COMPANY NAME: KINGFISHER AIRLINES
1) INTRODUCTION ABOUT COMPANY
2) LITERATURE REVIEW
· STRATEGIES ADAPTED BY THE COMPANY
·
· SWOT ANALYSIS
3) CONCLUSION
4) REFERENCES
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1) INTRODUCTION ABOUT COMPANY
Kingfisher Airlines is
In just over two years, Kingfisher Airlines has achieved a market share of 10% and has one of the most aggressive expansion plans of all Indian carriers during 2007. In Jun-07, it dramatically increased its influence in the market with the acquisition of a 26% shareholding in
Kingfisher Airlines is part of The UB Group which is one of
Kingfisher Airlines currently operates with a brand new fleet of 8 Airbus A320 aircraft, 3 Airbus A319-100 aircraft and 4 ATR-72 aircraft. It was the first airline in
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GEOGRAPHIC SCOPE
Kingfisher Airline is a private airline based in
SERVICES OFFERING BY KINGFISHER AIRLINES
In a short span of time Kingfisher Airline has carved a niche for itself. The airline offers several unique services to its customers. The services offering by Kingfisher airlines are offering of world class in-flight entertainment with personalized video screens on every seat with 10 channels of chartbusting Kingfisher Radio and 5 channels of the trendy FUN TV, personal valet at the airport to assist in baggage handling and boarding, exclusive lounges with private space, accompanied with refreshments and music at the airport, audio and video on-demand, with extra-wide personalised screens in the aircraft, sleeperette seats with extendable footrests, spacious leg room and large over-head storage space, international cabin crew and designer interiors. For the passengers, Kingfisher airline offering the gourmet meals of breakfast, lunch and dinner in vegetarian and non-vegetarian options. For welfare of the clients, Kingfisher airlines providing low fat, low-sugar meals.
USING THE ADVANCED TECHNOLOGY
They selected Honeywell avionics systems, it will give the number of new features to A320 family, A330 and A340 aircraft, it include Enhanced Ground Proximity Warning System (EGPWS), Airborne Collision Avoidance System (ACAS II), Weather Radar with Forward-Looking Windshear Detection, solid state Flight Data Recorder (FDR) & Cockpit Voice Recorders (CVR), Quantum™ Line Communications & Navigation System (CNS), Flight Management Systems (FMS) and Air Data Inertial
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Reference System (ADIRS). Kingfisher also selected high speed Satellite Communication System (SATCOM) on its A330 and A340 fleet (www.1).
2) LITERATURE REVIEW
2.1) STRATAGIES WERE USED BY KINGFISHER AIRLINES
a) Merging
According to Johnson (2008), Merging can be defined as combination of the assets and liabilities of two firms, forming a single business entity. Kingfisher airways merged the
b) Market development
In future Kingfisher airlines want to promote their services from domestic airlines to international airlines. So Kingfisher airlines following the market development strategy, it moves beyond its immediate customer base towards attracting new customers for its existing products and services. This strategy often involves the sale of existing products and services into new international markets. This may entail exploration of new segments of a market, new uses for the company’s products and services, or new geographical areas in order to entice new customers (Lynch, 2003).
c) Cost leadership
At present Kingfisher Airlines using the strategy of cost leadership that is offering the air fare with low fares but elaborate services. The kingfisher airlines company attempting to become the lowest-cost producers in an industry, so the strategy can be referred as cost leadership strategy. The company with the lowest costs would earn the highest profits in the event when the competing products and services are essentially undifferentiated, and selling at a standard market price. By following this strategy any company place emphasis on cost reduction in every activity in the value
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Chain but Kingfisher airlines not doing it. It is important to note that a company might be a cost leader but that does not necessarily imply that the company’s products and services would have a low price. In certain instances, the company can for instance charge an average price while following the low cost leadership strategy and reinvest the extra profits into the business (Lynch, 2003).
The risk of following the cost leadership strategy is that the company’s focus on reducing costs, even sometimes at the expense of other vital factors, may become so dominant that the company loses vision of why it embarked on one such strategy in the first place
d) Market penetration
Kingfisher airlines using Market penetration strategy at domestic airlines to improve number of travelers travelling by Kingfisher airlines by improving the number of services offering. Market penetration means company penetrates a market with its current products. It is important to note that the market penetration strategy begins with the existing customers of the organisation. This strategy is used by companies in order to increase sales without drifting from the original product-market strategy (Ansoff, 1957). Companies often penetrate markets in one of three ways: by gaining competitors customers, improving the product quality or level of service, attracting non-users of the products or convincing current customers to use more of the company’s product, with the use of marketing communication tools like advertising etc. NDTV India’s first lifestyle channel collaborated with the kingfisher brand (Ansoff, 1989, Lynch, 2003). This strategy is important for businesses because retaining existing customers is cheaper than attracting new customers.
e) Acquisition
Kingfisher airline is using the strategy of Acquisition. Acquisition means tends to be used when a larger firm absorbs a smaller firm and merger tends to be used when the combination is portrayed to be between equals. That means taking the ownership of another organization. Kingfisher airlines are using this strategy for acquisition of aircrafts.
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But Kingfisher airlines are planning to concentrate on both existing customers as well as new customers.
f) Differentiation
In the beginning kingfisher airlines used the strategy of differentiation it means charging a premium price for its services in the market because kingfisher airlines are offering exclusive services and first class service. The services which are offering by the kingfisher airlines can differentiate, in comparison with the existing competitors. Porter (1980) has argued that for a company employing a differentiation strategy, there would be extra costs that the company would have to incur. The extra costs kingfisher airlines doing is because of extra services like hospitality services and include high advertising spending to promote a differentiated brand image for the product, which in fact can be considered as a cost and an investment.
Differentiation has many advantages for the firm which makes use of the strategy. Some problematic areas include the difficulty on part of the firm to estimate if the extra costs entailed in differentiation can actually be recovered from the customer through premium pricing. Moreover, successful differentiation strategy of a firm may attract competitors to enter the company’s market segment and copy the differentiated product (Lynch, 2003). By using the differentiation strategy kingfisher airlines got losses, it is not suitable for them because the price of the fare high. So very less people afforded to travel by kingfisher airlines. Kingfisher airlines are targeting only high class or rich people who will spend more money for comfortable travelling. So at present they are targeting middle class people who can afford somewhat to travel by airways. For capturing those people the fare should be less it means the middle class person also afford to travel.
2.2) PESTEL analysis:
For analyzing the macro-environment, it is important to identify the factors that might in turn affect a number of vital variables that are likely to influence the organization’s supply and demand levels and its costs (Kotter and Schlesinger, 1991; Johnson and Scholes, 1993). The “radical and ongoing changes occurring in society create an uncertain environment and have an impact on the function of the whole
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organization (Tsiakkiros, 2002). PESTEL analysis is one of them that are merely a framework that categorizes environmental influences as political, economic, social, technological forces, environmental and legal. The results can then be used to take advantage of opportunities and to make contingency plans for threats when preparing business and strategic plans (Byars, 1991; Cooper, 2000).
Kotler (1998) claims that
The use of
Political factors:
- Whether Government support for national carriers
- Knowing Security controls
- Restriction on migrations
Economical factors
· How will be the National growth rates i.e. whether increase or decrease
· Fuel prices will increase or decrease. For example fuel rates are increased then its necessarily to increase the price of the fare. Again there is a problem if fare is increased the number of customers travelling by airways will reduce, it leads to less turn over.
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Social
· rise in travel by elderly
· student international study exchanges
Technological
· fuel-efficient engines and airframes
· security check technologies
· teleconferencing for business
Environmental
· noise pollution controls
· energy consumption control
· Land for growing airports
Legal
· Restrictions on mergers
· Preferential airport rights for some carriers
2.3) SWOT Analysis
An evaluation of an organization’s strengths and weaknesses in relation to environmental opportunities and threats is generally referred to as a SWOT analysis.
Environmental opportunities are only potential opportunities unless the organization can utilize resources to take advantage of them and until the strategic leader decides that it is appropriate to pursue the opportunity. It is therefore important to evaluate environment opportunities in relation to the strengths and weaknesses of the organization’s resources, and in relation to the organization’s resources, and in relation to the organizational culture. Real opportunities exist when there is a close fit between environment, values and resources.
The wizardry of SWOT is the matching of specific internal and external factors, which creates a strategic matrix and which makes sense. It is essential to note that the internal factors are within the control of organisation, such as operations, finance, marketing, and other areas. On the contrary, the external factors are out of the organisation’s control, such as political and economic factors, technology, competition,
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and other areas. The four combinations are called the maxi-maxi (strengths/opportunities), maxi-mini (strengths/threats), mini-maxi (weaknesses/opportunities), and mini-mini (weaknesses/threats). Weihrich (1982) describes the four combinations as follows:
1. Maxi-maxi (S/O). This combination tells the organisation’s strengths and opportunities. In essence, an organisation should strive to maximise its strengths to capitalise on new opportunities.
2. Maxi-mini (S/T). This combination tells the organisation’s strengths in consideration of threats, e.g. from competitors. In essence, an organisation should strive to use its strengths to parry or minimise threats.
3. Mini-maxi (W/O). This combination tells the organisation’s weaknesses in tandem with opportunities. It is an exertion to conquer the organisation’s weaknesses by making the most of any new opportunities.
4. Mini-mini (W/T). This combination tells the organisation’s weaknesses by comparison with the current external threats. This is most definitely defensive strategy, to minimise an organisation’s internal weaknesses and avoid external threats.
Kingfisher airlines Strengths
- Superior product on ground; in the air Jet business class is being equated with Kingfisher's economy.
- UB group backing for raising financing.
- The Kingfisher airline is well capitalised airline, prepared to take losses.
- Better handling of employees and staff; less centralised style of functioning
- Chairman Mallya's grand vision where it is looking to be among the best in the world
- The
- First airline with full new fleet of aircraft
- Brand image with Flamboyant personality of vijaya mallya
- Unmatched in flight service
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- Exclusive terminal share deal
- Route rationalization
Kingfisher airlines Weaknesses
- Kingfisher is yet to build itself into an organisation; structures yet to fall in place
- Not as professionally run as Jet; yet to build a professionally competent team
- Chairman's people skills are better but employees have to work very erratic hours
- Unable to leverage connections to the same extent while lobbying
- Service delivery to metros and other big cities only but they are planning to increase the service delivery.
- At present Kingfisher airlines are not earning the profits.
- High ticket pricing but now they are changing their policy
- High attrition in top brass
Kingfisher airlines opportunities
- The domestic market of
- International market exposure
- Untapped air cargo market
- Expanding tourism industry in the country
- Fleet size expansion
Kingfisher airlines Threats
- Existing operators
- Problem of Infrastructure issue
- Fuel price hike (www.2, www.3).
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3) CONCLUSION
Kingfisher airlines having the chance to become leading domestic airline industry and then they have the chance to become the world leading traveler because kingfisher airline is economically strong with personal care of passengers by providing more hospitality services and by using the good business models and different strategies according to the situation. Kingfisher airlines can maximize performance by striving to be the cost leader in an industry, by differentiating its services from those of other airways company, and by focusing on a narrow target in the market. By using the PESTEL analysis kingfisher airlines can looks the external business environment and it will help to operate the business, enabling to take the advantage of the opportunities and they can minimize the threats faced for doing business activities.
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REFERENCES
Ansoff, I. H. (1957), Strategies for diversification, Harvard Business Review, Vol. 35, No. 2, p. 113-124.
Ansoff,
Byars, L. (1991) Strategic Management, Formulation and Implementation – Concepts and Cases,
Johnson, G. and Scholes, K. (1993) Exploring Corporate Strategy – Text and Cases,
Kotter, J. and Schlesinger, L. (1991) Choosing strategies for change, Harvard Business Review, pp.24-29.
Kotler, P. (1998) Marketing Management – Analysis, Planning.
Lynch, R. (2003), Corporate Strategy, 3rd ed., Prentice Hall Financial Times.
Weihrich, H. (1982) The TOWS matrix: a tool for situational analysis, Journal of Long Range Planning, Vol. 15 Issue 2, pp.12-14.
www.1---indiaaviation.aero/news/airline/7036/Kingfisher+in+talks+to+purchase+40 +Airbus+aircraft
www.2---www.rediff.com/money/2007/dec/01spec.htm
www.3--- www.slideshare.net/hiteshmanek/kingfisher-airline
www.4---www.kingfisherairlinesopen.com/press2.php
www.5---www.iloveindia.com/airlines-in-india/domestic/kingfisher-airlines.html
www.6---indiaaviation.aero/news/airlineCarrier/view/87/107/Kingfisher+Airlines