Swift Airline - Entering into Market, Increased Flight Numbers, Cabin and Food Services - Report Example

Airline Game: Report on the Simulation Introduction Swift Airline is a regional carrier making flights to seven destinations with ten routes. The airline operates as a normal carrier and this means that the charges for the ticket are moderate. Initially, the airline was operating within five destinations but new opportunities rose from two significant areas; F and R. These two destinations have helped the airline expand its market share in the industry making it one of the top competing airliners. Market segmentation According to McDonald & Dunbar (2013) businesses venturing into new markets need to segment the market into smaller parts. These smaller parts are very crucial in making decisions such as pricing of products and services as well as the general operation of the business in the area. Market segmentation theory expresses that most businesses have set inclinations in regards to the extent of resources and investments they will put in a new market. For that reason, businesses carry out market research in order to establish the state of business. Swift airline operates on normal ticketing within the region due to the following reasons; There are a limited number of people within the region majority of who do not frequently make flight travel. a. There are other regional airlines which give competition to the business. b. There is one airline offering luxury flights and they have established a brand within the region. c. Swift airline is a regional airline and there limited to offer luxury and discount services which work best for international flights. d. The region is occupied by people who do not make more flights within the region. The few business oriented individuals are the ones who make regular flights. As the simulation progressed, Swift airline maintained the strategy of offering normal services as this proved to be more effective than the rest of the packages. However, it is important to mention that after the airline ventured into the two markets, F and R, the airline offered sale services which allowed more people to use the airline to travel. The two markets have few airlines operating in the region due to the distance and challenges with the infrastructure. This has been an advantage to Swift airline as it introduced an alternative to the customers. According to Lamb et al (2010) business entering into new markets need to come up with marketing strategies that will attract new customers and help the business establish its brand within the region. This can be done by giving discounts and offers to the customers. The decision to have normal services have proven to be successful since the airline has been able to acquire new and regular customers. By offering normal services, the airline has made its services affordable to majority of the people. The absence of international airlines has been an advantage to the airline as this created an opportunity to have a bigger market share. As mentioned earlier, there is only one airline offering luxury services and this has relatively attracted more people to Swift airline because of the comparison they make with the luxury airline. Key performance Indicators From the beginning of the simulation, the airline had the following targets and objectives; Expand the market by adding two new destinations. Increase the net profit by 10 percent. Increase the stock share by 10 percent Increase the total number of flights by adding 11 new flights Increase the number of routes by adding four more routes. In doing this, there were several performance indicators that would be used to evaluate the success of this objectives and goals. They include; Entering into market F and R The airline entered into the two markets as a plan to increase its markets as well as maximize the new profit for the company. The airline was able to enter into the above mentioned markets and created four new routes. According to Kim & Mauborgne (2007) market expansion creates new opportunities for any business as well as challenges. There is need to analyse the market in order to have a higher chance of winning the market. After entering market F and R, the airline decided to give a one month sale for tickets which enabled create a customer base in the region. Increased flight numbers With the introduction of the two markets, the airline has been able to introduce eleven new flights through eleven routes. This was a strategic step to make sure that the airline is able to maximize and utilize all the fleets available. Four flights were allocated to these regions with each route working with one flight. In response, the market demands were met with high number of people taking advantage of the one month sale. Market F has proven to be more productive than even the initial markets and destinations and this can be connected to the one month sale as well as the absence of many competitors. According to Ziesak (2009) the absence of competitors in an industry is an opportunity for a business to maximize on the demand from the customers. Table 1 is a summary of the current flights and routes the airline is operating with. Table 1 Route Flights Total Seats Fare sales Locked 4D - 360 Miles 2 68 Regular Fare No 8F - 420 Miles 3 108 One-Month Sale No 9A - 600 Miles 3 102 Regular Fare No 10B - 400 Miles 3 102 Regular Fare No 11C - 340 Miles 2 68 Regular Fare No 12D - 360 Miles 3 102 Regular Fare No 14F - 420 Miles 3 111 One-Month Sale No 15E - 400 Miles 3 102 Regular Fare No 16F - 420 Miles 2 74 One-Month Sale No 17R - 600 Miles 3 111 One-Month Sale No Cabin and food services The airline has added free soft drinks, snacks, and small snack meal for certain flights. This is a strategy to increase the number of people using our airline. We noticed that most airlines do not offer these services considering that the operations are limited to a small distance. In return we placed these services to entice them. The services are not part of the ticket fee and to the customer this is an added value to whatever they pay. Flights made to destination F and R have particularly been graced with this service considering that they are new markets and they are long distance flight compared to the other destinations. According toFerrell & Hartline (2010) introduction of offers and other services that add value to the customer has a great impact on the general performance of the business. International Collaboration In the beginning of the simulation, each team had the option to collaborate with an international airline in its operations as a means of expanding the market share and gain a competitive advantage. However, Swift Airlines opted to work independently without collaborations. Some of the competitors in the industry opted to do this and for Swift Airline this seemed as complexity to the market. The following are the reasons why Swift airline opted not to work with International airlines. Terms of the collaboration Most of the International airlines are well established and have operations globally. Majority of these airlines have a bigger bargaining power and this does not only apply to its suppliers and customers but also to prospecting partners. The challenge here is that the terms of the collaboration would be of greater benefits to the international airline and not to Swift airline. The conditions may be exploitative and manipulative. In addition to that, the operations and activities of an international airline are likely to be more advanced and of higher level than that of a regional airline like Swift airline. According to Sachsenmeier & Schottenloher (2008) medium level business are faced with challenge of partnering with global corporations due to the differences in terms of strategies and systems of operations. This means that such partnership might have more benefit to the bigger business other than to the smaller business. Difference in target market International airlines have their target market based on global level. On the other hand, Swift airline is based on a regional operations and this difference means that our collaboration would mean expanding the market of the airline. At this level of the business lifecycle, swift airline is not in plans to expand the market to the international level. Considering that the airline had just expanded to two new other regional market, going to an international market would be a wrong move and a wrong investment. However, this option is open in future as the airline has a long term goal to be an international airline. Regional Competition The current market is faced with very stiff competition as the airlines in the industry have improved their services to the customers. This competition means that every airline has to focus its operations within the region and work towards winning the market share. By collaborating with an international airline, Swift airline would easily loss focus on the regional market and focus on the new markets created by the new collaboration. This would give the competitors a competitive advantage. According to Stasch (2010) competition in any market calls for businesses to be keen to adapt to changes in the market and work on meeting the customer demands otherwise it would loss relevance. Any move that might shift this focus would mean negative implications to the business. By not collaborating with international airlines, Swift airline has been able to focus on winning a bigger market share in the region. The airline has been able to venture into two new markets independently. This would have been a challenge in the presence of a partner. The airline has been able to introduce new services to the customers as part of marketing strategy. According to Crane & Matten (2010) whenever a business goes into collaboration with other business, there are limitations in terms of making major decisions as all stakeholders need to be consulted. Performance of the company in the industry The performance of company can be termed as satisfactory. The first two years were very successful and productive. However, this changed as we went into the third year. The net revenue started to deteriorate unlike before where it was steadily rising. Rajagopal (2012) says that business strategies should be running along the performance of the business to ensure that the business does not make. Figure 2 is an illustration of the trend of the net revenue and from this; we can see that the performance started to fall as we approached the third year. This can be associated to the investments made to the two new markets. There was also a one month sale for our services which might have affected the total revenues and earnings. Figure 1 Strategy implementation Running of the Swift airline was based on sticking to the initial strategy and maintaining the objectives and goals. In the begging of the simulation, the team came up with long-term and short-term strategies. The short term strategies were more flexible and had an opening to change in order to adapt to changes in the market. Entering the two markets was a long-term goal but the introduction of the one month sale was a short-term strategy used to win more customers. Hutt & Speh (2013) say that entering to a new markets need to come along with flexible strategies that will be used as survival tool to the business. Sticking to the initial strategy had an advantage in that we were able to achieve the goals that we made in the beginning of the simulation. However, sticking to the initial strategy meant that we could not make any changes in case of changes in the market. Very minimal changes were made as means of maintaining the market share. To some extend this gave the competitors an advantage over us. According to Doole & Lowe (2008), business strategies need to be flexible in order for a business to remain relevant to its dynamic market. Conclusion Swift airline has been able to successful identify its target market through market segmentation. This move helped the business reach to lower level customers who would otherwise find it difficult to access the services. The airline was able to venture into new markets and this was part of the marketing strategy and objectives. Through the two new markets, the airline was able to increase the number of routes as well as the destinations. These consequently helped in improving and boosting the companys revenue income. The airline worked independently without any collaboration with international airlines as expected. Working independently ensured that the airline would focus on the regional market other than put focus on other upcoming markets. The success of the airline was not fully realised due to a number of factors one of them being the fact that we spend more time in the initial strategy and plan. The situation might have been different is the strategies were made to be more flexible. According to Markman & Phan (2011) it is a big risk to stick to one strategy in a competitive market. Completive markets tend to be very dynamic and therefore the strategies should also be dynamic. Reference list McDonald, M., & Dunbar, I. (2013) Market segmentation how to do it, how to profit from it Chichester, John Wiley & Sons Top of Form Lamb, C. W., Hair, J. F., & McDaniel, C. D. (2010) MKTG4: student edition. Mason, OH, South-Western Cengage Learning Bottom of Form Top of Form Kim, W. C., & Mauborgne, R. (2007) Blue ocean strategy: how to create uncontested market space and make the competition irrelevant. Boston, Mass, Harvard Business School Press. Bottom of Form Ziesak, J. (2009). Wii Innovate - How Nintendo created a New Market through the Strategic Innovation Wii. München, GRIN Verlag GmbH Top of Form Ferrell, O. C., & Hartline, M. D. (2010) Marketing strategy Mason (Ohio, Estados Unidos), South-Western Sachsenmeier, P., & Schottenloher, M. (2008) Challenges between Competition and Collaboration the Future of the European Manufacturing Industry Berlin, Heidelberg, Springer Berlin Heidelberg Top of Form Stasch, S. F. (2010). Creating a successful marketing strategy for your small new business Santa Barbara, Calif, Praeger Bottom of Form Top of Form Hutt, M. D., & Speh, T. W. (2013) Business marketing management: B2B. Australia, South-Western, Cengage Learning Top of Form Doole, I., & Lowe, R. (2008) International marketing strategy: analysis, development and implementation. London, Cengage Learning. Markman, G., & Phan, P. H. (2011) the Competitive Dynamics of Entrepreneurial Market Entry Cheltenham, Edward Elgar Pub Top of Form Rajagopal (2012) Systems thinking and process dynamics for marketing systems: technologies and applications for decision management. Hershey, PA, Business Science Reference Top of Form Crane, A., & Matten, D. (2010). Business ethics: managing corporate citizenship and sustainability in the age of globalization. Oxford, Oxford University Press. Bottom of Form Bottom of Form Bottom of Form Bottom of Form Read More