Aviation Industry Organization - Case Study Example

Analysing the Aviation Industry Name of Student: Name of Course: Name of Instructor: Date of Submission Executive Summary The management of an organisation has a direct influence on its success. An organisation should always opt for a management approach that enables it increase its efficiency and ultimately its performance. The following report will give an insight into various management elements with a special focus on the aviation industry and will use Kingfisher Airlines as a case company. The report will first introduce the topic and the company. It will also discuss on the relevance of a good organisation structure and give reference to the airline under study. The report will then discuss about strategic organisational design, its influence on Kingfisher airlines, the company’s current situational analysis and the challenge to the management. The conclusion will highlight the main discussion points in the report. Table of Contents Executive Summary 2 Table of Contents 2 1.0Introduction 3 2.0 Kingfisher Airlines 4 3. Organisational Structure 5 4.0Strategic Organisational Design 5 5.0Influence of the structure on the Organisation 7 5.1Competition 7 5.2 Fluctuations in the Global Oil Prices 8 5.3 Human Resource Management 8 6.0Current Situational Analysis 8 7.0Challenge of Management 8 8.0Conclusion 9 References 9 Analysing and Aviation Industry 1.0 Introduction The global aviation industry is one of the most dynamic industries in the world. Owing to the rise in globalisation trends, air transport around the world has risen tremendously, leading to a direct growth in the aviation industry. The increased travelling is seen in both domestic and international markets; an occurrence which has seen the emergence of small carriers who focus on domestic flights. Moreover, global carriers have also resorted to tapping domestic and regional markets owing to the eminent need to embrace sustainability. Ideally, it can be acknowledged that the global aviation industry is very competitive (Thomas 2013, p.2). Out there in the market, organisations are outdoing each other in service delivery, customer service, technology among other key elements associated with the industry. Because of this reason, it is of utmost importance that an organisation develops and maintains a good management system; one that ensures that it has a competitive edge over the others. On this aspect, it is important to note that the management have a direct influence on the performance of a company. The following report will give an insight into management in the aviation industry with reference to Kingfisher airlines; one of the recent entrants India’s aviation industry. 2.0 Kingfisher Airlines Kingfisher Airlines was started in the 2003. It is based in Mumbai and has risen to be the fifth biggest Indian Airline. The company operates in both the domestic and international markets. The airline connects major cities in India together in addition to other cities around the world .The airline is owned by a united Breweries group which is based in Bangaluru. It first flights were in 2005 and connected Mumbai and New Delhi. Four Airbus A320 200s planes backed the operations. Its international operations started in the 2008 when the flight started flying to Europe, connecting Bengaluru and London (Khattar 2012, p.1). Over time, Kingfisher Airlines has grown to provide above 100 daily flights both India and International destinations. The organisation provides experience to its customers via three service classes namely; Kingfisher first which is equivalent to the business class, Kingfisher Class which is equivalent to the Premium economy and Kingfisher Red which is equivalent to the low fare class (Kingfisher Airlines 2013, p.1). Key to its strategic management practices is its organisational vision whose aim to ensure that the company continuously provides safe, enjoyable and value orientated experiences to all its customers. Key to this vision are its organisational values which are safety, happiness, service, accountability and teamwork (Kingfisher Airlines 2013, p.1). The Following sections will analyse key management aspect with respect to the company. 3. Organisational Structure United Brewers, an alcohol brewing company located in India, own kingfisher Airlines. The company got its name from a famous beer named Kingfisher, which is a brand associated with the brewing company. The chairperson of the company is Vijay Mallya, a renowned brewer. The company is management by a board of directors. The board of directors of the airline company are answerable to the United Brewer’s group. Under the board of directors are the CEO, managers and other executive personnel. Although the company had a well-structured management, it has been undergoing a decline in the recent years, an occurrence which has almost left it on its knees. This decline can be attributed to the lack of strategic management. The company lost its focus on its core objectives of providing low cost air transport domestically and around the world. Instead of this, the airline took to the route taken by many commercial airlines in the world. The following sections will look at the management elements in detail. 4.0 Strategic Organisational Design An organisational design is a well laid out structure which outlines the key functional areas of an organisation and their interconnection (Wyman 2010, p.2). The main objective of an organisational design is to allow an organisation to boost innovation, communication and productivity within the work place. On this point, it is important to acknowledge the fact that organisational design has a major influence on the ability of an organisation to meet its objectives. Looking at Kingfisher Airlines, it can be acknowledged that they lacked a proper organisational design hence their inability to link up their processes with their objectives. Initially, the company wanted to provide low cost air transport which would be associated with excellent service delivery; which is an opportunity which existed in the aviation industry. Ideally, it can be noted that most of the commercial airlines in the world treat low cost customers are third customers, often given a privilege third to the first and second class clients. However, Kingfisher airlines turned out to be like the other airlines in the world; commercialising their services hence making them no different from the other operators (Khattar 2012, p.13). From this it can be concluded that the airline’s organisational design was not geared towards enabling the organisation increase its productivity and on the way achieve its objectives. The main decisions in the company were made in the executive level by the United Brewers board which had little knowledge in managing in the aviation industry. From the above, it can be acknowledged that an organisational design must be met by a strategy. Strategic organisational design is an organisational management approach which aims at identifying the specific position of a company in current time and outlines the exact position which an organisation aims to be in a specific period of time. In addition to this, strategic organisational design organises the management of an organisation in a way which ensures that the goals and objectives outlined in the strategic plan are met. Linking this with Kingfisher Airline’s management, it can be noted that the company was doing well in the initial years (Khattar 2012, p.6). The company’s growth was good since it was managing within its goals and objectives. However, the organisation design was not strategic, hence explaining the loss of focus which the company had as it grew. This made the company to be conformed to the commercial practices of the global aviation industry; an issue which made the company lose its competitive advantage in the market (Khattar 2012, p.6). From the above, it can be acknowledged that a strategic organisational design is necessary for an organisation to meet its goals and objectives. A strategic organisation design perceives an organisation as a system where all the processes are interconnected (Anand & Daft 2007, p.329). On this effect, the management must work together in order to achieve the organisation’s goals and objectives. This is realised when a strategic organisational design that takes into consideration all the management aspects of an organisation is in place. 5.0 Influence of the structure on the Organisation According to (Khattar 2012, p.3) the company was experiencing a steady growth from the year 2005 to 2010. The company enjoyed an increase in the market share and in its fleet. This is attributable to the organisation’s initial start-up strategy. However, things turned dull for the company from 2010 when the forces in the market started to hit the company hard. The following section will analyse some of the effects of the lack of a strategic organisational design in the company. 5.1 Competition In the 2010, Jet airlines, a major carrier in India Acquired Sahara Airlines, making it to be overtake Kingfisher airlines as the second largest carrier in India. This resorted to an increase in competition in the Indian Aviation industry. The competition caused trouble to Kingfisher airlines and its decline in revenue was largely associated to this. The lack of the company to handle the rising competition in the market is a sign of lack of strategic organisational design. The company’s strategic plan did not take care of possible increase in competition in the market. 5.2 Fluctuations in the Global Oil Prices The rising cost of fuel in the global market was also a cause of trouble in the Kingfisher family. The company’s management was accused of not paying oil companies their dues. As a result of this element of mismanagement, the company’s cash flows were hard hit. In addition to this, the company was in big debt and the management did not have a strategic way of leading the company out. 5.3 Human Resource Management The company also lost its key personnel for instance pilots to its rivals. This left the company under skilled; an occurrence which led to a decline in the quality of service delivery. 6.0 Current Situational Analysis Currently, the company has closed all its major operations in India and around the globe. The company has already been classified as a non performing organisation and its accounts are frozen. The company has accumulated losses of Rs. 6,524 and is yet to pay Rs. 7,057 worth of debt. In addition to this, the company is out of funds and is operating on a negative balance. The company is also understaffed, with most of its remaining employees unpaid for several months (Khattar 2012, p.10). 7.0 Challenge of Management Kingfisher Airlines management needs to refocus to the goals and objectives of the airline. As seen in this report, the management should not deviate from its initial vision of providing low cost air transport around the world. The main challenge for the management is to embrace sustainability in the operation of the airline. Sustainability can be realised by strategic management which starts with the formulation of strategic organisation design which is meant to cater for the management requirements of the company. After this, the management should source for funds to run the company in addition to paying its debts. 8.0 Conclusion In conclusion, it has been seen from this report that the management of an organisation is directly related to its ability to achieve its objectives. The report has analysed a case study of Kingfisher airlines, one of the major aviation companies in India. From the case study, it has been seen that the lack of a good management leads to the inability of an organisation to meet its objectives. On this point, it can be noted that Kingfisher airlines fell from its glory due to the lack of strategic management; one which would put the company at a good position of being able to cope with the challenges which arose in the industry. The report has discussed about strategic organisational designs, the influence of a lack of strategic management design in the case company, the current situation of the company and the challenge to the management of the company. References Anand, N., & Daft, R., 2007. What is Right Organisation Design? Organisational Dynamics, Vol. 36, No. 4, pp. 329 - 344 Khattar, C., 2012. Kingfisher Airlines, A Case Study, Retrieved on 11th August from http://www.slideshare.net/ckhattar/kingfisher-airlines-a-case-study Kingfisher Airlines, 2013. About Us, Kingfisher Airlines. Retrieved on 11th August from http://www.flykingfisher.com/about-us/vision-values.aspx Thomas, J., 2013. Aviation Insights Review (AIR) – 2013 Global Industry Performance Update, L.E.K. Vol. XV, no. 8, pp. 1-4 Wyman, O., 2010. Strategic Organisation Design, An Integrated Approach, Delta Organisation and Leadership, pp. 1- 15 Read More