Cathay Pacific Airlines' Current Strategies, Strengths and Weaknesses, Opportunities and Threats - Case Study Example

Table of Contents Executive Summary----------------------------------------------------------------------------2 Internal Analysis-------------------------------------------------------------------------------4 Current Strategies------------------------------------------------------------------------------7 Critical Evaluation-----------------------------------------------------------------------------8 Recommendations----------------------------------------------------------------------------11 References-------------------------------------------------------------------------------------12 Executive Summary Cathay Pacific Airlines has looked towards developing their business by concentrating on their core competitive advantage which has been improved market penetration leading to higher market share, improved services by having the best employees and user friendly interface to ensure maximum customer satisfaction. The airlines has developed their business by ensuring best facilities for the staff to provide training and improving its operations by having more flights, aircrafts and route expansion. This has made Cathay Pacific Airlines towards using strategies which will improve market capitalization through: 1) Improving the quality of services by having more air crafts, coverage to more routes and improved services by having different package according to the needs of an individual. 2) Developing developmental hub which looks towards improving the business by working on areas which will ensure maximum coverage. 3) Improvement in facilities by developing new improved training ways aimed at better services. Cathay Pacific Airlines that is looking towards achieving the stated objective should look towards the following Improving the facilities for the staff which will ensure better services by having proper training facilities to develop the personnel Improved promotional methodology which looks to promote the airlines by presenting the different package and coverage Improved coverage by having more fleet of aircrafts that helps the customers to reach even far off places Improving the relationship with the stakeholders, suppliers and external bodies along with the customers so that it helps to develop the business according to the desired framework Internal Analysis The analysis of Cathay Pacific Airlines through their mission, vision, customers, competitors, and environment helps to understand the SWOT of Cathay Pacific Airlines which will help to work towards developing the business model accordingly. Strengths Among its strengths is the excellence of its service in quality, and ability to satisfy the customers by offering quality services. Aside from the ordering of 30 Airbuses A350-900s in August 2010, a total of 91 new aircrafts directed to Hong Kong is currently on their way, while 15 Airbuses A330-300s and 10 new Boeing 777-300ERs have recently arrived last March 2011 which has helped to build the brand name. Ability to perform better in comparison to other airlines (Business Monitor International Ltd. 2011). This has helped in growing brand name thereby ensuring better coverage and flights to different destinations (Heracleous & Wirtz 2009). Presence in different sectors helps to aim all customers (Business Monitor International Ltd. 2011). This has ensured improved interface which allows the customer to be able to gather the useful information and also book tickets Weakness Not operating in the low cost segment making the company lose vital customers. Also the increase cost of operations due to rising oil prices is making it difficult to provide similar services. Growing competition from other players as all look to target similar segment of customersEconomies reeling under recession making it difficult for Cathay pacific to provide similar services at the determined cost Opportunities Moving towards low cost airlines due to growing customer base and increased preference towards airline travels is an area to work on. Move into other market where business looks towards providing opportunity of growth with aided with an increase in population base providing a larger section of people to cater to. Improving services which will ensure proper and correct information with the customers thereby enhancing customer experience and providing an opportunity to make loyal customers Threats High staff turnover rates due to lucrative salaries and package being offered by competitors’ thereby increasing competition making it difficult to have an edge. Also, rising prices of fuel having a direct effect on the prices of ticket. This is addition to little differentiation and similar services being provided by all airlines makes it difficult to differentiate between the services The strengths of Cathay Pacific Airlines will help in successfully determining the manner in which the airlines will be able to provide quality services. Cathay Pacific Airlines capabilities lie in their quality service due to the work force employed by them along with long distance flights which are available to most destinations. The company has been able to dominate ensure competitive advantage by ensuring that they have the work force which matches their quality of service and improved interface which enables to maximize customer satisfaction (Moreton, 1999). Cathay Pacific Airlines has also been able to take advantage of the competitors’ condition in the market. The airline industry is dominated by major players which thereby makes it difficult for the new entrant as huge capital is required to set up the required infrastructure (Dagmar, 2011). Also, the fact that the airline industry offers more compared to trains and buses as there is no other substitute to travel overseas apart from the sea route which it time taking and costly. This has made Cathay Pacific Airlines to be able to use it as their competitive advantage and develop the workforce that is able to deliver quality performance on the ground. The external factor highlights certain areas that Cathay Pacific Airlines needs to watch out. The rising prices of fuel and lucrative offers being offered to employees has resulted in high turnover rates. Along with it the present economic scenario is creating a situation which is making it difficult for Cathay Pacific Airlines to sustain the same competitive advantage they had. This has thereby resulted in employees having a higher bargaining power which has affected the bottom lines to a certain extent (Dagmar, 2011). The manner in which economies are looking towards coming out of recession will improve the market scenario for the airline industry and will provide opportunities which Cathay Pacific Airlines can look to garner on. Cathay Pacific Airlines by developing better services and packages can ensure growth in traffic. Cathay Pacific Airlines needs to look towards developing their business by having flights for more destinations and improving their fleet. This will help Cathay Pacific Airlines to cash on the growth in travelers and having for destinations which are more prone towards tourist will help Cathay Pacific Airlines to develop their business. Cathay Pacific Airlines is already working in that direction as they have developed their work force and have ensured proper interface with the customers so that their experiences enhances and improves the business. Current Strategies Cathay Pacific Airlines is pursuing the following strategies to ensure that the work is accomplished in the most productive way. This will thereby transform into better services for the customers and help to develop their strategy for future development. 1. Cathay Pacific Airlines looks towards developing its services by having better coverage at different destinations, developing the infrastructure, improving the delivery time for freights, cost effective package and overall development of the business towards customer satisfaction (Gamble & Stone, 2006) 2. Improving the coverage by having more fleet of aircrafts that looks to connect the different destinations where the flight is presently inoperative which will thereby help to get a new market to cater to 3. Improving the in house facilities by having more employees that look towards providing quality services that will help to develop the business and ensure maximum customer satisfaction. Critical Evaluation The critical evaluation of the strategies of Cathay Pacific Airlines is based on the “objectives-strategies-tactics” model which will help to understand the manner in which the airlines looks towards accomplishing the objectives Objectives Cathay Pacific Airlines looks towards improving the coverage by having more flights for destinations where they are inoperative. Along with it Cathay Pacific Airlines looks towards hiring more fleet of aircraft, developing cost effective offers and having the best in house staff so that customer experience gets enhanced and the business is able to fetch maximum advantage Strategies Cathay Pacific Airlines in order to achieve its objectives need to look towards improving their services so that they are able to enhance customer experience. Cathay Pacific Airlines needs to hire the best staff so that they can be directed to provide customers with the correct guidance. Cathay Pacific Airlines on this aspect can look towards improving the interface which they already have done. Cathay Pacific Airlines can also look towards developing their call centers which is more effective so that they are able to provide the correct information to the customers. This will have an effect on the performance of Cathay Pacific Airlines as having the best employees might result in poaching and employees moving to other organizations. For, this Cathay Pacific Airlines need to develop different loyalty programs for the employees as well. The company should determine the perks and incentives of the employee in a way that ensures maximum loyalty from them. Cathay Pacific Airlines can look towards stock option and improved package as one of the options. Cathay Pacific Airlines needs to purchase and develop their fleet of airlines so that they are able to tap and fly over destinations which has the potential but the airline in inoperative. Cathay Pacific Airlines should look towards differentiating between the premium routes and other routes. This will help Cathay Pacific Airlines to ensure that the flight size is determined according to the volume of passengers which will help them to deal with the aspect of rising fuel prices. Also having flights for more destinations will help the customers to be loyal as they will find all the services under a single roof (Schebera, 2007). Cathay Pacific Airlines to be able to implement their strategies need to consider the importance of having more flights at peak hours as the travelers at that point of time is maximum. This will help Cathay Pacific Airlines to be able to develop their business better and ensure proper revenues per employees. This will help Cathay Pacific Airlines to deal with the economic conditions as business class still travel by airlines during the peak time (Plunkett, 2007). Lastly, Cathay Pacific Airlines needs to identify the importance of understanding the market and prime routes so that they are able to take timely steps to develop their business and provide customers with the best facilities that will help to develop their business strongly and lead towards better accomplishment of the objectives. Tactics Cathay Pacific Airlines needs to devise tactics which is based on the 4P’s of marketing i.e. price, place, promotion, and product which will help to determine the success of the airlines. Cathay Pacific Airlines already has the product component dealt with as they have Aside from the ordering of 30 Airbuses A350-900s in August 2010, a total of 91 new aircrafts directed to Hong Kong is currently on their way, while 15 Airbuses A330-300s and 10 new Boeing 777-300ERs have recently arrived last March 2011. This has ensured that they have the required portfolio of airlines to provide quality services. Cathay Pacific Airlines need to develop business on routes where they are inoperative as the growth in tourist and travelers by airlines have grown. This will require identifying the potential market correctly and ensure proper timing of the flights to ensure maximum travelers (Holloway, 2008). On the promotional aspect the airlines need to develop more cost effective packages which are comfortable at the same time within the budget of the individual. For this Cathay Pacific Airlines needs to look towards differentiating between the customers and design packages which is more lucrative. On this front Cathay Pacific Airlines can look towards entering into contracts with fuel companies so that the fluctuations in the prices of oil are checked and the airline is able to provide quality service at the same price. This will ensure maximum efficiency and will ensure that Cathay Pacific Airlines is able to achieve its objectives (Medalla, 2005) Recommendations Cathay Pacific Airlines needs to look towards incorporating the following in their business so that they are able to provide continuous and quality services to its customers. Improve the coverage by having more fleet of flights for different destinations. This will help to improve the coverage and will ensure that Cathay Pacific Airlines is able to work on the important areas Identify ways which will help check the fluctuations that exist in the prices of fuel so that Cathay Pacific Airlines is able to provide competitive pricing to its customers Improve the quality of service by hiring the best talent that looks towards providing quality services and develop the required infrastructure which will highlight the importance of proper timing of flights The recommendations provide important insights but are limited to the fact that the competitors strategies in comparison to Cathay Pacific Airlines has not been identifies. Also the fact that the manner in which the financials of the company will be affected hasn’t been dealt with which will help to understand the strategy for Cathay Pacific Airlines better. References Business Monitor International Ltd. 2011, Cathay Pacific Airlines, pp. 47 – 50 Cathay-Pacific-Airways, 2011. Vision and Missions. Retrieved on November 21, 2011 from http://www.cathaypacific.com/cpa/en_HK/aboutus/cxbackground/missionstatement Dagmar, R. 2011. Porters five forces, Retrieved on November 22, 2011 from http://www.themanager.org/pdf/p5f.pdf Gamble, P. & Stone, M., 2006. Up close & personal?: customer relationship marketing @ work. London: Kogan Page Publishers. Holloway, S. 2008. Straight and level: practical airline economics. New York: Ashgate Publishing, Ltd.. Heracleous, L & Wirtz, J 2009, ‘Strategy and Organization at Cathay Pacific Airlines: Achieving Sustainable Advantage through Dual Strategy’, Journal of Air Transport Management, vol. 30, pp.1-6 Medalla, E. 2005. Competition policy in East Asia. New York: Routledge. Moreton, P., 1999. The very stuff of general practice. New York: Radcliffe Publishing. Plunkett, J. 2007. Plunkett's Transportation, Supply Chain and Logistics Industry Almanac 2007 (E-Book): Transportation, Supply Chain and Logistics Industry Market Research, Statistics, Trends and Leading Companies. London: Plunkett Research, Ltd.. Schebera, J., 2007. Development of Airfreight Hubs in the Southern Chinese Pearl River Delta - A Comparative Analysis. London: GRIN Verlag. Read More