Opportunities: are positive trends in external environment factors.
Threats: are negative trends in an external environment.
The last thing about an external analysis is that one environment can represent an opportunity to one organization and a threat to another in the same industry for their different abilities and resources.
2.3 Step 3: doing and internal analysis
An internal analysis offers significant information about a company’s capabilities and resources.
Resources: An organizations assists that are used to develop, manufacture, and deliver products or services to its customers.
Capabilities: An organizations skills and abilities in doing the work activities needed in its business.
Core competencies: the organization’s major value-creating skills and capabilities that determine its competitive weapons.
An organization’s competitive weapons can determine by both resources and core competencies. Managers should be able to identify an organizations strengths and weaknesses after doing and internal analyses.
Strengths: any activities the organization does well or any unique resources that it has.
Weaknesses: Activities the organization does not do well or resources it needs but does not posses
This step lets managers realize that no matter how large or successful an organization is they are forced by their capabilities and resources. One important part of internal analysis that’s often overlooked is organizational culture. It is important because different cultures have different effects on strategy. Most of the employees have a clear understanding of what the organization is about in a strong culture. This makes it easier for managers to express to new employees the organizations core competencies and strengths, but it may be more difficult to change organizational strategies. A strategically appropriate culture is one that supports the organization’s strategy. Another important but hard to analyze asset during an internal analysis is cooperate reputation.
SWOT analysis: is an analysis of the organizations strengths, weaknesses, opportunities, and threats.
SWOT analysis is a combination of external and internal analyses. After a completing the SWOT analysis the managers should be ready to plan appropriate strategies:
- Take advantage of an organization’s strengths and external opportunities.
- Protect the organization from external threats.
- Correct grave weaknesses.
2.4 Step 4: formulating strategies
There are three typed of strategies. Top level managers are responsible for corporate strategies; middle level managers for business (competitive) strategies: and lower level managers for functional strategies.
2.4.1 Corporate strategies:
An organizational strategy that determines what businesses a company is in, should be in, or wants to be in, and what it wants to do with these businesses.
It is based on the goals and missions of the organization and the roles that each part of the organization will play. There are three main types of corporate strategies: growth, stability, and renewal.
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Growth:
Growth Strategy: a corporate strategy that is used when an organization wants to grow and does so by expanding the number of products offered or markets served, either through its current businesses is through new businesses.
Organizations grow my using diversification, concentration, vertical integration, or horizontal integration.
Growth through concentration happens when an organization concentrates on its primary line of business and grows by increasing the number of products offered or markets served in this primary business (the company chooses to grow by increasing its own business operations).
An organization may also choose to grow by either backward vertical integration, forward vertical integration, or both. In backward vertical integration, the company tries to gain control of it inputs by becoming its own supplier. In forward vertical integration, the organization gains control of its outputs (products or services) by becoming it own distributor.
In horizontal integration a company grows by combining with other organizations in the same industry (its competitors), because combining with competitors decreases the amount of competition in an industry.
An organization can also grow through diversification either related or unrelated.
Related diversification: when a company grows by combining with firms in different, but related, industries.
Unrelated diversification: when a company grows by combining with firms in different and unrelated industries
- Stability:
Stability strategy: a corporate strategy characterized by an absence of significant change in what the organization is currently doing. The organization does not grow, but does not fall behind either.
Stability strategy is the most appropriate choice when an industry is in a period of rapid disorder with external forces, or if the industry is facing slow or no growth opportunities.
- Renewal:
Renewal strategy: corporate strategy designed to address organizational weaknesses that are leading to performance declines.
There are two main types of renewal strategies:
1. Retrenchment strategy: short run renewal strategy used when performance problems aren’t very serious. Retrenchment strategy helps stabilize operations, revitalize organizational resources and capabilities, and prepare to compete once again.
2. Turnaround strategy: a renewal strategy for situations in which the organization’s performance problems are more serious.
2.4.2 Business (or competitive) strategy:
Business (or competitive) strategy: an organizational strategy focuses on how the organization will compete in each of its businesses
Strategic business units (SBU): the single businesses of an organization in several different businesses that are independent and formulate their own strategies
- The role of competitive advantage:
Competitive advantage: is what sets and organization apart; its distinctive edge. That edge can come from doing something that other cannot do or doing it better than other, it can also come from organizational resources (the organization has something that is competitors lack).
- Quality as a competitive advantage:
Quality can be a way from an organization to create a sustainable competitive advantage. It focuses on customers and continues improvement (it can differentiate itself from competitors and attract loyal customers).
- Sustaining competitive advantage:
Every organization must be able to effectively take advantage of its resources and to develop the core competencies that can prove it with a competitive advantage and must be able to sustain it.
- Competitive strategies:
Helps managers create and sustain a competitive advantage that will give a company above average profitability, by doing an industry analysis. In any industry, five competitive forces dictate the rules of competition: 1. Treat of new entrance, 2. Treat of substitutes, 3. Bargaining powers of buyers, 4. Bargaining bower of suppliers, 5. Current rivalry.
Cost leadership strategy: a business or a competitive strategy in which the organization competes on the bases of having the lowest cost in its industry
Differentiation strategy: a business or a competitive strategy in which a company offers unique products that are widely valued by customers.
This strategy helps set firms apart from its competitors and be significant enough to justify price premium that exceeds the cost of differentiating.
Focus strategy: A business or a competitive strategy in which a company pursues a cost of differentiation advantage in a narrow industry segment. In to the words mangers select a market segment and try to take advantage of it rather than serve the broad market.
Stuck in the middle: a situation where an organization hasn’t been able to develop either a low cost or a differentiation competitive advantage.
Rule of three: Explain how, in many industries, three major players emerge to dominate the market.
2.4.3 Functional Strategy:
Functional strategy: the strategies used by an organization’s various functional departments to support the business or competitive strategy.
2.5 Step 5: implementing strategies
A strategy is only as good as its implementation. Because more organizations are using teams, the ability to built and manage effective teams is an important part of implementing strategy. Furthermore, top management leader chip is a must in a successful strategy also a motivated group of middle and lower level managers carry out the organizations strategy.
Step 6: Evaluating results
The final step in strategic management process is evaluating results. Knowing how effective the strategies have been, did they help the organization reach its goals, and are any adjustments necessary.
Mission Statement:
Qatar Airways CEO, Akbar Al Baker, had the following to say about the newest purchase of aircraft. "Qatar Airways' mission is one of overall excellence. We look forward to utilizing our new Boeing so that we can further enhance service to our passengers, while also playing a pivotal role in the economic development of the State of Qatar through expanded and optimized cargo operations."
Goals:
Al Baker said he was extremely pleased that Qatar Airways was once again honored as one of the world’s top airlines.
“We place an emphasis on providing the best quality product and service for our passengers, and to have our customers recognize Qatar Airways’ efforts in these awards is very satisfying.
“For an airline that is barely a decade old, we have already achieved phenomenal success. However, Qatar Airways will continue to strive further ahead to reach our ultimate goal of being voted Best Airline in the World.
“Recognition must also be given to the airline’s staff, who are committed to delivering the best levels of service in the skies. It’s their efforts which ultimately determine how the airline is judged,” added Al Baker.
Strategy:
As part of its new strategy, Qatar's national airline has set measurable financial goals, such as reducing finance and administrative costs, while cutting IT-related expenses and improving internal efficiencies. The Oracle E-Business Suite will enable Qatar Airways to 'manage by fact' through the provision of consistent, accurate, and enterprise-wide data. An enhanced understanding of the organization's financials is particularly vital in light of Qatar Airway's plans to double its fleet from the 18 aircraft currently in operation.
SWOT Analysis:
We will be doing a SWOT Analysis of Qatar Airways.
SWOT Analysis: an analysis of an organization’s strength, weaknesses, opportunities, and threats.
Strengths: any activities that an organization does well or any unique resources it has.
Qatar Airways’ strength is that it is one of the few (six) airlines in the world that has received Skytrax’s five star ranking. “Five star ranking is the 'ultimate' ranking, awarded to airlines achieving the highest Quality performance. Five star status recognizes airlines at the forefront of product and service delivery achievement, that generally set trends to be followed by other carriers.
A five Star ranking recognizes highest standard of Product across the different quality assessment categories, and consistently high standards of Staff Service delivery in Onboard and Airport environments.”()
Also, when booking online for tickets from the website you can find links that help you in hotel reservation, car hire, and buy travel insurance.
Weaknesses: Activities the organization does not do well or resources it needs but not possess.
One of its weaknesses is that when booking for a far away place you find that it reaches only limited places. For example, a passenger wants to go to Montréal but because Qatar Airways only goes to Toronto, the passenger will have to take another plane or 8 hour bus ride to get to Montréal. Another weakness is that there aren’t frequent flights to far away countries, and online booking just gives you an error when there isn’t a flight which states:
and not telling the passenger when the next flight is. Furthermore, passengers wait for an hour or so for transit in Doha airport during short trips like Oman or Lebanon.
Opportunities: Positive trends in external environmental factors.
The main or most important opportunity that each airway company must attain is increasing their destinations to many cities as much as possible. To do that they need to increase their fleet number, not only to increase their destinations but also to increase the number of customers they can serve at the same time while maintaining their high performance.
Threats: Negative trends in external environmental factors.
Every company has threats to deal with, in Qatar Airways’ case there is a high competition between airway companies to attract more and more customers to their organization and achieve the most profit possible. Competitors may also try to attract other competitors’ employees by offering better deals to them than in the organization that they used to work at. Furthermore, there could be an increase in threats at certain periods of time such as an economical crisis, where most customers won’t travel as much as they did and that may cause huge losses for a company or even getting bankrupt.
There are many strategies that Qatar Airways can follow to improve their company or organization. We will discuss each of the strategies and how they can help Qatar Airways.
- Corporate strategy:
- Qatar Airways may use the growth strategy to grow, either through vertical or horizontal integration. In backward vertical integration they can become their own supplier, meaning they can produce their own foods and drinks that they serve to their customers instead of making a contract with another company that specializes in these things. In forward vertical integration, they can grow by becoming their own distributor, in other words, they can make more offices exclusively for Qatar Airways instead of travel agency offices where they have a lot of other airways they can offer to the customer.
In horizontal integration, they can combine with other airways to decrease their competition in that industry, example, combining Qatar Airways with Etihad.
- They can also use the stability strategy which is very useful at times like these (of economic crisis), where the organization does not, but it doesn’t fall back either. They can achieve that by continuing to serve the same customers by offering the same services.
- Business (or competitive) strategy:
- Qatar Airways can use competitive advantage to set itself apart from its competitors by doing something better than others companies or something that they cannot do. They have skills at giving customers what they want (fun, inexpensive, and convenient service.
- They can make their main goal is quality, (focusing on customers and continuous improvement). This helps them in attracting loyal customers, and can result in a competitive advantage that can’t be taken away.
- Functional strategy:
- They can update the human resource department improving its employee selection or by training programs that teach them how to treat customers uniquely and make them feel special.
- They can also have the marketing department develop new promotions or packages (including transportation, accommodation, and meals) for customers at a fairly reasonable price to encourage people to fly with Qatar Airways.
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