Delta Airlines Long Term Objectives & Strategies - Case Study Example

Chapter VII Long Term Objectives & Strategies Long Term Objectives Organizational Redesign: This is a long term strategy of Delta Airlines and is aimed at “reducing the functions, hierarchical level, division, reducing some of the work by outsourcing and consolidating the work by reducing the working hour” (Atwood, Coke, Cooper & Loria, 1995). This will work well for the Delta Airline as it will be able to ensure that the functions which don’t add much revenue is outsourced thereby improving focus and efficiency. It will also help to find the non core areas and differentiate those so that concentration and efforts can be laid on the important areas which will help to improve efficiency in the working. Delta Airlines as a result will be able to sustain growth in the long run. Systemic Strategies: This is a long term strategy for Delta Airlines and is aimed at “bringing a change both in the internal and external functioning by changing the culture, system of work and the attitude with which employee work” (Atwood, Coke, Cooper & Loria, 1995). This will ensure that the overall changes are easily acceptable by the employees thereby ensuring that the motivation level is not hampered. This will ensure easy transformation for Dlta Airlines as high motivation will give an impetus to change. The company thereby in the long run will be able to transform itself according to the working enviornment which will help to bring a change in the management process. Generic Strategy Low- Cost Leadership: Delta Airlines has been differentiating itself as a cost leader. The company has been successful in it by developing internal branding in areas which it has no relation thereby ensuring that the company gets the best talent (Verma, 2006). This has enabled Delta Airlines to get the best talent at the lowest cost. The company on the other hand has ensured that that they don’t use printed tickets; the meals provided in the flight have been done away with, operate a single type of flight and make use of the facilities of the airport on a competitive agreement. This strategy will help Delta Airlines to save on valuable cost which can be diverted elsewhere to improve services. Service Differentiator Strategy: Delta Airlines has differentiated itself by offering better service. With an aim to eye the business class has brought about necessary changes. The company has kept the first few rows for them. These rows have more leg space; the luggage allowance is more; the middle seats have been done away with and are given access to lounges. This when mixed with the low cost, is offering business class more compared to the competitors. This will help Delta Airlines to make easy entry into this segment and differentiate itself. Grand Strategies Innovation: Leaders are “people who get things done” (Jaude, 2010). A leader needs to come up with creative ideas and ensure that the creativity is transformed into necessary changes (Jaude, 2010). Leaders need to ensure that there is innovation as it will motivate the employees and help everyone associated with the organisation like customer, supplier and government bodies to grow. To ensure this changes in the organization leaders are entrusted with the responsibility of identifying the talent within the organization. Providing training and responsibility to those will help orgaizations to come with new ideas. While bringing this innovation and change Delta Airlines should ensure that the vision and goals of employees matches with the organisation. The communication process should be clearer and training provided to ensure that this change is easily accounted for. Delta Airlines should also ensure that the compensation package is such that it motivates and helps to bring all the employees together. This should match with the organisational structure and it is the role of the leader to see that the environment is pleasant and the employees feel comfortable with it. Leaders, thus have to play a huge role to play and ensures that innovation and changes in the functioning and working is transformed in such a manner that it affects a few Delta Airlines by ensuring innovation can look towards eyeing markets where they have little presence. This will make it easy for Delta Airlines to penetrate the market and will act as a tool to ensure growth in the future. This will help the airline to ensure that they are able to grow and innovate. Summary Delta Airlines thereby needs to focus on areas so that the long term objectives of the organization are achieved. The airlines need to lay strength on its generic strategy which is to be a differentiator and cost leader. Delta Airlines need to focus on this to develop their long term objectives. This will help Delta Airlines to bring the required changes in the working enviornment and will ensure that the airline business is able to grow to face competition. Chapter IX Multibusiness Strategy The Portfolio Approach: A Historical Starting Point BCG Matrix: The BCG Matrix for Delta Airlines helps to find areas where the company needs to work on. It also identifies the sustainable competitive advantage for Delta Airlines. It looks as follows Market Growth Rate Stars Question Mark Business Sector Leisure Sector Cash Cows Dogs Relative Market Share Here, we see that leisure sector contributes the most towards the revenue and is the cash cow for the company where as the business sector is a question mark because if the company follows a proper strategy it could become a cash cow else it might not (Anweshabh, 2010). Delta Airlines thus has an advantage to move up which is seen in the GE Matrix. Industry Attractiveness – Business Strength Matix: This helps to identify the key areas of success and discover areas and strategies which could help Delta Airlines to grow. The matrix looks as follows Business Strength Industry attractiveness High Strong Average Weak In Flight services Branding   Expand its destinations Aircraft fleet of Boeing   Business Service Airline   Medium Flyer Program Ground Service Management   Other Airlines providing same facility   Tie up with retailers Redeem points for tickets   Low     Moving into other sectors  The matrix shows that Delta Airlines needs to concentrate on the business sector and also look towards increasing its brand presence by having tie ups with other companies which would allow them to expand their reach (Kotler, 2001). This will help the company to market itself well and move into other avenues Stratgic Enviornment Matrix: Delta Airlines by using this tool can find out the opportunity through which it can grow and market itself. This will help Delta Airlines to better position its product so that they can grow. Product Market Market Present New Present Market Penetration Product Development Promoting its low cost airlines in the leisure sector Promoting its airline by new ways to attract different segment Promoting its airlines with new reward programs New Market Development Diversification Promote Delta Airlines into new markets so that it can gain the advantage of cost leadership Improving their presence by entering into agreements with hotels, and other facilities for growth The above strategy helps to understand the buyer behaviour which can leads towards strategy development for the future. Summary The BCG Matrix highlights the different areas Delta Airlines needs to work on in the future to ensure growth to be ahead of competitor. The industry attractivness matrix for Delta Airlines identifies the different areas which Delta Airlines need to work upon to ensure attractiveness and to grow their business. The strategic environment matrix highlights the different areas Delta Airlines needs to work to increase its market reach. Overall the different matrix helps to identify the different area that Delta Airlines needs to work upon to ensure successful business growth in the future. Chapter X Strategy Implementation, Control & Innovation Short Term Objectives Positioning the airlines as a differentiator and cost leader: Using this strategy will help Delta Airlines to be able to identify its customers properly and devise a mechanism through which it can tap those. The company is looking to position its product in between the leisure customers who are price conscious; and the business class who want facilities even at a higher price (Treacher & Pollard, 2004). They are trying to position themselves in between the price leader and differentiator but ensuring that they don’t take any side (Treacher & Pollard, 2004). This will help them eye a lot of customers in different segment. The strategy of positioning has been such that it is both for the business and economy class. The positioning strategy will help to identify the strategy the company is likely to use to distinguish itself as a cost leader and differentiator. This will help Delta Airlines to pursue its marketing strategies better and will act as a boost for future growth. Marketing Strategy to attract more customers and retain the old ones: Delta Airlines needs to differentiate itself by offering better service. With an aim to eye the business class necessary changes has to make around. The company has to keep the first few rows for them. These rows should have more leg space; the luggage allowance should be more; the middle seats to be have been done away with and are given access to lounges has to be provided. This when mixed with the low cost being offered to business class more compared to the competitors? This will help Delta Airlines to make easy entry into this segment and differentiate itself. To eye the business sector Delta Airlines should offer “Corporate Plus fare where new incentives like access to lounge, baggage up to 32 kg and priority check in” (George, 2006). This will work well as the business class will get more facilities at a lower price compared to other competitors; at the same time make their journey memorable. Delta Airlines should develop partnership with online retailers so that consumers have easy access to the airlines facility (Kelly, 2005). This will help the airlines to promote its name with different brand and making customers to associate with the airlines easily. This will ensure that Delta Airlines instead of “relying on the traditional methods takes advantage of technology” (Kelly, 2005) to promote itself. This will also help the company to enter into new markets with different brand association thereby making it easy for them to expand. Ways to reduce cost and improve efficiency so that the slogan of the company goes with the pleasure people experience Delta Airlines has to differentiate itself as a cost leader. The company has to develop internal branding in areas which it has no relation thereby ensuring that the company gets the best talent (Verma, 2006). This will enable Delta Airlines to get the best talent at the lowest cost. The company on the other hand should ensure that that they don’t use printed tickets; the meals provided in the flight are been done away with, operate a single type of flight and make use of the facilities of the airport on a competitive agreement. This in addition to offering loyalty programs like “velocity for frequent traveller who will get a free life membership card where they can accumulate points of their travel journey and can be redeemed all the year round” (Gunter, 2007). This will help Delta Airlines retain its old customers as they can get additional benefit apart from flying. Bonus Compensation Plan Compensation holds a very important place in every organization. Organisations compensate their employees to motivate them so that the task can be easily accomplished. Different individuals have different ways to get motivated. For example the efficiency level of certain employees fall when they continue the same work again and again but, when they are temporarily shifted to other job their efficiency increases. For this employee change is the drive which motivates him. Delta Airlines needs to find out this drives and work towards those to achieve best results. Thus, motivation is a continuous process. Thus, we can say that Delta Airlines needs to make use of an employee’s intensity in the right direction. This should be a continuous process as an employee who is motivated remains for a long time with the organisation. Delta Airlines should use both their intrinsic and extrinsic goals to motivate their employees. Intrinsic goals are growth where employee is promoted to higher positionwhereas extrinsic is money where employees are paid hansomely. Study has shown that “physiological threat increases priority people give to extrinsic goals” (Smith & Robert, 1994). Delta Airlines need to devise a compensation plan in such a manner that the workers who are efficient are paid handsomely. Delta Airlines need to devise a method to distinguish between the efficient and inefficient employees. This will help Delta Airlines to ensure that proper training can be provided to the needy. This will also help equity to prevail in Delta Airlines and will help to ensure that the airline is able to develop their business model which helps them to have an efficient workforce. Delta Airlines also need to ensure that they identify the needs to each employee and design the compensation package accordingly. This will help to build a good rapport and will ensure that the intensity of the employees is used in the correct direction. This will also help to ensure that the company is able to develop talented employees within the company to take up responsible position in the company. Summary Delta Airlines by identifying their short term objectives which is to build their brand name by improving services need to look towards integrating it in their scheme of things. They along with it need to ensure that they are able to compensate the employees accordingly. This will help Delta Airlines to have a strong and continuous supply of employees which will help to ensure that their short term goals are achievable. Delta Airlines by pursuing this can readily make changes in their working behaviour thereby enabling them to grow and face competition at all levels. Delta Airlines also need to ensure that the compensation package is designed in such a manner that it reaps maximum benefit and helps to bring the employees together so that their intensity can be used to help the organization grow. Chapter XI Organizational Structure Traditional Organizational Structure & Their Strategy- Related Pros & Cons Simple Organizational Structure: Organisational structure forms a vital part for every organisation. Organisational structure defines “the manner in which employees works” (Organisational Structure, 2010). Having a structure results in a coordinated efforts as it defines “the relationship of reporting, and identifies how people are linked in the hierarchian chain (Organisational Structure, 2010). Any change in the structure results in a change in the manner the task is performed. For example, suppose the structure changes from centralization to decentralization then the responsibilities get distributed and responsibilities change. Delta Airlines has thus defined the role of all members. Even the hierarchy framework defines who will be accountable to whom. It defines the role for each that can help Delta Airlines to look at alternatives within the organisation to fill areas of responsibility. This can also be attributed by the fact that Delta Airlines has all the deparments required in a company and are functioning together to ensure growth. The organizational structure looks as follows The above structure will help to ensure that the hierarchy level reduces and decisions are quicker. This will also help Delta Airlines to ensure that the management process is better and there will be efficiency in services. The company on the basis of it will be able to grow ther market share and ensure better customer satisfaction. What a difference century makes Globalization Globalization today is gaining prominence as borders are disappearing and countries are entering into treaties with each other which favour free trade. This has made companies expand its reach. Companies are benefitting greatly from the global markets as it is giving them a wide market to cater to and at the same time helping to improve the bottom line (Ellis, 2001). This is making more companies to get acclimatized to the local conditions. Today “businesses which are global are a force for good” (Ellis, 2001). This is because it gives them ample opportunities to grow. The most important for Delta Airlines is to “understand the local conditions and get it transformed so that the local people start to favour the company” (Ellis, 2001). The reason for which Delta Airlines is looking to get global is to expand its operation to different countries, project itself as a differentiator and cost leader, and provide quality service to make it one of the market leader in the airline business (Ellis, 2001). This motive is guiding every company to become a multinational. It is seen by the fact that foreign direct investment is increasing. This is making more companies enter new area of business. Delta Airlines if they want to be successful it is important that “they have the appropriate structure and support system” (Aharoni, 1996). They along with it need flexibility so that they can grasp the strategic options which might arise due to environmental changes (Aharoni, 1996). This is all possible when the company adapts to the local responsiveness. A company which want to be in a global arena has to ensure that they understand these factors clearly. To put it multinationals need to achieve local responsiveness, global efficiency and creating more knowledge (Aharoni, 1996). The Internet Internet has been a major force in changing the face of the consumer products. It has brought about change in the way marketing was conducted and is a major marketing tool which has defined the way consumer market performs. Internet has ensured that consumers get a lot of options and variety to choose from. The customer can use internet and compare the products of different companies thereby making their decision making process better and ensure that they get desired product. Internet has educated the customers “by transmitting information about the product and services thereby changing the usage of internet from the educational purpose to a commercial tool” (Anderson, 2010). The penetration of internet to vast areas has ensured that consumers get information about Delta Airlines and when they purchase the product they recall whatever information they have gathered to decide which consumer product to purchase. The owners thereby need to ensure that maximum information is displayed and provided to the customer at the least time possible so that his decisions are quicker (Anderson, 2010). Internet has also evolved the consumer market as it has made the market a global place where the customer can look for products all around and ensure that they get the best one at the correct price (Chaffey, Fiona, Johnston & Mayer, 2008). This has increased the bargaining power as people from different background, culture and religion can convulse together and ensure that their satisfaction and bargaining power increases. The customer market has also shaped the way it functions as it has increased transparency as consumer can gather all the information via the internet about each product and company and decide their future course of action accordingly (Chaffey, Fiona, Johnston & Mayer, 2008). This ensures that the bargaining power of the consumers increase as they are able to extract the best deal and will increase the bargaining power. Delta Airlines can benefit greatly from it as by using the latest development in technology the airline can improve the manner in which they are working. Along with it Delta Airlines can ensure that information is passed at the correct time regarding the departure of flights. This will help Delta Airlines to ensure that their short and long term objectives are achieved. This will thereby help Delta Airlines to shape the manner of working by bringing the required changes in the working climate. Initial Efforts to Improve the Effectiveness of Traditional Organizational Structure Redifine the role of Corporate Headquarters from Control to Support & Cordination A transformation in the organisational structure of Delta Airlines brings about a transformation in the way work is done. Special attention needs to be paid while doing so and it should be ensured that this strategy pays off. If the strategy back fires it could create serious repercussion. There are various things that need to be looked into while Delta Airlines looks towards transforming the structure of the organisation. Delta Airlines while transforming its business model needs to ensure that changes tahe places in the leadership pattern. A study also supports this and states that organisation transforming their structure needs to bring about change in leadership to improve their lateral and upward communication (Wright & Pandey, 2010). This transformation is more in case of public companies as the bureaucracy is less. Delta Airlines needs to watch that it and account for the changes with the change in structure. A business bringing a change in the structure needs to ensure that executives are hired as per the business condition. It is important that Delta Airlines realize the importance of this. Delta Airlines changing their structure need to be on “a hiring spree as the generic leadership qualities” (Van, 1992) are insufficient when a major change takes place. Here a change in structure results in a change in strategy making people to follow towards those strategies. An organisation which doesn’t consider this point has problems. Important decision are not been taken due to inability. This also results that the new structure adopted doesn’t work making the organisation move backwards. Delta Airlines thus needs to concentrate on the minute details to be able to ensure the transformation to strengthen their business model and develop their mechanism of working to ensure better results in the future. This will help Delta Airlines to ensure easy transformation and develop them for the long run. Creating Agile, Virtual Organization Outsourcing- Creating a Modular Organization: Outsourcing is “relocation of the companies business process to another country where the company shifts there production, manufacturing, operation and accounting process” (Stevens & Shi, 2009). Delta Airlines is looking to relocate to other locations to ensure that cost and production improves. Off shoring does help to solve the problem to a certain extent but doesn’t always benefit the organisation. It depends on the strategy and usage adopted by Delta Airlines. Still we see that business units have been following the principle of outsourcing and ensuring that growth pertains for the business units. Outsourcing thereby looks at using foreign labour instead of the domestic ones (Penter & Pervan, 2009). This ensures that growth for the business unit is ascertained and cost is controlled at the same time quality is improved. Outsourcing will also help the airline to find a new place where it can expand its business in the future. Getting similar things at a lower cost will ensure that the airline is able to spend those on areas which will make travelling comfortable and fun and multiply the effect for each commuter. Summary Delta Airlines thus needs to understand the business model and structure they are following. They need to upgrade to the changing enviornment with adoptation of internet to be able to ensure better services. Along with it Delta Airlines needs to look at ways to develop a mechanism which helps to transform the organizational structure in such a manner that it helps them to grow. At the same time Delta Airlines needs to consider the option of outsourcing some of its activities so that the airline can concentrate on the core activities. Delta Airlines by working on the various areas will be able to garner a bigger market and enable the market price of the share to rise by improvment in management of the overall business. Chapter XII Leadership & Culture Strategic Leadership: Embracing Change Leadership is important in all organisations irrespective of their size and volume. The growing importance of leadership can be adjudged by the fact that rising competition is compelling more complicated decision thereby making it important that leaders continue to guide business and help the employees in difficult situations. Leadership presents different personality styles like brilliant, lonely, and imaginative and risk takers. Leadership has a wide connotation and it arises due to different personality styles, attitudes, the basic concepts, relationship and self identity towards goal. A research conducted by Angelo (2007) shows that leadership is a vast concept compared to management especially and leaders have broader roles to play. This shows that a certain type of quality is preferred at one place and other at another. It has given stress on various factors to be successful. Leaders ensure to use the surroundings to their effect so that maximum can be extracted from the employees. Leaders look to integrate the different cultures, devise mechanism to motivate the employees, develop different compensation plans and ensure effective leadership so that the employees feel part of the organization and stays with the organization in the long run. When we look at the CEO of Delta Airlines we see that he was charismatic as “he was enthusiastic and self confident” (Jacob, 2008). This can be seen from the fact that he was able to get the job done. This created enemies as he used to take the steps that would allow the work to be done but was not in the correct manner by exerting pressure on the employees. The overall qualities and styles demonstrate that the CEO followed the Fielder model. This is on the backdrop of using all powers i.e. “legitimate power, informative power, personal power, referent power and expert power” (Jacob, 2008). Organizational Culture Culture affects human behaviour. It is something which humans acquire. This brings a change in human pattern. It makes them do different things. Culture gets ingrained by the group he has. “People belong to different caste, country, creed, colour, and region which affect the manner in which they carry out their duties” (Innah, 2009). Suppose, a person influenced from the western culture will have a liking for different product compared to others. The culture also affects the pattern. “A set of beliefs, attitude, language, life style affects the spending pattern” (Innah, 2009). This brings changes. A research shows that people from different countries have different culture as a result of which their pattern of influencing other is also different there by suggesting that culture brings about a change in the way person behaves and this gets moulded by the group he belongs to (Ralston, Hallinger, Egri & Naothinsuhk, 2005). Different culture also gives rise to conflicts. People think differently. Conflicts make it difficult to sustain growth as people belong to different regions, countries and differ in their thinking process (Innah, 2009). So when this people come together it results in difference in opinion which results in conflicts within the organization (Innah, 2009). The organizational culture at Delta Airlines shows that the employees have to get the work done by taking every possible step for it. This is making Delta Airlines put lot of pressure and even look towards ways of accomplishing it. Delta Airlines needs to ensure that a culture is developed where employees, society and stakeholders are looked after as it will help in the long run. Delta Airlines can here look to provide employees regular feedbacks about the work and conduct training for them on a regular basis so that the work is better accomplished. Thus, culture affects the manner in which a person behaves and it is necessary to encounter those changes to ensure that conflicts reduce and employees are motivated and brought together to work as a unit. Delta Airlines was able to identify the cultural factors which can guide the airline to build a platform where it can compete against the best of airlines. Delta Airlines thus by ensuring a proper organizational culture was able to integare the things that will help them to grow. Delta Airlines need to ensure that they are able to use their leadership resources in such a manner that it will reap maximum benefits. Delta Airlines by using the leadership should bring the changes in the management process and at the same time ensure that the culture evolves in such a way that it is able to inculcate the changes in the working environment. Summary Delta Airlines was able to grow due to the leadership ualities being demonstrated by their leaders. The maners at respectable position were able to identify the needs of the organization and mould those into their organizationa culture. The transformation of the working environment by inculcating the different culture helped Delta Airlines to provide better services and grow. This strategy of Delta Airlines is paying good return and with better leadership the airline can ensure that the transformation of organizational culture becomes easy for the airliner. References Atwood, J., Coke, E., Cooper, C. & Loria, K. (1995). Has downsizing gone too far. University of North Florida. Retrieved on March 18, 2011 from http://iopsych.org/downsize.htm Anderson, L. (2010). How the Internet has changed the face of marketing. Retrieved on March 18, 2011 from http://www.prospectamarketing.com/ArticlesAndCaseStudies/faceofmarketing.htm Aharoni, Y. (1996). The organisation of global service of MNC. International Studies of Management & Organisation, 26, 35-57 Anweshabh, T. (2010). Differentiating the dogs from the stars. BCG Matrix, Blue Water Press Angelo, C. (2007). Transcendental Leadership versus management in hospitality industry. International Journal of Knowledge, 8 (1), 61-70 Chaffey, D., Fiona, C., Johnston, K. & Mayer, P. (2008). Internet Marketing. 4th Edition, page 237-239, Pearson Education, India Ellis, V. (2001). Enterprise or exploitation: Can global business be a force for good. The New Statesman. Retrieved on March 19, 2011 from http://www.newstatesman.com/vernonellis.html Innah, A. (2009). The effect of cultural factors in consumer buying behaviour. Journal of Industrial Psychology, 34 (1), 134-137 Jaude, K. (2010). Innovation and Change: Breaking the Rules. Retrieved on March 19, 2011 from http://www.leadershiparticles.net/Article/Innovation-and-Change---Breaking-the-Rules/77732 George, T. (2006). New Corporate Plus Fare Delivers Significant Cost Savings to Corporate. News & Press Release, Delta Airlines Pty Ltd Gunter, P. (2007). Delta Airlines Velocity Program. Airline Business Media Partner, Edition 7 Kelly, M. (2005). Delta Airlines sleeps around seeks new partner. Travel trends, Travel Tech, Blue Water Press Kotler, P. (2001). Marketing Management. 11th edition, Prentice Publication, Upper saddle River, New Jersey Organisational Structure. (2010). Organisational Structure. Retrieved on March 19, 2011 from http://www.web-books.com/eLibrary/NC/B0/B58/044MB58.html Penter, K. & Pervan, G. (2009). Outsource business process outsourcing. Business & Economics. Springer Link article, Australia Ralston, D., Hallinger, P., Egri, C. & Naothinsuhk, S. (2005). The effects of culture on work place strategy of upward influence. University of Bangkok, Elsevier Inc Stevens, A. & Shi, E. (2009). Union Response to outsourcing of call centres. The International Journal of Interdisciplinary Social Sciences, 4 (1), 441-454 Smith, R. & Robert, D. (1994). The psychology of work and human performance. 2nd edition, New York, Collins Treacher, K. & Pollard, J. (2004). Does Delta Airlines Deliver on Promise. Marketing Strategies, B & T Today Wright & Pandey. (2010). Transformational Leadership in the public sector: Does structure matter. Journal of Public Administration & Theory, Oxford University Press, 20 (1), 75-89 Van, M. (1992). Strategy and Structure follow people. Questia Journal Article, Human Resource Planning, 15 (2), 137-145 Verma, M. (2006). Internal Branding & HRM at Delta Airlines. Internet & e-commerce, OB Case study code HRM0047P Read More