Strategy and Problems in Management: Delta Airlines - Essay Example

?Strategy and Problems in management: Delta Airlines Strategy and Problems in management: Delta Airlines Introduction The analysis of value chain of a firm helps to gain deep understanding of the process in which the firm conducts its activities from the procurement of raw materials to the offering the product or service to the customers. Value chain refers to the chain of activities made by a firm that operates in a particular industry. The value chain of a firm reflects the performance put up by the company in terms of delivery of a quality product (or service) to the customers. Analysis of value chain of Delta Airlines is made on the basis of the different processes and systems that run in an organization, the subsystems within the organization, the process of acquiring inputs and the process of transforming those inputs to develop the final products. The primary activities within the organization include inbound logistics, outbound logistics, operations, sales and marketing strategy, post sales service. There are certain activities that are considered secondary or supporting activities, but, are as important as the primary activities. This is because the primary activities are supported by these activities and would not be sustained without secondary activities. Such activities are infrastructure, human resource and technology development. The process of transformation involves acquisition of resources, such as, land, labour, raw materials and equipments. The efficiency level of value chain of a firm reflects costs incurred and the profits earned (Kaplinsky and Morris, “A Handbook for Value Chain Research”). In this paper the value chain model developed by Michael E. Porter in 1985 has been used to analyse the strategic capabilities of Delta airlines (Porter 78). In the course of this paper, the role of primary as well as support activities of Delta airlines would be discussed in detail. Company overview: Delta Airlines Delta Airlines was started in 1925 as a small aerial company and over the years has grown into a leading airline company in the world. The company is privately owned and on an average has 160 million travellers, who use their services (“About Delta”). Presently, the company provides pre-scheduled transportation facilities to passengers and freight across the United States. It also possesses a valued “global route network” (“Form 10-K”), which enhances the international presence of the company. The route network of Delta Airlines is centred on an intricate system of national and international airports located in and outside the USA. The company operates in Atlanta, Detroit, Amsterdam, New York-JFK, Seattle, Minneapolis-St. Paul, Cincinnati, New York – LaGuardia, Memphis, Salt Lake City, Tokyo-Narita and Paris-Charles de Gaulle (“Form 10-K”). There is a broad fleet of aircrafts belonging to Delta and it comprises of aircrafts of varying sizes and capabilities; this has been made to allow the company to adjust itself to the flow of customers and the level of congestion in the route network (Rivkin and Therivel, “Delta Air Line (A): The low-cost carrier threat”). Such level of operations demands that the company must have a stable and efficient value chain for completing its operations successfully and deliver services to its customers with promptness and satisfaction. In depth knowledge about the company would help in evaluating its value chain activities. Inbound logistics These activities of the company include route selection, passenger service system, yield management system (pricing), procurement of fuel, flight scheduling, crew scheduling, facilities planning and management and aircraft acquisition. All these activities are related to one another and smooth running of each step ensures the successful delivery of services. Operations Delta believes in the fact that success of their business depends on the satisfaction of their customers on using their services. Selling services is similar to selling experiences (Bischoff 46). While good experience would bring in the customers repeatedly and also attract prospective customers that are related to them, bad experience would act as a big de-motivator for customer. The employees of Delta are trained to bridge any gap that exists between product design and client expectations. They take good care at each step of operations, such as, ticket counter operations, gate operations, aircraft operations, on-board service, baggage handling and backend services. The company recruits makes effort to recruit the right person at the right place with the aim of creating a positive customer perception. Its employees are provided with appropriate training and are taught crisis management tactics. Outbound logistics Outbound logistics of the airline company refer to the activities that the company makes to provide proper services to the passengers after they reach their destinations. Delta has efficient baggage management system and provides services like, flight connections, rental car and hotel reservation. Marketing and sales Marketing plays an important role in the success of any growth oriented privately owned firm. Delta Airlines has its own target customers and development of proper marketing strategies is imperative to the long run success of the firm. Delta is currently one of the leading airlines in the globe and good marketing tactics would help the company to maintain its position in the world. Its marketing activities include promotion, advertising, advantage program, travel agent programs and bundled sales. Services In the current business world, after sales services hold a position in firms’ activities that is as important as sales service (Sekhar 31). Customers value those companies that provide good after sales services. Delta provides combinations of services and support focusing on the needs and demands of the consumers. It offers the facility to the customer to browse through its websites and the magazines that provide all necessary information regarding flights, locations, food on board and price range. The company has achieved the admiration of almost each customer due to the prompt lost baggage service provided by its help desk. Good complaint management also pacifies the unsatisfied customer and turns his attitude into that of faith and trust. Secondary activities Infrastructure Delta Airlines has been operating for more than 25 years and currently has a global presence in the airline industry. The company has a strong infrastructure. Based in the United States, the company offers services to domestic and international passengers of the US and the Europe. Strong infrastructural facilities allow further expansion of the company. Human resource Delta has a very flexible human resource management system that makes the system effective. It believes that it is important to have trained and knowledgeable human resource personnel that would look after the activities of the organization. Although he firm follows the most advanced technologies, the firm values its staff and is employee oriented. The employees are provided with training from various aspects; flight and route training, pilot safety training, baggage handling training, agent training and in-flight training. Technology development Delta Airlines is one of the airline companies that is technologically well advanced that its competitors. It has computer reservation system, mechanized in-flight system, flight scheduling system, yield management system. There is also baggage tracking system that helps the customers to locate their baggage easily or track it if misplaced. Finally, the company makes significant investment for product development purposes and market research. Conclusion The discussion presented above shows that the value chain of a firm is an integral part of the business and determines the long term success of the firm. Delta Airlines present an example excellent value chain in the service sector. All the primary activities of the firm are knitted with one another thereby developing holistic service for its customers. The company is confident enough about its services and knows that these are capable of gaining satisfaction of customers. However, sometimes there arise cases in which the customers are unsatisfied, but, the grievance management system deals with complaints with precision. The secondary activities of the company are managed effectively that assists in proper management of the services provided. Works cited “About Delta.” Delta. Delta Air Lines, Inc., 2013. Web. 16 Sep. 2013. Bischoff, Anna Lena. Porter's Value Chain and the REA Analysis as an Accounting Information System. Munich: GRIN Verlag, 2011. Print. “Form 10-K.” Delta. Delta Air Lines, Inc., 2012. PDF file. Kaplinsky, Raphael and Mike Morris. A Handbook for Value Chain Research. Globalvaluechains. IDRC, 2000. PDF file. Porter, Michael E. Competitive Advantage: Creating and Sustaining Superior Performance. New York: Simon and Schuster, 2008. Print. Sekhar, G. V. Satya. Business Policy and Strategic Management. New Delhi: I. K. International Pvt. Ltd., 2009. Print. Read More