Strategic Foresight and Porter's Five Forces - Assignment Example

TERMINAL 5 Name Course Date Introduction Terminal 5 (T5) refers to Heathrow Airport in United Kingdom which is designed to handle 30 million passengers annually. The airport was designed at a cost of ₤4.3 billion in a period of 6 years. When the airport was officially opened in March 2008, it was not a smooth process as expected by most (BBC News 2008). The terminal is one of the key advanced airport terminals globally. According to Krigsman (2007) in a ZDNet article, the technical complexity of the terminal goes in line with the terminal’s physical size and this took 400, 000 man hours for software engineers to develop (Heathrow Airport Guide, 2013). This therefore, prompts investigators of the case to wonder what could have gone wrong, given that more coding was also set to continue after installation was made. Krigsman (2007) points out that £75m of the aforementioned costs catered for technology, whereas £175m was invested in IT system installment. The terminal was supposed to create a telecommunications network for in a small town, particularly for the construction workers. The problem therefore, reflects negatively on the company’s management and questions arise such as if the British Airways had a strategic plan. This case study will also focus on the change processes that have to be adopted by the organization. Question 1: Causes, Triggers and Drivers of the Disastrous Opening day Articles documented by the BBC News and Computer weekly.com blame this problem on combined factors. Though the two companies agree that combined factors played a role in this problem, they have several differences that explain the cause and triggers of this disastrous day. a. Causes BBC News reports that the cause was mainly from technical glitches, where the sophisticated baggage set up failed despite being designed to handle thousands of bags per hour (Savill and Millward, 2008). The other causes as reported by BBC News were employee factors. From the news report, BBC stated that employees had a hard time getting space to park their cars. This shows that the workforce was initially unmotivated and this only means that the productivity levels were down. Employee motivation always presents a problem to most large organizations, but this is the reason why a company like British Airways needs to be keener on employee motivation strategies (BBC News 2013). Having problems with parking space, immediately an employee arrives at work means that the employee always starts his or her day in a mood. This may seem like a minor issue to the management, but unmotivated employees do not put so much effort in their work and produce poor work or low quality services. b. Triggers From the BBC News report, the British Airways company had already identified the problem while in its teething stages. The employees and passengers had problems when it came to parking space. Time spent while looking for parking space for employees meant that the staff members were also delayed in taking their security screening and the result was a backlog of baggage. A backlog of baggage on the other hand meant that flights would be cancelled or delayed (Woodman, 2008). Additionally, road signs were also not clear for the passengers, which meant that confusion was inevitable. c. Drivers The report given by ComputerWeekly.com news on the other hand IT problems were the key causes. This as reported in ComputerWeekly.com news report shows that the airline was likely to cope with the IT issue, but a combination of this problem and others played a large part. Similar to the BBC News report, ComputerWeekly.com report also blamed the problem on delayed security searches and issues with car parking. However, ComputerWeekly.com news also blames it on ineffective training of staff and poor construction work process. An excellent example as indicated in the report on the 275 lifts at the terminal. 28 of them were not working properly and 17 lifts were and are still broken (ComputerWeekly.com 2008). This is the situation according to the reports, which gave rise to such a chaotic opening for such a large terminal. The unintended change processes were the reason that the effects of this problem were unchangeable. Question 2: Heathrow Airport Holdings’ Strategic Position and Competitiveness Heathrow Airport Holdings (BAA) has in the last few years been trying to make the change process more acceptable to its employees. From the news report given by Aljazeera, there are outlined proposals that have been outlined by BAA’s management to allow more than 260,000 flights on an annual basis (Aljazeera, 2013). Most people support the idea of having a third runway for the country, but the critics argue that the idea does not seem like a good strategic plan. Porter’s Strategic Model It is crucial for international companies such as the BAA to understand how to cope with competition (Porter, 2008). Porter’s argument is that coping with competition entails having a strategic plan where a company will be strategically positioned in the market. Competition for profit is an issue that is beyond the rivalry that exists between companies. From Porter’s argument, strategic positioning and competition has everything to do with suppliers, product or service substitutes and customers. From the news report given by Aljazeera in the year 2013, it was clear that the airport had to come up with a strategic plan to solve a different problem from one that occurred in 2008. The British Airport had the daunting task of dealing with cancelled flights and frustrated customers all because of severe weather conditions (Aljazeera 2013). Weather conditions are entirely a natural hindrance to an airport’s performance, but this does not mean that the management cannot do something about it. Given that the airport operates around European states, there has to a plan that the management can come up with to solve issue of delayed and cancelled flights because of bad weather conditions. This is where Porter’s five forces on strategic competitiveness comes in the picture. If BAA applies these five forces, it is likely to beat more competition, other than through the profits that it makes. Source: http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ Evidence from the Case In the aircraft industry, configuration of these forces cannot be carried out in a similar way like in other industries. Porter’s conviction is that a strong competitive force from a company in the aircraft industry is the key determinant in an industry’s profitability and hence the key to strategy formulation (Ray 2011, 26). Perhaps the most significant force in the industry is not always obvious as indicated by Porter. However, what is most certain is that fierce rivalry between airport companies exists and the bargaining powers of customers in the industry is the reason why some airlines are globally successful whereas other are not. If the British Airways places an emphasis on threat of entry from other airlines, then perhaps it is more likely to have serious strategic plans. Question 3: Required Changes and BAA’s strategic Competitiveness For BAA to achieve the change that it desires, the company has to consider different strategies in its contracting procurement techniques. This is change that requires traditional thinking in construction and delivery of services. A change in leadership may also be beneficial for the company (Burnes 2008, 25). A change in leadership is likely to be a successful strategy because people will always seek guidance and emulate behavioral traits from leaders. Having a T5 agreement is also likely to demonstrate that the management cares about the employees’ team work efforts and commitment (ITV News, 2013). When it comes to introducing change to employees, BAA should not assume that this will be an easy task. In most organizations today, particularly in the airport industry, cutting costs, re-organization of staff members and downsizing are no doubt the norm for surviving a harsh market. To survive the ever changing economy it is clear that change has to be adopted whether employees like it or not. The challenge of change for an organization like the BAA is that it may have occurred during the opening day in 2008. Change can be negatively accepted particularly if it occurs after a company makes a lot of profits (Graetz, Rimmer, Lawrence and Smith 2006, 15). However, it is more pronounced and not easily dealt with if the company is only new in the market, like in BAA’s case. After assessing the changes that have to take place in the organization, BAA has already identified the changes that it can control and those that it is not in a position to control. If the management at BAA adopts such as mindset, it will be easier for the organization as a whole to confront future challenges related to delayed flights and angry clients (Hymowitz, 2008). Evidence based change is likely to have an impact on BAA because the approach that it takes to introduce the change will have either a positive or negative impact on customers or staff. The traditional procurement technique of reasoning has to be revisited. A logical way of introducing change is also crucial for the purpose of maintaining a strong, change, implementation program (Heathrow 2008). Question 4: Analysis of Emergent Change Processes Emergent change processes mainly engage most organizations in open interactions with the competitors and this may result to a lasting shift in the behavior. Change process occurs from various theories such as the social theory, systems theory and psychoanalytic theory. A few years ago, an experiment conducted by various experts combined all the three theories and facilitated the change of their organizational systems. When it comes to planned change, most organizations are comfortable with the idea because it is easily controlled by boundaries (Greenlinger 2008, 36). In other forms of change, like planned or opportunistic change, the benefits are definable and there are few unknowns. However, when it comes to emergent change, the boundaries cannot be easily controlled and there are no clear roles. Nonetheless, emergent change involves a team of members in aiding success. The reason for this is because as organizational challenges and aspects are emerging, competitors usually compete for client feedback (Greenlinger 2008, 35). This means that for emergent change to be successful at BAA, everyone in the organization has to be involved so that all the emerging issues are comprehended by all parties. There are five emergent change processes that are likely to be beneficial to BAA. One, with a clear understanding of its values and goals, Heathrow Airport is likely avoid conducting activities that are not in line with its mission and vision. Two, with excellent knowledge of the industry, the company may have avoided the whole problem from the beginning. By developing motivational techniques, the organization will be in a position to strategize when employees are frustrated (Lilyquist, 2000). Lastly, gaining insights from other companies in the same industry is another way in which BAA would attract and retain its clients. For example, the BAA can take advantage of the fact that it is one of the largest and well known terminals in the world. According to a CNN reporter, Katie Hetter (2013) Heathrow Airport is the third largest terminal globally, offering services to 70 million passengers. This means that the company should embrace opportunistic change because it affects the company from the external environment. Question 5: Impact of Disorganized Opening of Terminal 5 The impact of a disorganized airport on the business as a whole cannot be positive. The most common characteristics of a disorganized organization include poor communication channels, ill-defined goals and the structure of reporting is not clearly defined (Hill and Jones 2010, 348). If employees have no idea of what is expected of them, then it is clear that Heathrow airport is also likely to have a similar problem in future. The results of this, is diminished productivity, and accomplishing goals will not be easily achieved. In most airports, the profits made are charged based on the aircraft’s landing weight. The contract that most airports form is highly based on passengers’ numbers and it can always be renegotiated if the airport is operating on increased losses (Stevenson March 24, 2008). An excellent example of what happens when the airport is disorganized is if this weight is increased too much it will lose its airlines and if raised to low, the airlines may also lose a lot of money. One impact on stakeholders may be negative and this may make them resentful towards the new HR policies, citing that it can be burdensome to implement it with limited finances (Hanna 2009, 297). On the other hand, the other effect is that the stakeholders may be highly supportive of new strategy implementations because it may offer them an opportunity to living a better life economic life for the group or the company. A disorganized terminal 5 will call for change and as aforementioned, change is not easily accepted. The stakeholders may not understand why certain human resource policies have been adopted and may be afraid to try new Human Resource policies on assumption that such policies may not work (Heathrow 2013). Some stakeholders like the FLOPC may be afraid that the terminal may turn out to be much worse than before. This may make them feel like they are being looked down on, if the airport management does not involve them during new changes. The third effect is that some of the stakeholders are likely to remain greedy and cite that only a few dollars can be spent on changing employee standards and motivating them. Some of the concerns cited by some stakeholders may be legitimate meaning that the concerns may be a sign that there are no finances for changes every time the clients become frustrated. The fourth and fifth impact on stakeholders is also negative. One, if Heathrow Airport remained disorganized, this meant that most flights were canceled and customers were highly frustrated (Beale, 2013). If the clients were frustrated, this meant that most would seek alternative airports. This is a way of making future losses for an airport that is about to be opened. It also means that the stakeholders got a bad reputation if efforts were made to avert the activities the stakeholders were initially supporting. In order to gain their support, Heathrow’s management understood that it had different interests and the management understood that their concerns had to be addressed (BBC News 2013). BAA was also able to involve them in decision making when terminal 5 was at its knees. Depending on an organization’s goals, the impact on stakeholders may be negative while at the same time positive. Hence, the focus can be directed on those who may be affected more by the efforts made or those who have a lot of influence and interest in a company. Question 6: Reflection on Conduct of the BAA When terminal 5 is disorganized, the stake holders are impacted on in numerous ways. The stakeholders in an airport have the task of organizing and discussing issues of noise. They include the (ANMAC) Air Noise Monitoring Advisory Committee, (HACC) Heathrow Airport Consultative Committee and the (FLOPC) Flight Operations Performance Committee among others. The disorganization at Terminal 5 meant that the management had to revisit its human resource policies to introduce new and stronger strategies of coping with unexpected challenges (Francis 2003, 310). The stakeholders also have the task of ensuring that the issue of communication is solved. The management also has to be ready to handle any crisis that emerges unexpectedly. Communication breakdown at the Airport is part of the reason why some of the flights were leaving with baggage and others without the baggage (Woodman, 2010). This is the reason why most customers were frustrated given that there were no announcements that were made on monitors or websites. Having baggage handlers at the airport with little or no training was also another problem that had the stakeholder had solve. With poor signage of papers it was impossible for the staff members to navigate the building. Therefore, the stakeholder management is tasked with ensuring that the Human Resource department at for the firm hires qualified personnel and that it also trains them regularly. By working closely with the professional IT firms and the HR department, the services will continue to be improved and the passenger experience will be transformed for the better (Al Bawaba Node News, 2011). Informing the passengers about their flights will ensure that the airport will be in a position to recover from problems faster. This will allow the firm to plan for its future better than its competitors (Amor Group, 2011). Conclusion BAA realized that change would not come easily as it does for most companies. The management also realized that it had to act fast because there was no one else who would promote the organization’s successful delivery of programs. By taking the brace decision of adopting new contract and procurement strategies, involving the stakeholders and looking for new ways of motivating and training employees, BAA became successful (Lee 2010). In addition, by revisiting it human resource policies and ensuring that it hired only the qualified applicants, BAA paved the way for a skilled workforce. From this research, it is clear that T5 had a disastrous opening because of its disorganization. Today the terminal has improved after the year 2008 and it now has a large client base of people from all over the world (Kortekaas, 2012). 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The Independent, "Disastrous opening day for Terminal 5" March 27, 2008. http://www.independent.co.uk/news/uk/home-news/disastrous-opening-day-for-terminal-5-801376.html. Read More