The Strategic Plan in Turning around Airbus Problem - Essay Example

Assuming you are helping the CEO of Airbus to prepare a presentation to the union. The presentation will outline the company's strategic plan in turning around Airbus' problem. You should, in particular, cover areas on (1) global strategy with transnational approach,(2) how to manage "knowledge management" across the global border, and (3) "integration capability". Dear friends, I am sure you are all proud to have played a major role in developing the world's largest airliner - the Airbus A380 super-jumbo. Fortunately, the double-deck Airbus A380 has provided all the answers to the problems of increased passenger traffic, airport congestion and high quality-travel. Capable of carrying between 500 and 800 passengers, it is Europe's attempt to compete with the Boeing 747 as the largest passenger aircraft. As you are all aware, Airbus will provide a saving in the range of 10 to 20% per passenger per mile over the competitors, thanks to Airbus's efforts to reduce weight, maximize aerodynamic efficiency, ensure safety, mitigate environmental impact and lower the cost of development and manufacture. Now coming to our problems, I am sure we can jointly overcome them. Let us go by the book and use strategies to turnaround the problems we are facing today. Without taking much of your time, I would like to focus on the key areas that would help us maintain growth and increase our RoI (Return on Investment) year on year. If we are ready to adopt a few innovative ideas in our organization, we would be able achieve our targets in the minimum possible time.The strategic ideas would be as follows: (1) global strategy with transnational approach, (2) "knowledge management" across the global borders, and (3) "integration capability". Let us discuss these points one by one: 1. Global strategy with transnational approach As globalizations takes on new dimensions, it becomes imperative to adopt new technologies and innovations to be in step with your competitors, if not ahead of them in any field. Each organization's economies are now influenced to a large extent by the economies of the outside world. These major shifts have been facilitated by global connectivity. Radical transformations in the way businesses are carried out have become possible with Internet and other technological developments. The globe has shrunk and businesses are competing on larger platforms. Any organization that wishes to compete globally and maintain its relevance in the international scene must necessarily be involved in strategic planning, keeping in mind that there are no boundaries or territorial borders in trade today. When we speak of expansion of our capacities, we should keep in mind a global perspective, a plan that tears across nations. Acquisitions and joint ventures have taken up a transnational hue. Mergers and cross-border partnerships are the mantras to success today. A plan which has been successful in our country could be replicated in a foreign country. Economies of replication together with the complementary relationships between different types of knowledge permit unprecedented levels of productivity growth. Digital technologies reinforce these increasing returns by reducing costs of replication to near zero and allowing instantaneous global distribution.1 Different Approaches to Global Strategy: 1. Headquarter driven approach: This transnational strategy will strive to achieve the slogan, 'think globally but act locally', 'through dynamic interdependence between the parent and the subsidiaries. We will coordinate efforts, ensuring local flexibility while exploiting the benefits of global integration and efficiencies, as well as ensuring worldwide diffusion of innovation. There will be standardization of interfaces, procedures, and policies from the headquarters itself. Autonomously in functioning will enable subsidiaries to quickly respond to changes in local markets. This approach will help us achieve global efficiency through economies of scale. 2. Headquarter commissioned and regionally executed approach In this approach, the headquarter will set out broad guidelines and policies and initiate the knowledge management dialogue; and later allow the regional centers to take command of actual execution. Regional centers will be the main hubs at each of the continents where the organization will operate. This will ensure a common theme and mission, while allowing solutions to be tailored to meet distinct requirements of each region. 3. Regionally commissioned and locally executed The vision and initiatives for knowledge management efforts will come from the regional offices themselves. As local offices in a given region will need to exchange expertise on a frequent basis to operate efficiently and effectively, so, rather than go for a corporate-wide effort, the regional headquarters will commission a locale-specific knowledge management effort. Each field office in the region will be free to execute this in a manner that achieves goals and policies set at the regional office - 'think regionally but act locally'.Regional efforts will take substantially less time due to the close-knit ties found between local offices and the commonalities. One adverse effect of this strategy might be the difficulty in sharing knowledge beyond the regions, since each region may deploy its own tools and initiatives to capture and store knowledge and exchanges between regions became cumbersome. 2. "Knowledge Management" Across Global Borders Global factors have led to an increase in the flow of information, knowledge, commodities and capital among nations.For transfer of knowledge across our organizations, we will make use of electronic linkages, forums, temporary assignments, international teams, internal markets, meetings, cross-border assignments, boundary-spanning roles, and personnel flows. Knowledge management efforts can be successfully executed if we change our mindset from sharing on a 'need to know basis' to 'continuous sharing of new insights' .We shall have a central repository, for knowledge hosting and distribution. We shall have to break out of traditional habits, and share our ides with our co-workers and management. Knowledge providers will be identified and suitably compensated . Only when one contributes insights into the central repositories is it known to the rest of the organization that he/she has relevant knowledge on a domain. Since all members of the organization do not share the same language, place, or behavior and, it is physically impossible to know how to contact a knowledge provider following the traditional scheme of things. Hence we will try to break all methodologies and encourage people to share their insights with the organization as a whole rather than wait to be asked by their peers. Issues in Managing Knowledge Across Borders There are a few barriers to knowledge management, namely: 1. Change Management In their own interests, we would expect our fellow workers to be adaptive to change and follow all the requirements mentioned by the management from time to time. 2. Culture Cultures are bound to be different, as we move across regions and organizations set-ups. We will have let go of our traditional approaches and instead adopt a more global culture, where people from different continents will feel at home. 3.Integration Capability. To streamline and align business processes, optimum functioning of individual units, managing logistics and successful coordination and integration of these is very important .Vertical integration of all regional branches is important to achieve our goals of being the Number One company in the industry. When the combination and integration of individual units lead to synergies, our objectives of profit maximization and staying ahead of the competitors will be achieved. Organizational capabilities are not factor inputs like tangible and intangible assets; they are complex combinations of assets people, and processes that organizations use to transform inputs into outputs. The list of organizational capabilities includes a set of abilities describing efficiency and effectiveness: low cost structure, "lean" manufacturing, high quality production, fast product development. The ultimate output is the development and implementation of unique and exciting value propositions for all the key players: customers, consumers, suppliers, and complementors. Source: David Collis and Cynthia Montgomery Having manufacturing units across the globe might lead to problems of coordination, increased costs of transportation and unforeseen delays. We will put a plan in place for coordinating and integrating all our geographically diversified manufacturing and servicing efforts. A centrally located unit will monitor all the regional units and optimize our integration capability. 1. Paul Romer, "The Soft Revolution," Journal of Applied Corporate Finance (Summer 1998); Carl Shapiro and Hal Varian, Information Rules (Boston: Harvard University Press, 1998). http://www.blackwellpublishing.com/grant/5thEdition/pdfs/CSA5eC17.pdf 2. http://www.pesochallenge.org/docs/pes1/strategic_management_frameworks.pdf Read More