Strategic Management Tiger Airways Australia - Essay Example

XXXXXXX Number: XXXXXXX XXXXXXXX XXXXXXX XXXXXXX of XXXXXX XX – XX – 2011 Strategic Management Task 1 Introduction: With the current market situations, the demand for low cost airlines is at a constant high. Customers look for reliable service at the lowest possible costs. This paper aims at developing a strategic management discussion of Tiger Airways Australia. The paper will firstly provide a brief overview of the company and its competitors following which a detailed internal analysis (SWOT) and external analysis (PESTLE) will be conducted. Based on a complete analysis of the company, the future direction mission and vision will be drawn out along with a strategic objectives and key strategies for the next three years. Overview of Company: Tiger Airways Australia has been developed to be an ultra – low cost airline. The company was started in 2007 and is a subsidiary of Singapore Airlines. The main office of the company is located at Melbourne and the secondary base of the company is at Adelaide Airport. The main competitors of the company include some well known airlines like JetStar, Virgin Blue, Qantas etc. The table below provides a clear view of the competition of the company. Airline Competitiveness Jetstar Airways Biggest and direct competition Virgin Blue Very High levels of competition Qantas Airways Very High levels of competition Singapore Airlines High levels of competition SilkAir Medium levels of competition AirAsia Medium levels of competition Philippine Airlines Low Levels of competition Malaysia Airlines Low Levels of competition Cathay Pacific Airways Low Levels of competition (Which Airline) The high levels of competition has led the company to share routes as well as destination with other competitors. The table below provides detailed understanding of the same. Airline Shared Routes/Destinations Jetstar Airways Almost 54% of the routes are shared (52 Routes) Virgin Blue Almost 29% of the routes are shared (28 Routes) Qantas Airways Almost 27% of the routes are shared (26 Routes) Singapore Airlines Almost 23% of the routes are shared (22 Routes) SilkAir Almost 15% of the routes are shared (14 Routes) AirAsia Almost 13% of the routes are shared (12 Routes) Almost 26% of the destinations are shared (25 Destinations) Philippine Airlines Almost 7% of the routes are shared (7 Routes) Malaysia Airlines Almost 6% of the routes are shared (6 Routes) Company Market Details: Tiger Airline has been in the industry for a relatively shorter period and the company has yet to build its brand name and image in the markets. However Tiger Airlines has been able to effectively develop a number of routs for itself. The company is strictly a point to point travel airline and hence the company does not provide range of services like baggage to other flights, or transfer of passengers (Joshua). However the company has been able to effectively reach out to a strong market in the past years. The diagram below provides a clear view of the route of the company. (Airline Route Maps) Tiger Airways Fleet Total Singapore 10 Australia 9 Total 19 (Tiger Airways) It is clear that Tiger has been able to effectively launch itself into several routes. The next section will provide an overview of the company’s internal and external analysis. Here SWOT analysis and PEST analysis has been chosen for the company. SWOT Analysis: Strengths Ultra Low Cost airlines Wide range of routes available Excellent coverage of the South East Asian countries and Australia Weaknesses Too focused on the low costs Lack of proper service in terms of the services included in the price Incomplete or inaccurate processes Opportunities Recessionary period is an opportunity for the company to make the best of the travel of people Higher availability of technology Improved ecommerce website Threats Increasing number of negative reviews from customers Increasing facilities by other low cost airlines Increase or fluctuation in terms of the fuel prices Tiger Airlines has a number of strengths and the company has the ability to grow to become a major airlines. One of the first strengths of the company is the ultra cost of the tickets. It is clear that Tiger offers one of the lowest fares in the markets. However it is essential to also note that due to the low fares the company has not been able to effectively keep up the quality levels and there has been a lack of service. These form the main strengths and weaknesses of the company. A major opportunity for Tiger Airlines is in the current times where almost every economy is in a crunch and people are looking for cheaper opportunities for travel. The company can use this to their strength and can work on improving the overall service and can capitalize on the markets. However a few of the major threats that is faced by the company is the high levels of negative reviews from customers and also the increasing number of competitors in terms of low cost airlines. These areas form the basic internal aspects of the company. Considering the external analysis of the company, discussed below is a PEST analysis. PEST Analysis: It is crucial to complete a detailed external analysis for the company as well. This will assist in gaining a more, well rounded and complete view of the company in the current markets. Firstly, dealing with the Political aspects, it can be noted that Tiger faces issues with the ability to easily gain access and entry into airports. This again is mainly due to the brand image and low recognition of the company. In terms of the economic conditions, it is clear that Tiger is one of the only airways which has not as impacted by the economic conditions and recession, mainly due to the low costs. The company has this as a major advantage and hence does not require any form of cost cutting or other similar tactics. In relation to the social aspect, it is clear that the company focuses on the budget class travelers and is more drawn towards these travelers than any other. In the present social context, the company is a blessing for most travelers. Technologically, the company has been faced with numerous issues. As seen in a number of reviews of the customers, it is evident that the company has faced number of technical errors and issues due to which the flights have needed to be cancelled. Revised Mission Statement: “We aim at being the safest and reliable ultra low cost airlines. We aim at providing customers with excellent quality service at the low cost rates. We aim to become the largest low cost airline by the year 2030”. Revised Values Our company operates on a few basic values: We are customer oriented and aim at providing our customers with the best of service and safe and reliable travel. We take pride in our company and its reputation. We value our people and are proud of our employee achievements, sincerity and also transparency. We are a learning organization and despite the fact that we provide low cost travel, we strive to create a standardized, disciplines and well developed processes which we believe will not only help us grow as a company but will also help ensure higher levels of customer satisfaction. Strategic Objectives 1. To become the leaders in low cost airlines: Our ultimate aim is to become the leaders of the low cost airline industry and to provide our customers with the best service. The objective here is to build the brand name and image and to use this as a means to not only acquire more customers but also retain the current ones. 2. To have the best online booking and ecommerce systems: Although we are a low cost airlines, we believe in keeping in track with time and with the growing need for simpler and easier booking options, we realize the need for a strong, effective, and user friendly online booking website. The strategic objective here is to reach out to the customers in a better manner and we realize that every single detail plays an important role in the customer experience. Hence we aim to make the experience a pleasant one from the first step. 3. To increase customer loyalty and retention by 5% every year: We realize that the competition in the markets is intense and there is a wide range of options that customers have from which they can choose. Hence we aim at improving our services and the overall customer experience on a continuous manner. Gronroos (1994) says that better service delivery clubbed with competitive pricing and features with a sharply focused marketing strategy can help the customer acquisition process the best. We aim at improving the customer experience and the overall customer loyalty and this we aim at keeping as an ongoing process. Key Strategies 1. The key strategy for the company is to build its brand image and brand recognition. This can be done by improving on the services for the same costs as well as focusing on the customer retention to a great extent. It is estimated that the cost of acquiring a new customer is six times costlier than retaining an existing one (Jobber, 2004). Hence the focus is on customer retention first following which customer acquisition. 2. The second key strategy here is to use the technology and information age to our strengths and to develop our online booking system to provide the customers with easier booking options as well as better overall experience. The main aim of the company is to improve its current standing in the markets and to develop a strong, effective, yet low cost airline service. Within 3-5 years the aim of the company is to gain as many customers as possible and to grow and increase the brand name of the Tiger Airways. Works Cited Airline Route Maps. Tiger Airways. 2011. 31 Jauary 2011 . Gronroos, C. "From Marketing Mix to Relationship Marketing – towards a paradigm shift in marketing." Marketing Journal (1994): p322-339. Jobber, D. Principles and Practice of Marketing. Berkshire: McGraw – Hill, 2004. Joshua, NG. The Impact on Airports in Southeast Asia. 2009. 31 January 2011 . Tiger Airways. Investor Relations. 2011. 29 January 2011 . Which Airline. Tiger Airways. 2011. 29 January 2011 . Read More