Introduction
Jet airways is one of the major airlines based in Mumbai India. On the other hand the company prides itself as a market leader in the domestic sector. The company owned by billionaire Naresh Goyal operates 4000 flights in projected 67 destinations worldwide. In addition, the company is listed in the Bombay stock market. As of march 2007 the company had 10, 017 employees.
Initially the market was being controlled by India airlines but the industry was later on regulated to allow 8 other airlines to start operating in the market. It has its headquarters at S.M center in Andheri. In addition, its finance and marketing activities are coordinated from Mumbai. The company has a low cost brand called Jet Konnect and was launched in May 2009.
Jet airways serves 23 international and 44 domestic destinations. Most of the short haul routes are in India. On the other hand long haul routes are served across 4 continents and were launched in London in 2005. It seeks to become the first choice airline for all customers while setting standards that other companies can emulate.
The company seeks to achieve this by providing reliable high quality and efficient operations. The core objectives include attaining high profitability and long term returns for both the employees and investors. It has two strategic business units that it operates. That is cabin (domestic and international short haul) and cargo services.
Under the cabin services the company has different classes that can take care of the diverse market needs. These strategic business units can be said to be behind the company’s success and therefore the main sources of revenue. Finally, all work within this report is taken from the case study Jet Airways unless referenced otherwise
Financial analysis
The company’s financial performance has been increasing considerably over the recent years. Improvement in the global business and leisure travel has led to this increase. The company’s revenues rose by 24.5% to stand at US$650.9 Million. In addition, the company’s profit after tax also rose considerably in the first quarter of 2010 (US $ O.8 million) than the previous year where the company had made a loss of US $ -47.0 million.
Good financial prospects have been aided by a high achieved seat factor of 82.5 %, which is the main business unit of the company (cabin). On the hand the number of revenue passengers carried increased to 3.55 million (this was up by 37%). The domestic market has performed well as it has accounted for 44% of the total revenues that the company got.
It can be said that its international operations have also performed well as they brought in 56% of all the revenue that the company collected (US$ 364.6 million). In conclusion it can be said that the world airlines business is experiencing improved business and demand which will continue to help the company achieve high and continued profitability. The industry traffic grew by 23% in the first quarter of 2010 which indicates good prospects for both the international and domestic operations.
Marketing analysis
The company’s continued success has been contributed by a good marketing strategy. It has increased its market share from 6.6% in early 1990s to 42% in 2001. The company has enhanced its service delivery which has moved it close to the customers. For instance after discovering that the market is diverse, the company has different travel preferences like classes for both the domestic and international customers. This has enabled it to attract a wide base of customers.
To ensure that all the customers get utmost experience and luxury, the airline has ensured that there is in-flight entertainment to the customers. Through this the airline has been able to ensure that the customers feel more comfortable and in turn market the company more often.
Jet ways has special offers to customers like king power and concessional fares. These offers have moved them closer to customers and attracted their numbers. In addition, the company runs promotions every now and then to reward its customers. These promotions are run together with the company’s partners in business.
It can also be said that the company runs TV commercials to promote online booking which seems to be cheaper than the use of agents. In looking at the marketing analysis the company has done pretty well and that is why its profitability has increased after the global economic crisis that was characterized by low passenger traffic.
HRM analysis
It is managed by a board of directors that are led by the chairman Naresh Goyal who is also seems the largest shareholder (he has 80% holding in the company). In addition the directors are responsible for most strategic decisions that are made concerning the company.
In recent years, the directors have made strategic decisions like the Air Sahara buyout which ended up being the largest takeover in the history of aviation in India. On the other hand the company has a strong management team that ensures that there is proper execution of operations.
As it expands its business, the company has recruited correct and competent staff in different destinations to help in giving customers an ultimate experience. This explains why it has a 40% market share in the domestic market and a considerable share in international operations.
Human resource plays an important role in an organization and that is why the company has ensured that it does not contravene the best practices. This can be explained from the way it reinstated its employees in 2008 after it had sacked them. The action was reviewed after the management was advised to review the decision with the possible impact to the business.
Currently the company employs over 10, 017 employees to drive its business. With these good numbers of staff the company will be able to achieve its organizational and business goals that will improve business in a long way.
Operations analysis
Its operations have always been effective and that is why it recorded improved profitability in the first quarter of 2010. It has handled both domestic and international operations well.
The company operates in 66 destinations that connect places in the shortest time possible. By flying to may destinations it has enhanced its operations by offering customers a better choice in the skies. Although the company is headquartered in India, it has other operational offices in other countries that have enhanced its running and execution of duties.
It is not easy to succeed in business alone and that is why the company has partnered with other businesses to strengthen them (where they are weak). These partners have ensured that the business runs smoothly by participating in activities that could have been otherwise unachievable alone.
Just in case their customers have any queries there are many centers where they can inquire about anything and hence be helped. This has reduced overdependence on the main center at the headquarters to help resolve minor and major issues. In addition, its finance and marketing activities take place in Mumbai other than Andheri for independence. It has achieved operational efficiency through good operational strategies employed like the ones above.
This explains why a company should first of all understand good operational activities to avoid any other shortcomings. To conclude, the company has a good operational strategy that will ensure that it succeeds in its day to day running.
Strengths and weaknesses
The company has much strength that has enabled it to grow. It flies to many destinations, meaning that it has a wide access to the market that it can still capitalize on to capture. Because it flies many destinations, the company has the ability to introduce well tailored services that can satisfy different customers.
In addition, the company has a large fleet that can be tailor made to satisfy customers and enhance their loyalty. This fleet has enabled the company to win many awards for its exemplary services. Jet airlines has a strong management team that it can use to build its business and come up with good strategies for the future.
It also has a low-cost brand (Jet Konnect) that it can use to capture a given segment of the market for its own good. The company has a weakness in its ownership; the controlling stake by Goyal is too big and should be discouraged. Employees are supposed to be given an opportunity to own the company so that they can also be part of it.
The marketing and finance departments of a company are supposed to be together but this is not the case with Jet airways which has delinked these important departments from the main office. This is likely to reduce the pace of decision making which in some occasions can be risky.
Pestle analysis and conclusions
The pestle analysis has a bearing on the environment that the business operates in. This can be looked at from different angles; political, economic, technological and sociological. The economic environment has not been good at all (especially the global economic crunch). This is because it forced it to discontinue some of its flights and leased out is Boeing. The political environment has been favorable as the governments have facilitated it to enter into agreements with other airlines to provide its services.
Technologically the company has been forced to update its fleets to remain competitive as customers become more advanced. The average age of its fleet is 5.4% years and this explains why it has 34 orders pending for new ones. When it comes to social environment the company has been forced to partner with other airlines to remain competitive.
Jet airways plans to continue analyzing the environment so that it can determine how to realign its business strategies. This can be explained from the provisions that the company has for more partnerships and technological forwardness.
Porters’ 5 forces analysis
This is the analysis of all the forces that will determine the attractiveness and competitive intensity of the market. The company’s strategic business unit is the cabin business where it carries passengers to different destinations. There is ultimately a high threat of the entry of new competitors because the industry is becoming more profitable after slowing down during the global economic crunch.
The company will have to come up with new products that will ensure that the company withstands competition from other passenger carriers. Intensity of competitive rivalry is set to increase as customers are more knowledgeable and demanding and that is why the company has been improving its in-flight services. This rivalry will be mainly based on price, innovation and quality.
Because the cabin business is becoming more competitive there is a high threat from substitute services that can deny the business a significant share of the market if it does not continue being innovative. Customers have a high bargaining power because they are likely to put the company under pressure to always give what they want. Failure to do these may result in the loss of market share.
Because the company deals with suppliers like the Boeing manufactures they have to be more effective in delivering the orders as failure may mean that the company is not moving with others. These forces are important for the airline to succeed in coming up with good market strategies that will not drive it out of business. It will be important in coming up with the firms strategic position.
Critical success factors
The airline needs good activities that will guarantee it success in the market. The cabin business is more demanding because it deals with different customers from different backgrounds. First of all the company will need to be more innovative with their services as they have to reflect the wishes of the customers. The company should continue using technology in executing its operations like booking of tickets which should be done online. Success will also be guaranteed when the company embraces the best operational practices that will be cost effective as the airline industry picks up from the global economic crisis.
Opportunities and threats
The cabin passenger business is ever expanding in different markets and the company can use this opportunity to grow and expand to new markets. Because the company recorded an increase in the number of customers/passengers it can retain them by enhancing quality in the provision of services.
The only threat to the business is increased competition and more demanding customers. This means that the company will have to invest a lot to remain afloat or be outmaneuvered.
The strategic position
The airline industry is expanding and needs a more strategic approach. A strategic position will be found in the provision of quality services through innovation. If this lacks then the company will be locked out of competition due to increased intensity. To take care of the low end market the company has a low cost brand for the market. Another strategy that the company has adopted in reaching a wider market is to increase destinations. This will give it a wider reach. Because the cost of reaching all markets can be high the company will need to engage in more sound agreements.
KEY issues
As much as the company has recorded an increase in the number of customers it has to enhance on quality in the provision of services. It has the manpower and will to achieve this as it can be the main driver of business. Another issue that the company needs to look at is the destinations that it sets business in.
Some of them may look lucrative but end up being risky. In such cases the company will need to review and analyze the best destinations. It also needs to review its shareholding to avoid a controlling stake by one person to allow fresh investors in the company. This is not easy to achieve and will only depend on goodwill.
New future strategies
The company will need to strengthen its brand before increasing it to enhance loyalty among customers and passengers. It will also need to pioneer in-flight experimental and innovative experiences. Innovation is important for success and therefore the company must invest a lot in research and development to be unique. It can also develop cost advantages that will work in its favor. Because passenger traffic is considered a commodity the business is competitive and will need new strategies.
Winning strategy
The best winning strategy is for the company to strengthen its brand as it is more viable. This is because a strong brand delivers results that will shape the company from all angles.
Description of recommended strategy
Jet airways will need to enhance service differentiation from the very beginning. This will be achieved through excellent customer service and genuine quality. In the long run they will end up as the main drivers of a strong brand. The company will also need to remain true to its brand attributes through well tailored innovations. Innovation is important in brand success and the company will invest a lot in this to continue giving the brand a new face.
Key issues in implementing the strategy risk assessment and management
This strategy will not be achieved unless the passengers are meant to cooperate with the company as it builds the brand. It is also risky as it may backfire and end up being costly to the company. The company needs to carry out a proper risk analysis before implementing the strategy. Employees play an important role in enforcing the company’s strategy’s and will need to be well informed before the strategy is embarked on.
Reference List
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