AIR NATIONAL CASE ESTUDY

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MP1009N. INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

AIR NATIONAL CASE STUDY

INTRODUCTION

During the civil aviation in the early 1980’s, the market was highly competitive and was managed closely by the relationships between the airlines companies, their competitors and the governments. Market shares were determined by the skill of their governments in negotiating bilateral ‘air service’ agreements that establish the volume and distribution of the air traffic.

In 1998, Air National turns as a newly privatised company that face the future with enthusiasm, confident that they can compete in a deregulated industry. After, in April 2000, the tone changed because they had a pre tax loss of $93 million. Then, the newly appointed CEO announced a major change in the company business strategy that would influence to a transformation of business operations and human resources practices in the company.

  1. FACTORS THAT ENABLE SENIOR MANAGEMENT TO TAKE A STRATEGIC APPROACH TO ITS BUSINESS AND TO ADOPT AN EMPOWERING-DEVELOPMENTAL APPROACH TO HRM.

In the middle of 1980s AN’s external environment was privatised by Britain’s conservative government. This exposed the company to competitive forces. They have to prepare for privatisation that required a painful restructuring because they needed to make the company attractive to initially sceptical investors. This gave the senior management the degree of stability to implement a new and HRM strategies. At the same time, there was a prolonged economic recession and the ongoing deregulation of civil aviation in Europe and America.

With this environmental forces, AN adopted a low-cost competitive strategy and joined the industry-wide price war. At this time, they were aggressive in the market place and they reduced costs in areas like service, marketing and advertising. This low cost competitive strategy failed.

At this stage, AN changed its strategy and began to develop a differentiation business strategy (Porter, 1980), that consisted in: Prioritisation of high quality customer service; re-engineered the company; launch a discount airline (operating as a separated company); the management structure was reorganised; AN’s operations were divided into route groups based of five major markets; the company advertising began also to emphasize the added-value elements of AN’s services; new brand names and new uniforms for the cabin crew and for the point-of-service staff . For that, aircrafts and buildings were sold and unprofitable routes suspended or abandoned altogether. Labour costs offered the most potential savings and with that, the company was able to focus on product development, marketing, customer service and HR development.

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This low-cost or differentiation strategy involves a unique set of responses from workers or ‘needed role behaviours’ and a particular HRM strategy that might generate and reinforce a unique pattern of behaviour (Schuler and Jackson, 1977; Capelli and singh, 1992). Thus, the practice of strategic HRM is concerned with the challenge of matching philosophy, policies, programs, practices and process, the ‘five Ps’ in a way which will stimulate and reinforce different employee role behaviours appropriate for each competitive strategy (schuler, 1989).

The Human Resource strategy that the company adopted emphasizes in employee empowerment and commitment. They emphasize to their managers to ...

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