Introduction
Over the last decade, research in strategic leadership has grown tremendously with researchers aiming to establish the relationship between strategic leaders and sustainability. The capability theory supports that the attainment of competitive advantage in any organization is promoted when leaders embrace certain strategies in their performance. Today, there is a frequent occurrence of global crises which demand organizations to remain strategic in their leadership to remain relevant and operational. Organizations establish strategies to provide the direction required in the business environment. In the past, organizations with strategic leadership successfully faced disturbances and maintained business sustainability. Cathay Pacific’s resilience and sustainability are attributable to its robust strategic leadership.
A Critical Analysis of Leadership and Strategy at Cathay Pacific
Cathay Pacific’s Background Information
The organization was established at the end of WWII by an American known as Roy Farrell together with an Australian called Sydney de Kantzow (Cathay Pacific). The company was later registered under the name Cathay Pacific Airways in October 1948 (Cathy Pacific). The organization came into being after the founders’ drive to promote connectively around the world and their passion for flying In 1957, Cathy Pacific acquired the rival Hong Kong Airways leading to the company’s growth spurt (Cathy pacific). Cathy Pacific continued to experience tremendous growth becoming the most prosperous region’s carrier by 1960s. In the late 1980s, the company featured in the Air Transport World Magazines’ Airline for being one of the world’s premier carriers (Wong 2021). However, later the company started experiencing several challenges following various crises.
Cathay Pacific’s expansion in the 1980s extended into 1990 and 2000. For instance, between 1991 and 1997, Cathy Pacific’s passenger service revenues grew by 33% after recording a 36%increase in passenger capacity (Interim Report 2016). However, Cathay’s earnings were adversely affected by the Asian Economic Crisis in 1997 (Zippia). Consequently, the passengers demanding air travel from the Asia Pacific declined, leading to a 5.5% decline in passenger load and a 55.5% drop in profits (Christensen 2017). The crisis led the company into financial turmoil and it was forced to join an international alliance known as Oneworld to extend its global networks (Zippia). The alliance opportunity contributed immensely to Cathay’s success in the global economy.
Despite the great hopes Cathay had attained by joining the global alliance, there were several turbulences that the company continued to face affecting its financial position and sustainability. For instance, the attack on the World Trade Centre in New York in September 2001 and the Bali terrorist bombings in October 2002 led to a significant drop in the airline business (Interim Report 2016). Despite significant external environmental turbulences experienced by the company over the years, it is the largest airline in Hong Kong and one of the largest carriers in the world.
Leadership and Strategy
Leaders and the strategies they adopt determine their organization’s resilience during turmoil and longevity. Cathay’s leadership led by the current CEO Rupert Hogg is a key factor in the company’s success and sustainability (Cathay Pacific). According to Lee (2020), the company’s top leadership has adequate experience to lead an international brand like Cathay Airways. The leadership believes in diversity and collaboration through which they have created structures and frameworks that have made the brand succeed (Centre for Aviation. 2018). The company is one of Hong Kong’s organizations with an inclusive leadership team. One of the company’s famous decisions concerning leadership was the appointment of two women to the top management (Lee 2020). The leadership focuses on their responsibility to serve customers and future generations.
Leaders at Cathay Company have a priority for corporate responsibility and sustainable development. The brand’s governance is committed to conducting its affairs with high ethical standards to achieve long-term objectives. The leadership at the company is guided by three values probity, accountability, and transparency. Cathay’s leadership team has been critical of change management a fundamental component for any business to address its transformation.
Cathay has a four-pillar strategy that acts as the company’s backbone and accelerator toward its growth and sustainability. According to the Centre for Aviation (2018), the strategy involves using the available data to make informed future business decisions focused on enhancing customer-centricity and promoting operational excellence and productivity. The strategy is also committed to attaining value management and high-performance teams. The company’s strategy aims to transform the business to meet the growing market demand and sustain its competitiveness. Cathay Pacific spends a significant amount of resources to understand its customers and have a good insight into the customer segment. The second pillar of operational excellence helps Cathay to develop a culture of great utilization of its assets for the organization’s future success. Value management and all-around productivity are what drive the Airways. The company has a high-performing team that is committed to meeting the customer demands and securing Cathay’s future.
The Influence of Cathay Pacific’s Leadership on Decision Making during Turbulent External Environmental Challenges
Probity
Probity is one of the fundamental qualities for effective leadership in any organization to succeed. As Mbithi and Susan (2019) state, building trust within the leadership of an organization through communication enhances the creation of inclusive and consistent policies. Cathay’s leadership has a strong culture of leadership based on honesty and trust. The leaders during turbulence will collaborate and create a safe space to engage in trusting conversations that will provide the company with the best decisions to address the challenges. The leadership at Cathay will offer adequate oversight to make noble decisions that concern dealing with financial pressures that disrupt operations during turbulence. Cathay’s probity within the leadership team specifically with the top management explains the company’s longevity and success. The company’s top management has a long-term vision to guide its decisions during a crisis. The outstanding leadership at Cathay played a major role in helping the company overcome the COVID-19 pandemic.
Accountability and Transparency
Many organizations today have experienced the effect of bad governance which has led to collapsing of the business resulting in significant losses. Mbithi and Susan (2019) believe that a lack of accountability in the leadership of an organization falls short of financial stability and sustainable growth. Cathay’s leadership is built on accountability and transparency in all its operations. These two values have helped the organization in realizing its goals and maximization of objectives. During past crises, Cathay’s leadership demonstrated its powerful resilience and sustainability given the strong leadership team in the company (Wong 2021). Cathay’s transparency and accountability relate to the stewardship theory which enables leaders to make decisions in the best interest of the organization. Cathay puts collectivist options above individualism and this aspect will facilitate effective decision-making during unprecedented environmental turbulence.
The Influence of Cathay Pacific’s Strategy on Decision Making during Turbulent External Environmental Challenges
Customer Centricity
A company’s ability to adapt to environmental turbulence through the alignment of its strategy determines its success. Integrating customer centricity within the company’s strategy is critical to its longevity and future performance. With customer-centricity in mind, firms produce and sell products that care about the environment and society. Literature shows that organizations that prioritize customer-centricity in their operations engage in decisions whose main criterion is sustainability (Sergio, Andres, Ignacio, and Rolando 2020). Cathay’s customer-centricity strategy pillar will influence its future business decisions and help the company cope with unprecedented environmental threats.
Cathay has faced several instabilities which have had a major impact on the company’s financial status. However, Cathay’s prioritized strategies have been critical in helping the company deal with these challenges. The company’s major priority is the safety of its customers over the revenues and profits (Cathay Pacific Airways limited). One of the major crises in the company’s history was the Asian Economic Crisis which led to a significant decline in the customer load. The company had to come up with measures that would safeguard the welfare of the customers. Among these measures was cutting back on planned passenger capacity to provide the best services to customers.
During the global financial crisis of 2008, the company also adopted several measures to promote customer-centricity. Cathay offered its crew members a voluntary unpaid leave scheme to ease the company’s financial burden. The organization also postponed its new cargo terminal construction in Hong Kong to align the capacity expansion with the market growth (Cathay Pacific Airways Limited). These measures played a major role to help the business continue operating while offering quality services to customers amid the turbulence.
During the COVID-19 pandemic, Cathay was still at the forefront of safeguarding its customers. The company’s commitment to safe travel resulted in the launching of a new protocol called Cathay Care (Cathay Pacific Airways Limited). The protocol involved disinfection practices and promotion of hygiene practices at the airport. During COVID-19, Cathay developed a series of risk mitigation processes to ensure that everyone in the company was safe. There was an adequate supply of personal protective equipment among the crew and other staff. To promote better customer service from employees, the company introduced a flexible remote work policy which helped cope with anxiety and stress.
Operational Excellence
The strategy of operational excellence focuses on business processes’ effectiveness and efficiency increase. Cathay’s business processes and sustainable development which results from the organization’s operational excellence are instrumental in any decision making during crises. According to Wojtkowiak and Cyplik (2020) during turbulent challenges, operational excellence will influence the creation and development of coping mechanisms and influence the innovations and solutions meant to deal with the challenges. Operational excellence will influence Cathay’s utilization of resources during the turbulences leading to efficiency in the execution of the strategic plan.
Cathay’s goal toward carbon neutrality is based on its commitment to the future productivity and existence of the brand. Climate change is among the disruptive crises that any company based on strategic leadership should never ignore. Cathay’s goal toward net-zero carbon emissions by 2020 is aligned with its operational excellence strategy (Baxter 2021). The long-term goal which was set in 2020 when the company was experiencing COVID-19 effects shows its commitment to future sustainability and all-around productivity.
Serving the community and participating in corporate social responsibility are the leading sustainable strategies by organizations in the 21st century. Cathay’s high-performing teams have a great concern for the community. For instance, during the COVID-19 pandemic, the company was actively involved in serving the communities. Cathay pacific collaborated with the Charity Food Angels, a charity organization in Hong Kong to feed vulnerable people in the region through donations of pre-prepared meals (Cathay Pacific Airways Limited). Cathay’s employees joined Feeding Hong Kong, a charity partner in the country to distribute food to the less fortunate families. Through the Cathay-donated iPads, the company made a huge contribution to Hong Kong’s school-going children. Cathay’s participation in the health of the community was felt through providing transport services for medical equipment needed to attend to the patients in different healthcare centers. The company endeavors to enhance sustainability in all its business practices.
Productivity
A key strategy concerning business growth and sustainability is productivity. An effective productivity strategy promotes performance in an organization, enhances competitiveness, and promotes survival (Alatailat, Hamzah, and Okechukwu 2019). Cathay operates in a turbulent business environment and requires reliable navigational frameworks to achieve competitiveness. The company’s strategic management decisions are influenced by productivity strategy. The effects of this strategy will have a long-term impact on the organization’s performance. Cathay’s productivity is concerned with how the company achieves a competitive advantage position amid turbulent external challenges. The company will use this strategy to make decisions involving the expansion of its current market share to compete against its rivals. Productivity at Cathay will encourage the company the engage in profitable business operations by exploiting its strategic advantages.
Strategic productivity has and will continue to influence Cathay’s decision-making processes in dealing with crises. The strategy helped the company survive many crises in the past including the Asian crisis. After the crisis, the company’s profits returned and it started gaining rapid expansion. It was through the productivity strategy that Cathay decided to adopt a 3.6% reduction in capacity and the Asian export boom (Aviation Strategy). These two decisions played a fundamental role in the company’s recovery from Asian turbulence. The productivity strategy will the company adapt to potential changes caused by future turbulence and maintain long-term sustainability.
Value Management and High-Performance Teams
Today, organizations are operating in an increasingly dynamic and complex environment. For organizations to remain relevant and attain a competitive advantage they prioritize the development of organic structures which enhance change management. Companies are adopting value management strategies to develop competence-based authority and form organized teams that deliver results. The value management strategy at Cathay will enable the company to come up with a high-performing team with specific complementary competencies. The company will employ the strategy to make decisions concerning the most appropriate factors to consider when faced with turbulences. According to Cizmaș, Emőke-Szidónia, Mădălina-Dumitrița, and Silvia (2020), value management takes into consideration factors such as resource availability, members’ diversity, operational processes, and organizational context when faced with a crisis. Cathay will employ the same strategy to select what factors would be more robust than others for the company’s stability and long-term existence.
Value management strategy looks into factors that have a significant influence on the performance of teams. Organizations utilize team structures to increase their competitiveness and adapt to any changes caused by turbulences (Black, Kihwan, Shanggeun, Kai, and Sut 2018). Cathay Pacific is a team-based organization that invests its resources in enhancing team performance. The company implements team works for decision making. A comparative study on the differences in the organization’s results between employees who utilized team structures and those who did not show significant disparity (El-Bassiouny and Noha 2018). The former group of employees recorded a significant increase in productivity and profitability.
Value management at Cathay will facilitate real-time problem solving through the company’s team’s work. The strategy will guide the company in coming up with more flexible and responsive strategies to meet the changing demands. Cathay’s value management strategy will enable the company’s performing teams to focus on priorities during a crisis and support the company’s vision. The strategy will enhance decisions that will lead to an alignment of the organization’s shared vision to the available resources (Cizmaș et al., 2020). It is a value management strategy that will inform Cathay about its priorities and the projects with the highest impact. High-performance teams at Cathay consist of employees who have a shared sense of purpose.
Conclusion
Despite facing enormous external environmental turbulence since its establishment, the integration of Cathay’s leadership and strategy has provided the company with a framework for enhanced sustainability. Cathay Pacific Airways has a strong leadership whose values, probity, accountability, and leadership have propelled the organization’s success and influenced its decisions during crises. The company has a four-pillar strategy that is the backbone of its operations and effectiveness in service delivery. During crises, the company will adopt its customer centricity and operational excellence to decide on the most fundamental processes to engage in. Cathay’s decisions on the delivery of services during turbulent will consider the strategy of development, value management, and high-performance teams. The company’s leadership commitment and integrity and the strong strategic management explain Cathay’s milestones through the crisis and provide a successful path to unprecedented future opportunities.
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