Executive Summary
Businesses undergo various changes depending on the situation in the industry and the demand for change by the internal and external environment. One change that happens to business is improvements in the technologies they use. Business improves their technologies so that they can create better products, improve their competitiveness against other firms and provide better service to clients. They also improve their technologies to correct any things not working well for the company’s operations. The improvements in the technologies can make the business and the employees perform better or it can create more problems for the company. This paper will focus on the business change done on the travel service industry.
People travel most of the time because of different needs and different reasons. People always look for the kind of travel services that will give them excellent kind of care and services. There are many companies who offer such kind of travel services. One of these companies is Cathay Pacific Airways; this company strives to continue to be a leader in the industry it belongs to. This report will give a history and background of the said industry. This report will also discuss a background of Qantas and the failed take over bid. The report will also discuss how the company used decision making on the issue of the failed takeover. The report will discuss on how decisions in the company should be implemented and evaluated. The paper will also determine the importance of decision making to the company.
Contents
Executive summary
1. Introduction
Organizational Structure
2. Brief of the case object
3. Drivers of change
External Driver
Internal Driver
4. Description for current scenario
Organization growth stage
The scope of change
The process of change
5. Sources of resistance
6. Assessment styles of leadership
7. Prognosis
8. Key issues in implementation
9. Conclusion
10. References
Introduction
Cathay Pacific was generally seen as a quality airline, but one strongly associated with Hong Kong’s colonial past. A major challenge for the future was for Cathay Pacific to be perceived as more Asian rather than British/Asian in order to strengthen its market abilities in Asia including attracting a wider Asian customer base, as well as to reflect the changed political realities in Hong Kong. In short, the company needed to align its Conceived Identity with its new Identity. Cathay Pacific chose to undertake this identity realignment through a massive coordinated set of initiatives intended to transform the reality of the company to achieve the new perceptions that would reflect the new strategy and permit communications based on the substantive changes (Balmer & Greyser 2003). Cathay pacific is one of the most well known airline company in the world. It competes with different airline companies for prestige and notoriety in the airline industry. Recently the company underwent a change in image and strategies to counter the problems its industry has. It shifted the focus of its strategy into making sure that their will be an increase of clients who demanded their services, it also made sure that the services and technologies they use can be competitive to other airlines company. The company has taken advantage of the information technology revolution and updated it with their ticketing system and booking system. The company makes sure that whenever someone wants to have his/her flight booked the data they will share can be available within minutes and information can be easily found. The company’s system also makes it easier for a client to transact for tickets and acquire that ticket that will be used for the flight.
Organizational structure
The company‘s top man is the Chairman Christopher Dale. The CEO of the company is Anthony Tyler. The finance director is Robert Atkinson. They are the ones that lead the company; underneath them are department heads, sector managers and other personnel that work in different locations. This structure of the company intends to promote teamwork and camaraderie amongst the members of the organization. The people responsible for decisions on strategies the company intends to use include the Chairman and the CEO.
Brief for the case object
The airline industry presents a paradox. For the last fifty years it has been characterized by continued and rapid growth in demand for its services. Yet it has remained only marginally profitable. Inevitably growth was much faster in the 1950s and 1960s when aviation was a new industry than it is today when it is reaching maturity. But growth rates are still impressive. In the 1950s and 1960s the world’s air traffic grew on average at around 14-15 per cent each year (Doganis 2002). In the decade 1970-79 the annual growth was close to 10 per cent. This still meant that air traffic, and the airlines with it, doubled in size every seven years or so. In the following ten years to 1989 growth declined to around 6 per cent annually and in the decade up to 1999 growth was down slightly at 5.2 per cent. In absolute terms, because of the much higher base, a 5 per cent jump in recent years represents a much greater surge in demand than a 10 per cent annual growth thirty years ago (Doganis 2002).
The airline industry appears to be cyclical and this inevitably impacts on growth rates from year to year. Nevertheless the underlying trend has been one of declining but consistently good growth in demand. Most industries or businesses faced with continued and high growth of demand for their products or services would be basking in substantial profits. Not so the airlines. This is the paradox. The financial performance of the world’s airlines taken as a whole has been very marginal, even in the years when the industry was highly regulated and largely protected from internal competition. The traditional measure of profitability, namely the rate of return on assets employed, cannot be applied to the airline industry as a whole (Doganis 2002). This is because of the difficulty of estimating real asset values for airlines with varied depreciation policies, using varying proportions of leased equipment and often receiving direct or indirect government subsidy in a variety of forms. Another measure of profitability commonly used among airlines is the operating ratio, which is the annual operating or net profit or loss expressed as a percentage of the total annual revenue. The cyclical nature of the airline industry is clearly evident. Four to five years of poor or bad performance are generally followed by an upturn and five or six years of improving results (Doganis 2002).
However, even in the good years profit margins are low. The net profits after interest and tax rarely achieve even 2 per cent of revenues. Airlines can be low-cost and very unprofitable or high-cost and financially sound. Unit costs or unit revenues are not critical in themselves (Doganis 2002). The airline industry has its own share of problems over the years; this does not mean that companies in this industry should be affected by such situation. To conquer the problems, the industry influences companies belonging to it to alter their strategies and relate it to strategies used by other industries. One company trying to succeed in the industry is Cathay Pacific. It constantly changes its strategies to meet the demands of the environment. The paper will discuss about the company, its strategies and the changes in its strategies. The paper will also discuss about the drivers of change for the company.
Drivers of change
External drivers
Political
The company will not get any good reputation, trust and success if it will not be aware of what is happening in the political sector of the country. The company and the airline industry have made sure that they were aware of the political situation of every country they have operated in and the company has its position with regards to political issues. Cathay Pacific is continuously prepared for any problems concerning the political sector.
Economic
Cathay pacific can be said to be economically stable for the past years. Its economic stature is doing well that’s why they try to improve their products to give the best to their clients. It is not only the internal economic situation of the company should be taken note of but also the economy of the country, the company checks first the economic status of the country they are operating in before making decisions because making decisions during a difficult time on the economy of another country may cause catastrophe for the company.
Social
Cathay Pacific makes sure that the service they offer and the technology they use to tender their services will be accepted by the public. The company does not authorize the delivery of some services they know will cause outbursts or complains from different group in the society. The entertainment provided in flights will not contain anything that will cause problems with the passengers. The company also engages in social activities that tend to develop a better relationship between them and the clients. These activities can be in the form of outreach programs and free tickets to special people.
Technological
Cathay Pacific offered new innovations in its technological aspect and introduced new concepts with regards to its industry. Since technology rapidly changes the company and the company makes sure they are updated to what is happening and they can adjust to these changes. Cathay Pacific makes sure that the services they offer are updated with regards to what technology is used to tender their services. If other companies use new technologies to provide services, the company has the technology capable of competing with such technologies.
Legal
In any country there are laws that need to be followed. These laws restrict or allow any action to be done. The laws make sure that the people do what is right and just. It prevents any arguments or differences. Cathay Pacific makes sure that it follows the different laws of a country they engage transaction in. The company also makes sure that the different local and international transportation laws are followed in any trips made by the company. The company doesn’t want to risk their client’s welfare by breaking local and international transportation laws. Cathay Pacific follows the international air travel laws that provide regulations for different things like the route allowed for every flight.
Environmental
The world is starting to be more conscious of building a better future for the children. Every possible way to ensure a better future is used. Different organizations are doing things to ensure that the future will be a bright one. Cathay Pacific makes sure that the technology they use to tender services to their clients will cause minimal problems to the environment. The technology should pass certain standards or the requirements of the state. The company puts up certain regulations on the gases and other equipments used on the air transport devices. The company then makes sure that the gases and the equipment will not be the source of more environmental problems. The company has also introduced better waste management strategies that aim to reduce pollutants and create a cleaner environment for the future.
Internal Drivers
Stage of growth
Stage I of organizational growth is the inception of a new venture. In this stage the critical issues for management are to identify the markets and niches that will be served and to develop the products or services appropriate to the selected market segments. During stage I, the firm must perform all of the critical tasks of organizational success; however, the relative emphasis will be on the first two tasks: defining markets and developing products. If an organization successfully completes the key developmental tasks of stage I, it will reach stage II-the rapid growth or expansion of sales revenue, number of employees, and so forth. Expansion presents a new set of developmental challenges (Golembiewski 2000). Organizational resources are stretched to the limit as increasing sales require a seemingly endless increase in people, financing, equipment, and space. Similarly, the firm’s day-to-day operational systems for recruiting, production or service delivery, purchasing, accounting, collections, and payables are overwhelmed by the sheer amount of product or service being pushed to the door. The major problems of stage II are those of growth rather than survival (Golembiewski 2000).
During stage III of an organization’s life cycle the emphasis must be on the management systems, To this point, it was possible for managers to be hands-on doers, but what is increasingly required are people who are adept at administration: planning, organization, motivation, leadership, and control. Thus the individual manager is faced with a personal transition; He or she must increasingly adopt not merely the title but the behavior and psychology of a manager. During the growth to stage IV, the firm brings in new waves of people. The key problem in stage V will be to develop new products and services to facilitate additional growth. Typically a firm will grow to a point as a result of its initial products or service. Beyond that point the firm may well have to develop new products or services to facilitate future growth. This stage requires the reintroduction of the entrepreneurial spirit that launched the firm and also involves the development of segments of the firm that resemble new ventures. The firm’s growth from the diversification that took place in stage V has made it significantly larger and more complex. It may have geographically dispersed divisions, for example, which results in new organizational problems. In essence, each location of the organization is a different business, but also part of a larger entity (Golembiewski 2000).
Accordingly, the key management challenge for the firm will be to integrate the separate units into an operating whole while simultaneously allowing them to realize the benefits of quasi-decentralization. It appears inevitable that all organizations will ultimately decline, and the key issue at this stage is organizational revitalization. The organization will have to deal with the symptoms of aging. It will have to find new markets in order to reestablish itself as a viable competitive entity (Golembiewski 2000). The growth of a firm will depend on how its development prospers. Each stage of a firm’s development is important and vital for the firm’s success. The stage must have been successfully completed before any change to another stage so that any problems will not pent up and will not cause bigger barriers to the organizations success. The changes in each stage will help a company in determining whether it is ready to advance to a new stage or downgrade to a former stage.
Description for current scenario
Organization growth stage
Stage 1
Different problems and the consequent effects of these problems initiated the need for change for organizations. In the first stage the focus of the company was to determine the main problem, what caused it and what can be done to solve it. In the first stage of growth Cathay Pacific take a look at its systems and how its system provides service to the clients. Cathay Pacific made use of various strategies to know how its service systems relate to the changing clients.
Stage 2
In the second stage the company expanded and improved the materials it uses to provide services. Cathay started upgrading their systems and the different technologies they use so that better service can be given to clients. This was also done to provide solutions to the complaints aired by clients. The company changed some of its personnel that have low evaluation ratings. The company hired better personnel that have new ideas on the updated service strategies. This helped the company to introduce changes on the way services are given to the clients.
Stage 3
In the fourth stage Cathay pacific evaluated the way it manages the firm. It checked on how the firm evolved using its current management strategies. The company evaluated its management team and it tried to find out how the management team handled and motivated the personnel. The company then initiated changes in its management strategies. The company researched about new and better management strategies. They then studied the changes in the management strategies and initiated it in their own company. The company also replaced members of the management team when they believe that such member is not effective enough to perform his/her duty.
Stage 4
In the fourth stage Cathay pacific hired more people that passed their requirements. The company made sure that those newly hired by the company was given rigorous tests to see how well they can perform. The company also made sure that the new hires were successful in their previous fields. The company made sure that they have no previous records demeaning to the company. The new hires were given backup checks by chosen trusted members of the company. The company believes that the newly hired people will bring more improvements to the company’s service and they will help the company adjust to new trends in the environment. The newly hired people are expected to perform above standards with so much enthusiasm and dedication for the company to reach its goal.
Stage 5
In the fifth stage Cathay Pacific tried to introduce new service that other airlines have not introduced. The company made sure that the clients will not forget about the company and the service it provided to them. The company created better systems that fit their goal of providing service straight from the heart. The company made use of new upgrades in technology to speed up the process of booking a flight and purchasing a needed ticket. This made sure that the clients won’t have to go long lines just to have their flights booked.
The scope of change
System
For every company improving a previously used system is a rigorous but beneficial task. Setting up a system requires a well thought out plan of action that intends to make sure that order is maintained as the information system is built. The internal and external environment of Cathay pacific plays a big part in the creation and improvement of systems. There are many things that should be considered before the system can be put into the company. The company considers first its internal capacities and fixes its internal conflicts before knowing means on how to improve the systems. The company then knows the situation in the industry and what changes have been done by the industry in terms of their own system. The company also sees to it that economic indicators are doing well before doing any changes in the systems. The company then checks the need of the clients how it relates to their system.
Culture
Organizational culture helps in aligning the values and norms of the employees to the values and norms of the organization. The organizational culture of Cathay Pacific is concentrated on making sure that their missions will be attainable. The missions include providing service straight from the heart, make sure that clients are safe whenever they are using the transportation services of the company, encourage to their employees product leadership, make sure financial returns are made and provide beneficial career opportunities to willing and acceptable employees.
Mission
The mission of Cathay pacific is making sure that the clients will be given effective service. The company wants to make sure that the best service will be given to clients but they want to make sure that the company will maintain its advantage over other airlines.
Structure
The structure of the company focuses on the promotion of teamwork and camaraderie amongst the members of the organization. The company’s structure enables the personnel to have good interactions with their superiors. The company allows the both the management team and the personnel to discuss things that may or may not relate to the firms operations so that they can work together harmoniously for the benefit of the firm.
The process of change
Moving
Information technology helped Cathay pacific to introduce newer means for them to provide service to the clients; this helped the company to put itself in a position that has a distinct competitive advantage. Information technologies are something that is constantly evolving and being improved over the course of time. It grows and adapts to the changes in the society. As time goes by IT is changing its different techniques in providing service to the clients and in making business transactions be done in the shortest time possible. Cathay pacific made use of IT to have better internal and external communications. The company used IT to have better communication with different departments and divisions in the firm. These have lead to better procedures in delivering funds, goods and information. The major change in IT that can trigger a major change in the industry is when IT cannot provide support towards newer and complicated problems that give the industry and firms within it difficulty to achieve each of their goals.
Freezing
Change should not be forgotten after implementation, it is a continuing process and it needs maintenance. Cathay pacific needs to continuously adopt improvements to its systems so that the company will continuously achieve its benefits. Cathay pacific needs to strengthen the systems and information technologies its uses to prevent information going into the wrong hands.
Sources of resistance
Resistance may be mainly sourced from human barrier that stems from people’s fear to change in working place and uncertainty. There are different sources of resistance. It includes barriers to interpretation. This comes when employees have lack of information about the flexible working hour’s scheme. The interpretation part may fall onto the hands of various people but one person’s interpretation may be different from another person’s interpretation. A source of resistance is distorted perceptions of the need for change. Employees may consider that the change is due to the possibility for the company to cut their current cost or increase the extra workloads for them to develop a flexible working time scheme. A source of resistance is the lack of creative response. Some leaders are not willing to involve themselves with the change. Since they are just outsourcing and they lack power to implement such scheme. Lastly a source of resistance is communication barriers. This may happen when the manager lacks awareness with regards to the change and there is poor communication in the workplace.
Assessment on styles of leadership
Shared value
Cathay Pacific stands for continuous innovation of services so that people will easier time in using the airplane as a method of transportation. The company based their values on the desire to provide a much better service to clients and make sure that such service will never be forgotten by clients.
Strategy
Cathay Pacific through its leaders is trying hard to learn from its past mistakes so that they can be market savvy. The company tries to minimize committing its past mistakes. The company is trying to have closer relationship with customers so that they can provide services that people will purchase. The company also wants to invest in better equipments. The new and better equipments will be the source of the company providing the best service.
Structure
The structure of the company is decentralized wherein decisions are not made by a single person. Each department has a say on decisions that will be made. Each department communicates with each other before making any kind of decision. This structure of the company helps it to make the best decisions that in turn will be vital so that the company can provide the best service that people will avail. This also makes sure that any conflicts within the company can be minimized.
Systems
The different systems of the company were reconfigured to make sure that the system will positive changes to the way the services are given. The different systems are revised according to the different concerns and needs of the department using them. The systems have been altered depending on the needs of the company in that environment.
Staff
Cathay Pacific makes sure that the employees they hire will be an asset to the company. They hire the best people for a specific job. This people are trained well by the company so that each employee will have an important role to play in the company. The company provides various financial and compensation packages to their employees. This ensures that for every effective service the employees do they are greatly rewarded. The company also recognizes and gives awards to employees who perform above standards and do things that exceed what is expected of them.
Style
Leaders of the organization are not all the times perfect in the way they handle the job and the way they treat the personnel. Their can be times when some of the leaders act differently from what is expected from them. Leaders learn from their mistake and they correct mistakes by making sure that the actions they will make will benefit the company.
Skill
Cathay Pacific uses the personnel that have ideas on how service should be given and these personnel are the ones assigned to provide the best service. The company tests these personnel before letting them provide service to the clients. Cathay pacific makes sure that the personnel are skilled enough to make use of high tech materials that will provide service to their clients.
Prognosis
No change scenario
There will be no abrupt changes in the goal of the company and the company will continue upgrading its technologies to meet the changing demands of clients. The company will remain with its dedication to provide the best kind of service to its clients. This will lead for the company to maintain in its current path and make sure that the working strategies will be used continuously.
Change scenario achieved through organizational development
The company will initiate change if there is a need for it and when organizational development calls for such change. When the problem cannot be contained and no solution can be given for it then change would be considered by the company. The change would focus on the part of the company that needs development and the one that has huge amounts of problems. The change would be done in a step by step process so that those will be affected can adjust and not cause any other problem to the company.
Key issues in the implementation of the change program
The change program may have various issues before it can be implemented. One issue is the effect of the change program. Some members of a company might be adamant to change because they are not sure of what will be the effect of changes to their welfare. Another issue in the implementation of the change program is the availability of the budget that will be used for the change program. The budget is an important part of the change program. The lack of it will create problems for the initiation of the change program. Lastly an issue in the implementation of the change program is the time that will be used by the change program. The change program should not cause more time for the company and it should not disrupt any activity of the company that was previously scheduled.
Conclusion
Cathay Pacific makes use of the best service strategies that intends to make an identity separate from the competitors. It concentrates on providing excellent service to clients. That is the reason why the company made use of information systems. The company introduced the information technology systems on the belief that it will help them provide a different kind of travel experience. The company saw the potential of information technologies and how it benefited other firms. With this kind change, there are different key issues that it needs to address. One is the maintenance of such change. Change if not maintained will be worthless. It should be gradually evaluated and altered if there is a need for it. Another issue is the ability of the change to maintain providing benefits to the company. The change program should make sure that it will continue to provide benefits to the company. Lastly an issue that needs to be addressed is the change program‘s ability to adapt to the environment. The change program should have the capacity to adjust to the environment and the different situations in it.
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