Strategic Management of Azul Airlines

This assignment requires a critical analysis of Azul Brazilian Airlines' strategic management. Students must examine the airline's competitive strategy, evaluating its strengths and weaknesses in relation to competitors. The analysis should also cover Azul's marketing efforts, particularly their brand management and customer relationship strategies. Finally, students need to assess the impact of Azul's strategic partnership with United Airlines on both companies.

Running head: STRATEGIC MANAGEMENT
Strategic Management of Airline Industry: Azul Brazilian Airlines
Name of the Student:
Name of the University:

STRATEGIC MANAGEMENT
Table of Contents
Introduction......................................................................................................................................3
1.0 Critically review organizational strategic plans........................................................................4
1.1 Analyze the position of the organization in current market..................................................4
1.1.1 Market situation analysis................................................................................................4
1.1.2 Porter’s five force analysis.............................................................................................5
1.2 Analyze the effects of existing plans on organization...........................................................7
1.2.1 Internal business environment- SWOT analysis.............................................................7
1.2.2 External business environment- PESTLE analysis.........................................................8
2.0 Propose strategic options for the airline organization.............................................................10
2.1 Critically discuss the relationship between corporate, business and operational strategies 10
2.2 Apply strategic models and tools to develop strategic options for Azul Brazilian Airlines11
2.3 Evaluation of strategic options for Azul Brazilian Airlines................................................14
3.0 Create a strategy implementation plan for Azul Brazilian Airlines........................................15
3.1 Create appropriate vision, mission and strategic goals for Azul Brazilian Airlines............15
3.2 Propose a suitable structure for an organization that fits a Strategic plan...........................16
3.3 Create a resourced strategy implementation plan................................................................20
4.0 Critically analyze the principal processes of organizational change.......................................21
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4.1 Apply force field analysis to analyze and identify forces of change...................................21
4.2 Critically evaluate various change management models.....................................................22
4.3 Apply leadership and change agent skills to implement a strategic change in Azul
Brazilian Airlines.......................................................................................................................23
5.0 Evaluate the implementation of strategic plans.......................................................................24
5.1 Analyze the time schedule for the implementation of strategic plans.................................24
5.2 Design key success indicators in order to monitor the implementation of the strategic plan
...................................................................................................................................................26
5.3 To analyze potential risks during implementation...............................................................27
Conclusion.....................................................................................................................................28
References......................................................................................................................................30
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Introduction
In today’s world, low cost carrier airlines become a trend, therefore the airline industry
applied of strategies to grow into the market. Airline industry is chosen for this particular report
to analyze the strategic plan of the organization, Azul Brazilian Airlines. It provides with
passenger as well as cargo air transport services within Brazil1. The airline organization provides
of air transportation services with connecting cities in Brazil. The company is founded in the
year 2008 with fleet size of 144. Azul Brazilian Airlines is the third largest airline within the
country2. The airline industry utilizes of technology in order to reduce the cost and propose of
better service with superior expediency to passengers.
The report analyses the organizational strategic plans, strategic options, creates an
implementation plan for the organization, analyses the principle processes of the organizational
changes and implementation of the strategic plans. Both internal in addition to external business
environment are also analyzed for implementation of the strategic plans of the airline industry.
This particular report also analyzed the internal and external business environment using
strategic models and tools. Different change management models are also analyzed to implement
of changes into the organization using Koter’s 8 step change model.
1 Sabre.com, "Azul Brazilian Airlines implements Sabre’s distribution technology to boost sales in the USA, Brazil
and global markets « Sabre", in Sabre.com, , 2015, <https://www.sabre.com/insights/releases/azul-brazilian-airlines-
implements-sabres-distribution-technology-to-boost-sales-in-the-usa-brazil-and-global-markets/> [accessed 3
November 2017].
2 Worldairlinenews.com, "Azul Brazilian Airlines | World Airline News", in Worldairlinenews.com, , 2015,
<https://worldairlinenews.com/tag/azul-brazilian-airlines/> [accessed 3 November 2017].
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1.0 Critically review organizational strategic plans
1.1 Analyze the position of the organization in current market
1.1.1 Market situation analysis
Azul Brazilian Airlines is the third largest airline within Brazil. With the purchase of “63
airbus group NV (AIR) A320neo jets”, Azul is being poised in order to operate their largest
planes on the domestic routes. The airline organization is going to offer 3000 more seats than
other foremost airlines. Currently, the airline organization has largest airline network in terms of
cities served, with service more than 100 destinations as well as 792 daily flights3.
Items 2012 2013 2014 2015 2016
Passengers
transported
12 million 20 million 21 million 22 million 24 million
Aircraft into
services
118 133 138 138 139
Destinations 100 103 105 106 107
Market share 15% 17% 17% 18% 19%
Table 1: Key drivers of continuous growth of Azul Brazilian Airlines
(Source: 4)
3 Voeazul.com.br, "About Azul", in Voeazul.com.br, , 2015, <https://www.voeazul.com.br/en/about-azul/about-
azul> [accessed 3 November 2017].
4 United - Newsroom, "United Airlines and Azul Brazilian Airlines Form Long-Term Strategic Partnership",
in United - Newsroom, , 2015, <http://newsroom.united.com/2015-06-26-United-Airlines-and-Azul-Brazilian-
Airlines-Form-Long-Term-Strategic-Partnership> [accessed 3 November 2017].
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1.1.2 Porter’s five force analysis
Using this strategic business planning tool, it analyzes the external factors of the
organization consists of decline into passenger traffic, increase into operational expenses, higher
price of fuel and greater maintenance cost5. Following are the factors of Porter’s five force
analysis:
Supplier power: There is vast supplier power within the airline industry based on three
inputs such as fuel and labor. Those are affected by the external environment. The price of fuel
leads to fluctuations into global marketplace of airline. Labor is also subjective to power as
sometimes unions bargain and gets unfair and expensive allowances from the airline
organization6.
Buyer power: It is moderate. With the process of online ticketing, the filers are no longer
dependent on agents for booking of tickets. Entry of the low cost carrier also benefited the fliers.
The buyers are engaged into price discovery means there is fluctuations into price as they are
various channels through which the passenger can book their tickets.
Entry and exit barriers: It is high. The airline industry, Azul requires huge capital
investment in order to enter into airline industry and make a competitive advantage. The
organization requires higher infusion of capital and sophisticated expertise to compete into the
Brazilian marketplace7.
5 P Thaichon and T Quach, "From Marketing Communications to Brand Management: Factors Influencing
Relationship Quality and Customer Retention", in Journal of Relationship Marketing, vol. 14, 2015, 197-219.
6 K Moller and P Parvinen, "An impact-oriented implementation approach in business marketing research",
in Industrial Marketing Management, vol. 45, 2015, 3-11.
7 T Ritter and H Andersen, "A relationship strategy perspective on relationship portfolios: Linking customer
profitability, commitment, and growth potential to relationship strategy", in Industrial Marketing Management, vol.
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Threat of substitutes: It is at moderate level. With use of train, bus, car people can travel
from one state to another. The switching cost is low for those transport channels as compared to
airline. The people may not switch to other transportation system as the airline provides of free
Wi-Fi, passenger amenities provided by full service8. They are also induced to minimum fare.
Threats of competitive rivalry: It is high. Azul is competitive airline organization as the
barriers to entry are low cost carrier and tight regulation of the industry. The industry is regulated
to supply side as compared to demand side.
43, 2014, 1005-1011.
8 D Baker, "Social Influence and Contextual Utilization of Customer Relationship Management Technology in an
International Field Sales Organization", in Journal of Relationship Marketing, vol. 13, 2014, 263-285.
6
Supplier power
Buyer power
Entry and exit barriers
Threat of substitutes
Threat of competitive
rilvalry
0 1 2 3 4 5 6 7 8 9
8
5
7
5
7
Porter's five force analysis

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Figure 1: Porter’s five force analysis
(Source: 9)
1.2 Analyze the effects of existing plans on organization
Both internal and external business environment is analyzed for determining the effects
of the existing plans on Azul Brazilian Airlines. External business environment of the airline
industry is analyzed using PESTLE analysis whereas internal business environment is analyzed
using SWOT analysis.
1.2.1 Internal business environment- SWOT analysis
SWOT analysis of the Azul Brazilian Airlines provides with strategic report of the airline
organization with operations and position of the organization into current market of Brazil.
Strengths Weaknesses
 Azul Brazilian Airlines has skilled
workforce
 Higher profitability and revenue10
 The airline organization is focused on
future cost and income structure
 Higher competitors11
9 A Mumuni and K O’Reilly, "Examining the Impact of Customer Relationship Management on Deconstructed
Measures of Firm Performance", in Journal of Relationship Marketing, vol. 13, 2014, 89-107.
10 M Wiśniewska, "Key values of business-to-business relationship marketing", in Modern Management Review, ,
2014.
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 There is higher growth rate of the
airline industry
Opportunities Threats
 New technological trends increase the
market share
 The new and innovative technologies
are obtainable at realistic costs
 Expansion of network operations into
Europe, US and South America12
 There is changing demand of new
products along with technologies
 There is change in price
1.2.2 External business environment- PESTLE analysis
Due to various factors, Azul Brazilian Airlines consist of higher operating cost, lower
profit and decrease into margin. PESTLE analysis is a strategic management tool used to analyze
the external and current state of the airline industry.
Factors Description
11 O Kilic and D Miller, "Exploring the Influence of a Salesperson's Selling Approach on Buyer-Seller Relationship
Outcomes", in International Journal of Customer Relationship Marketing and Management, vol. 5, 2014, 1-15.
12 R Debnath, B Datta and S Mukhopadhyay, "Customer Relationship Management Theory and Research in the New
Millennium: Directions for Future Research", in Journal of Relationship Marketing, vol. 15, 2016, 299-325.
8

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Political factor The political environment of the airline industry is highly regulated and
it favored the passengers over the airlines. Azul Brazilian Airlines
operated into such an environment where the safety of passengers is at
higher priority13. Brazil ranked 72nd out of 180 countries in case of
corruption.
Economic factor The potential growth of Brazil is high. Prolonged recession,
fluctuations into the price of oil and global slowdown are the factors
which affect the growth of airline industry14.
Social factor The passengers are become more demanding; therefore their demands
are changing day-by-day. There is change into profile of passengers
where there being more economical minded.
Technological factor The airline industry adopted of latest technology to compete into the
market. It will result into lower the consumption of fuel, cost of airline
operations with improved into efficiency15.
Legal factor Lawsuits against the airline industry are gone up. It is due to intolerant
of the delays and safety issues.
13 S Forkmann et al., "Supplier relationship management capability: a qualification and extension", in Industrial
Marketing Management, vol. 57, 2016, 185-200.
15 T Jung, E Ineson and E Green, "Online social networking: Relationship marketing in UK hotels", in Journal of
Marketing Management, vol. 29, 2013, 393-420.
14 S Kladou and E Mavragani, "Assessing destination image: An online marketing approach and the case of
TripAdvisor", in Journal of Destination Marketing & Management, vol. 4, 2015, 187-193.
9

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Environmental factor With change into the climate, the passengers are counting of the carbon
footprint which is a higher environmental factor. Therefore, Arul
Brazilian Airlines is forced to adopt of green flying due to concerns of
the environments. It will stop emission of carbon.
2.0 Propose strategic options for the airline organization
2.1 Critically discuss the relationship between corporate, business and operational
strategies
Strategic management activities of the airline industry are taken place at three levels such
as corporate, business and operational. These three levels affect impacts of the activities at each
phase of the company’s operations. At top of the corporate level, there is board of director and
chief executive officer. They have responsibility towards financial performance of Azul
Brazilian Airlines like enhancement of the image of the airline industry and fulfill social
responsibilities16. In the middle, there is business level which consists of business as well as
corporate manager. Business strategic managers conclude how the airline industry participates
into chosen product market field. At bottom of the hierarchy, there is operational level which
consisted of managers for the product and operational areas17. The selected airline industry
develops of short term strategies into production, research, development, finance, marketing
along with human resources areas.
16 W Chen and M Chen, "Factors Affecting the Hotel's Service Quality: Relationship Marketing and Corporate
Image", in Journal of Hospitality Marketing & Management, vol. 23, 2013, 77-96.
17 M Tichindelean, "The Influence of Marketing Communication on the Consumer’s Buyer Behavior – A
Relationship Marketing Approach", in Studies in Business and Economics, vol. 10, 2015.
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Azul Brazilian Airlines has benchmark into the airline industry for their excellence of
operational strategies. The organization provides efficient business operations to drive their low
cost structure, outstanding of the delivery of customer’s service along with innovative practices
of HR management18. The airline organization managed to implement of innovative technologies
while maintaining reputation into the market. The strategies used to keep the operational cost
low are flying from point to point routes, carrying of the reliable aircraft, and maintenance of the
higher utilization of aircraft as well as encouragement of the e-ticketing. Airline carriers such as
Azul Brazilian Airlines consists of cost advantage over the network due to generation of more
workforces generate of more output per employee19. The productivity of the business becomes
higher due to longer length of flight and larger average size of aircraft into network carriers.
2.2 Apply strategic models and tools to develop strategic options for Azul Brazilian
Airlines
The purpose of this study is to investigate the causes behind diversification of the airline
business of Azul Brazilian Airlines. This report discusses the strategies used by the airline
industry which help to strengthen the position of the company into the marketplace. Ansoff
matrix model is used for developing the strategic options for the airline organization20.
18 S Miraghaei, V Shabani and V Shabani, "The Foundation of Moral Relationship Marketing Approach with the
Axis of the Virtue Ethics", in Kuwait Chapter of Arabian Journal of Business and Management Review, vol. 3,
2014, 60-70.
19 S Cohen, "Recruitment and retention", in OR Nurse, vol. 7, 2013, 8-10.
20 K Seefeld, "The Role of a Scholar Practitioner in Strategic Enrollment Management", in Strategic Enrollment
Management Quarterly, vol. 3, 2015, 29-40.
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Figure 2: Ansoff matrix strategic model
(Source: 21)
Ansoff matrix includes of the following four conditions such as:
Market penetration: With use of Ansoff’s matrix, it provides strategic direction for the
development the airline organization. Market penetration defines an increment into sales along
with profit into the existing market by means of acquisition as well as low ticket fare22. As it is
21 M Trojanek, "Strategic municipal real estate management", in JOURNAL OF INTERNATIONAL STUDIES, vol. 8,
2015, 9-17.
22 M Flanigan, "Diagnosing and Changing Organizational Culture in Strategic Enrollment Management",
in Strategic Enrollment Management Quarterly, vol. 4, 2016, 117-129.
12
Market Penetration Product
Development
Market
Development
Diversification
Existing products New products
Existing marketsNew Markets

STRATEGIC MANAGEMENT
done by acquisition, it achieves of lower cost, consolidation of the existing routes and increasing
of the market share.
Market development: This strategic model suggested that the existing products are sold
to new marketplace in order to improve the growth of airline industry. Azul Brazilian Airlines
introduces of new routes to Europe, America and others23. They provide of diversified services to
their passengers by launching of loyalty card as a medium to draw more customers to fly.
Product development: It is the process to examine the importance of new products for the
current airline industry market like online ticketing. It consists of development of new product
for providing comfortable journey to the passengers. Development of the product also consists of
global expansion as well as secondary airports24. Azul Brazilian Airlines provides free flights,
development of IT to promote of online ticketing and use of new planes to increase ability of the
airline carriers.
Diversification: Using this business strategy, the airline organization improves both
productivity as well as profitability by introduction of new products into the marketplace. In
order to compete into the airline market, the company should collaborate with other airline
industry to provide of connecting flights in various cities. Connecting flights increase frequency
of the customers which is beneficial for the company. Ansoff matrix provides of strategies to
make a diversified based on competitive advantage such as enhancement of the innovative
23 S Ethiraj, A Gambardella and C Helfat, "Replication in strategic management", in Strategic Management Journal,
vol. 37, 2016, 2191-2192.
24 W Mitchell and A Leiponen, "Virtual Special Issue on Innovation, Intellectual Property and Strategic
Management", in Strategic Management Journal, vol. 37, 2016, E1-E5.
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sources, cost differentiation, increase of the market share and change of the rules25. It is also
achieved by means of long haul routes.
2.3 Evaluation of strategic options for Azul Brazilian Airlines
According to (26), following are important strategic options evaluated for Azul Brazilian
Airlines such as:
1. Growth as well as diversification of the market is limited to business which generate of
synergy. It pertains to create of economics of scale among two or more products. It
lowers the cost of the services by lowering of operational cost.
2. Corporate strategies are based on exploit of core competencies across various products.
There is strong customer base to sell of the products27.
3. Successful growth strategies are based on portfolio of products and services that fit with
the managerial style. The airline industry promotes of triple bottom line for promotion of
green images.
4. Merger is a key importance strategic option consists of shared ownership and used to
determine what the merging company provides with diversification to acquire new
customers and products.
5. There is electronic development into sales as well as check in services, printing of the
boarding cards, tagging of the bags and others. Through use of electronic sales and self
25 S Ethiraj, A Gambardella and C Helfat, "Reviews of strategic management research", in Strategic Management
Journal, vol. 38, 2016, 3-3.
26 M Kodama, "Boundaries innovation through knowledge convergence-developing triad strategic communities",
in Technology Analysis & Strategic Management, , 2017, 1-16.
27 R Bettis et al., "Theory in strategic management", in Strategic Management Journal, vol. 35, 2014, 1411-1413.
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services, the airline cut the cost on sales as well as checks in personnel28. It is efficient for
the customers as less time required in queue at the airport for check in.
3.0 Create a strategy implementation plan for Azul Brazilian Airlines
3.1 Create appropriate vision, mission and strategic goals for Azul Brazilian
Airlines
Vision of Azul Brazilian Airlines:
 To make travel more easy in addition to economical
Mission of Azul Brazilian Airlines:
 To derive of “Passenger Revenue Per Available Seat Kilometer (PRASK)” premium
from network
 To optimize of fleet, higher operational efficiency with higher quality of offering of
airline services
 Focus on customers, generate of crewmember and serve benefits to communities
Strategic goals of Azul Brazilian Airlines:
1. To become largest airline network in Brazil
2. To implement an efficient cost structure into the Brazilian airline marketplace
3. High quality of customer experiences throughout product as well as service
focused culture
4. To add of new destinations, larger aircraft and increase into frequencies of flight
28 L Schultheis, "Creating a Culture of Inclusive Excellence in Strategic Enrollment Management through
Distributed Leadership", in Strategic Enrollment Management Quarterly, vol. 2, 2014, 12-21.
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5. To have experienced team of management
3.2 Propose a suitable structure for an organization that fits a Strategic plan
Azul Brazilian Airlines consists of matrix organizational structure based on their market
and organizational functions. The organizational structure is based on size of airline. Following
are the stakeholders involved into the airline organization:
Stakeholders Responsibilities
Board of Director  Evaluate entire direction and strategy of the airline business
 Recruit, evaluate and supervise the managers
 Provider of direction to the organization29
 Establishment of organizational policies
Chief executive
officer
 Oversee the operations of the airline industry
 Review airline and flight operations
 Oversee implementation of the organization’s long and short term
strategic plans30
 Assessing risks of the airline organization
 Ensure on internal control along with management information
system
Human resource
officer
 Recruit, train and develop the staffs
 Approval of job descriptions31
29 A Nandialath, J Dotson and R Durand, "A Structural Approach to Handling Endogeneity in Strategic
Management: The Case of RBV", in European Management Review, vol. 11, 2014, 47-62.
30 P Bromiley, D Rau and M McShane, "Can Strategic Risk Management Contribute to Enterprise Risk
Management? A Strategic Management Perspective", in SSRN Electronic Journal, , 2014.
31 A Johnsen, "Strategic Management Thinking and Practice in the Public Sector: A Strategic Planning for All
Seasons?", in Financial Accountability & Management, vol. 31, 2015, 243-268.
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 Provide benefit and rewards to the staffs
 Monitoring of performance of staffs and their attendance
Financial officer  Making sure that governmental resources are managed properly
 Keep record of the daily transactions
 Prepare of the balance sheet32
 Processing of the invoices
 Participation into financial audits
Accounting and
financial controller
 Documentation of accounting allocations
 Performing of cash management functions
 Oversee of the accounts payable, receivable and payroll functions
Front line Manager  Maintain and control over the daily operations
 Recruit and hire of expertise to work into airline industry
 Providing of training and support to the new people
 Communicate and understand the functional goals
 Identification of the requirements for accurate actions
Technical officer  Plan and manage of airline activities like information technology
development
 Schedule maintenance and repair of the airline equipments33
 Inspect of the airline business functions to ensure that it is safe and
supervise electrical contractor’s work
32 J Gallus and B Frey, "Awards: A strategic management perspective", in Strategic Management Journal, vol. 37,
2015, 1699-1714.
33 W Mitchell and A Leiponen, "Virtual Special Issue on Innovation, Intellectual Property and Strategic
Management", in Strategic Management Journal, vol. 37, 2016, E1-E5.
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Technical
development and IT
officer
 To address of technical problems and provide solutions
 Install of the computer operating system
 Monitor and maintain the IT system
 Support roll out of the new applications
Flight operation
officer
 Involve into daily running of airline’s operations control centre
 Deal with issues affect the airline business34
 Monitor the airline by making sure that it runs on time
 Plan to reduce disruptions into flight programme
 Arrange of aircrafts to undergo the maintenance
Cabin crew  On board welcoming the passengers and direct them towards their
seat
 Making of announcements on behalf of pilot
 Ensuring that the passengers follow safety procedures in case of
emergency35
 Carrying pre-flight duties like security check, check the safety
equipments
Ground manager  Checking for the passengers in for the flight
 Re-route and re-book the passengers those are delayed
 Provide up to date information on flights36
34 S Miraghaei, V Shabani and V Shabani, "The Foundation of Moral Relationship Marketing Approach with the
Axis of the Virtue Ethics", in Kuwait Chapter of Arabian Journal of Business and Management Review, vol. 3,
2014, 60-70.
35 R Debnath, B Datta and S Mukhopadhyay, "Customer Relationship Management Theory and Research in the New
Millennium: Directions for Future Research", in Journal of Relationship Marketing, vol. 15, 2016, 299-325.
36 T Ritter and H Andersen, "A relationship strategy perspective on relationship portfolios: Linking customer
profitability, commitment, and growth potential to relationship strategy", in Industrial Marketing Management, vol.
43, 2014, 1005-1011.
18

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 Assist the passengers by providing proper enquiries
 Assist the staffs to do security check
19
BoardofDirectorChiefExecutiveOfficerHumanResourceOfficerFinancialOfficerAccountingandFinancialControllerFrontlinemanagerTechnicalOfficerCorporateDevelopmentandITFlightoperationOfficerFlightoperationsCabincrewGroundoperationsmanager

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Figure 3: Structure of Azul Brazilian Airlines organization
(Source: 37)
3.3 Create a resourced strategy implementation plan
In case of Azul Brazilian Airlines, the key important points for proposed strategies are
the following with implications of resources:
1. There should be a superior workflow process to provide better airline services and
products to the passengers.
37 T Ritter and H Andersen, "A relationship strategy perspective on relationship portfolios: Linking customer
profitability, commitment, and growth potential to relationship strategy", in Industrial Marketing Management, vol.
43, 2014, 1005-1011.
20

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2. There should be a reward program to include resources to behave as per interest
of the organization38.
3. There should be a communication process to interact with each other, helps in
exchange of information and values.
4. There must be evaluation process help to define value for people, activities and
allocate them to the required levels.
5. There must be identification process to develop significance of the airline
industry. Emotionally toned symbols are used for this purpose39.
The key components of the strategic plan includes of the following implications of resources:
Human and capital requirements: In order to implement the strategies along with
potential sources, both human capacity as well as skills is needed. Requirement of human
capacity are internal system, engaged partners and supportive legal framework.
Financial requirements: In order to implement proposed strategies, funds are required.
Assessment of risk: At first the risks are identified, then for respective risks mitigation
strategies are implemented40.
Estimation of the lifespan and sustainability: There is estimation of how long the
implemented strategies are stand and ensured for sustainability of the achievements of the
organizational objectives.
38 O Kilic and D Miller, "Exploring the Influence of a Salesperson's Selling Approach on Buyer-Seller Relationship
Outcomes", in International Journal of Customer Relationship Marketing and Management, vol. 5, 2014, 1-15.
39 S Kladou and E Mavragani, "Assessing destination image: An online marketing approach and the case of
TripAdvisor", in Journal of Destination Marketing & Management, vol. 4, 2015, 187-193.
40 M Tichindelean, "The Influence of Marketing Communication on the Consumer’s Buyer Behavior – A
Relationship Marketing Approach", in Studies in Business and Economics, vol. 10, 2015.
21

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4.0 Critically analyze the principal processes of organizational change
4.1 Apply force field analysis to analyze and identify forces of change
Following are the factors which are identified from the force field analysis and forced to
make changes:
Stiff competition: The airline industry, Azul Brazilian Airlines faces stiff competition
into the market due to their competitors such as LATAM airlines and GOL. On the short haul
routes, the organization faces vital competition into ground as well as in air.
Increase in fuel price: There is a sharp increase into price of the fuel leads to higher
price of the airline tickets41. The result is that Azul Brazilian Airlines has tough competition from
the lower cost carrier airlines which offer with discounted rates to their passengers.
Degradation into quality of the services: There is huge reduction into the quality of
services provided by the airline organization. Due to lack of punctuality of the staffs, it affects
the reputation of the organization. The result is that it has slapped with series of fines with new
laws as well as regulations concern the airline industry.
Therefore, the reasons to change are competition, rise in fuel price and lack of quality of
airline services.
4.2 Critically evaluate various change management models
Lewin change management model and Kotter’s 8 step change model are significant
change management strategies for managing the changes into the airline industry of 21st century.
41 M Flanigan, "Diagnosing and Changing Organizational Culture in Strategic Enrollment Management",
in Strategic Enrollment Management Quarterly, vol. 4, 2016, 117-129.
22

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Lewin change management model: There are three phases of this model such as
unfreeze, movement and refreeze. The first stage unfreeze, the leader diminishes power of
people. Under second state movement, Lewin believed that new attitudes are developed among
people, where people are finding for new ways to do their work throughout new direction. The
third stage refreeze, which consists of new behavior providing by support42. In this particular
stage, criticism is a challenge for the leaders in order to freeze the behaviors when continuous
changes are required.
Kotter’s 8 Step Change Model: Using this change management model, it is claimed that
there is changes into recession into competitiveness, share of the market and also financial
performance. The organizational vision is also created to meet with its organizational goals. Lack
of vision of the organization is resulted into irrelevant plans, confused staffs which lead to
incompatible of the activities43. The vision of the airline industry is developed using
communication channel.
4.3 Apply leadership and change agent skills to implement a strategic change in
Azul Brazilian Airlines
Effective leadership skills are required to manage people into the organization such that
people can implement of strategic changes. The skills required are formulated and communicated
the strategy, management of people alignment, alignment of decisions as well as actions. The
strategic leaders motivate the airline employees to become more productive by providing of
reward as well as incentive system. They have potential to foresee with the work of airline
42 L Schultheis, "Creating a Culture of Inclusive Excellence in Strategic Enrollment Management through
Distributed Leadership", in Strategic Enrollment Management Quarterly, vol. 2, 2014, 12-21.
43 A Johnsen, "Strategic Management Thinking and Practice in the Public Sector: A Strategic Planning for All
Seasons?", in Financial Accountability & Management, vol. 31, 2015, 243-268.
23

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business environment44. The main skills required into the leader are loyalty, motivational skills to
achieve organizational goals, self control and self-awareness. A change agent consists of two
main skills diagnostic and behavioural skills. The agent can identify the challenges and then
define it. There is acquiring of skills throughout formal training and experimentation. They have
good communication skills to make the changes45. They also have good goal setting as well as
planning skills to set of goals for the organization to make a commitment to see the strategic
plan.
5.0 Evaluate the implementation of strategic plans
5.1 Analyze the time schedule for the implementation of strategic plans
Activities Duration
Implementation of strategic plan for Azul Brazalian Airline 100 days
Review of the organizational strategic plan 19 days
Perform a situation analysis of the airline industry 2 days
Analyzing the internal and external business environment 14 days
Analyzing the internal business environment using SWOT 5 days
Analyzing the external business environment using PESTLE 9 days
44 Voeazul.com.br, "About Azul", in Voeazul.com.br, , 2015, <https://www.voeazul.com.br/en/about-azul/about-
azul> [accessed 3 November 2017].
45 Sabre.com, "Azul Brazilian Airlines implements Sabre’s distribution technology to boost sales in the USA, Brazil
and global markets « Sabre", in Sabre.com, , 2015, <https://www.sabre.com/insights/releases/azul-brazilian-airlines-
implements-sabres-distribution-technology-to-boost-sales-in-the-usa-brazil-and-global-markets/> [accessed 3
November 2017].
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STRATEGIC MANAGEMENT
Analyzing the effects of the existing strategic plans of the airline industry 3 days
Propose of strategic options for the airline organization 16 days
Discussing relationship between corporate, business and optional strategies 4 days
Apply strategic models and tools to develop strategic options for an
organization
5 days
Evaluate strategic options for the airline industry 7 days
Strategic implementation plan of the airline industry 30 days
Identify the vision, mission and strategic goals 9 days
Propose of structure for the airline industry to fit into strategic plan 12 days
Resource strategy implementation plan 9 days
Critically analyze the principal processes of organizational change 16 days
Apply force field analysis to analyze and identify forces of change 3 days
Critically evaluate various change management models 8 days
Apply leadership and change agent skills to implement a strategic change
in an organization
5 days
Evaluate the implementation of strategic plans 19 days
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STRATEGIC MANAGEMENT
Design key success indicators in order to monitor the implementation of
the strategic plan
10 days
Analyze potential risks during implementation 9 days
5.2 Design key success indicators in order to monitor the implementation of the
strategic plan
The key success indicators are required within the airline industry to monitor of the
implementation of strategic plan so as to achieve of organizational mission, goals and objectives.
The top level management considers of following indicators during setting of organizational
goals such as:
Strong management: There should be a strong management for the airline industry so
that they can control the increase of cost which makes their travel plan difficult to do. The
management also motivates the worker to work properly and meets with organizational goals46.
Capable workforce: There should be high qualified along with competence workforces is
a key significant requirement for the airline industry to perform the airline operations. They also
have strong communication skills to interact with the customers. Staffs are required to be highly
paid so that they even cannot leave the organization.
46 United - Newsroom, "United Airlines and Azul Brazilian Airlines Form Long-Term Strategic Partnership",
in United - Newsroom, , 2015, <http://newsroom.united.com/2015-06-26-United-Airlines-and-Azul-Brazilian-
Airlines-Form-Long-Term-Strategic-Partnership> [accessed 3 November 2017].
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In-flight services: The promotion within the organization is also enhanced the base of
the loyal customers and they are focused on regular higher revenue of the customers. In-flight
services are provided to the customers such as comfortable seating place, class for offerings of
service and proper business plan47. Simple service is a critical success factors for the selected
airline organization.
Financial management: The airline industry should regular proper investment into their
airline business so that they can plan a proper cost structure. There should be proper
accountability of unit revenues in order to compute profitability that is calculated by the revenue
minus the expenses which is divided by total seats flown48.
Proper route system: The route of the airline organization is most reliable so that the
organization can perform their business functions properly and efficiently. The fly and frequency
of the flight is also a success factor which increases the demand of the passengers to use their
services for fly in tour and business plan49.
5.3 To analyze potential risks during implementation
Following are some of the risks which are identified during implementation of strategic
plan for Azul Brazilian Airlines such as:
High competition: The airline industry such as Azul Brazilian Airlines is highly
competitive; therefore they are not successful to compete into the airline marketplace. Therefore,
47 Worldairlinenews.com, "Azul Brazilian Airlines | World Airline News", in Worldairlinenews.com, , 2015,
<https://worldairlinenews.com/tag/azul-brazilian-airlines/> [accessed 3 November 2017].
48 C Deck and S Jahedi, "Time Discounting in Strategic Contests", in Journal of Economics & Management
Strategy, vol. 24, 2015, 151-164.
49 A McWilliams et al., "Strategic Decision Making for the Triple Bottom Line", in Business Strategy and the
Environment, vol. 25, 2014, 193-204.
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STRATEGIC MANAGEMENT
the result is that business, financial conditions as well as operating results are affected the
business operations of the selected airline organization. At the time of implementation of
strategic plan for the organization, the airline industry faces competition into the market due to
routes and high fares50. The revenue is affected due to growth of low cost carrier into Brazil.
However, due to expansion of low cost carrier, it affects the hub airports of the Azul airlines
business.
Reduction in cost structure: The business of selected airline industry is highly based on
accessing the capital market. The credit ratings of the organization are lowered and therefore
they achieve lower cost structure. At the time of implementation of the strategic plan, high cost is
required and when they have low cost structure, they are not able to access to the capital market
for new borrowing51. It results into hinder of their ability to function into the business.
High cost of fuel: The airline organization is highly dependent on availability as well as
price of the airline’s fuel. When there is higher cost of fuel, it disrupts the supply of the fuel and
affects the operating result of the organization. Due to stiff competition into the airline industry,
high price of fuel results into increasing the fare price of the passengers. Therefore, impact of
low aircraft price of fuel offsets by raising the competition of price, which results into revenue
reduction for the air carriers. Change into governmental policies also affects the fuel production.
Conclusion
It is concluded that due to raise into the price of fuel, it affects the marketplace of the
airline industry. There is high competition of the airline industry due to growth of low cost
50 R Rosenbaum-Elliott, Strategic brand management, in , Oxford University Press, 2015.
51 J Thompson, F Martin and J Scott, Strategic management, in , Andover, Cengage Learning, 2014.
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STRATEGIC MANAGEMENT
carrier which provides their customers good service with low cost of fare. A huge capital
investment is also required to compete into the market. Therefore, Azul Brazilian Airlines decide
to implement of strategic plan to make a competitive advantage. The switching cost is low for
those transport channels as compared to airline. From the SWOT analysis, it is analyzed that the
airline organization has higher revenue and growth rate but they have high competitors too.
Apart from this, the organization implement of technological system such as baggage checking,
online ticketing to increase market share. The selected airline industry makes their travel easier
into economical. They have also derived of PRASK premium. The organization should make
some changes into their business functions by using of change management model. They should
be preparing a communication plan to cooperate with each other and facilitate in exchange of
information and values. In order to make changes, the management decided to merge their
business with other airline business for raising frequency of the customers.
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