Exploring Strategy 8
EXPLORINGSTRATEGY FOR OMAN AIR
ExploringStrategy for Oman Air
Thisreport focuses on the strategy for Oman Air. The report utilizes theexploring strategy model to analyse the strategic positions,strategic options and the strategies in action for the Muscat-basedairline corporation. A study of the case scenario of Oman Air canassist corporate managers in the av industry to gain a deepunderstanding of the intricacies of strategic management in a dynamiccorporate world where exploring the strategic positions, options andactions are becoming inevitable. The report explores the corecompetencies that Oman Air can utilize to gain both comparative andcompetitive advantage over its competitors in the competitive airlineindustry. Consolidating the strategic management options at thedisposal of Oman Air is crucial in cost reduction, maintaining thecorporation`s efficacy and penetrating potential markets.
Identifyingproper strategies is crucial in maintaining the long-termsustainability of any organisation (Johnson, Whittington, Scholes2012, p. 84). This report will focus on how Oman Air will remaincompetitive in the air-travel industry as well as the strategies itcould use to gain both competitive and comparative advantage in thecapital intensive of industry of air transport. Oman Air canstrategically place itself to play and win ahead of other establishedairline corporations such as Emirate Airlines and Qatar Air.Examining the strategy that Oman Air has is also crucial inidentifying areas of change. This would influence the management ofthe corporation to respond appropriately to specific areas for whichchange would be inevitable. Such a step would align the companytowards the attainment of its fundamental objectives.
Theobjectives of this report are:
To identify and analyse the distinctiveness of Oman Air.
To explore the attractiveness of the airline industry in which Oman Air operates.
To examine how Oman Air can redefine its business and operational goals in light of the strategic choices that the corporation can use.
To examine how Oman Air can sustain their operations in a dynamic business environment.
To examine how Oman Air can sustain their long-term objectives in a dynamic corporate world.
To examine the macro-environmental factors that could impede the attainment of Oman Air’s organisational objectives.
Inline with these objectives, the report will cover the strategicpositions, strategic positions and the strategies in action for OmanAir. The report will begin by exploring the strategic areas of OmanAir through utilizing a critical approach to investigating the pestleanalysis to identify the macro-environmental factors that influencethe operations of Oman Air. The report will then apply Porter`sframework and capability analysis to analyse the air-travel industry.This will be followed by a section that explores the strategicoptions that the Muscat-based airline company has at its disposal.Finally, the report will present the strategies in action at thebusiness and corporate levels as well as the recommendations forenhancing the airline`s competency.
Analysisof the Industry and the Firm
Accordingto Johnson, Whittington, Angwin, Regner, and Scholes (2014, p. 103),strategic position denotes a company`s business culture, long-termand short-term objectives and its strategic potential concerning itsresources and competencies. An organisation`s strategic position iscrucial in assessing the approach that a firm takes in itsoperational activities.
Analysisof the Airline Industry
Bharadwaj,Sawy, Pavlou, & Venkatraman(201, p. 14) indicated that the macro-environment in which a firmoperates has a profound impact on the tactics that a company uses tosharpen and maintain its competitive edge. The complex technological,legal, socio-cultural, political and economic environment in whichcorporate organisations operate means that companies cannot afford toassume the complexity and intricacies of business factors for whichthey have little control. Utilising the Pestle analysis couldfacilitate the process of identifying the environmental factors forwhich Oman Air has little control. According to Bharadwaj,Sawy, Pavlou, & Venkatraman(201, p. 14), Pestle analysis incorporates the legal, economic,socio-cultural, technological, environmental and political factorsthat influence business operations.
Thecultural beliefs and practices alongside social factors play a vitalrole in dictating how consumers relate to a firm`s commodities andservices. This implies that a company`s profitability is linked tohow it identifies and manipulates social and cultural factors to itsadvantage. In the case of Oman Air, both domestic and internationalsocio-cultural diversity have a direct bearing on the company`soperations. For instance, In Western Europe and the United States,most people prefer overseas travels during annual holidays. Accordingto Bharadwaj,Sawy, Pavlou, & Venkatraman(201, p. 14), December is the month in which Most Americans andEuropeans travel by air. In such parts of the world, people attach ahigh value on holidays. In other parts such as India, people assign asmall value on Holidays. In the entire Middle-East, locals attach ahigh value on religious Holiday which usually results in an increasein trips to the Holy City of Mecca. On the grounds of these examples,Oman Air can, therefore, identify untapped destinations that canenhance its corporate operations.
Anygovernment regime determines the extent to which a firm cansuccessfully attain its objectives. According to Kuo,Kremer, Phuong, and Hsu(2016, p. 184), government policies, regulations, and legislationscan either promote or take a toll on the operations of anorganisation. For example, many governments in different corners ofthe globe have stringent regulations and policies on internationalairline companies that traverse certain routes. Such regulations aimto protect domestic airline companies that do not enjoy the vasteconomies of scale that some foreign carriers enjoy. Theever-expanding creativity and innovation among airline companies arethe primary reasons why many governments are applying protectionismmeasures that seek to protect the local airline companies.Conversely, some governments endorse liberal measures of encouragingtheir local carriers to stay on their ties. Oman Air can re-establishitself through taking full advantage of India which seems to be apotential market since the reigning government is one that appliesliberal measures that has resulted in a level playing ground. Anothergood example is Dubai which has embraced an open-skies policy (Kuo,Kremer, Phuong, and Hsu(2016, p. 184)This has encouraged the international airline companiesto navigate the Dubai air-travel market.
Kuo,Kremer, Phuong, and Hsu(2016, p. 184) argued that in the air-travel industry, economicconditions of a particular industry has a profound impact on thedegree to which the local people use air as a means of transport.This is because air-travel is the most expensive modes of transportdue to the convenience of advantage that other transport means lack.Strong economies mean that more passengers can afford to travel byair. Powerful economies such as the United States and China have asignificantly higher number of air travelers than economies in Asia,Latin-America, and Africa. High-income people can afford to make bothleisure and business travel through the most convenient means oftransport (Puntor & Karl 2014, p. 201). Across all thedestinations in which Oman Air operates, the airline corporationrecorded more than 6.3 million clients in 2015 compared to 5 millionclients in 2014 Kuo,Kremer, Phuong, and Hsu(2016, p. 184). This indicated the global economy was more stable in2015 than it was in 2014. As such, economic conditions have a directinfluence on a firm’s profitability.
Fora long time, the airline industry has received much criticismconcerning the industry’s commitment to econ-friendliness andenvironmental conservation. According to Puntor and Karl (2014, p.221) these criticism revolve around the industry`s commitment tocontaining the release if greenhouse gases that have negativelyinfluence global warming. As such, airline companies that could bedepicted as non-eco-friendly could suffer severe reputation damagesthat could take several years to rebuild. This has prompted airlinecorporations and manufacturers of aircrafts to form environmentalpartnerships that aim to devise techniques of reducing the negativeenvironmental outcomes of air-travel. Such techniques includebiofuels and quieter takeoffs. This means that Oman Air canstrategically place itself reduce the environmental burdens of airpollution. By ensuring its aircrafts are environmentally friendly.
Theairline industry depends significantly on technological innovations.The availability of the most recent technologies is crucial inensuring all facets of the industry are up to the task. Pursuing thelatest technology will ensure Oman Air can serve a more diversifiedclientele.
Analysisof the Firm
OmanAir has experienced a steady growth in recent years. The increase isattributable to the strategic planning that the firm`s management hasutilized. There are three key strategic success factors for Oman Air.First, are brand loyalty and the quality of the services that theOman Air provides. Oman Air has successfully built its brand whichhas subsequently resulted in the loyalty of its clients who preferOman Air when travelling to different destinations that the airlinecorporation operates. Secondly, are internal and external economiesof scale (Lee,Seo & Sharma 2013).Despite the high operating expenses associated with the airlineindustry, the company has been able to maintain relatively lowexpenditures as a result of the scope of its operations. Effectivestrategic management has further facilitated lower operational costs.With the access to several international markets, Oman Air hasensured its profitability remains optimum. Finally, Oman Air hasmaintained its cost competitiveness. This has resulted in highpre-tax profitability margins. The corporation has inculcated aculture of balancing the travelling costs for passengers and theexpenditures that the company incurs in all its operations. Suchexpenses include fixed cost such as staff salaries and variable costssuch as fueling costs and maintenance costs.
Identificationof the Possible Scenarios
Businessand corporate strategies are permanent process for airline companiesin the modern era where competition in the industry is drivingstakeholders and managers in major airlines to devise strategies formaintaining their cutting edge. The strategies must, however, takeinto account the extent to which customers see the values for themoney they pay for travelling by air. In the past decades, airlinehad less elaborate business and corporate strategies for enablingthem to reach wider geographical markets. This is because theindustry operated with a few companies that maintained high levels ofmonotony in all their operations. Today, Oman Air, just like anymodern airline corporation has to take into consideration bothcorporate and business strategies for breaking even and climbing highranks in the industry.
In-flightservices include high seating arrangements, free soft drinks andmeals to all passengers. Some in-flight are usually free but somenecessitate the charging of a small fee for additional services thatare not enlisted in the free services. High seating arrangements areparticularly essential for long-distance passenger airlines whichguarantee that travelers obtain the best of comfort that can possiblyget when travelling by air. Adopting new strategies for ensuring thatsuch inflight services are maintained to the maximum standards iscentral in no only raising the profitability of Oman Air but also toensure the company can win the allegiance of its first-time and loyalclients. If Oman Air can come up with tactical ways of strategicallytransforming some of its in-flight services across all the 47 globaldestinations, the international clientele will increase.
Servicedifferentiation denotes the tactics that organisations utilize toensure that their commodities and services not only distinctive, butexceptional as well. One way of service differentiation is loweringthe costs of air-travel while, at the same time, maintaining qualityservice provision. This would influence passengers in all the 47nations that Oman Air operates that Oman Air is committed to reducingthe cost of air-travel. This can strategically increase the number ofclients that the firm serves. One way of attaining this corporatestrategic option is to enter into strategic alliances that will seethe airline reduce its overheads and other operating costs that arenecessary in implementing a cost reduction strategy.
Theuse of low-cost carrier planes is gaining momentum due to thesignificance it has cutting down the massive capital requirements inthe airline industry. Low-cost airplanes have positively impacted thegrowth of air traffic. For this reason, the use of low-cost carrierswould enable Oman Air to increase its daily flights. Embracing lowcost-carriers is not only beneficial to an airline companies but alsobeneficial to the environment. Low-cost airlines are alsoeco-friendly. This is because they consume less fuel which translatesto reduced fuel emissions.
Improvinghuman relations can take place in many ways. Provision of qualityservices in the service industry is the first major step to improvinghuman relations with the target customers for which Oman Air seeks toreach out. Another way of advancing human relations is througheffectual marketing strategies that would depict Oman Air as a uniqueairline corporation. Marketing can take place across a multitude ofplatform.
Businessstrategy denotes the approaches that an organisation uses to ensureits operational efficiency is optimum in a particular financial year.
Theairline industry, though being a service industry can make use of theretail model of providing services to clients. Oman Air can havestrategic locations to enable their clients to have one-stop shoppingexperiences. These experiences would enable customers to make alltheir purchases at designated areas that give them adequateconvenience. The increasing competition in the airline industry alsoimplies that utilising the model could mean the strategic use ofdoo-to-door services that facilitate the process of delivering cargoto customers. This is especially important for the cargo airliners.From a critical angle, the retail model implies that airlinecompanies such as Oman Air, Dubai Air, Etihad Airline and EmirateAirline source aircraft supplies from companies such as Airbus andBoeing, customize their services and present the customized servicedto their customers.
Havingproper alliances is imperative to expanding the operationalefficiency of any airline firm. Business partnerships have severalmerits to the airline industry. For instance, since the capital andoverhead requirements for operating in the industry are immense,business partnerships and alliances can play a central role inbalancing the capital and overhead burdens. This will eventuallyreflect in reduced travelling expenses for passenger and cargoplanes. These partnerships and alliances can either be permanent ortemporary. Either way, both strategies are imperative to ensuringthat the operations of Oman Air grow steadily and effectively at thesame time.
Evaluationof the Strategy and Recommendation
Evaluatingthe strategic options that corporate organisations have is vital inchecking whether an organisations’s strategic choices and plans arein accordance with its objectives and goals. Moreover, assessment isimperative to ascertaining that a firm’s corporate and businessstrategic can place it a better position to maintain competitive in adynamic business world. This means that evaluating the corporate andbusiness strategies that Oman Air has is central to improving thecorporation’s overall performance. For many Airline corporations,evaluating their strategies simply denotes appraising how acorporation has performed in the light of what other competitorsoffer. Evaluation takes four main forms. These are: feasibility,consistency, advantage and consonance. Feasibility denotes thecapacity of a strategy to solve certain issues that it the strategyis expected to solve. Advantage denotes the capacity of a strategy tocreate a competitive and comparative advantage in a competitiveindustry. A consonance indicates the assessment of the extent towhich a strategy adapts to changes. Consistency refers to ability ofa strategy to remain dependable. The corporate and businessstrategies identified above are all appropriate for Oman Air.Implementing both the corporate and business strategies is vital inensuring the Oman Air remains not only competitive but profitable andsustainable as well. A valid strategy is one that bringsextra-ordinary outcomes for a company that only depends on ordinaryresults. This means that assessing the extent to which the strategicoptions that Oman Air will ensure the firm remain competent.
Startingwith in-flight services, the availability of high seatingarrangements for instance is applicable and relevant in so far as theresources at the company’s disposal are concerned. When travellersare guaranteed proper seating arrangement in the flights they travelin, they are certain to come back. This can form a strong basis forensuring the airline company maintains its ground. As such, in-flightservices have a high consonance, advantage, consistency and is highlyfeasible.
Interms of performance, all the corporate and business strategicoptions that Oman Air has are key in ensuring that the orgnisation’sperformance is up to the task. For instance, service differentiationwould be highly reliable in ensuring that Oman Air’s commoditiesand services would not only become distinctive, but exceptional aswell. One way of service differentiation is lowering the costs ofair-travel while, at the same time, maintaining quality serviceprovision. This would influence passengers in all the 47 nations thatOman Air operates that Oman Air is committed to reducing the cost ofair-travel. This can strategically increase the number of clientsthat the firm serves. One way of attaining this corporate strategicoption is to enter into strategic alliances that will see the airlinereduce its overheads and other operating costs that are necessary inimplementing a cost reduction strategy. Therefore, from a criticalpoint of view, the use of service differentiation would serve asmeans of making Oman Air have a high performance output.
Theinternal consistency of Oman Air is also central in ensuring thecorporation maintains a sustainable form of growth that would see ittraverse several geographical markets that are currently under thedomination of Gulf competitor airlines such as Etihad Airline. Theuse of low cost carriers as a corporate strategy is important inmaintaining a stable pace in the organisation. The use of low-costcarrier planes is gaining momentum due to the significance it hascutting down the massive capital requirements in the airlineindustry. This is due to the consistency that comes with having lowoperational costs in passenger and cargo transport. Low-costairplanes have positively impacted the growth of air traffic. As suchoperational consistency will continue inspiring the expansion of airtransport. For this reason, the use of low-cost carriers would enableOman Air to increase its daily flights. Embracing low cost-carriersis not only beneficial to an airline companies but also beneficial tothe environment
Interms of feasibility, some business strategies may appear as thoughthey could be far from feasible. However, in the case of Oman Air,the strategic options are highly feasible. For instance, the retailmodel is feasible in so far as meeting the prospects of clients isconcerned. Evaluating the feasibililty of a strategy entails theprocess of enquiring whether a corporation has the capacity toimplement a prospective strategy. Usually, this is normally withrespect to the personnel and resources that an organisations has. Theuse of the retail model is essential in meeting the long termobjectives of Oman Air. The airline industry, though being a serviceindustry can make use of the retail model of providing services toclients. Oman Air can have strategic locations to enable theirclients to have one-stop shopping experiences. These experienceswould enable customers to make all their purchases at designatedareas that give them adequate convenience. The increasing competitionin the airline industry also implies that utilising the model couldmean the strategic use of doo-to-door services that facilitate theprocess of delivering cargo to customers. This is especiallyimportant for the cargo airliners. From a critical angle, the retailmodel implies that airline companies such as Oman Air, Dubai Air,Etihad Airline and Emirate Airline source aircraft supplies fromcompanies such as Airbus and Boeing, customize their services andpresent the customize serviced to their customers. For this reason,Oman Air can utilize the immense resources and expertise at itsdisposal to ensure it reaches the retail model target.
Assessingthe clarity of purpose of both business and corporate strategies iscrucial in ascertaining the strategic options that Oman Air has arewell articulated. For instance the use of alliance and businesspartnerships would steer the airline to massive success. Havingproper alliances is imperative to expanding the operationalefficiency of any airline firm. Business partnerships have severalmerits to the airline industry. For instance, since the capital andoverhead requirements for operating in the industry are immense,business partnerships and alliances can play a central role inbalancing the capital and overhead burdens. This will eventuallyreflect in reduced travelling expenses for passenger and cargoplanes. These partnerships and alliances can either be permanent ortemporary. This would offer the opporutinity to make every operationgoal oriented.
Thisreport presented the strategic options for Oman Air. The reportconsolidated the strategy for Oman Air by analysing the industry andthe firm, the concepts underpinning the corporate and businessstrategy and evaluation of strategies that are suitable for theMuscat-based airline company. Astudy of the case scenario of Oman Air can assist corporate managersin the av industry to gain a deep understanding of the intricacies ofstrategic management in a dynamic corporate world where exploring thestrategic positions, options and actions are becoming inevitable. Thereport explores the core competencies that Oman Air can utilize togain both comparative and competitive advantage over its competitorsin the competitive airline industry. Consolidating the strategicmanagement options at the disposal of Oman Air is crucial in costreduction, maintaining the corporation`s efficacy and penetratingpotential markets.The following are the recommendations for market penetration and costreduction for Oman Air:
The airline corporation can increase the number of cargo planes to Europe to attain a higher pre-tax profitability margin.
Oman can enter into strategic alliances to further reduce the current operational costs. This will enable the company to lower its ticket prices which, in turn, will enable the company to reach a wider geographic market.
Before Oman Air enters into strategic alliances, it should conduct comprehensive background checks on the corporation it would liaise with for such an alliance.
The airline corporation should carry out a business process re-engineering (PBR) to restructure its activities. This will ensure the company ascertains that its 6733 members of staff contribute towards the attainment of the objectives of the organisation (Oman Air 2015, p. 13). BPR will also ensure that the corporation’s cargo tonnage are not stretched beyond its limit.
Bharadwaj,A., El Sawy, O.A., Pavlou, P.A. and Venkatraman, N.V., 2013. Visionsand voices
onemerging challenges in digital business strategy. MISquarterly, 37(2),pp.14-001.
Boeing,2016. Airlinestrategies and business models.[Online] (Updated 15 Oct. 2016) Availableat: <http://www.boeing.com/commercial/market/long-term-market/airline-strategies-and-business-models/> [Accessed 11 Dec. 2016]
Johnson,G., Whittington, R. Scholes, K., 2012. Fundamentalsof strategy.London: Brook-Cole.
Johnson,G., Whittington, P., Angwin, D., Regner, P. & R. Scholes, K.,2014. Exploring
Strategy:Text and Cases.London: Brook-Cole.
Kuo,T.C., Kremer, G.E.O., Phuong, N.T. and Hsu, C.W., 2016. Motivationsand barriers for
corporatesocial responsibility reporting: Evidence from the airlineindustry. Journalof Air Transport Management, 57,pp.184-195.
Lee,S., Seo, K. and Sharma, A., 2013. Corporate social responsibility andfirm performance in
theairline industry: The moderating role of oil prices. TourismManagement, 38,pp.20-30.
Litov,L.P., Moreton, P. and Zenger, T.R., 2012. Corporate strategy, analystcoverage, and the
uniquenessparadox. ManagementScience, 58(10),pp.1797-1815.
OmanAir, 2016a.OmanAir.[Online](Updated 25 Nov. 2016) Available at: <http://www.omanair.com/en/>[Accessed 11 Dec. 2016]
OmanAir, 2016b. AnnualReport 2015: Our Journey to become the Best.Muscat: OAPL.
Pierson,K. and Sterman, J.D., 2013. Cyclical dynamics of airline industryearnings. System
Portney,P.R. ed., 2016. Publicpolicies for environmental protection.London: Routledge.
Puranam,P. and Vanneste, B., 2016. CorporateStrategy: Tools for Analysis and Decision-
making.Cambridge: Cambridge University Press.
Verbeke,A., 2013. Internationalbusiness strategy.Cambridge: Cambridge University Press.
Wensveen,J.G., 2016. Airtransportation: A management perspective.London: Routledge.
Young,J.D.A., 2016. Evaluating Key Factors of Innovation as a CorporateStrategy. The
InternationalJournal of Business & Management, 4(4),p.270.