Since the appointment of RALPH NORRIS as Managing Director and CEO of Air New Zealand in February 2002 Air NZ has been working on its new strategic direction. Structural changes in the marketplace made a new direction indispensable and Air NZ is now turning away from inflexible service offerings to align its route and service standards to customer needs.
In fact, Air NZ is developing from a full service airline into the direction of a “value-based-plus” airline (Airline to put profit on menu, 2002) which involves lower fares and more customers. Reduced revenues (per customer) should be offset by lower operating costs mainly achieved by simplification of product bundles and services. (UBS Warburg Conference, 2003, p.11 ; Airline to put profit on menu, 2002)
This essay gives an overview of Air NZ strategic direction. It analysis its strengths and weaknesses (SWOT). Moreover a recommendation for a new strategy is worked out and strategy implementation issues discussed.
Table of Contents
1 Current strategic direction
1.1 Mission and goals
1.2 New Philosophy
1.3 Cost reduction
1.4 Portfolio of businesses and airlines
1.4.1 Engineering and Cargo
1.4.2 Airlines
1.5 Strategic Alliance with Quantas
2 SWOT analysis
2.1 External – societal environment
2.2 External - industry analysis
2.2.1 Competitors and intensity of rivalry
2.2.2 Critical industry success factors
2.3 Internal – organisational analysis
2.3.1 Sales network and distribution channels
2.3.2 Products, service, marketing and aircraft
2.3.3 Staff, culture and management
2.3.4 Finance
2.4 SWOT diagram
2.5 Core competence and competitive advantage
3 Strategy formulation
3.1 Strategic Factor Analysis Summary (SFAS Matrix)
3.1.1 The ten key strategic factors
3.1.2 The top three strategic factors being faced by Air NZ
3.2 Modification of Air NZ’s current strategy
3.3 New strategic goals and objectives for Air NZ
3.4 Alternative strategies and effect on corporate strategy
3.4.1 Alternative strategies
3.4.2 Effect on corporate and current competitive strategy of Air NZ
3.5 Implications for the various lines
4 Implementation Issues
4.1 Strategy evaluation and control
4.2 Ethical issues
Objectives and Core Themes
This report analyzes the strategic realignment of Air New Zealand following the appointment of Ralph Norris as CEO in 2002. The core objective is to evaluate how the company is transitioning from a traditional full-service carrier toward a value-based business model while addressing internal challenges and competitive threats.
- Strategic transformation of Air New Zealand's business model.
- External environment analysis, including industry rivalry and societal factors.
- Internal organizational assessment of culture, management, and finances.
- Development of strategic alternatives using a SFAS Matrix approach.
- Implementation challenges, including operational and cultural change.
Extract from the Book
1.2 New Philosophy
“It is no longer sufficient to be good at flying planes. The Air New Zealand of the future will excel at flying people.” said Ralph Norris and concludes: “From an airline perspective, the core of this turn-around is a new and fundamentally different philosophy.” (UBS Warburg Conference, 2003, p.8)
In this new way of thinking customers become the centre of attention. Their needs are what counts. But Air NZ wouldn’t offer anything that is possible rather than what is justifiable from a business point of view. Those service components which don’t bring added value compared to their costs externally (for the customers) and internally (Air NZ) will be dismissed. (Annual Report 2002, p.5)
Chapter Summary
1 Current strategic direction: This chapter outlines the shift towards a "value-based-plus" airline model, focusing on mission alignment, new corporate philosophy, cost reduction, and business portfolio management.
2 SWOT analysis: This section examines the external societal and industry environment alongside internal organizational factors to identify key strengths, weaknesses, opportunities, and threats.
3 Strategy formulation: This chapter uses the Strategic Factor Analysis Summary (SFAS) matrix to prioritize strategic issues and proposes alternative growth strategies for the airline.
4 Implementation Issues: This section discusses the ongoing requirements for monitoring, control, and ethical considerations during the strategy implementation phase.
Keywords
Air New Zealand, Strategic Management, SWOT Analysis, SFAS Matrix, Value-based-plus, Airline Industry, Cost Reduction, Corporate Strategy, Organizational Culture, Competitive Advantage, Operational Efficiency, ANZES, Market Rivalry, Strategic Alliance, Implementation.
Frequently Asked Questions
What is the primary focus of this report?
The report focuses on the strategic turnaround of Air New Zealand, detailing how the company navigates market shifts, financial pressure, and the need for a new corporate philosophy under CEO Ralph Norris.
What are the central themes covered?
The central themes include the transformation of the business model, competitive dynamics in the aviation industry, internal organizational health, and strategic decision-making.
What is the overarching research goal?
The goal is to assess Air New Zealand’s current strategic position and provide recommendations for sustainable growth by balancing operational efficiency with market-responsive service strategies.
Which methodology is applied to the analysis?
The report utilizes standard strategic management tools, specifically SWOT analysis and the Strategic Factor Analysis Summary (SFAS) matrix, to evaluate and weight critical factors.
What does the main body address?
The main body covers a comprehensive audit of the company’s current strategic direction, an in-depth internal and external analysis, and the formulation of strategic alternatives and their organizational implications.
Which keywords best characterize this work?
Key terms include Strategic Management, Air New Zealand, Value-based-plus, competitive advantage, and SWOT analysis.
How does the author evaluate the "New Philosophy" of the airline?
The author views the "New Philosophy" as a shift from focusing merely on technical flight operations to a customer-centric approach that prioritizes service components with proven value, although the author questions if this is fully supported by current culture.
Why is the "ANZES" engineering unit considered critical?
ANZES is identified as a highly profitable "star" within the portfolio that provides Air New Zealand with a sustainable competitive advantage through operational efficiency.
What is the significance of the potential alliance with Qantas?
The alliance is presented as a "logical" solution to the airline's long-term strategic dilemma, intended to prevent a war of attrition on international routes and strengthen market position.
- Quote paper
- Marc Dominick (Author), 2003, Air New Zealand. Strategic Analysis and Recommendations, Munich, GRIN Verlag, https://www.grin.com/document/44841
