Jet Airways is one of the biggest airline companies in India. The company started its
operations in May, 1993 from Mumbai/India. The main products of the company are
passengers air transportation, cargo service and services such as City Check-in or Ramp
handling. Jet Airways operates 340 flights daily and mostly to their 44 domestic
destinations but the company also serves the six following international destinations:
Malaysia, Nepal, Singapore, Thailand and the United Kingdom. Jet Airways’ revenue in
2006 accounted for 1379.9 million USD, which signifies an increase of 38.8%
compared to 2005 (ICFAI, 2005).
The trend of fast global travel goes together with the strong supplier power, as aircraft
manufacturing is dominated by a duopoly. The global airline industry is a deregulated
industry which attracts new entrants (airlines) and the most successful segment is the
domestic one, with a volume of 67.3%. Another indication for more and fast global
travel are growing passenger numbers of 6.5% (2002-2006)(ICFAI, 2005).
Table of Contents
1. Introduction
2. TOWS- Analysis
3. SAF-Analysis
4. Choice of Strategies
5. Risk Assessment
5.1 Short-Term Strategy
5.2 Mid-Term Strategy
5.3 Long-Term Strategy
6. Implementation
6.1 Short-Term Strategy
6.2 Mid-Term Strategy
6.3 Long-Term Strategy
7. Monitoring & Control
8. Conclusion
9. References
1. Introduction
Jet Airways is one of the biggest airline companies in India. The company started its operations in May, 1993 from Mumbai/India. The main products of the company are passengers air transportation, cargo service and services such as City Check-in or Ramp handling. Jet Airways operates 340 flights daily and mostly to their 44 domestic destinations but the company also serves the six following international destinations: Malaysia, Nepal, Singapore, Thailand and the United Kingdom. Jet Airways’ revenue in 2006 accounted for 1379.9 million USD, which signifies an increase of 38.8% compared to 2005 (ICFAI, 2005).
The trend of fast global travel goes together with the strong supplier power, as aircraft manufacturing is dominated by a duopoly. The global airline industry is a deregulated industry which attracts new entrants (airlines) and the most successful segment is the domestic one, with a volume of 67.3%. Another indication for more and fast global travel are growing passenger numbers of 6.5% (2002-2006) (ICFAI, 2005).
2. TOWS- Analysis
Choosing the correct business strategies is essential for the future development of
Jet Airways. Thereby the development of a TOWS analysis, which is shown in figure 1, is a useful tool to evaluate different strategic options (Adcock et al., 2001). By systemising the different strategic options from the SWOT analysis, the TOWS highlights which options might be the best (Weihrich, 1995).
External opportunities and internal strengths combined, for instance, result in two strategies: the Grand Strategy of Stability (1) and the Strategy of Product line Extension (2). Furthermore, the combination of internal weaknesses and external opportunities result in three possible strategies: the Partnership Strategy (3), the Internal Diversification Strategy (4) and the Internal Stability Strategy (5). Deriving from external threats and internal strengths, an External Growth Strategy (6) and a Partnership Strategy (7) can be developed. Finally, the internal weaknesses and the external threats can also be combined. The result is the Retrenchment Strategy (8).
The number of strategic options available in this case is very high. However,
Jet Airways has to consider external realities and internal capabilities. In addition to opportunities and risks, there is the fact that environments are not static but subject to constant change (Adcock et al., 2001).
Figure 1
illustration not visible in this excerpt
TOWS analysis (Source: adopted by MindTools, 2008)
3. SAF-Analysis
The main strategy and as well strategic alternatives are very important to guarantee the
success of a business strategy (Aaker, 2008). During this process, different strategic alternatives, which are developed in the TOWS matrix, will be evaluated and one will be considered each for long-, mid- and short-term of future planning. By evaluating these different strategic options, the SAF-analysis is very helpful, which is shown in table 13. Thereby “S” stand for “suitability”, “A” for “Acceptability” and “F” for Feasibility. According to Johnson et al. (2006, p.357) suitability finds out if a “strategy
addresses the circumstances in which an organisation is operating –the strategic position.” Acceptability is more about the outcomes and expected performance of the
strategic option. Finally, feasibility investigates if the resources and core competencies of a company suffice in order to deliver the strategy.
Investigating SAF, different factors are determined in order to evaluate the developed strategies: customer demand, strategic performance, improvement of competitive position, resources, core competencies and profitability. The resulting strategies according to the rankings are External Growth Strategy & Partnership Strategy for rank one, Product line Extension & Partnership Strategy for rank 3, Stability & Internal Stability for rank 5, Internal Diversification for rank 7 and finally the Retrenchment Strategy for rank 8. This can be seen in table 1.
illustration not visible in this excerpt
Table 1
SAF-Analysis (Source: adapted from Johnson & Scholes, 2006)
Description: Yes = ü No = û not sure = ?
4. Choice of Strategies
After applying the SAF, following strategies were selected. As a short-term strategy, a mix of Grand Strategy of Stability and Internal Stability will be used. In the dynamical business environment of the airline industry, it is essential for Jet Airways to operate in a stable internal environment. Stability is the foundation of an organisation and company. Jet Airways must ensure that the occurrence of risks will be avoided by developing specific risk plans to mitigate those risks.
For the mid-term, mixes of different Partnership Strategies are most suitable, which include Alliances and Code share Agreements. Alliances are a quite common practice of the big players in the airline industry such as Lufthansa, British Airways and Quantas. They give stability in the market, strategic advantages concerning fuel and aircraft purchase and a competitive advantage. Furthermore, on one hand, code share agreements allow Jet Airways to work under the name of another company and provide transfer flights inside India, for example for Lufthansa, and on the other hand smaller Indian airline companies such as “Go Air” that connect smaller cities can provide flights in the name of Jet Airways that just connect big Indian cities.
As long-term strategy, the extension of the current product line by buying a well-established business hotel chain is recommended. The company will be able to gain revenue in the hospitality sector and therefore enter a growing market. In the case of a successful product implementation, the further expansion of the product line such as car rental and coach transportation is possible.
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