Designing Strategies For Ethiopian Airlines Essay.

You have been retained by IATA to advise the government of Ethiopia on whether the airline’s 15-year strategy is tenable. Your coursework should take the form of a report addressing the following issues:
Present the background to Ethiopian Airlines outlining the status of the airline in terms of commercial, financial and operational performance.
Critically analyze the strategic objectives of Ethiopian Airlines. What are the specifics of this strategy and what are the risks? You need to consider elements such as the external environment, market potential, competitive positioning, growth potential, partnership strategies and fleet strategies. You should build a SWOT analysis as well as a risk analysis. It is important that you argue your case.
Develop a set of possible alternative paths the airline could take in the event of disruption to the strategic plan.
Finally, you should present a recommendation to Ethiopian Airlines as to whether the 15-year strategic plan should be amended or not.

Background

Strategic management is very crucial aspect for every business organization irrelevant to its size, nature and type of industry. Adequate strategic management helps the organization to reach towards its desired destination along with the establishment of remarkable position in the target market. While designing strategies for the purpose of reaching towards the desired goals, management needs to ensure that all the strategies are flexible in nature in order to match up with the dynamic business environmental conditions (Hill, 2017).

In this report, strategies will be designed for Ethiopian Airlines which is the largest airline of Africa. Company operates 100 aircrafts in Africa, North America, and South America and in Asia. Due to increasing competition, Ethiopian Airlines has made a vision to enhance its fleets to 150 aircrafts within next seven years. Thus, the report will mainly focus over designing the strategies for organization in terms of reaching towards the vision. Along with this, organizational existing 15 year strategic plan will be reviewed in order to determine the organizational performance. Further, focus of the report will be diverted towards analysing the strategic objectives of Ethiopian Airlines along with determining the risk factors involved in the strategic plan of the organization. Organizational strengths and weaknesses will be determined in order to make sure that the appropriate amendments could be made in the existing strategies of the organization for the objective of accomplishment of desired goals. Alternative strategies will be designed which could act as disruptive for the strategic plan and in accordance to that, recommendations will be given in order to uplift the performance of the organization along with the objective of attainment of desired goals.

Ethiopian Airlines is the largest airline company of Africa. The company operates in various parts of the world such as North America, South America, Asia, etc. with approximately 100 aircrafts. As every company operates with a vision of growing its business regularly to enhance its revenues, profitability and market share, Ethiopian Airlines has also made a vision of enhancing the number of its aircrafts to 150 in next seven years. The company is fully owned by the African government and it was founded in 1945 and its operations were commenced in 1946. Further, international flights under the name Ethiopian Airlines were held in 1951. Ethiopian Airlines is a member of International Air Transport Association since 1959 and African Airlines Association since 1968. Apart from this, organization is an effective member of Star Alliance since December, 2011. Company’s headquarters and hub is situated at Bole International Airport in Addis Ababa and its secondary hubs are situated in Togo and Malawi subsequently. The numbers of flights operated by Ethiopian Airlines in destinations in Africa are more than any other carrier. With this, company has become the one of the fastest growing companies in the industry and the largest in the whole African continent (Ethiopian Airlines, 2018a).

Company is moving towards its vision 2025 and for the same; they are continuously making amendments in their 15 year strategic plan with the objective of reaching out there. Company has earned a net profit of 6.8 billion Ethiopian birr ($245 million) in the last year (Dron, 2018). Ethiopian Airlines’ operating revenue has also increased approximately by 43% in comparison to the last year. This is showing that Ethiopian Airlines is moving in direction and by this manner; organization would easily be able to reach towards its vision 2025 of enhancing the number of aircrafts to 150. Thus, it could be said that organizational performance is quite effective and with regards to this, organization has been able to retain its acquired position of being the leading carrier along with enhancing its profitability and revenues (Ethiopian Airlines, 2018c).  

Strategic Objectives

On the basis of their vision 2025, company’s priorities are to retain the acquired position along with adopting new measures for enhancing the performance of the organization (Albers, et. al., 2017). This includes providing up-to-date training to its employees, encouraging employees towards generating new and innovative ideas, making them realise that organizational growth will ultimately help them to grow, etc. Organizational vision is to be “most competitive and leading African cargo airline by offering safe, customer focused cargo, market driven, courier and transport services by 2025”.

In relation to this, following are strategic objectives of organization which are also highlight of their vision 2025:

• Attaining revenues of USD 2 billion annually;
• Expanding its operations along with serving 37 International Freight Destinations;
• Total tonnage of 820,000 on annual basis;
• Reaching towards the profitability of USD 200 million yearly;
• Leading Quality Cargo Services in Africa;
• Operating 18 Jet Aircrafts;
• 100% eAWB by 2025;
• Attaining Cargo 2000 (C2K) certification by 2025; and
• Implementation of IATA e-freight fully by 2016 on the basis of revised deadline issues by IATA (Ethiopian Airlines, 2018c).

In order to attain these objectives, Ethiopian Airlines is regularly updates their strategies. The primary factors which are given more importance than other factors for the purpose of attainment of above discussed objectives by the organization are safety, security and reliability. An aircraft is judged on the basis of these parameters along with the speed as it is has become one of the most significant factors nowadays. Ethiopian Airlines’ mission is to become the leading cargo airline in the whole African continent by offering safe, reliable and fast cargo transport services and that too at less prices and high quality in comparison to its competitors. Quality and price are those factors which plays crucial role in terms of attracting target audience along with gaining competitive advantage. Apart from this, both these factors also plays vital role in terms of making the organization flexible enough to attain sustainable growth and overall development (IATA, 2013).  

Ethiopian Airlines ensures that their cargo airline is fulfilling the demands and wants of their target audience. Organizational management also ensures that their employees’ demands are getting fulfilled as they plays vital role in transforming the process of planning into reality, thus, organization involve them in every Signiant process of the organization in order to get their views, opinions and opinions so that relevant aspects could be considered while making required amendments in the strategies to reach towards the set vision 2025. Along with this, to support the economic development of Ethiopia and the countries it operates by undertaking its Corporate Social Responsibilities and providing vital global air cargo connectivity in its existing strategies (Maasho, 2018).

Risk analysis is a technique that is mainly used for identifying the factors which may affect the success of the running project. With the help of this technique, organization could easily determine all those factors which could affect the organizational performance and in relevance to those factors, appropriate measures could be adopted for the objective of dealing with the risk factors (Vanek, 2018).

Africa is a continent with 54 separate countries, thus, trading with rest of the world along with maintaining effective relations with them is bit difficult and complex. The whole African continent is considered as poor in comparison to other continents in the world and currently, it is going through an economic boom which is good sign for the development of African countries. There are various destinations in Africa where no direct flight exists and due to which passengers need to go for the only option available i.e. connecting flights (van Drongelen, et. al., 2017). Apart from this, African Aviation industry also faces the challenges in the form of high prices tickets due to which people do not prefers to travel through air mediums. Non-African airlines are slowly and gradually acquiring the market share of the aviation industry. International airlines have acquired 8% of the aviation industry while African airline companies are steady on their market share (University of Cape Town, 2014).

SWOT Analysis

This has weakened the position of African airline companies in front of the international airline companies and due to this; strategic plan of Ethiopian Airlines may get affected. Due to past records related to safety and security, image of the Ethiopian Airline is not such good but with the passing time, organization managed to mark itself as the most safest airline in the Africa. Apart from these risk factors, inadequate infrastructure, lack of regulation and government actions is another big factors which not only hampers the organization future goals and objectives but it also affects the current organizational performance (African Development Bank Group, 2012).  

In order to eliminate these risk factors, it is necessary for the organization to adopt appropriate measures. As per the context of Ethiopian Airlines, they are very concerned about their vision and in order to gain positive outcomes, basic risk eliminators such as ignorance of risk, acceptance of risk and transfer of risk will be implemented. According to the severity of risk, appropriate risk eliminator is implemented such as ignorance of risk is implemented when the risk severity is negligible for example, slight increase in the fuel prices. As the slight increase in the fuel prices would not create much impact over organizational performance, thus, this type of risk could be eliminated (Fleischer, Tchetchik & Toledo, 2015).

The second risk eliminator is implemented when the risk is unavoidable for example, group of employees strike for increasing their salaries and as this will directly affect organizational performance, so this type of risk needs to be accepted and appropriate measures needs to be implemented to settle the situation as well as to get the employees back on the floor (Dahlberg, 2017). The third risk eliminator is implemented when the type of risk very severe and there are no other options to tackle it rather transferring it to some other party to pay for the losses and damages incurred. For example, fire occurs in one of the aircraft while flying so, this type of situation neither can be ignore nor it can be accepted as the price of an aircraft is quite high, thus, in this situation, risk will be transferred to the insurance company to pay for the losses and the damages incurred to the organization. There are various other scenarios and risk factors involved which can easily be tackled with the help of these risk eliminators.

Ethiopian Airlines have made a strategic plan for 15 years to accomplish their vision in relation with the enhancement of organizational performance. Every organization is required to design certain alternative paths in order to deal with the scenarios where existing plan does not work. Ethiopian Airlines have adopted the pricing strategy and the total quality management strategy as the alternative paths to reach to their vision 2025 along with executing the set strategic plan in an effective and efficient manner.

Under pricing strategy, organization have decided to focus over the prices of the flight tickets in order to attract target audience along with enhancing the demand of services offered by the organization. Cost leadership strategy will help the organization to gain the constant demand from the target audience as well as it will also help in originating the opportunities for enhancing the number of aircrafts to match up with the increased demand (Rampini, Sufi & Viswanathan, 2014) .

Apart from cost leadership strategy, organization has also adopted total quality management approach with the objective of enhancing the quality of services offered inside the flight to enhance the customer experience with the organization. This is another effective alternative approach to reach towards its desired goals and objectives designed under the vision 2025. Under total quality management approach, each and every aspect related to the quality is evaluated on the basis of standards decided by the management of the organization (Belobaba, Odoni & Barnhart, 2015).

Conclusion

The above discussed approaches, ideas and plans describe the clear strategic plan designed by the management of Ethiopian Airlines. After reviewing all the strategies and approaches included in the strategic plan for 15 years, it has been observed that these are the most effective approaches for the purpose of attainment of desired goal. The set objective by organization is behemoth, thus, the management has also adopted effective approaches which will ultimately result in the favour for the organization. Thus, no changes are required for enhancing organizational performance rather adaptation of change management in the workplace. As change management helps the organization to remain in the frame along with retaining its acquired image as well as to move towards their primary goal.

The report has concluded the approaches and strategies implemented by the organization to reach towards their desired goals. Ethiopian Airlines is the largest airline in the whole African continent and with regards to the retention of acquired image as well as enhance the number of aircrafts to 150 from 100, relevant strategies and tools have been discussed in the report for the objective of attaining desired goals. Impact of external environmental factors and analysis of the risk factors involved in the environment have been determined in the report for the objective of making appropriate changes to attain desired goals as well as to boost up organizational performance.

References 

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