Business background
Air New Zealand Limited is a flag carrier service situated in New Zealand. This organization is associated with the scheduling of passenger flights amongst which 20 of them are domestic and 31 of them are international. The organization provides its services in almost 19 different countries all around the Pacific Rim and the United Kingdom. Since the year of 1999 the organization Air New Zealand has been a part of the Star Alliance (airnewzealand.co.nz, 2018). This is a business which belongs to the aviation industry and was originated in the year of 1940 and was named as the TEAL or the Tasman Empire Airways Limited which mainly operated the trans-Tasman flights between the country of New Zealand and Australia. Government of New Zealand took over TEAL in the year of 1965 after which the name was changes to Air New Zealand Limited. International route were served until the year of 1978 but followed by this year the Government merged the system with the domestic New Zealand National Airways Corporation or the NAC so as to form a single airline company with the name Air New Zealand.
- Political Factors: Political factors are associated with playing a vital role for any kind of organization so as to succeed. Same thing has happed for the organization, Air New Zealand as well. A significant roe is played by the government New Zealand as they are associated with providing assistance to the airlines to grow and succeed in achieving all their goals. Understanding this importance of political feature can be done by looking into the fact that the government of this New Zealand holds the largest amount of shares in the airline industry which is around 82% (airnewzealand.co.nz, 2018). In addition to this the government is also associated with supporting the airlines whenever there is a financial crisis like that of 2001 and this is mainly done by providng the company with financial help. The government of New Zealand has been associated with providing a full time support to the organization so as to grow along with develop the tourism sector. The Organization is associated with sharing an active partnership with the tourism sector so as to promote and attract more tourists towards the country.
- Economic Factors: Economic conditions of a country plays a vital role in the different kind of businesses conducted by an organization. The economic conditions of the country New Zealand along with the other countries which includes Australia and some other gulf countries from where the operations of the organization is being conducted is very good which acts as an favourable factor responsible for the growth of the company in near future (airnewzealand.co.nz, 2018). The demand of the airline services has increased at a considerable rate in New Zealand as well as other countries in which the organization operates which has initially led to an enhanced rate of profits for the organization.
- Social Factors: This type of factors generally includes the affects that the trends in lifestyle, culture of the countries, the incomes made, taste of the people and lastly the preferences of people, have upon the organizations growth and development process. The organization has an aim of serving the peoples with a service in accordance to their preferences by considering the different kind of values as well as the cultural opinions that the population of different countries are having (airnewzealand.co.nz, 2018). In addition to this the staffs that the airline is having is provided with proper trainings so as to make them efficient in providing assistance to their customers who belong to various cultures in a proper way. Besides this the organization is also associated with incorporation of the various kind of social factors for its marketing strategy in order to make themselves appealing to the other people.
- Technological Factors: The organizations which are associated conducting business have to adapt and implement the different innovative technologies so as to gain competitive advantage in the market in which they operate. This can be demonstrated in a better way by understanding that the organization is associated with providing the seating and booking facilities which are the best in order to stay ahead and to provide the best customer satisfaction.
- Legal Factors: Not only the air New Zealand but all airlines operating in the country of New Zealand have to follow the ‘New Zealand Civil Aviation Act 1990’. All the rules and regulations mentioned in this act are followed by the organization Air New Zealand Limited (airnewzealand.co.nz, 2018).
- Environmental Factors: Airline companies like the Air New Zealand have to place an special emphasis upon the ways of providing protection to the environment from the various kind of adverse effects from any kind of operations conducted by the organizations. One such example includes the introduction of the carbon offset program by Air New Zealand so as to minimize the air pollution. In addition to this the airline is also associated with making huge contributions for the Air New Zealand Environment Trust.
- Bargaining Power of Suppliers: This generally includes the powers that the suppliers which are associated with proving the needed input resources for the organization. Air New Zealand has been associated with providing a special emphases upon the various facts which includes the development of good relationship with the suppliers. This is initially responsible for providing them with an opportunity to achieve the commitment on a long term basis. This commitments are very essential so as to grow and develop in a sustainable way. Air New Zealand is having different suppliers and from this suppliers the airline is associated with purchasing the operational fleets that they require. The organization receive its supplies from two major sources which includes the Boeing and Airbus. Along with this the skilled labour are also having the capability of exerting a power in the airline industry (Hill, Jones and Schilling 2014). Besides this the competitive force of suppliers are also taken into account.
- Bargaining Power of Buyers: This is generally considered to be the pressure that is exerted by the consumers so as to get high quality services at a cost which is minimum in amount. Air New Zealand is associated with providing its services to various sections of the world and for this reason it can be considered that they are having a very strong customer base. Beside this the customers are also having the capability to switch their choice from one airline to another because of the presence of numerous airline services. So the bargaining power of buyers is also considered to be an important factor for the success of the organization.
- Threat of New Entrants: This type of threat is relatively low for the organizations operating in the aviation industry because of the requirement of huge investment so as to function in the airline industry and another major reason for low rate of this kind of threat is that the risk associated with this industry is also high (Shaw 2016).
- Threat of Substitutes: Airway is generally kept in the category of fastest mode of transport which is associated with creating a fast communication between the various businesses that operates in the international market and for this fast rate of transportation speed the threat due to substitutes is also considered to be very low for the airline.
- Rivalry between existing competitors: Air New Zealand is associated with facing an intense rate of competition from the domestic airlines along with facing competition from the international airlines as well. For this reason it can be considered that the rivalry is relatively high. The major airline companies which acts as the competitors of Air New Zealand includes the Emirates Airlines, Virgin Australian Airlines, Qantas Airways and many others.
- Inbound Logistics: The major competitive advantage of Air New Zealand is achieved by the various inbound operations which is generally maintained by keeping a good relationship with suppliers which helps them in getting access to the aircrafts equipped with latest technology.
- Operations: Competitive advantage is also obtained in the various operational activities by providing services like the online booking system, check-in and security services of high quality to the customers. The organization has also been associated with the implementation of high digital technologies for its different business processes which is responsible for the enhancement of the various operational efficiency (Rothaermel, 2015).
- Outbound Logistics: The activities related to the outbound logistics of the airline companies mainly includes the providing of rental car, good connecting flights, presence of effective baggage system and systems for reserving the hotels for customers. Air New Zealand is consisting of a very good baggage system and along with this they have also introduced a biometric technology so as to provide self-service bad dropping facilities at Auckland Airport.
- Marketing and sales: Appealing nature of the marketing and sales strategy of the Air New Zealand has attracted a large customer base. They have also been engaged in various activities like the sales promotions, online advertising, public relations and direct marketing helps a lot in providing competitive advantage.
The opportunities and the threats faced by the organization Air New Zealand has been listed below:
Opportunities:
The major opportunity is the Extensive rate of support which is received from the government of New Zealand. This can further be associated with the fostering of the new growth pan of the airline (Mallikarjun 2015). This would initially be responsible for the expansion of the various operations of the airlines toe new international destinations in the future by having support of the government (Albers et al. 2017).
Threats:
- One of the major threat which is faced by the organization is the increased prices of the fuel.
- Increased rate of competition from the international market which mainly incudes the other major firms like the Qantas and Cathay Pacific.
- Service: Various kind of complaints and queries from the customers are handled in an appropriate way by the airline which helps a lot in attaining competitive advantage.
- Firm Infrastructure: The seating facilities of the Air New Zealand is one of the best and along with this the aircrafts of this organization are having a pleasing infrastructure which helps a lot in attracting more customers (Frynas and Mellahi 2015).
- Human Resources: The presence of the competent staff and managers in Air New Zealand has helped in providing proper services to the customers.
- Technology Development: The airline has been associated with continuous implementation of the various innovative technologies in the different operational activities which helps in enhancing the satisfaction of the customers (Merkert and Webber 2018).
- Procurement: Procurement of the input resources from the best suppliers helps the airline in providing in-house services which are of high quality.
Strengths:
- Air New Zealand is considered to be one of the best airline and for this reason this airline is having a very good brand image
- Air New Zealand has also been associated with the incorporation of the usage of various environment friendly fuels for the purpose of minimizing the rate of air pollution
- The aircrafts of the organizations are equipped with High technological equipment’s along with which the seating facilities provided by them are also comfortable. This has initially been helping in the process of attaining the best amount of customer satisfaction (Bailey et al. 2018).
Weaknesses:
- The major weakness of the Air New Zealand is that they are not associated with providing services to many destinations as compared to that of the other international airlines.
It is being suggested to the airline to adopt and apply the idea of strategic alliance. This will enhance the profit margin and will gain advantage for future. The aim of the strategic alliance is to offer the airline with maximum opportunity of enlargement in an sustainable way and expansion by developing the customer base. Strategic alliance offers opportunity for increasing its Pacific Rim operations, in such a way that it can increase the sales in Europe, Southern Africa and Asia. With efficient and well trained stuffs of Singapore airlines or Qantas airlines, strategic alliance can manage their outbound and inbound operations effectively (Flouris and Oswald 2016). The major benefit of strategic alliance is, it offers better and improved services towards their customer and also ease the airlines for retaining their competence. The disadvantage that are supposed to be faced by adopting the strategic plan of combined course will affect the airline and will lead to losing the identity of individuals and the capabilities of the airlines.
General environment analysis
- Strategic Alliance: Strategic alliance is basically an agreement signed within two or more organization that are independent and aims for working in collaboration for attaining strategic objectives which are similar in nature. The organizations in strategic alliance holds their own identify and are different from joint ventures. An alliance would be formed by Air New Zealand with Singapore Airlines for a time of four years (Chen, Delmas and Lieberman 2015). Qantas aims at becoming one of the stakeholders of Air New Zealand and has proposed alliance with them in order to achieve this. For both the companies Air New Zealand and Qantas, the collaboration has proved to be beneficial. The international market of Air New Zealand can be expanded by applying strategic alliance. Among the major international airlines, Qantas is accepted to be one and this would be acting as a benefit for the Air New Zealand so as to create their brand in the market. This will efficiently improve the customer service and customer base will increase. This will bring profit and the market value will increase.
- Joint Venture: Strategic joint venture can be explained as one of the agreement that is done within two firms that are likely to collaborate with each other for completing their goal. The collaboration formed is permanent. For example, a joint venture has been proposed by Singapore Airline with Air New Zealand, for this they enhanced the stake of the company from 25% to 50%. This will help the organization in achieving extensive asset from Singapore airline for providing support for its global growth plan (Lawton 2017).
This will lead to gaining more customers in the market and will be recognized over the world. Strategic alliance will provide facility for the airlines that includes increasing the awareness of brand among the people and the market , and this will add up to increase the profit rate and will be efficient. From this, it can be stated that strategic alliance will help Air New Zealand to achieve broad audiences without making any asset. The money and time can be saved by using strategic alliance for the airline and in addition to this, it will improve the awareness for the brand. Strategic alliance offers several chances to get access to the new resources without making any investment. Air New Zealand has developed many strategies, so that they can form alliance Qantas, so that they can grow as a brand in the international market (Tham and Evers-Swindell 2018). The Singapore airline alliance has helped in gaining market value and also got access to many resources. The airline can is capable of creating new alliances with other airlines so that it can retain the competencies and can aim specifically at the services.
Apart from all this the main challenge is that to choose a right strategic partner, so that it will benefit Air New Zealand. The alliance airline should be beneficial for them and should help them in gaining good brand name in the market, so that in future it can expand and can earn huge brand name. Before creating alliance the airline needs to do proper research on the airline they want to create alliance with. They should be clear about their objectives and goals. As above stated , it can be said that the proposed strategic plan would be associated with providing advantage to the airlines Qantas and Air New Zealand ,as both are the members of star alliance. They have common strategic plan and goal, this will help them to gain success in the market and the profit rate will also increase as this will also increase growth in the market.
References
airnewzealand.co.nz (2018). About Air New Zealand | Air New Zealand. [online] Airnewzealand.co.nz. Available at: https://www.airnewzealand.co.nz/about-air-new-zealand [Accessed 26 Aug. 2018].
Albers, S., Baum, H., Auerbach, S. and Delfmann, W., 2017. Strategic management in the aviation industry. Routledge.
Bailey, C., Mankin, D., Kelliher, C. and Garavan, T., 2018. Strategic human resource management. Oxford University Press.
Chen, C.M., Delmas, M.A. and Lieberman, M.B., 2015. Production frontier methodologies and efficiency as a performance measure in strategic management research. Strategic Management Journal, 36(1), pp.19-36.
Dyer, J.H., Godfrey, P., Jensen, R. and Bryce, D., 2015. Strategic management: Concepts and cases. Wiley Textbooks.
Flouris, T.G. and Oswald, S.L., 2016. Designing and executing strategy in aviation management. Routledge.
Frynas, J.G. and Mellahi, K., 2015. Global strategic management. Oxford University Press, USA.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.
Lawton, T.C., 2017. Strategic management in aviation: critical essays. Routledge.
Mallikarjun, S., 2015. Efficiency of US airlines: a strategic operating model. Journal of Air Transport Management, 43, pp.46-56.
Merkert, R. and Webber, T., 2018. How to manage seasonality in service industries–The case of price and seat factor management in airlines. Journal of Air Transport Management, 72, pp.39-46.
Nhuta, S., 2012. An analysis of the forces that determine the competitive intensity in the airline industry and the implications for strategy. International Journal of Physical and Social Sciences 2(9), 433-469.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Shaw, S., 2016. Airline marketing and management. Routledge.
Tham, A. and Evers-Swindell, B., 2018. Stand Up and be Counted—A Diverse Economy Perspective of Air New Zealand. Tourism Planning & Development, pp.1-17.
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