAC will do away with the bloated staff capacity to a more manageable workforce that would be competitively compensated in line with industry and Labour law standards. With better compensation, employees’ motivation will improve, leading to improved service delivery such that, the previous complaints by professionals in relation to stagnating salary levels and poor working conditions will be a thing of the past. Customers expect the company they purchase from to accord them satisfactory service. Although this has not been the case, especially considering the complaints of flight delays and high costs of travel, the restructuring program will see the company providing service to customers’ expectations. First, improving working conditions will motivate employees who will in return provide excellent services to customers. In addition, a lean structure will enhance cost-effectiveness, which will see the company reducing the fees charged to customers, making the airline compete effectively with other airlines in attracting customers. Moreover, outsourcing marketing services will encourage the company to formulate strategies geared towards improving service delivery in order to satisfy customers. The government remains a key stakeholder of the firm, and in this case, although less interference will be required, the government will as well be encouraged to enforce regulatory framework that provides fair competition in the market. With the restructuring in operations and internal organization, KAC will be in a position to realize profits that will not only yield returns to shareholders, but also tax returns to the government. Conclusion KAC constitutes a perfect example of public organization faced with dilemma in the modern world, characterized with fierce competitiveness strategies and efficient sustainability strategies. However, unlike other organizations in the private sector, KAC is disadvantaged in that bureaucratic nature of government operations affects its activities. Numerous alternatives are available for the company to incorporate in an attempt to improve its operation, but given that the company is public, political interests are likely to dominate at expense of everything else. Therefore, it is wise to pursue strategy that has ability to incorporate both public needs and market demands of the day. Due to this, it is suggested that by adopting a hybrid strategy of organizational restructuring, KAC will be able to transform into a competitive organization in the market. Reference List Burke, RJ & Cooper, CL 2000, The organization in crisis: downsizing, restructuring, and privatization, Wiley-Blackwell, MA, viewed 07 December 2011, http://books.google.com/books?id=L0q43EMQ3LcC&pg=PA284&dq=organization+restructuring+and+competitive+advantage&hl=en&ei=C1DfTqzBCIbDhAeI5YjnBA&sa=X&oi=book_result&ct=result&resnum=4&ved=0CEMQ6AEwAw#v=onepage&q=organization%20restructuring%20and%20competitive%20advantage&f=false. Kuwait Airways N.d, ‘Kuwait Airways: Case-Study’. [Attached notes]. McLean, GN 2005, Organization development: principles, processes, performance, Berrett-Koehler Publishers, CA, viewed 07 December 2011, http://books.google.com/books?id=Fxex99VOU20C&pg=PA248&dq=organization+restructuring+and+strategic+plannning&hl=en&ei=NFLfTtiZLorDhAea6JnODg&sa=X&oi=book_result&ct=result&resnum=9&ved=0CG0Q6AEwCA#v=onepage&q=organization%20restructuring%20and%20strategic%20plannning&f=false. Wagner, JA, Wagner JA & Hollenbeck, JR 2009, Organizational behavior: Securing competitive advantage, Taylor & Francis, PA, viewed 07 December 2011, http://books.google.com/books?id=NDiTGKbnqqcC&pg=PA279&dq=organization+restructuring+and+competitive+advantage&hl=en&ei=C1DfTqzBCIbDhAeI5YjnBA&sa=X&oi=book_result&ct=result&resnum=7&ved=0CFMQ6AEwBg#v=onepage&q&f=false. Read More