Managing Organisational Change - Why Virgin blue Is Changing - Case Study Example

Managing Organizational Change Name Institution Course Professor Date Executive Summary This report analyses critically the reason why virgin is changing. In the first part of the report, there is a deep analysis into the reason why the airline is choosing to change. Reasons for this stipulated change have been well elaborated in the report. The report is also looking at the changes in place and the merits for each move it takes. In the conclusion bit, the report is looking at the recommendations in place that the airline should put into consideration if it is to succeed in its transition. The report has also considered the knotter eight models that the airline should follow in this changing period. In addition, the report also looks into details the challenges that the managers are in a position to face in initiating this change. It also shows how these managers should provide strategies on how they will effectively manage this change. Table of Contents Executive Summary 2 Table of Contents 3 Introduction 4 Body 4 Kotter Eight Step Model 6 Step 1: Need for Urgency 6 Market analysis 6 Problems and opportunities in place 6 Techniques followed 7 Step 2: Powerful Change Group To Help In Implementing The Change 7 Creation of team structures 7 Ensuring sufficient power of the team in driving the change 8 Step 4: Developing A Vision 8 Step 5: Communicating The Vision 9 Recommendations 10 Conclusion 11 Bibliography 13 Introduction Virgin blue is the second largest form of airline in Australia. It condones ten per cent of its business market and is in a bid to double it over a stipulated period (Forsyth 2009). This is to reduce its total dependency on leisure travelers. It is undergoing a series of changes to attract more travelers than its competitors are. One of its visible changes is the designation of new uniforms for the employees. Initially, the airline used to be called the Virgin blue, but has since changed its name with its changing trend. The airline has in the last few economic, years undergone numerous losses because of decline in the number of customers choosing to travel with therefore, this management has chosen to change its working system to deal with this problem. Body Virgin is ultimately changing in a series of time due to the pressure in the market sector. Initially, Virgin relied on customers travelling for leisure. However, these customers are decreasing gradually due to struggles in the economy. Due to the hardships in the economy caused by factors such as joblessness, most tend to cut off that leisure bit and concentrate on saving that money for more basic activities. The management had forecasted decline in profit as they had started sensing danger from the start. Another reason for this change is the increased completion from other airlines in the region. This is because this airline had been targeting customers who were travelling for leisure. Initially, this airline was not well organized and equipped to cater for other cluster of travelers including the most common business corporate individuals (Coram, and Burnes 2001, p. 96). These travelers thus opted to travel with the largest airline in the region because as we know, it is the second largest airline in Australia. Therefore, its competitor snatched numerous customers from it thus explaining the accrued losses. The changes that virgin has put in place includes the implementation of a brand new business class to cater for business corporate. This added to its competitive pricing as compared to other business enterprises will enable it to attract more and more business individuals. The class would cater for all business individuals whether they are travelling in business or economy class. This move will help raise the currently deteriorating profits of the airline because it will have another alternative apart from that of consumers on leisure (Yong-Joo 2002, p. 352). In addition, virgin airline is having the thought of purchasing new aircrafts in partnership with exceedingly famous SkyWest. Thus, it would enable it to increase the number of its flying routes to other regional areas. The most recent one was the sixty-eight seat ATR-600 aircraft. Therefore, it would cater for more customers due to its coverage of a large area. Moreover, it is stipulated to open a lounge at Coolangatta airport. Plans are in place to add two more lounges by the end of this economic year more evidently than in the previous years. These lounges would ensure that all customers are assured of quality service if they choose to travel with them (Morrow 2007, p. 782). Hence, more and more people will be convinced to travel with them. More to this, the uniform of all the cabin crew and the ground staff was changed. The new uniform looks more presentable and was designed by a professional in design. The uniform was shown off at a red-carpeted fashion show. The staff looks very elegant in the new uniform, and it is one of the resemblances of change in the airline. Moreover, it launched new services between two destinations that is Sydney and Abu Dhabi. It also implemented partnership with Air New Zealand and had a brand new menu for the passengers courtesy of a professional globally renowned chef. Initially, lounges were only available to passengers flying for international business class and members belonging to the velocity gold. This velocity gold did not limit members to any access regardless of their class of travel. Moreover, passengers belonging to the business class and economy class were only allowed to gain entry to their domestic lounges on the day of travel. This law has; however, changed since the implementation of new guidelines. Passengers are not restricted to be in the lounges, in fact, their comfort is well looked upon in this lounges no matter their time of travel or the travel class they booked. Kotter Eight Step Model Step 1: Need for Urgency Market analysis After performing the market analyses, the airline is incurring uncountable losses due to decline in the leisure travel. This loss had, however, been forecasted in the previous half economic year. The market seems to dwindle in the number of people willing to travel for leisure. Business corporate, however, travels all year round in terms of carrying out their businesses. Problems and opportunities in place The airline after analyzing the problem of low cost travel market, an opportunity arose. Qantas the competitor has a virtual monopoly on all its business process. Virgin has only a ten per cent monopoly. Therefore, virgin sees this opportunity of tapping a business option that had not yet been explored. This is because the slowing economic background less affects business corporate than other leisure travelers. They are also known to purchase flexible air tickets, which are often more expensive than other tickets. Therefore, this move by virgin airlines tends to be more advantageous in out doing their challengers in the airline market. Techniques followed Moreover, virgin has techniques in place on the importance of change to deal with the challenges that emerge. This is seen in its changing uniforms for its staff, name and style of conducting business. This is to prove to the other publics that it is ready to provide quality services by changing every old aspect about them for the better. In encouraging more customers to fly with them, virgin has adopted a reward program for these customers. If one flies with this airline, one earns some velocity points depending on the destination, and the number of time one flies with the airline. These points can then be redeemed at any virgin airport as fares or used to purchase items such as the ITunes. This move greatly encourages many passengers to travel with them as many times as possible. Step 2: Powerful Change Group To Help In Implementing The Change Creation of team structures In driving the change, virgin airlines had a new design team to work on the new look. This is evidently seen in its designer new uniforms for its staff members. In addition, the airline has also sought the expertise of the media to advertise its new look. For instance, its new designer uniforms were shown off to the public in a red-carpeted affair. This was a part and parcel of publicizing their new services to their targeted customers. As a business agent, I would not follow the same routine as the virgin airliners. I would seek the expertise of a marketer or a public relation officer to create this new looks for me. These professionals are in a position to guide a business through its transition stage without many difficulties (Friday, & Friday 2003, p. 870). Ensuring sufficient power of the team in driving the change In ensuring that the team members of this airline work towards the desired change, limits have to be put into consideration. As the company is seeking for a complete change, I would advise them to change their existing theme color. This is including the staff uniforms and even the interior of these aircrafts. Therefore, consumers even aboard the aircraft’s feel significant change. I would also advise for the reshuffling of the cabin crew and change of even the decorations in the aircraft. I would also advocate for an interior project within the virgin Australia team. This project would mostly involve rewarding all the team members who show considerable efforts in their work. Therefore, this would enhance motivation of these members thus work hard to face the upcoming challenges in the changing system (Warner, and Church 1992, p. 301). By so doing, the management would be assured that they are having the same goal with the staff members’ thus increasing chances of success in the new look company. Step 4: Developing A Vision Moreover, the company should develop a vision to provide the necessities focus for change. As a business agent, I would rather that the company establishes more lounges than just the stipulated two. This is because if the company is expected to venture in a larger corporate market share, then it has to overlook the question of the number of lounges. This is because business corporate is, more often than not, affected by the economic hardships. This corporate are, however, very time conscious. Therefore, as the company is targeting these customers more, it has to increase the number of lounges from just two to cater for the number of its customers. Two lounges would mean that services offered would be to a limited number of customers. A lot of time would be wasted trying to offer services to a large number of customers in the two lounges. Thus, an increased in the number of lounges would save time and ensure that the customers achieve quality services. Moreover, this airline should have a target share of thirty per cent by the year 2015 if all the stipulated measure is followed to the latter. Therefore, in a few years to come, virgin would take over Qantas as the corporate airline of Australia. Step 5: Communicating The Vision The main challenge would be on how to communicate to the staff about the upcoming changes. For starters, as a manager in this airline, I would throw a huge party for their staff to enlighten them on the upcoming changes. In addition, I would create brochure and notices pinned all over the airport to let the staff know of all the changes bound to happen. I would also ensure that I initiate seminars for all the staff members to make sure that all of them understand how the company is expected to change. Staff morale and motivation is the key determiner for the success of this company in its transition (Goodwin, R. 2004, p. 58). Therefore, all aspects that would elevate the morale of the staff members would be put into consideration. This includes such aspects as increasing the employees’ salary by a significant percentage. The company has no choice than to try to enhance its staff member’s motivation despite its accrued losses in the previous subsequent economic years. In launching this new look to the world, I would ensure a much bigger public event than the company’s manager did. The first impression that the world gets about this company mattered, and the public event was the first impression to the public who had not heard of this airline before. I would also advertise this airline in a national television for all to see. Flyers and billboards were also important means of marketing this business. I would also hold a competition in an open place to get people excited thus enhancing a good image of the company. Initiating this change process is not an easy task to the top managers. This is because some of the staff members might be reluctant to cooperate with the change system (Thalheimer 2005, p. 5). Therefore, the managing director has to ensure that he does not enforce the new changes on the employees. Rather, the company should come up with measures to guide their employees through each step of the changing process. The top managers should also make the employees understand the reason behind the desired change in the airline. Moreover, the company had undergone subsequent losses in the previous years. Therefore, working with the stipulated budget turns out to be a challenge to these managers. This is putting into consideration that some considerable amount of money should be set aside for boosting the morale of the employees. These managers and their accountants should plan very well for every single dollar used to avoid the last minute shame. Recommendations For it to achieve the desired change, the airline should ensure that its fares are considerable and affordable to every customer. Most travelers tend to run to the cheapest mode of transport offering quality services. In addition, the management should come up with measures to ensure all customers enjoy quality services (Tan 1999, p. 38). It should offer affordable packages that combine the flights with the most suitable accommodation option. Though it recently started this move in some destinations, it should ensure that it enhances this move to other parts of the globe. More to this, virgin airlines should increase it number of airlines flying to different destinations. By so doing, it will ensure that it attracts an enormous number of customers thus adding to its profits. It should also ensure subsidized fares to different holiday destinations, in Australia to encourage investors into their own country. In addition, the airline has to consider the entertainment bit. Therefore, inbuilt entertainment system has to be put in place all the working aircraft’s. It can in build a system such as the Panasonic Ex2, which is full touch screen but can also be controlled by a handset. This system should be free to use by all, and it should feature a library of new videos on demand (Morton et al. 2004, p. 220). Children travelling with their parents should also be kept busy. The hosts’ management should put children playing equipment in place including video games. The airplanes should also allow seat-to-seat chat and provide all the information on the flight in question including a flight map. If the company lacks enough money to make all the necessary transactions, it can borrow a loan from a bank of choice though loans are not a very advisable means of raising capital for such a business. This is because this business is a means of taking risks. It does not mean that the company will attract many customers just because it has undergone numerous changes (Riddle 2000, p. 29). It also is not guaranteed that the business will regain profits if it undergoes the so-called changes. However, the company can also sell some of its share to willing individuals to arise the capital required. Conclusion Virgin Australia is the second largest airline in Australia now. However, with the changes put in place, it will be the largest airline in the corporate market outdoing its main competitor. It is expected to have a rise of close to thirty percent market shareholders by the year twenty fifteen. Despite the financial challenges facing the airline now, it is going places if complete teamwork is initiated between the top managers and staff. The staff motivation should be the first priority of this airline if it is expected to succeed in its transition stage. The managing director looks at a vision, communicates the vision to the staff members and leaves the rest for the staff members. The knot eight model; is a significant strategy used by this airline to enhance its stipulated success. The challenges facing this airline company initially acts as a source of opportunities that the company seeks to fill. For example, the decline in the number of customers travelling for leisure enables the company to foresee the need to target new customers. Initially the company had a ten per cent market shares, but it is expected to arise this to double the amount to cut its reliance on leisure passengers. Therefore, this is one of the best airlines in the whole Australia and will become one of the best renowned airlines globally if it continues with the same spirit. The need for this company to undergo changes was due to a sixty-two per cent decline in profit, which was even below the required market forecasts. Bibliography Coram, R. & Burnes, B. 2001, "Managing organizational change in the public sector – Lessons from the privatization of the Property Service Agency", The International Journal of Public Sector Management, vol. 14, no. 2, pp. 94-110. Friday, E. & Friday, S.S. 2003, "Managing diversity using a strategic planned change approach", The Journal of Management Development, vol. 22, no. 9, pp. 863-880. Forsyth, A. (2009). Fair Work. Chicago: Adventure Work Press. 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Yong-Joo, L. 2002, "Managing Korean Business: Organization, Culture, Human Resources and Change", ASEAN Economic Bulletin, vol. 19, no. 3, pp. 352-353. Read More