The Air New Zealand Business Essay

The great developments in technology have enabled people to experience easy connectivity throughout the globe. The connectivity is enhanced through various means including telecom or internet connections. However, it is good to be cognizant of the fact that these are not the only reliable methods of establishing connectivity and communication. Travelling has also undergone a great revolution and people can now conveniently and promptly meet at low cost. Travelling round globe has become a simple process taking only a few hours and people in New Zealand have found Air New Zealand an effective travel option towards this end. The journey by New Zealand Air began in 1940 from a humble beginning with numerous challenges and joint ventures. However, with time New Zealand Air has acquired independence and become the government airline. The journey to prosperity has been a long one and it has taken great effort for the company to stand on its feet. In this struggle, leaders and their strategic plans have played a significant role in enhancing success. The numerous strategies employed by New Zealand Air are comprehensively highlighted within Part A and B of this report. In a bid to be the best, the company’s leaders designated a vision for its airlines business and worked hard to attain the success currently enjoyed by the airline.

Part A of this report highlights the environmental scan conducted where both the micro and macro analysis were considered. The outcome of the scan seemed to favor the airlines. In addition to the environmental scan, a SWOT analysis was conducted. The analysis reviewed weaknesses and strengths as well as external and internal opportunities and threats.

The environmental analysis also highlighted significant strategic issues, which included the following:

Brand Image Management

Hiring Competent Staff

Maintenance of Good Relations with Other

Consumer Satisfaction

Adhering to the regulations of Regulatory Bodies in the Industry

Ensuring expected profitability is attained

Part B of this report highlights the approaches adopted towards attaining these goals in a concise and brief manner. The strategic points highlighted above are later reviewed with an aim of sowing how they have given the company direction and a bridge to reach its new goals. In addition to highlighting the strategic path that led to this success, the risk element and various risks involved in the process are also mentioned. Literature in leadership has taught us that no business strategy is simple, and there are numerous barriers to success. However, if the leadership of an organization is equipped with the right skills and strategy, then it can be possible to attain the desired goal. The last section of this part highlights the monitoring of activities of the organization and the evaluation of outcomes such as operations, finances, employee retention and clientele building and maintenance.

The section also highlights important company resources, which are necessary for the survival and operations of the company. The report develops a critical analysis on the extent to which these resources are needed for operations and actual availability of the resources. The outline of resources is divided into four sections. These resources include financial resources, human resources, intangible resources and tangible resources. The availability of the resources highlighted is portrayed in a table format. The table also shows a column of alternatives for resources that may not be within the company’s reach.

Apart from the elements highlighted above, the report also does an extensive review of the company’s goals and the operational steps undertaken to attain the desired goals. The strategic pursuits of the company commonly employed to overcome risks are also highlighted. In addition, the report highlights the evaluation system applied in assessing the company’s performance over time. The evaluation system is a multifaceted system that evaluates various aspects of performance including finances, -operations, employee retention and day-to-day business operations.

Resource Demands:

The world has currently shrunk significantly and the global village has become a reality due to technological advancements that have transformed communication and travel. As globalization advances the substance of a competitive advantage in the global market has become a very tricky attainment due to great dynamics in the global market, which have increased competition. Timely resource identification constitutes one of the clever moves used to reach the company’s goals. This is a significant consideration because resources are the major determinants of the course of any organization. The acquisition of knowledge and information on resources such as human resource, finance and information technology is essential for the success of any business. The report highlights the various resources available for the company’s disposal as well as how these resources affect company operations. Each of these resources has different functionalities and helps differently in the running of the company. These roles are highlighted below under respective categories.

HUMAN RESOURCE:

The human resource constitutes people and structures used in facilitating the existence and survival of the human aspect of the business. This resource constitutes of a support system that is tasked with hiring, personnel sourcing, skills development, applicant tracking, administration of benefits and ensuring compliance to legal structures defined by statutory bodies (Entrepreneur, 2012).

The department of human resources is tasked with the responsibility of ensuring that all the needs of employees are catered for appropriately. As such, it is an employee welfare department. The list of responsibilities and tasks that fall under this department include payroll preparation and maintenance, hiring, updating federal tax law records, firing employees and the provision of various employee benefits in terminal states of employment (Entrepreneur, 2012).

Air New Zealand’s human resource department is headed by Keith Muirhead, who is responsible for all recruitments for the company (Air New Zealand, 2012). Air New Zealand has a working force of 10500 employees that work the company. This workforce includes casual, part-time and full-time employees (Star Alliance, n.d.).

Below is a list of the executive team of managers that works for Air New Zealand (Zealand, 2012).

Manager’s Name

Management Position Held

Mr. Rob Fyfe

Chief executive officer (C.E.O)

Mr. Norm Thompson

Deputy C.E.O

Mr. Rob McDonald

Group general manager corporate affairs& Chief financial officer

Mr. Christopher Luxon

Group general manager International airline

Mr. Bruce Parton

Group general manager short-haul airline

Ms. Vanessa Stoddart

Group general manager people and technical operation

Captain David Morgan

General manager airline operation and safety

Mr. Mike Tod

General manager marketing and Communication

Mr. Stephen Jones

General manager strategy

2.2 FINANCIAL RESOURCE:

Start up finance is necessary for starting and running operations within any organization. Organizations may also require funds for the purpose of expanding their operations into new markets or offering new forms of goods and services. Business organizations have different options on how they can source their funds for business. The choice of method depends on the organization’s needs and roles in the field of operation. Traditional modes of funding include bank loans and equity from investors. There are also other government-based options such as capital funds and grants from the government (Vitez, 2012).

The table below presents the company’s financials in a brief summary of the mentioned period. The company’s profit prior to and after taxation is also listed (Air New Zealand, 2011).

2.3 TANGIBLE RESOURCE:

2.3.1 Advertising and Marketing:

Marketing denotes a number of activities undertaken to ensure that the airline fulfills the needs of its consumers while getting value in terms of return on its investments. The act of marketing is aimed at popularizing services or products. The process mainly entails brining the products or services to the attention of the consumers. There are numerous ways of conducting advertisements, and these may include social networking sites, local dailies, magazines, television, radio, e-mail or text marketing among many others (McNamara, n.d.). Airlines round the globe have adopted numerous approaches to advertisement and New Zealand Airline has not been left out. The airline’s advertisements can be seen in various forms of media such as Facebook, newspapers and magazines. In addition to advertising, a number of promotional schemes have also been employed. These promotional schemes feature a number of draws, seasonal holiday offers and special fare offers.

2.3.2 Technology: Technology has also been widely used by the company as a way of advertising itself. The Auckland region is a prime region for newly arriving forms of technologies. As part of the airline industry, the company has grabbed the latest technologies in customer service, on board service provision, cancellation of tickets as well as online booking. The adoption of these technologies has not only improved service delivery, but also marketed the company. The current technology has eliminated queuing, which was initially necessary in order to get a ticket. Technology has permitted automated printing of tickets, which clients can even acquire via online booking. Clients can now book and make ticket cancellations online. This enhances convenience and ease in making travel arrangements. Technology has also been used in enhancing entertainment on board, and now travelers can enjoy watching movies on LCD screens as well as play games (Air New Zealand, 2012). Apart from using technology to enhance the travel experience, the organization has also harnessed the advances in the technology to increase utility. For example, the company has acquired new and larger planes for its fleet. These include the Airbus A380, which is capable of carrying 550 passengers and more luggage (Airliners.net, 2012). This advance in technology has opened up the company’s abilities in terms of carrying capacity and service.

2.3.3 Infrastructure and Location: The excellence of Auckland airport has also acted as marketing element, which has seen the airline greatly benefit from the popularity of the airport. The airport has been recognized as one among the ten best airports globally for two consecutive years. The airport earns billions of dollars for the economy by facilitating trade and creating numerous job vacancies. In addition to trade, the airport has also led to expansion of tourism by establishing a connection to the rest of the world. The sheer size of its contribution is evidenced by the 13 million passengers that pass through the airport annually (Auckland Airport, 2012). This has been a result of its perfect infrastructure, which has acted as the marketing point for its services. Therefore, the overall perfect location and excellent infrastructure open up great prospects for the airline’s future.

2.4 INTANGIBLE RESOURCES:

Apart from physical, financial and human resources, there are other resources that may not be visible or tangible, but nevertheless add to the overall value of the business. These are resources that may not appear on the physical balance sheet, but have the capacity to make a financial contribution to the company’s success. These intangible resources include brand name, goodwill, strong client base and customer relationships as well as reputation of the airline. Perhaps Air New Zealand’s best intangible resource is its brand name and reputation. The airline stands in 6th position on the global ranking of the world’s best 10 airports. The list of ranking is as outlined below:

Qatar Airways

Singapore Airlines

Asiana Airlines

Cathay Pacific Airways

Thai Airways International

Air New Zealand

Etihad Airways

Qantas Airways

Turkish Airlines

Emirates

2.4.1 Goodwill: This denotes a company’s standing in business which is earned out of its conduct of business operations in a prudent manner. Goodwill increases the significance of a business, and it means an increase of value that cannot be accredited to any other business assets (Value Adder, 2011).

2.4.2 Reputation: Reputation denotes a favorable public recognition of a name of standing of meritorious achievement (Dictionary.com, 2012). Air New Zealand has been able to increase its good reputation through participating in social functions and events, which have positively promoted its name.

2.4.3 Brand building: Brand building entails the general popularization of a company’s name and its positive association with quality service and product delivery. Once the brand is firmly established and build, products and services under its name are able to sell widely due to its popularity. In order to build its brand name Air New Zealand has used a number of strategies including communication, external and internal marketing as well as establishing reliability (tutor2u, n.d.).

2.4.4 Customer Relationship Building: The building and maintenance of customer relationships is also part of the creation of intangible assets. Satisfied clients often double up as returning clients and a potential marketing tool because they are able to effectively market the company. A customer’s word of mouth is a very reliable mode of marketing and one that can ensure that a company’s client base expands significantly. This is why it is very important for companies in need of long-term survival in the market to target and maintain good relations with their clientele (Gordon, 2012).

“In order to get prospective and old clients thinking about the company, the following measures have been suggested:

Development of a two-way mode of communication with feedback

Ensure frequent communication

Organize for special events

Offer free rewards

Enhance promptness in customer service

Visit operational grounds to interact with clients

Develop multicultural programs to reach a wide array of people (Gordon, 2012).

Resources Availability:

Resources

Availability

Resources Unavailable

and its alternatives

Human Resources

Skilled and competent staff available

Vacant positions at the airline company include the positions below, which are listed on its main site (Air New Zealand, 2012):

First officer

B787 Tech pilot

Second officer

Senior java developer

Financial Resource

The airline’s first half of 2012 had a net profit of $38 million dollars after tax (Air New Zealand, 2012).

The company experienced an increase in operating revenue from 2.5% to 2.3%. This implies that the higher costs may cut on profits and therefore, the company will be compelled to cut costs so as to attain the desired profit levels (Fyfe, 2012).

Tangible Resources

Advertising and Marketing

The company used a wide array of mediums to pass its advertisement messages, which were successfully received through social media, TV, internet and print media. The success in the advertising campaign won the company an award in the marketing strategy category (Air New Zealand, 2012).

The company is planning on introducing better schemes for the end of the year (Air New Zealand, 2012).

Technology

New Zealand Airline is up-to-date with the most current technological use in the industry.

The company won the 2012 Airline of the year award (Air New Zealand, 2012).

The airline is still exploring the possibilities of embracing new technologies that are up-coming in the airline industry for future improvement (Fyfe, 2012).

Location and Infrastructure

The airline operates from an airport that is highly ranked in the top 10 list of top global airports (Auckland Airport, 2012). The company therefore benefits from having a base at Auckland.

The airport is considering opening up one more runway to ease traffic and improve service (Auckland Airport, 2012)

Intangible Resources

Goodwill

The airlines investments in other business entities raised the goodwill of the company by $2 Million (Air New Zealand, 2012).

The organization tried to maintain relationship with other business entities while still maintaining subsidiary relationships and joint ventures (Air New Zealand, 2012).

Reputation

According to New Zealand’s Herald the company has significant reputation (Nordqvist, 2011).

The airline has maintained a long-term positive operational relation, which has successfully led to the development of reputation.

Brand building

The company is working towards being the best globally, and its brand name has significantly increased across the nation and across borders (Air New Zealand, 2012).

The Chairman of Air line stated within his report that the organization was in an effort of trying to improve brand name and reputation (Palmer, 2012).

Building Customer relationship

Air New Zealand has always strived to offer the best services by providing an outstanding service for all its clientele in the unique “KIWI” style. The organization has developed a campaign in which they have developed healthy relations with their consumers. The company has also introduced interactive ways of interacting with their clients through e-mail. The process informs customers about flights, weather and offered delicacies (Silverpop, 2012).

The company is on an ever developing process of enhancing consumer experience, and the development process is never ending.

The table above is critical analysis of resources, which reveals the resources that are readily available and those that are deficient or rather require supplementation. In spite of the deficiencies of resources, it is notable that Air New Zealand is not new in the market and therefore, its operations only require a few additional assets. The company is already up and running has numerous resources. As such, it does not need any new significant resources as portrayed in the table above.

The organization is not satisfied with the profit margin it attained in the first half of the 2012 financial year. The expectations were higher, but the increase in operating revenues from 2.5% to $2.3 billion led to reduced levels of profit expected. The airline’s review of financial commitments and performance has led the board to declare an interim dividend of two cents per share. Apart from the slight decline in expected profits the airline is also under pressure due to an increase in fuel prices. In spite of these challenges the airline has been able to achieve the prestigious award of ATW airline of the year. The fact that this is a second award in three years makes the company’s achievement remarkable (Palmer, 2012).

In the report presented by CEO, he mentioned that the business is in the process of reducing cost so in this leadership process, Executive management staff fees, including his, would be reduced by 10% with effect from 1 January 2012 (Fyfe, 2011).

The airline’s marketing bid has been a great success, and in 2011 the company won the top marketing award. A panel of judges including Qantas’ ex-CEO, Air Canada director and EasyJet ex-CEO stated that the airline was at the top of the market leaders within the industry (Air New Zealand, 2012).

The airline’s “Bare Essential” and the “Nothing to Hide” in-flight safety video featuring staff in body-painted uniforms including the CEO prove a great point for the organization. The marketing approach gave the organization widespread exposure to the organization after these videos became viral (Bergh, 2009). The advertisement spread significantly through word of mouth and online platforms.

Source: (Stuff, 2009).

Business goals:

The maintenance of company goals is a significant aspect of conducting business. Every company has to ensure that there is strict focus on its goals so as to attain the vision of the organization. The focus calls for hard work and a strong drive to attain the goals.

5.1 Good Relations with other Airlines:

The airline is a member of the star alliance group and may soon direct its service provision to the domestic network.

The airline can make approaches to other airlines especially in places where emergent markets are budding.

The organization performs discussions and meetings with the star alliance group as a way to introduce more airlines to the fold.

The organization has always aimed at forming better networks with other international and domestic airlines.

The company has introduced schemes that offer tools and equipment as well as loans for the maintenance of facilities of training of the staff members.

5.2 Brand Image:

The airline has maintained high quality services that attract the clients.

The airline has enhanced its credibility by building greater brand trust among its customers

The initiation of internal marketing is also recommended to serve the purpose of brand image development.

Enhancement of communication both internally and externally is recommended.

The introduction of unique activities such as the ‘Nothing to Hide Campaign’ can help improve brand image by creating a distinct image.

5.3 Attaining expected profit levels:

High margins on returns can be achievable through the hard work and strategic initiations aimed at developing strategic marketing points.

Cutting costs should be introduced where possible as exemplified by Fyfe’s approach.

Preparation of bulk purchase schedules can help reduce costs and improve margins of returns.

Enhancement of value addition on services so as to attract more clients and increase business.

Increase and better the marketing campaign so as to get more consumers and business.

5.4 Hiring competent staff:

In order to achieve proficient hiring an efficient human resource manager should be hired and proficient and supportive team.

The organization should make the HR department aware of the human resource needs of the organization in terms of experience and education so that they can hire appropriately.

Perform recruitments at the right time by acquiring the right staff so as to cut costs on possible needs to re-hire.

The employees should have a proper orientation on their work and have a proper understanding of their job description.

Mentorship programs could be initiated so as to help new employees blend in easily. Training should also be offered to employees in form of refresher courses for all employees so as to ensure their skills are up to date.

Regular employee evaluation should be always conducted as a means to ensure that employees’ performance is up to date.

Special plans should be made for discussions and question and answer sessions that make employees feel part of the team and decisions made. This will also enhance their comfort of working within the team.

5.5 Customer Satisfaction:

Employees should be appropriately trained on how to handle consumers.

Service provision should be customer-oriented and the consumer should be treated as the top priority.

Employees should be taught on how to be friendly and accommodative to consumers.

Schemes of low fares can be introduced as a means to attract more clients. Plans in this move may include discounted tour packages and gifts.

Feedback should always be collected from consumers and incorporated into the decision-making process.

The overall focus should be on low cost fares and high quality services.

Risk Analysis: This part considers a number of risks involved in the airline business. The risk analysis is presented in a tabular format, where the severity and probability of the risk are presented as well as potential solutions.

Risk Particulars

Probability

Minimal/slight/moderate/high/extreme

Damage caused

Response

Loss of clients

Minimal

High

Reduce airfares.

Develop attractive schemes that can increase the number of clients.

Redirect focus to the area where there seems to be more business rather than waste time on areas with little business.

Decline in Service quality

Slight

High

Offer better training to the staff.

Motivate the staff so that they can deliver better services.

Introduce reward schemes for better performing employees.

Brand image erosion

Minimal

Extreme

Improve advertising.

Increase efforts to develop better customer satisfaction.

Improve the quality of the delivered services.

Loss of personnel

Moderate

High

Train the next in command in management just I case they may be required to make replacements.

Maintain proficient back up personnel that could possibly take over the position.

Decline in profits

High

Moderate

Find out the causes of decline and develop solutions from the mistakes learned.

Develop new strategic approaches to increasing.

Cut on expenses where possible so as to increase the returns.

Enactment of strict statutory regulations and rules by bodies such as FAA

(Federal aviation administration).

Slight

Moderate

Adhere to all regulations and laws because this is a mandatory requirement.

Seek to have extensions on the compliance deadlines so as to prepare for compliance.

Technology changes

High

Moderate

Always employ the latest technology and make prompt updates.

Always ensure that the organization is among the first users and implementers of new technologies so as to gain a competitive advantage.

Always be first with technological changes so as to be ahead of competitors.

Procurement of spares

High

Extreme

Always check the life of the components within the craft.

Order any replacements in advance so as to avoid inconvenience.

Seek loans from neighboring and friendly airlines in case of emergencies.

Major Accidents

Minimal

Extreme

Seek comprehensive insurance cover.

Investigate the cause of the accident so as prevent similar future cases. This could be done by looking for the black box.

Seek a window period from the media before going public. During this time come up with a comprehensive explanation.

Always offer training to pilots and engineers to ensure they are up-to-date and compliant.

Minor Incidents

High

Moderate

Report all incidents to the FAA or other relevant authorities.

Seek approval of repair and maintenances from FAA if required.

Offer sufficient training and refresher courses to all employees working directly on the aircrafts.

Increasing fuel price

High

Raise the air fare to a certain reasonable limit.

Try using alternatives such as biofuel.

Employees strikes

Minimal

Extreme

Arrange consultative meetings with workers’ unions to solve the problem.

Start the negotiations fast so as to avoid long frozen periods of service.

Evaluation and Monitoring:

Constant monitoring and evaluation is necessary in ensuring efficiency is attained at the workplace. The process should include evaluation of strategic plans and the implementations made towards attaining the set goals. The evaluation should cover all areas of the business.

7.1 Customers:

Maintain a comprehensive database of clients with all the necessary details. This should help determine the travel schedule of the customers and help in the marketing bid.

Thereafter, design an automated system to send e-mails to consumers. This should include a column seeking feedback and suggestions from the clients.

Make a review of the feedback and make changes according to the clients’ response.

Use the data to determine travel frequency and customer loyalty.

Introduce better schemes for regular clients and ask the clientele for feedback.

Ensure a clear focus on clients and focus on their preferences and in turn come up with special attractive schemes.

Monitor consumer complaints in relation to overall client base and determine the satisfaction percentage. This data can be helpful in determining whether there is a need for service improvement so as to enhance satisfaction levels.

7.2 Operations: Record pertinent variables in relation to operations. The operations section includes office work, ticketing, maintenance and ground handling. Individual records should be maintained on the above areas so as to determine the number of complaints, efficiency levels, problems faced and complaints.

Develop a system made of the number of aircrafts, repair details and maintenance conducted on the aircrafts.

Develop a clear record of parts that have been installed, replaced or those that are about to reach the end of the shelf life.

Make a measurement of all costs incurred in repairing and maintaining a plane in a year. Where necessary make replacements of the aircraft is found to be aged.

Maintain a clear record on all tools, equipments and parts available with the airline and ensure there is a physical cross-checking on the same.

Seek records from the operations manager detailing all the work conducted and the personnel involved so as to determine personal efficiency.

The same process can be designed for the ground handling and ticketing system. The handling of the aircraft should be documented properly and any mishaps openly declared, and those involved warned.

Keep track of canceled tickets and try to determine the cancellation reason. The results from the analysis could help design strategies to prevent increases in cancellation or at least reduce them.

7.3 Finance: Finance is the backbone for all business therefore; appropriate measures have to be taken to ensure the financial goals are attained.

Conduct periodic audits on the financial records

Review reports and check for variances in the budgeting process

Review cash flows and determine whether they are effective or not.

Review all financial performance ratios and monthly financial reports to determine performance trends.

Finally, compute profits attained and make comparisons to expected levels

7.4 Employee:

Schedule departmental discussions headed by department heads to determine any problems or challenges and establish rapport.

Reserve questions and answer sessions after the discussions so that employees can offer their views and make contributions on issues

Maintain proper records on the employees and their responsibility and evaluate their efficiency in accomplishing their duties.

Provide training under short-term courses to keep the employees up-to-date on their professional requirements and develop a health relation between them and their superiors.

Motivate employees by offering extrinsic rewards that prompt employees to work harder.

Make regular assessment of employee performance and design ways to motivate employees so that they can work better.

Conclusion:

In conclusion, Air New Zealand has developed innovative strategies that have helped in growing their business. In spite of the good performance the company has not given up on the culture of innovation and quality improvement, which has led to brighter ideas that have transformed the company. The company strives not only to excel in New Zealand, but also to become a global icon of success. The company is thus still developing new strategies so as to reach new and better heights. One of the measures put in place to ensure constant quality improvement and performance entails conducting regular monitoring. This is useful for the airline because it measures financial growth, employee performance and many other parameters that determine quality. In addition to helping in quality improvement, the process helps in ensuring that customer satisfaction is attained through assessing customer satisfaction levels and how to improve them. The comprehensive monitoring and assessment helps the company to bridge the gap between where it is and the ideal expected position by identifying deficiencies and working towards fulfilling them.

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