The Business Design Model for Modern Airlines - Case Study Example

Value Proposition: Full stream service from VIP Clientele Executive summary The business design model examines the logics of a business in its operations. The airline industry is targeted with the aim of improving service deliver to clientele. Service gaps have been identified in the existing airline that has opened an array for a model to be designed. The model operations are integrated as a whole to provide full stream service for VIP clientele. A systematic approach is adopted to analyse the business model sustainability and survival in its environment. An input, process and output model is established. Quality service and standards, test marketing, social marketing, key personnel involvement and competitive analysis are among the key aspects that are analysed in the model. A critical appraisal of the airline service provider is done by comparisons from other service providers. Business Process Model Review A well designed business process model should encompass the relationship of the entire processes as a whole to integrate the overall goal of value for the customer’s money. Value proposition section depicts the intended methods of services to be provided for the target market (see figure 1). VIP clientele are dispersed all over the world with an emphasis on the developed continents. Radical changes in this proposition are seen in the model. The intended goal of this proposition is to become leaders in providing full stream services in the airline industries. This has not been practiced before therefore, the introduction of the same will cause a shift in profits patterns from other airline competitors. Leasing of airplanes as well as rental of planes is a radical change in the airline industry. Focus has been in the past of private jet purchases but not rental or even on leasing terms. The door to door services is a radical change in this process. Often times these kinds of services are offered to prominent people in our society. Introducing door to door services to the high class range of customers while focusing on safety of the aircrafts will immerse high profits in this industry. Technological design in the architect of aircrafts is incremental since our business model will use the existing planes. New airplanes will not be designed in this case. The business model will encompass the existing marketing strategies as an incremental change for the intended airline business. Technology has been developed in e-marketing which helps in marketing strategies. Catering during the flight will be done by already established high class caterers. The full stream services in the airline business will integrate the various aspects of high class services as a whole to achieve the target market. The preliminary stages in the design of the business model called for a thorough research of the airline industry. Gaps in the services were identified as high oil prices which will devolve to wiping out low costs air tickets in the coming years. A further analysis shows that safety during flight is at the core of any customer’s choice of airline service provider. In light of this, we deduced that customers need value in the flight services. Hiring or leasing a plane at ones comfort is the way forward, ensuring high class services are provided from the beginning to the end. Door to door service is a deduced solution since the existing airlines do not offer such to customers. The innovation of this new business model is towards the customer’s experience before, during and after arrival of a flight. Customers are having fears of lack of safety in the pre-existing services. This will be counteracted by individualized services e.g. lease or rent of a plane, a cab for efficiency and effectiveness of the entire flight experience. High oil prices will cause high costs for travelling in the airline industry. The business model is market driven as a shift from highly priced and crowded airlines will be experienced to safe and specialized flight services. Existing technology will be applied in this business model. Coherent and integration of business process model (BPM) An effective business model integrates the entire organisation’s operations to achieve its goals. BPM is gaining increasing importance in business operations towards effective and efficiency introduction of products and services in the industry (Mathias, 2007, 72). This incorporates financial aspects, technological aspects, service delivery, marketing services, and follow up on the customers’ feedback. The whole model should follow a laid out business plan in order to achieve the intended goals. The first step in the design process has been outlined in the value proposition. The airline industry is targeted with the aim of providing better services during flight. This model aims at achieving one goal i.e. providing valuable airline services for VIP clienteles. By doing so, the business can become the lead in these kinds of services. To begin with, a thorough research has been carried out depicting gaps in the current airline services. A review shows lack of safety in airlines and the ever increasing rise in travelling prices. There are also facts on neglect of prior flight preparation issues. These include booking the flight, transport to the airport and timing of the flight. High class clientele desire luxurious treatment and this will be provided during the flight and after landing. The services will incorporate catering from high class restaurants, best cabs, planes and communication aspects. The web creates avenues that will be utilized to relay messages to and from the customers. Customer care is the most variable aspect in a business’ operations (Nawal, 2002, 6). This will be at the core of this airline industry. Inconvenience will be minimized by making a complete full stream of services. The marketing aspect will be integrated through the use of social marketing and online service providers. Blogs, podcasts and websites etc., will be used as tools for marketing (Steve, 2011, pp. 1). An understanding of threats from competitors is not overlooked. Major players in the industry will follow suit as soon as the business model is introduced. The finance sector is integrated in this model to ensure that there is enough funding of the project, to sustain it through the competitive times. The management team will be highly knowledgeable personnel in this business. Employees will be well paid as a motivation measure. Coordination, communication and control of activities will be inbuilt i.e. any employee be it a waiter to the highest service provider should share in to our goal achievement. To tap the full potential of this business, speed and responsiveness is at the core in providing quality services. A flat organisation structure will be adopted for effective decision making (Debra & James, 2010, 236). Social media services will also be deployed for marketing (Paul, 2011, pp. 1) The drive towards globalization and deregulation are among the key aspects to be considered. People are moving from one region to another in search of new ventures, vacations, coordination of international business amongst other reasons (Patricia et al, 2004, 10). The target market thus has to be profoundly selected and maintained in the business. To achieve this, integration of services i.e. paying for flight services, hiring a plane, leasing or renting will be included in this model to diversify on its operations (David & Ron, 2009, 36). Care is observed in choosing the service providers since the final experience in this airline industry will determine a comeback of the consumer base. A global study of the CEO has shown that top levels of management in various industries are on the search of guidance on how to incorporate innovation in their business models. This is meant to improve the value in a Company’s operations. This model will aim at providing value services to its consumer base as well as attain value for services delivered. See figure 1. Follow up will be carried out and a feedback analysis will be done to assess the experiences from customers and further do amendments where necessary. Quick responses will be incorporated in the end to stay on the lead. A simple systems diagram to evaluate the potential of the model to be “robust” Diagram one An integrated service provision will encompass: organisation management, finance issues, marketing technology and finally to providing full stream services i.e. Transfer to airport, Plane, Fuel, Food + drink, Pilots, Airport taxes, Transfer from airport. The client is placed at the middle of this system since reputation of the business lies with the customer’s experience from the airline. Diagram two A typical business model (Jon, 2005, 25). System design The three designs will be utilized in the business model. To combat the risks involved in competition and funds shortfalls, the business model will be critically evaluated. The process diagram two above outlines the various components of any entity’s operations. Input, process and output are the three essential components of a business. The predisposing risk in this industry is survival during competitive times. The move towards specialized flights will be the next advancement in the airline industry. Survival of this business will be achieved through proper funding and marketing. To run a whole airline industry calls for a substantial amount of funds. To attain this, outsourcing of potential investors will be done. The risk can also be reduced if the business model is sold as a copyright to an already existing airline industry (Bijan, 2010, 4; Kenneth et al, 2000, 109). Once the solution for funds is resolved, the management personnel can pitch in to implement the ideas. A through business plan should be developed and followed to the order. Registering the business with the various government authorities should be undertaken. Resources should be researched on in the various websites. Approach of the high services provider for cabs, catering, plane models and ticket services should be sought. Professional personnel (Svafa & Judith, 2005, 152), should be hired in this business as demonstrated in diagram two. Implementation should be done through a strategic approach. This is top secret since the competition will be high once the idea is implemented. A thorough advertising campaign should be done in social marketing targeting VIP clients. The way forward is sustenance of e-business in every aspect of our operations (Petter, 2007, 56). Test marketing will be undertaken to determine the price at which the consumer will be willing to pay (Gilbert, & Dawn, 2009, 120). A range of services will be given thus the whole package should be priced as one. Fuel prices will be adopted but moves should be made to forecast on the behaviour of future oil prices. Safety issues will be achieved through use of standard planes and professional pilots (Sachar et al, 2005, 252). In the end, the services will be of very high standards. The best wines and delicacies will be served during the flight. The after flight inconveniences are removed here by having a cab awaiting the customer to drive him to his final destination. The whole essence is to be on the lead in service delivery for specialized client base. To survive in this overcrowded industry, a good package will offered. The target is not in the number of flights but maximizing our profits through individualized flight services. The business model will be targeted for customers all over the world. A typical model of operations is analysed for an existing airline (see the system design). The airline business model can only stay on the lead by: avoiding inconveniences in flight cancellation, delays, prompt ticket booking, online communication etc. The operating margin can be maximized by providing an unforgettable experience at an affordance price. Cost per individual in this airline would range from $10,000- $ 100,000. This amount incorporates the risk measures to sustain growth of the business. Competitive business strategy A competitive analysis of other industries in the airline reveals different tactics for survival (Porter, 2009, 25). Virgin airline has adopted a variety of service mix that incorporates holiday package, entertainment, music, mobile communication etc. The Laker airways, back in the twentieth century, adopted price stability and offered value for money. Loyalty was achieved and an increase in prices did not affect the profit margins. Through these insights, Full stream service airline will achieve competiveness through specialized service delivery and value for money services. Inconvenience such as flight delays, cancellation, after flights are cut off. The diversification of services is also utilized in the model. A service mix of plane rentals, leases, destination of choice are among the suggested tactics. Total quality management business tool allows an entity to provide high quality in its operations (Pradeep, 2003, 89). Emphasis is laid on quality for every aspect of the business to achieve value for the end consumer (Johnson et al, 2011, 56). This will be achieved through careful selection process of the service providers for the airline. Deregulation strategy by the Australian industry lead to great losses of opportunities (Jeffrey, 2004, 65). This move had to be reviewed. Such mistakes will not be overlooked in this model since there are intentions of following such a strategy (Stephen, 2008, 26: Keith, 2009, 194). Our key aim is to offer service when the customer wants to travel on air. The risk perceived will be incorporated in the cost of the flight. The strategy aims at targeting VIP clientele who are ready and willing to pay for value services. Europe has also adopted the deregulation strategies. This however, has been seen not to cause very high competition let alone reduction in fare prices (Neil & John, 2006, 254). Research reveals three keys aspects that are followed in the airline industry recently. These are brand loyalty, diversification in the global route networks and further in customer and marketing strategies (Jim, 2009, pp. 1). They are all aimed at achieved competitiveness. Dominance in global mega-carriers will be experienced in this decade. The best strategy to be applied here is customer focused strategy in service delivery. The 4P’s of marketing i.e. price, place, promotion and product will be integrated to achieve customer specifications (Bilton, & Cummings, 2010, 56). E-business tools for reporting, analysing, bookings, performance assessment, communication and business process reengineering will improve the model (Mehdi, 2008, 500). Service leadership is at the core for this model. Route networks will be determined by the customers’ destinations. License fees will have be to be paid to fly across the skies of individual countries. To remain in the competition, an adaption of specialized jets for lease and hire will offer different taste of services in this scenario. Business growth in the airline service provider will incorporate: social networking tools, softwares for business performance analysis, social responsibility adherence, and corporate strategies (Werner, 2005, 607). In conclusion, I believe that the challenges being faced in the airline industry can be minimized through a specialized full stream service model. This move will see the airline as a competitive provider for prior, during and after flight services. The competition will be very intense since this is an innovative strategy in the industry leading to industry disruption (Gordon, 2003, 84). Major airline industries like Fly Emirates, British airways, USA, Air France amongst other will follow suit. These are established in the industry thus they will incorporate the mode in the freight package. Appendix Figure 1. A typical business model Bibliography Bijan, V., Ken, F. & Liam, M., (2010), Foundations of Airline Finance: Methodology and Practice, New York, Ashgate Publishing, Ltd. Bilton, C. & Cummings, S., (2010), Creative Strategy: Reconnecting Business and Innovation, Chichester, Wiley. Stephen, H., (2008), Straight and level: practical airline economics(3e), New York, Ashgate Publishing, Ltd. David M. & Ron Z., (2009), Business modeling: a practical guide to realizing business value, California, Morgan Kaufmann. Debra, L. & James, C., (2010), Organisational Behavior: Science, the Real World, and You (7e), London, Cengage Learning. Gilbert, A. & Dawn, I., (2009), Marketing Research: Methodological Foundations, London, Cengage Learning. Gordon, W., (2003), Modern Competitive Strategy, London, McGraw-Hill International. 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