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Megan Slater/Q10169334/STR350

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Student Name: Megan SlaterStudent Number : Q10169334

Faculty: BSELevel of study:5Course title: Business and Management (HND)Unit title: Business StrategyAssignment title: Report (Individual)Assignment tutor: Clive BakerWord count: 2,588Learner request for feedback:

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Southampton solent university

Implementation of a chosen strategy

Company: Flybe

Megan Slater

5/9/2014

This Report will include the reasons for the change in the strategy proposed for the company Flybe, the identification and evaluation of the resources the company needs to develop the strategy. It will assess the feasibility and acceptability and also the implications to management.


Contents1. Proposal Strategy...........................................................................................................................2

1.1 Ansoff product/market matrix...............................................................................................3

1.2 Stakeholder Mapping.............................................................................................................3

1.3 Risk Management..................................................................................................................4

2. Feasibility.......................................................................................................................................4

2.1 Financial Viability.........................................................................................................................4

2.2 Swot Analysis...............................................................................................................................4

2.3 Financial Resource Audit..............................................................................................................4

2.4 Human Resource Audit................................................................................................................4

3. Performance Measures.................................................................................................................5

3.1 Financial.....................................................................................................................................5

3.2 Customer...................................................................................................................................5

3.3 Internal Process.........................................................................................................................6

3.4 Learning and Growth.......................................................................................................................6

4. Management to change.................................................................................................................6

4.1 Motivating Staff.....................................................................................................................6

4.2 Planning Change....................................................................................................................6

4.3 Control and organise the change.................................................................................................7

5. Conclusion.........................................................................................................................................7

1. References.....................................................................................................................................7

Appendix 1.............................................................................................................................................9

Appendix 2...........................................................................................................................................10

Appendix 3...........................................................................................................................................10

Appendix 4...........................................................................................................................................11

Report 1...............................................................................................................................................11

1. Proposal StrategyThis report will look into Flybe as a company in detail using a range of business strategy models, to enable the launch of a new strategy for them in their future plans. In this report the proposed strategy will be analysed by performance measures and planning models, which will decide whether

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or not t the proposed strategy is suitable for the company. To be able to assure that the strategy is safe and worthwhile for Flybe there are key parts that need to be discussed, these are: Suitability, Feasibility, Performance measures and Management to change.

The future strategy for Flybe is leasing out their aircraft. With more than 500 job cuts at the Exeter based airline, some routes could also be cut due to the staff cuts., Flybe were carrying out cost cutting measures and said that more were needed to be done. (BBC News, 2014)

There are two ways in which a company can lease their aircraft. Wet leases are the rent of the aircraft with fuel; the pilot and the airline have operational control of the flights. A dry lease is when a company rents the aircraft but this is without fuel, pilot or any other flight expenses, the company who rents the aircraft has operational control of the flights and they can also keep the aircraft on trips. (Abacojet.com, 2014)

1.1 Ansoff product/market matrixThe Ansoff Matrix’s classifies and explains different growth strategies for a company. (Innovation, 2014) With the launch of the strategy this will move the company into the ‘Market Penetration’ section of the Ansoff Matrix, as they will be operating in an existing market with an existing product and service. (Appendix 1) Market Penetration is about the business focusing on the products and market it already knows. Therefore the company is likely to have good information on the competition and on the customers; this means that the strategy will not require much investment into market research and product research. (Tutor2u.net, 2014)

The Ansoff Matrix being used by Flybe can help them determine where the strategy will leave them if it is implemented. Flybe can use market penetration within their new strategy to indicate if there is any potential for increased sales, therefore the smaller the companies’ market penetration the more Flybe should invest in its strategy for leasing their aircraft. If Flybe want to become a market leader they will want a high market penetration to know that their aircraft leasing has been established. (Investinganswers.com, 2014)

1.2 Stakeholder MappingStakeholder Mapping is an important key to Flybe implementing their strategy, the company should identify their different groups of stakeholders. (BSR, 2014) Flybe’s stakeholders are customers, employees, owners and shareholders, the local community, pressure groups, suppliers and financiers. (123helpme.com, 2014)

Once Flybe has identified their stakeholders, they should now analyse all of them when implementing a new strategy, the stakeholder may have information and expertise on the strategy and influence the decisions Flybe will make. If Flybe are willing to lease out their aircraft this may cause some stakeholders to have some issues, like employees especially with a dry lease when the pilot is not used, if another company is using the aircraft then Flybe’s employees will not be used.

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This method can help the company identify how interested each of the stakeholder groups is with the new strategy and impact that the new strategy will have on all stakeholders. In Flybe’s situation the main stakeholders that this strategy will affect is Employees, the local community and suppliers. As you can see stakeholder mapping is a very good method to use, to establish if the strategy will affect the stakeholder in a negative way. Therefore before Flybe makes any major changes they should consider all of their stakeholders. (BSR, 2014)

1.3 Risk ManagementWhen implementing a new strategy Flybe need a risk management, by the company assessing the risk they are able to understand any outcomes or uncertainty events that could occur, this way Flybe can identify the steps that they can take to guard the whole organisation and everyone and everything involved within. (Diycommitteeguide.org, 2014)

2. Feasibility

2.1 Financial ViabilityCompanies use financial viability to define the “ability to generate sufficient income to meet its operating expenses and financial obligations, as well as providing the potential for future growth”. To be able to determine Flybe’s financial viability, they have to review their current performance level and their financial position and also consider the future. (Businessbuilding.com.au, 2014)

2.2 Swot AnalysisSwot Analysis is used as “An analysis of the internal and external environmental factors performed as part of developing the organisational strategy”

Flybe can use the Swot Analysis to analyse the strengths, weaknesses, opportunities and threats of the implemented strategy of aircraft leasing. (Appendix 3) This will help managers to find ways for Flybe to maximise the strengths, limit the weaknesses, avoid threats and use the opportunities. (Analysis, 2014)

The biggest threat for Flybe’s new strategy is the competition, aircraft leasing is not a new strategy and many companies already use this, so Flybe have to find a way to beat competition and be above the rest. The biggest weakness is finances; there is a large amount of debt that the company can get into. A company trying to grow quickly in a capital intensive industry is hard and may be a struggle for companies like Flybe, therefore they need to analyse if they can afford to do it financially. (Beta.fool.com, 2014)

2.3 Financial Resource AuditOne of the most crucial factors to the proposed strategy is finance, because there is a large amount of debt involved in the airline industry and also with the world economy struggling will Flybe be able to survive, if they were going to survive they would need capital, which they could get from leasing out their aircraft. Looking at Flybe’s key financial figures of the years 2012 and 2013, (See Report 1)

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there net debt in the year 2012 was -£29.7 million and in 2013 the net debt was -£66.3 million, therefore if the proposed strategy was to go ahead Flybe would want to decrease their debt as aircraft leasing could cause more debt due to the capital intensive industry. Although total revenue has increased from 2012 to 2013, which is a positive effect and shows financial stability for the strategy. (French, 2014)

2.4 Human Resource AuditA human resource audit is just as important as a financial audit and just as similar, it is a way to identify difficulties within a company’s human resource department. Flybe would not be able to go ahead with the implemented strategy if they did not have certain areas covered such as: recruitment, training, contracts and employee handbooks and benefits and compensation processes. (Wilkinskennedy.com, 2014)

Flybe’s employees are very important to the company, and with the human resource audit the employees are being trained and also have employee benefits, without the audit Flybe would not be able to understand if there are any problems within these areas. This will keep the employees motivated as they will feel as though they are always being looked after by the company. They can also make sure that they have a good recruitment process and the right people for the job.

3. Performance MeasuresPerformance measurements are important in a company’s new strategy as it monitors the implementation and effectiveness of the organisations strategy; it also compares actual and targeted performance and is very important in establishing if the strategy is working. (Performance measures & KPIs, 2014)

The balance scorecard (Appendix 4) is used to establish objectives, measures of the objectives, targets and initiatives for different performance measurements of the implemented strategy. Flybe can use this for the aircraft leasing strategy to see how the company will perform in the future.

3.1FinancialFinancial performance is a major objective within the balance scorecard. Although companies like Flybe could focus all their attention on customer satisfaction, quality or many other factors, without an indication of the financial implications from the above factors they are not of much use. (Niven, 2006)

In appendix 4, it shows Flybe’s financial objectives, measures, targets and initiative. In order to meet the objective of increased revenue, Flybe need to be able to increase the amount of flights they are producing which can be achieved by leasing out their aircraft. The target that should be reached by leasing aircraft is improved capital turnover which is stockholder equity which can generate revenue. (Anon, 2014)

3.2CustomerIn order for Flybe to implement their strategy and also to measure if the new strategy is working, customers are very important, Flybe as a company need to know how well their products and services meet the needs of their customers.

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The objective of increased number of customers (Appendix 4) links to the first performance measurement; finance. This is because an increase in the number of passengers can lead to an increase in revenue. (Anon, 2014) To be able to establish more customers, an initiative of total quality management is key for a business’s constant improvement and enables Flybe to establish the key management issue of the future; this is because it is essential for efficiency and competitiveness. A major factor to enable Flybe’s strategy to be successful is monitoring the performance of meeting or even exceeding customer requirements. (Hakes, 1991)

In the implemented strategy of aircraft leasing Flybe’s customers are the airline companies that are leasing the aircraft off Flybe and can also be the airlines customers especially in a wet lease as Flybe have operational control of the flights and therefore the more customers there are, leads to an increase in the amount of aircraft being leased.

3.3Internal ProcessIn order for Flybe to decrease the turnaround time (Appendix 4) they will have to measure the ground time, this is the time between the aircraft landing and the aircraft taking off again. To be able to reach the target of a turnaround time less than 25 minutes, they will have to introduce a cycle time optimisation program. The is a way of “Maximising the efficiency of suboptimal value- added activities while minimising non-value added activities and time for the best quality, cost and responsiveness to customer needs” (Lai, 2009)

To be able to see if the implemented strategy is efficient, ground time will decrease as well as turnaround time as more planes will be used due to increased flights and leasing aircraft.

3.4 Learning and GrowthLearning and growth is the essential foundations for the success for any organisations. This perspective includes employee training and corporate cultural attitudes; this is related to individuals and corporate self-improvement. (Balancescorecard.org, 2014)

In order for staff to deliver quality performance to customers they need to be able to continuously improve. This will be done through Flybe’s staff; they must be able to deliver quality performance (Appendix 4), this will be measured by customer feedback through customer satisfaction surveys. To be able to meet customer satisfaction, management must be able to fully train staff in customer services and also be able to offer top of the range, safe aircrafts and friendly staff.

4. Management to changeWhen a business is implementing a new strategy to achieve an objective, In order for this strategy to be successful Flybe must have an approach to dealing with change. Change management has three different aspects which are: adapting to change, controlling change and effecting change. Flybe need to be able to implement procedures to deal with the changes and to be successful from the change. (Searchcio.technology.come, 2014)

4.1Motivating StaffWhen implementing a new strategy staff may become unmotivated as they are unsure on their job roles or if they are going into a new unknown industry it may leave them feeling less important in the organisation.

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In order to keep Flybe’s staff motivated they should apply Herzberg’s motivational theory. If all employees within Flybe have job satisfaction they are more likely to be motivated and perform better within the implemented strategy. In order for this theory to work for Flybe’s staff, management should focus on rearranging work so that all motivator factors can be applied to the business. (Tutor2u.net, 2014) If this is successful, Flybe’s staff will feel more responsible in their job, have a status within the business and also feel a sense of achievement and personal growth in their job and in the new strategy.

4.2Planning ChangeIt is important for Flybe’s manager to implement through change, in order to assess and adjust the organisations direction through a changing environment. (Balancedscorecard.org, 2014) When implementing the new strategy of aircraft leasing the company will be emerging into new competition, this means ensuring that staff are experienced and trained in the aircraft leasing industry, if they are not then there are huge risks involved in implementing the new strategy. This can be done by hiring strategic planning specialists, as they have insight into the industry and therefore can ensure that the company and staff have expert advice. (Triple Pundit: People, Planet, Profit, 2012)

4.3 Control and organise the changeThe organisation should apply strategic control as the organisation will focus on monitoring and evaluating the strategy so that Flybe can ensure the implemented strategy is functioning properly. (Pathak, 2010) The company’s manager should be able to control and organise the strategy (Wickham, 2006), in order for this to be able to happen this is done through the balance scorecard (Appendix 4), objectives need to be met for the proposed strategy to be controlled.

5. ConclusionFlybe can see that the most important factor for the success of the strategy is human resources. Although it is key to improve the financial aspect of the business, especially with their net debt being so high, as financial resources are crucial for development in the strategy. (Campbell, Stonehouse, Houston, 2002) The strategy can be successful due to improved capital turnover which will lead to increased revenue, therefore decreasing the net debt. This links to human resources, as there will only be an increase in revenue due to the aircraft leasing but this will not be successful without employees being trained properly and motivated to work for the company. Without the finances, human resources and the management to change the strategy will not be successful. With the managers focusing on the future and any problems that the strategy may cause, this will help them to achieve their vision statement: “We hope to expand and continue great beliefs in the future, by receiving greater on cheaper airline costs. We aim to be the most used airline in Europe”

References

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1. Analysis?, S., 2014. What is SWOT Analysis for Strategic Planning. [online] Iplanner.net. Available at: <http://www.iplanner.net/business-financial/online/how-to-articles.aspx?article_id=swot-analysis>.

2. Anon, 2014. [online] Emeraldinsight.com. Available at: <http://www.emeraldinsight.com/content_images/fig/2680070405001.png>.

3. Anon, 2014. [online] Beta.fool.com. Available at: <http://beta.fool.com/blackngold/2012/11/08/take-a-swot-at-air-lease/16073/>.

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Appendix 1

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Appendix 2

Appendix 3Strengths

1. Large barriers to entry- Not all people can just start an airline or leasing company.

2. Demand for aircraft is high

Weaknesses1. Large amount of debt- Growing quickly in a capital intensive industry is not easy.2. Attempting to grow in a slow growth environment- world economy struggling, can Flybe survive?

Opportunities1. Risk Mitigation- Profit margins are

easy to achieve when you require your lessee to pay for everything. All Flybe have to do is lease the aircraft.

2. Rising fuel costs- The more money airlines have to spend on fuel costs the less money they have to spend on aircrafts, so leasing is attractive.

Threats1. Competition- Air leasing is not a new

thing.2. Fine print- The full cost of an aircraft

is not recovered over the term of the lease.

(Beta.fool.com, 2014)

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Appendix 4

(Kaplan and Norton, 1996)

Report 1

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Strategy: Aircraft Leasing

Financial Objectives: Increase Revenue Measures: Plane least cost Targets: Improved capital turnover Initiative: Increased flights/leases

Internal Process Objectives: Decrease Turnaround

time Measures: Ground time Targets: Less than 25 minutes Initiative: Cycle time optimization

program

Learning and Growth Objectives: Staff to deliver quality

performance to customers Measures: Customer Feedback Targets: Are all staff trained in

customer service Initiative: Customer satisfaction

surveys

Customer Objectives: More customers Measures: No. of customers Targets: Increased customers Initiative: Quality Management

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