Classic Airlines: Business Strategy, Marketing and Change Report

This report provides an analysis of Classic Airlines' business strategies, focusing on key elements such as cost leadership, corporate strategy, and operational strategies. It examines the adoption of Porter's Generic Strategy, specifically cost leadership, and its impact on the airline's performance, including revenue and operational expenses. The report delves into Classic Airlines' corporate strategy, highlighting the use of Ansoff's Matrix for market penetration and development. Furthermore, it explores the VRIN framework to assess the company's core competencies and sustainable competitive advantages, evaluating value, rarity, imitability, and non-substitutability of its resources. The analysis also covers the operational level strategy, marketing strategies, and change management initiatives, providing insights into how Classic Airlines aims to introduce new products and services and achieve long-term success in a competitive market. Performance management and the 4Ps of marketing mix are also discussed.

Paraphrasing

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................1
INTRODUCTION...........................................................................................................................1
1. Classic Airline adopting Business Strategy............................................................................1
2. CLASSIC adopted corporate Strategy....................................................................................3
3. CLASSIC VRIN framework...................................................................................................4
4. Strategy of Operational level by CLASSIC............................................................................5
5. Marketing Strategy..................................................................................................................6
6. Change Management...............................................................................................................7
7. Performance Management......................................................................................................9
CONCLUSION..............................................................................................................................11
RECOMMENDATIONS...............................................................................................................12
REFERENCES..............................................................................................................................13

EXECUTIVE SUMMARY
The objective of this assignment is about finding the requirements of various theories that
has been used by industry of airline. Thus, these theories will lead the industry in making
decisions in terms of managing the company.
All these theories are being provided by MBA toolkit that involves Performance
management, marketing, finance, change management, culture of the business and also the
strategic management. This aids them in analysing opinions that has been made in the airlines
that is based on theory. These theories also leads Fly high in making various decisions
successfully which later helps them in converting loss into huge profits.
In addition to this, strategy framework and structuring tools are the two inputs that are
present in order to know the latest position of the cited company in the particular market.
Therefore, to earn high market shares they have to expand effective strategic planning. In order if
the cited company wants to achieve competitive advantage these theories plays essential role that
later resulted to high term profit in CLASSIC Airlines.
INTRODUCTION
Classic Airlines operates in Great Lake Region of USA where small towns and cities are
provided with services where there is lack of attraction towards large aircraft. This report mainly
helps in analysing the models that has been used in business by leading them towards increased
growth of business (Alamdari and Fagan, 2017). Thus, the key elements of success of business
has also been described in this report in terms of Strategy, product portfolio, business model and
also the implementation.
Further, Strategic planning in Classic Airlines helps in building strategic choice. In
addition to this, various theories and models has been used in this report to achieve long term
success by benefiting in competitive market. Moreover, marketing mix is also being used in
order to introduce new and trendy product or service in a particular market. And the importance
has also been given to change management and key performance of Classic.
1. Classic Airline adopting Business Strategy.
Business strategy plays very essential role in the industry. So the cited company has to
adopt right business strategy (Bowman and Nurnberger, United Airlines Inc, 2018). Perfect
business strategy includes to set up the goals that has been desired, ideas and performance.
1

Therefore, to achieve successful business and long terms goals, they design the effective strategy
in terms of business. Thus, it becomes compulsory to accomplish the choices that are related to
strategy which has been given by particular business. This will help the cited company to achieve
long term success. Thus, if company wants to select the cost leadership, following strategy has
been used by them.
Porters Generic strategy- Cost Leadership
Porters generic Strategy helps in describing the competitive advantage that has been
pursued by the cited company across the chosen market scope. There are four types of this
strategies out of which company chooses one of this types in order to gain competitive
advantage.
This strategy of porter leads the company to create their reputation and competitive
advantage in a particular market by targeting on cost reduction (Bratton and Gold, 2017). The
main aim of this strategy is to minimise the production cost rather than the competitors that are
involved in market.
Therefore, if Classic airlines desires to minimise the cost of production and also wants to
earn high profitability, they have to select this strategy that will lead them with positive results
and will also help them in attracting huge volume of passengers.
Illustration 1: Porters Generic Strategy
(Source: Porter's generic strategies, 2018)
The income statement of the 4th quarter the cost that was incurred in terms of operations
in flights were maximum. In 2nd quarter the company has to face high expenses in terms of
2

operating as compared to the gross revenue and later it lead company Classic Airlines to move
forward to the theory in terms of cost leadership. This theory helped in reducing the cost of
operation in successful manner. The gross revenue of the industry was $2,731,634 and operating
expense in total is $2,983,467. But in second quarter this gross revenue decreased and was
$2,731,634 and total expense in terms of operating was $2,731,634.
Therefore, it has been analysed that this cost leadership theory helped to stand up with the
competitors and it also helped them in managing the expenses related to production. The gross
revenue were increased that resulted into profits. Thus, this theory that was adopted helped in
earning gross revenue by 3,881,928 to $3,015,096 that means the profit of $420,736.
The cited company Classic airlines therefore selected right strategy that later led them
towards reduction of cost and increase in reliability.
2. CLASSIC adopted corporate Strategy
Corporate strategy is termed as overview of the market that has been provided to be
massed on (Burke, 2017). This strategy also keeps an eye on the decisions that the company
makes in terms of products and services that has been offered. Thus, to achieve competitive
advantage the cited company has to Follow Ansoffs matrix.
Ansoffs Matrix
This Matrix was introduced or founded by Igor Ansoff in the year 1957. This model
includes four choices that can be adopted by the company to achieve competitive advantage. The
four choices that are included are market development, product development, diversification and
market penetration. The main aim of this strategy is to decide the scope, impact and purpose of
this in the company in terms of value addition.
The Classic Airlines company adopted Market penetration strategy. This helped them by
showing that the customers that are using trendy products and services are targeted mainly by
them in order to achieve competitive advantage. In order to serve to the new market with current
products and services is known as market development strategy. Classic made the load of highest
passengers in 24D by costing basic fare with the help of penetration strategy. This strategy also
lead them to 90.9% of passenger load in 9A and 11C. In this the company adopted market
development strategy in simulation period.
In 10th quarter Classic used development strategy that lead company to attain high profit. There
were the highest number of passenger load than 5th quarter i.e. 92.6%. in this way, development
3

strategy helped the Classic airlines. Thus, huge competition aids to basic fare that helped them in
competing with competitors therefore they decided and planned in order to come up with new
routes of market that may help the company to beat the competition in highly competitive
market.
Hence, both these theories that has been used by Classic Airlines helped them to increase
their brand image in the highly competitive market by attaining 91.0% passenger load in 20R and
83.0% loads in 26F.
3. CLASSIC VRIN framework
This framework was founded in 1991 by Barney. According to Barney any company can
easily find that the resource that are available in a company are termed as a source and it also
serves as basis for competitive advantage that is sustainable (Cameron and Green, 2015). This
framework leads the company in determining the core competencies that later helps them in
achieving competitive advantage in sustainable manner. Thus, it becomes essential for Classic
Airlines to determine the core competencies to achieve huge growth in q particular market. The
VRIN framework has been discussed as per the below context-
 Value- this states the value of the resources that are available in terms of gaining long
term competitive advantage.
 Rarity- Rarity states the discoverability of resources that are available in order to and also
determine the ability of the cited company or industry in order to grow as compared to
the competitors that are available in that particular market.
 Imitate- In this it has been found out about the amount of resources and capabilities that
are available. Thus, importance of that resources is also been determined.
 Non substitutability- this helps the company by showing them that existing resources
must not be replaced by the new ones.
Core
competencies
Value Rarity Inimitability Non
substitutability
Having expert
management and
staff
The staff and
management were
expert in Classic
that helped in
No other
companies were
able in order to
attain that
Yes they can be
copy well and
smoothly.
To substitute the
staff or
employees that
are existed will be
4

increasing quality
and reliability of
the company.
particular goals as
per the cited
company.
the toughest task
for them.
Structure of fare The load of
passengers were
increased due to
fare that were
discounted by the
company. This
helped in
attracting huge
volume of
passengers
towards the
brand.
They were also
able to reduce fair
price.
The other
companies are
also available in
market that may
attain the lower
price but in
maximum time
period.
No chance of
substitution.
Reliability Classic easily
attracted number
of passengers in
terms of creating
reliability.
This can be easily
gained by other
competitors that
are available in a
particular market.
Yes it can be
simulated easily.
No reliability can
not be replaced or
substituted.
Marketing Classic easily
attracted large
number of
customers with
the help of high
marketing budget.
There are many
competitors that
are available in
the market which
has ability in
order to invest in
marketing and
gain targeted
goals.
Yes they have
ability to simulate
easily.
No, there is no
replacement in
terms of budget
of marketing.
5

4. Strategy of Operational level by CLASSIC
This strategy leads in analysing the resources that has been used in order to obtain output
in maximum number that later helps the company in achieving long term goals (CREEDY,
2016). This mainly refers to use of system in efficient and effective way that helps in
management of resources, people and procedure that are available in Classic airlines. It also has
measurement in strategic way.
Thus, the company Classic Airlines invited large amount of quality by 93% and
reliability by 99% that was extremely higher than 1st quarter. In 9th quarter they also decided for
fleets realisation from aircraft 3 to 5 having 124 seats. This allowed company in achieving
reliability and also achieve increasing rating in terms of quality. In this quarter the price of the
stock and load of the passenger were 46.12% and 87.6% respectively. Thus, in 8th quarter the
Classic airlines suffered with huge amount of loss but recovered it and earned increasing profit in
upcoming quarter by operating in appropriate manner.
5. Marketing Strategy
Classic Airlines has to apply or adopt marketing strategy if they desire to introduce new
products and services in the new market (Davies, 2016). There are 4ps of marketing mix that
includes product, price, promotion and place. All these elements of marketing mix affects in
different ways to various persons. The cited company must have the ability in order to produce
such product and services that will help them in targeting the right market with help of the
products and services that are been produced. Thus, 4ps of marketing mix has been discussed as
per below context-
6

Illustration 2: Marketing Mix
(Source: 4Ps in Marketing, 2010)
 Product- The stated company followed various strategies as market penetration and
market development. This strategy that has been adopted by them lead the Classic
Airlines to achieve huge level of quality and also increased level in terms of reliability.
 Price- the cited company reduced to 30% from 38% that was first charged by them with
free snacks and soft drinks provided to passengers. This cost that was charged to
passengers were due to suffering of huge financial losses in early stage. This reduction
also helps the company to earn long term profitability (Żółtaszek and Pisarek, 2016).
 Promotion- there were lack of investment in 1st quarter. But the cited company Classic
Airlines invested huge amount in promotion that lead them towards huge loss. In the
latest quarter that is 9th quarter the budget in terms of advertisement was $46,000. This
helped the company in making huge amount of profit by this and also in increasing the
quality and reliability.
 Place- Short distance in terms of operation leads to less fare policy as the cited company
Classic Airlines were operating in US only. Thus, this short distance in order to operate
worked in positive manner for them.
6. Change Management
Change management is the systematic approach that helps in order to deal with transition
and also with transformation of various goals, process and technologies of a particular
7

organisation (Hayes, 2018). In other words this model also leads in achieving goals and targets
that has been set by the business that is Classic airlines. The cited company made some changes
in the process and decisions or plans of management as they were suffering with huge amount of
loss. The change that was adopted by them resulted in positive way for them and their business
came on track again. For adopting new plans and changing existing ones Classic Airlines
decided to use the change management model that was founded or introduced by Lewin. This
model helped the company to achieve outstanding performance in terms of change that has to be
adopted by the company. This model includes three stages as unfreezing, change and freezing.
Thus, with help of these steps the cited company can plan and forecast their plan in respected
manner. Thus, the three steps of Lewins change management model has been discussed as per
below context-
Illustration 3: Change Management Model
(Source: Lewin’s Change Model, 2012)
 Unfreezing- many people in the organisation tries to put maximum effort in order to resist
change. Therefore, to overcome this tendency, thawing and unfreezing period must
initiated by motivating employees of Classic Airlines. Unfreezing is refereed to as or
defined as to change. Therefore, the cited company analysed that they have to adopt
8

change and it is compulsory to adopt some change in order to gain long term profitability
and achieve targeted objectives in appropriate manner. In addition to this, sales
representative were hired by the industry in order to bring changes in the field of
operation.
 Change- after initiating change, Classic Airlines moves into implementing it. This period
have a lasting period of limited time. To make this process as the successful one,
Adequate leadership and reassurance is essential. In this stage the company can easily
analyse the area where there is actual requirement of change. It is also determined easily
about where that cited company may face it. Thus, Classic Airlines company changed the
management process completely that later resulted them into change of goals.
 Freezing- after the acceptance of change is done by the company in successful manner,
the stability of the company resets and the staff of the particular industry starts to operate
in the new guidelines that has been set by them. It is termed as the last stage of this
change management model of Kurt Lewins. In this stage the organisation has to be aware
about the particular modifications that has been taken place over there. This stage is also
known as the stage of implementation or execution. Further, this company suffered huge
loss that lead the stated company to go through various changes that helped them in
increasing profit in high level and also in increasing the reliability of the company.
The organisation therefore had $5,241,777 revenue and price of the stock was $39.59 for the
simulation in the 12th quarter.
7. Performance Management
Performance management is termed as the process in order to create work environment
ion such way that may help the people that are involved in cited company to perform in best way
by bringing out their maximum abilities (Rothaermel, 2015). It is also termed as the whole work
system begins when there is defined need of job till the employees ends their job in a particular
company. Thus, the operation that was started by Classic Airlines in terms of performance
management when there was huge competition in market. Further, the cited company has to face
huge loss in the starting period. Thus, to overcome those losses Classic Airlines has to adopt
different theories. These theories also helped them by good results and earn huge profit. This
models also lead them in increasing the quality of goods and also nature of reliability.
9