Overview of Kuwait Airways
The paper will provide information regarding the competitiveness strategy that is mainly followed by Kuwait Airways in concern to the Bowman’s Clock Strategy. Also, the PESTEL analysis of this firm demonstrates that apart from various difficulties of the political and social issues, the firm will increase their business growth in the market. Besides this, Porter’s analysis and its application of five forces over this firm will also be discussed in this context. The vision, objectives, target market, value chain analysis procedure will help in evaluating the different aspects of the concerned business procedures. Moreover, the new digital practice use by Kuwait Airways will also briefly describe in this paper.
Bowman’s Clock strategy is considered as the model that mainly explores the strategic positioning of a firm which thereby helps the business to enhance their competitiveness in the market. Kuwait Airways also follows this Bowman’s Clock strategy to increase their competitive advantage in the market. The competitiveness strategy of Kuwait Airways by following this Bowman’s clock strategy mainly based on two categories such as perceived value and price respectively. By following this Bowman’s clock strategy, Kuwait Airways provides unique services in comparison to the other airline services of the country (Kuwaitairways, 2018). Kuwait Airways provide modern, ambitious as well as innovative services to their customers so that they can easily maintain high competitiveness in the market in comparison to the other similar airline services of the country. Thus for enhancing their business growth, the competitiveness strategy that is used by this airline services is the “transformation plan.”
Kuwait Airways implemented this new bold strategy by following the Bowman’s Clock strategy, and according to this transformational plan, both the infrastructure and the technologies of the airlines are changed that will provide better comfort to their consumers (Al-Hawary, and Aldaihani, 2016). This transformational change is followed by the Bowman’s Clock strategy, and the whole plan will be completed by 2021. Hence this plan will thus help Kuwait Airways to improve their competitive advantage, and this Bowman’s Clock Strategy will help the company to analyze their competitive position in the market in comparison to the offerings of the competitors. In other words, this Bowman’s Clock Strategy usually helps the firm to consider their competitive advantage about their differentiation advantage by using this transformational plan (Low, and Lee, 2014). It is noted that Bowman’s Clock strategy is mainly based on eight strategic options and keeping this in mind the management team of Kuwait Airways has decided to implement the change.
Competitiveness Strategy: Bowman’s Clock
Kuwait Airways provides low price as well as low value-added services to their customer and offers them all sorts of comport, and this helps them to maintain a competitive position in the market. The low price of their services makes low-profit margin but with the high volume of an output enable them to generate high profits in their business (Tzvetkova, 2018). About their competition, Kuwait Airways innovated their technology and business procedure so that they could provide a differentiation aspect in concerning to the other airlines firm in Kuwait. They followed a focused differentiation strategy where the airline has adopted a complete suite of alternative solutions that include e-commerce, inventory, loyalty programmes, departure control, reservation, revenue management, and payments, mobile as well as travel intelligence (Karsalari et al., 2017).
In other words, it is seen that Kuwait Airlines is supported by Amadeus that help the firm with a new business process so that they ensure a cost-effective and timely upgrade system and this will help Kuwait airlines to hold a better positioning status in the market (Alkaabi, 2014). For the business class category, the firm offers high price services because they provide extra benefits in this class of people. By following this strategy of risky high margins, they quickly increased their profits which helped them to maintain a good position in the airlines market. Besides this, making the partnership with Amadeus the firm Kuwait Airways not just changes their technological approach but also they are working to find a trusted provider those who have expertise and long-standing experience in the airline business (Lin et al., 2018). Hence this will help them to increase their profits as well as competitive advantage in comparison to the other airlines firm in the country. Therefore, it is clear that by following the Bowman’s Clock strategy, Kuwait Airways easily maintained their competitiveness strategies in the market.
Kuwait possesses a closed economy, and the political parties wanted a liberalized economy so that they get benefits from the different actives that present in the country. Due to the high-cost oil production of Saudi Arabia faces problem in Kuwait political conditions. Hence it is clear that Kuwait Airways also faces a problem in developing their business in the overseas market due to an unstable political condition of the country (Messner, 2017). It is noted that political issue occurs in between the Israel and Muslim community which affected the business of Kuwait Airlines because the government order the company management for not selling the ticket to the Israel citizen. Thus it diminishes the business growth as well as profit of this Kuwait Airways firm.
Transformational Plan: Implementation and Effects
The economy of Kuwait mainly based on the exports of minerals and pearls and thus the total GDP rate of the industrial sector was 74.8%, and mining industry contributes 57.4% GDP in 2015 (Chang et al., 2015). The GDP of the country has increased by 1.8% per year until 2015, and the rate increases mainly due to the government income and export business (Laeequddin, and Abdul Waheed, 2016). Thus it will also help Kuwait Airlines to grow their sales rate from both the native and global country. In other words, the government supported the firm to increase their infrastructure investments so that they make an excellent revenue source for their business.
Kuwait is considered to be a hub of expatriates that has only one natural resource that plays an important role in growing their GDP rate. Kuwait can attract a large number of labors from other countries, but the major social issue faced by the people is that they do not get the illegal work permit and it causes the huge problem for the citizen to maintain their living style (Moutinho, and Phillips, 2018). Hence Kuwait Airways also, kept a high revenue so that they can easily support their employees with all sorts of help. Therefore, it can be said that Kuwait Airways makes new strategies to increase their business growth so that they can help their workers efficiently to maintain the social structure.
The technology of Kuwait is still improving, and for developing this, the Central Bank of Kuwait provide sufficient fund to the various industries in this country. In other words, the National Investment Authority help the oil mining and exploration projects to improve their technology so that they can offer high prices to their products (Schmidt et al., 2015). Kuwait Airways are supported by both Central Bank of Kuwait and National investment authority which help the firm to improve their technology so that they can easily offer more comforts to their consumers.
Kuwait is famous for oil exploration as well as drilling procedure, and this has affected the environment through both air and water pollution respectively. In other words, the presence of oil wells causes an average of 3-5 million barrels burnt per day, and this gives rise to nuclear or acid rain which also effects the environment too (Kim, 2016). Thus getting the huge impact from air pollution, Kuwait Airways sometimes faces problem while landing the plane. The situation sometimes causes great hazard such as delay of flight timings, cancelling of flights and all these causes negative effect on their business growth.
Competitive Positioning: Differentiation Strategy
The legal factor of Kuwait is quite good as the people do not have to pay taxes on wages and salary respectively (Min, and Joo, 2016). Whereas, other laws are strictly followed by all the citizens as well as the company holders too. Due to the law system, Kuwait is considered one of the secure and safe places in the world. In other words, the crime rate of this country is low due to this strict legal system (Alamdari, and Fagan, 2017). Hence, this strict legal system has also followed by the Kuwait Airways and the law help the firm to get every support from the Kuwait government easily.
Porter analysis is a tool created by Michael Porter to analyze the company’s attractiveness as well as profitability in concerning the five competitive forces (Castiglioni et al., 2018). The Porter’s analysis helps a firm to determine its strengths and weakness respectively. Porter analysis help a firm to identify its structure in concerning the corporate strategy, and thereby it explains the different levels of profitability. To determine the intensity of profitability level and competition, Porter identified five forces and these forces help the firm to determine its attractiveness in the market. The five forces are competition in the industry, powers of suppliers, the power of buyers, a threat of entry and the threat of substitute products (Hannigan et al., 2015).
The new entrants always possess threat from the existing firm that presents in another country. Kuwait Airways, in that case, possess a moderate level of threats from the existing firm that has the large cost advantage (Moir, and Lohmann, 2018). To maintain the competition, Kuwait Airways requires a large amount of capital, and it can only occur with a strong consumer base which can help them to maintain their business. It is noted that Kuwait Airways have built a high position in the market which enables them to compete against the threat of new entrants.
Suppliers mainly affect Kuwait Airways by their ability to enhance the price and reduce the quality of goods as well as services. In the whole world, only two airline industry supplies the airline products, and this is Airbus and Boeing, and this is the reason for which the bargaining powers of the suppliers is high (Moon et al., 2015). Thus the bargaining powers of suppliers of Kuwait Airways is also high because of these limited suppliers who can easily control the market by their airline manufacture products.
PESTEL Analysis: Political and Social Issues, Economic Aspects, and Technological Advances
Buyers are the one that affects the airline’s industry through their ability to reduce prices and bargain for higher services as well as quality. Kuwait Airways has also affected by this bargaining powers of the buyers, and it became a higher approach as the switching costs are low in comparison to their passenger’s numbers (Yan et al., 2016). In other words, passengers of Kuwait Airways have different choices regarding seat selection, services offerings and so on. Hence keeping this on mind the Kuwait Airways offer cheaper costs and better services to their customers so they can easily grab a higher competition in comparison to the other airline firms in Kuwait.
The threats of substitutes product in case of Kuwait Airways is comparatively low because they offer international flights with the highly comfortable offer according to the passenger choice. In other words, in the case of international flight, it became easier for the passenger to travel through airways rather than through trains (Spil et al., 2016). Kuwait Airways provides all types of international flight that will help the passengers to travel from one country to another without wasting time by traveling through a train and hence it is clear that the threats of substitute products of this airlines company are low in comparison to the other transport system of the country.
The rivalry among the existing industry present in the market is very intense as well as high due to various reasons. In Kuwait Airways, the rivalry amongst the existing industry is very high because several airlines industries are also present in Kuwait that provides the best aircraft as well as services to their consumers (Aldaihani, and Ali, 2018). Therefore other airline industry in Kuwait also attracts the huge number of passengers towards their company to gain a high competitive advantage in the market. It is also seen that many airline companies of Kuwait expand their market share by offering best customer services, prices and also provide creative advertising campaigns that can easily grab attention of the consumer’s towards their airline’s services.
The vision statement of Kuwait Airways is as follows:
“Kuwait Airways aimed at setting the standard for customer orientation and became an admired airline to fly, to invest in and to work for” (Cho et al., 2017).
The main objectives of this Kuwait Airways are as follows:
- To provide consumer-oriented services that easily meets the passenger’s preferences and needs respectively
- To serve the best-in-class services than any other airlines in Kuwait
- To provide reliable economy services to every passenger
- To serve the whole community of the country
- To become one of a link for business as well as Leisure travel in between Western and Eastern regions
- To grow as per the market demand and capture whole airlines market in the Middle East
- To use innovative technology that improves their safety, product reliability and on-time performance
- To be one of the viable investment opportunity for the private sector
The market of Kuwait comprises variety of elements and for this Kuwait Airways has divided their consumer’s segments by class of seating such as first class, business class, and economy class. Hence the target customers segments of this Kuwait Airways are as follows:
- Business travelers who usually form a large proportion of Kuwait Airways consumer base as these people often like reliability, schedules, and speed to reach their destination (Camilleri, 2018). Also, business travelers always travel in the group, so it also helps this airline to gain huge profit from it
- Government and international organization travelers are also called non-business customers that frequently go through this Kuwait Airways (So et al., 2017). Most of the government officers in Kuwait have their jet, and they travel with them, and in some situations, they travel through this airline company.
- Another target consumer is the regular airline travelers, and this customer often travels through Kuwait Airways particularly for business or for travel or also for personal reasons. Kuwait Airways consider this customers segment as a genuine customer group, and they offer many services or benefits to this group of people (Kim et al., 2016)
- The last target market of Kuwait Airways is the urgent customers, and this group of people represents a small market segment for this firm. This group of people always travel through airways due to some urgency and hence for this consumer group they sell the ticket as higher price so that it will increase their business profit (Ganiyu, 2017)
Legal Framework and Safety Laws
Value chain analysis of Kuwait Airways mainly describes the process by which various activities of the business such as primary and supporting activates can be analyzed (Ali et al., 2015). In other words, the activities add more value to their final products and services and by analyzing all these activities help the firm to increase their differentiation approach or to reduce their costs respectively.
The process involved in providing more added value to the consumers are as follows:
Always consider the perspective of consumers- Perspective of every consumer different, so it is essential for the firm to provide common benefits that can easily grab customer’s attractions towards the products or services (Daft, and Albers, 2015).
Work consistently to improve the consumer’s satisfaction- For attracting a high number of the customer, it is necessary for the firm to continuously improve its technology as well as services so that it easily grab consumers satisfaction.
Provide high service levels- To differentiate their services from other companies it is essential for the firm to offer a high service level at a low cost for their customer (Garg, 2016). This strategy will help the firm to increase their customer base in the market.
The digital new method that developed by Kuwait Airways that improve both the passenger experience and change cycle is as follows:
- Improving consumers’ conversations approach by introducing social media, quick help, and chatbots, this method of conversation procedure will thus help the customers to communicate easily with their friends, relatives and also with the business partners (Xiang et al., 2015)
- The journey must be genuine that provide truly personalization experience for the passengers traveling in Kuwait Airways. Kuwait Airways wanted to build truly personal connections by help the passengers from all sort of difficulties while traveling so that every passenger will experience their best flight journey
- Kuwait Airways always takes feedback from every passenger after the finishing of the journey so that the feedback will help them to improve their services in the coming days (Tubigi, and Alshawi, 2015)
Conclusion
The paper concluded that Kuwait Airways follows the Bowman’s Clock Strategy to increase their competitiveness strategy which thereby helps them to enhance their competitive advantage as well as profitability in their business. The PESTEL analysis of this Kuwait Airways shows that political and social factors cause some negative effect on their business growth whereas it does not affect it the economic and technological improvement. Also, Porter’s analysis along with its five forces determine the airways corporate strategy and even the level of profitability in their business. Furthermore, vision statement, objectives, target customers and the value chain analysis of Kuwait Airways provides a framework for this firm.
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