Corporate Strategy Analysis of Flight Centre: A Detailed Report

This report provides a comprehensive analysis of Flight Centre's corporate strategy. It begins with an introduction to corporate strategy and its importance, followed by an examination of three key strategic issues facing the company: lack of affordability due to rising fuel prices, difficulties in obtaining flying permits, and the impact of high technology usage. The report then delves into Flight Centre's resources and key capabilities, including its application of technology and its quality manpower. Furthermore, it explores the company's competitive strategy, including its competitive rivalry, bargaining power of buyers and suppliers, threats of new entry, and threats of substitutes. The analysis incorporates Porter's generic strategy model to assess Flight Centre's competitive advantages. The report concludes with a summary of the findings and suggestions for improvements.

Corporate strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. 3 key strategic issues facing by an organisation.....................................................................1
2. Resources and Key capabilities of Flight centre.....................................................................3
3. Competitive strategy of Flight centre, strategic issues, improvements...................................6
CONCLUSION................................................................................................................................7
REFERENCES ...............................................................................................................................9

INTRODUCTION
Each organisation have their own strategy which are used by them for accomplishing
their specific targets and goals in proper manner. Corporate strategy is one of the most essential
strategy for an organisation which takes a portfolio approach for making strategic decision for all
over the company. It also provide direction to an enterprise which combine with achieving the
desired goals and objectives in the long time period. There are different types of corporate
strategies which are available for the firm but still they are used Cost leadership and product
differentiation (Grinblatt and Titman, 2016). The report is based on Flight centre which is largest
retail travel company that is situated in Australia. They have more than 20,000 employees who
work in this organisation. In this report, analyse major key strategic issues which have been
faced by an organisation and also understand resources and capabilities of the Flight centre in
better manner. Along with this, they need to analyse competitive strategy of firm, strategic
issues, and give proper suggestion of improvements.
MAIN BODY
1. 3 key strategic issues facing by an organisation
A corporate strategy define long term objectives and goals which assist them in making
effective corporate values in the large market place and motivating the entire manpower for
doing their work in proper manner so that they can satisfy their customers needs and wants in
effectively. It is continuous procedure where firm try to engage with their company investors
along with their activities so that they can trust on them and also invest capital within an
organisation. Flight centre is one of the largest retail travel company which provide effective
services or facilities to their passengers from one place to another so they need to describe their
strategy of all the department which are help in achieving their potential goals and targets by
completing their activities in given time period (Hirsch, Burggraf and Daheim, 2013).
The definition of strategic planning is “addressing and analysing unsolved major issues”.
It is the general perception that an “issue” is always negative, this will make or create problem
for an enterprise but it is not fully appropriate so sometime positive can became positive and this
can make favourable effect for an organisation. Flight centre limited is facing loss because they
are failing to resolve certain key problems. The three main strategic issues which are faced by
company that are as follows:
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Lack of affordability - Each organisation know that if they increasing their tickets
pricing due to increase in fuel price then other companies may earn some benefits to low their
ticket rate for attracting more people. Flight centre does not change their ticket price which help
in retaining their customers towards their services. It is considered as strategic issue because for
smoothly run their business they need make effective strategy (Ingley, Mueller and Cocks,
2011). So this will indirectly impact on political factors because it will create instability in
business environment and does not easy for control fuel pricing in any manner. Flight centre is
known for lowest fair, it is a significant part of long term strategy. But increasing fuel price is a
big strategic challenges for them.
Why it is strategic
Flight centre make effective strategy for make affordability in the price of fuel with the
help of creative policies and schemes but if more then two years, this strategy does not work so
they think they need to make appropriate changes in their current strategies. Their strategy
should be clear, reduce the amount of fuel and earn more income. This is an strategic issue
because they want to keep lowest price of their tickets in the market as it is part of their strategy
but enhance fuel price is ruining their strategy.
Do not getting flying permits- It is considered as major key issue because Flight centre
want to expand their business in all over world. But they are facing some legal problems while
taking permits for flying. Most of the country government authorities does not provide them
permit for flying their plane, other take long time in making decisions relating to whether they
should give permit or not. So they will face various legal issues or problem for getting licensing
to fly.
Why it is strategic
It is strategic issue because Flight centre make strategy for spreading their flights in all
around the world. So they need to fulfilling all legal terms which create issue in between getting
permits for flying (Kim, 2015). They deal with different problems and issues which occurs
within an organisation in effective manner. Aggressive expansion of business is key part of long
term strategy of Flight centre but lengthy approval process is creating problems at time of
implementing this strategy.
High usage of technology - Every enterprise know that if they will not updated their
technology and methods then other organisation gain maximum profit in competitive place.
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Apart from this, this will became major strategic issue for company. If customers are using
online ticket service they know that in which month they are getting low price tickets then most
of them are purchasing tickets in that specific so by this company will face losses. But it is
necessary for an organisation is to update and upgrade their technology on regular time basis.
This key issue is indirectly affect on technological factor which impact on business operation and
activities (Kleinbaum and Stuart, 2014). Flight Centre is known for their low price tickets but,
nowadays, there are mobile application and websites which can allow a customer to check that
whether price of ticket is lowest or not. This impact credibility of company because sometime
their price is not lowest but they claim that it is.
Why it is strategic
For gaining more money, Flight centre limited need to update their online technologies
and methods. This can be said to be strategic because if customers know that when company
lower their ticket then they does not purchase tickets on peak season so organisation will facing
huge amount of loss. Selling tickets at lower price has been considered as an important part of
their strategy. Customer has not started using latest technology and now they can easily find
substitute of Flight centre in terms of lowest price.
2. Resources and Key capabilities of Flight centre
An organisation may be facing so that they have some financial issues in current scenario
but they have capability for surviving because they are facing such type of problems in past years
but they never came into these situation for shutting down the business. There are some key
resources of an organisation with their capabilities that are as follows:
Application or technology - Most of the organisation do not invest more amount while
their financial situations is not good but this company did not follow the similar strategy and
policies. Flight centre know that how to survive in this competitive market place, where they
update their business and it is main reason that they are able for facing major challenges which
they get from another players of an organisation (Kreng and Huang, 2011). They understand that
young generation does not tickets through offline mode but they are always buy tickets with the
help of online facilities. It is the main reason that they provide online payment for purchasing
flight tickets through websites. Flight centre has been adopted latest technology and methods for
operating business functions.
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Quality manpower- In the current time period, company need to select or hire talented
and skilled people within their organisation due to this if they have appropriate employees then
they engage with other issues or troubles. Flight centre Limited does not consider to hire more
workforce, their main aim is to improving skills and abilities which are existing among their staff
members. Most of the employees are proficient of their field and they have required experience
for tackle all major issues and problems. Along with this, quality manpower provides
competitive advantage to the firm (Kruehler, Pidun and Rubner, 2012). Also their rivals are
concentrate in expanding their workforce but still they did not evaluate in quantity of work, they
mainly focus on its quality of services which are provided to their passengers. Flight centre
Limited does not have employee strength so this do not have wastage much resources for
satisfying their needs and demand. This will assist in reducing the business burden because other
organisation have to spend high sum of paying salary to the employees.
There are some set capabilities which help firm for gaining competitive advantages that
are as under:
 They are having effective and good reputation and large number of people are attracted
towards Flight centre services or facilities.
 They are also make and develop advertisement for gaining attention of more number of
customers.
 They are increasing use of online channels and services for booking tickets.
If an organisation need to achieve competitive benefits then they have to integrate their
resources and capacity for getting superior value initiation. High resources and qualities are those
appropriate and effective factors which assist firm for acquiring competitive advantages. If these
aspects are not exist in the firm then major challengers will getting the opportunities for
introducing improved strategy.
Critical success factors are those aspects which are assisting firm in performing with their
rival because they are generally valued by large group of customers. So the key success factors
which are connected with Flight centre are as under:
 Attracting customers- There are two major factors of measurement which regard
customers such as attractiveness of airline services and effectiveness of airline
promotional income. In this analysis, the relative price has been used because ticket price
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is most important factor in attractiveness. Also the lower relative rate is usually more
attractive for most of the travellers (Lamberti and Noci, 2012).
 Caring the customers- Flight Centre Limited should take care of all passengers
regarding their seats, services and other facilities. They analyse their demand after that
according to their requirement they properly fulfil their wants in proper manner. This will
help in attracting more people towards their flexible services and facilities.
 Financial resources- Flight centre companies cash account, capital, debt, equity,
borrowing and investment. So they are lower the cost of tickets for attracting large
number of travellers from their travel group plane. They already set their financial
budgets which should be maintained by this company.
Porters generic strategy model help an organisation in gaining competitive advantages
within the market. These are described as follows:
 Competitive rivalry- In this competitive rivalry which is face by an organisation that is
very higher so they are facing huge competition with other similar type of company such
as American express global Business travel, GetThere, Smaller Earth, KDS, etc. They
also facing high level of competition from travel agencies and earn maximum
profitability.
 Bargaining power of buyers- Bargaining power of buyers is very high in the market
which can preferred by the customers or passengers of Flight centre. This will help in
identifying negotiation power of customers where they give service price according to
their demand and wants.
 Bargaining power of suppliers- The bargaining power is very low in Flight centre
because there is huge number of accumulated customers which are available in the large
market area (McFadzean, Ezingeard and Birchall, 2011).
 Threat of new entry- For an organisation, there are some threat arise for entry of new
company in the large market place. There are various services or facilities which are
established within the market and they are not allow any type of firm for enter in the new
market place.
 Threats of substitutes- There are large number of substitute exist in the market because
there are different number of airways companies who also provide same type of services
or facilities at reasonable rate by Flight centre.
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3. Competitive strategy of Flight centre, strategic issues, improvements
Some strategic issues faced by an organisation that can be retrieve by them if they are
utilise effective strategy in proper manner. All the competitive strategies assist firm for gaining
appropriate competitive benefits in the market that are mainly required for most of the
enterprises. It is very necessary for the firms is to resolve major issues and problems so they gain
advantages for achieving desired goals and targets of an organisation in easy manner.
In the case of Flight centre, there are different problems which firm has been faced but
management mainly introduce effective and good strategies that are capable for reconstitute and
re-introduce in this sector (Rugman and Verbeke, 2017). Their execution has been done in
correct manner so this was possible only because employees was effective. The strategies used
within flight centre Limited that assist them in acquiring competitive advantages and also resolve
major issues of the firm are as under:
SWOT analysis- With the help of this strategy, organisation are capable to regain their
effective market share and analyse their employees skills and abilities. Flight centre facing issues
for manufacturing various goods which are latest in designing so if they gain skilled they
required to understand their imperfections. There are few threats and weaknesses of Flight centre
that are described as under:
 they have poor technology and equipments
 they are not having customers focus
 the profit ratio and net contribution % of flight centre Travel group Limited are lower the
industry average.
 Organisation structure is matched with current business model thus limited growth in
adjoining section of goods.
IMPROVEMENTS:
 Selecting employees who have best suitable skills and abilities who work for achieving
desired goals and targets of an organisation so they need to provide them training.
 They also need to focus on their customers and analyse their likes and dislikes.
 Flight centre should adopt and use latest application which are accessible in the large
market so working efficiency is raise (Zhu and Chen, 2015).
ANSOFF MATRIX- It is that strategy which is used by an organisation for understanding the
strategic alternative for the firm regards to the services and market coverage. Flight centre
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require to do promotion of their flight services or its facilities in their market penetration so they
have inadequate services and if they need to be competitive then they have to formulate this in
proper manner. The firm can achieve this by developing themselves in large market and
strengthening it. In the case of market development, organisation try to enter in the new country
for expanding their business operations. It will help in providing good and effective image of the
company among their customers. With the help of this, firm are able to manage and maintain
their all core divisions. It will assist organisation for resolving their strategic issues and problems
of lack of affordability.
For improving these strategic issues, Flight centre have to use SAFe test. SAFe refers to
the Scaled Agile framework which is agile software improvement framework that belong with
knowledge based of combined patterns that deliberate for firm scale Lean agile development.
This will assist in positioning, delivering and cooperating more number of active teams. Such
framework is generally developed with the help of customers for resolving their major
challenging measuring issues.
3-LEVEL SAFe – The three level SAFe includes:
 Team – In this, SAFe teams are agile teams which is very modern or advanced method to
do work that required skills need to be define, refer, develop and test so that they can
easily deliver value of an organisation. This is not conventional team where all
employees doing work in independently and autonomously.
 Program – These team members create or make program after doing work together in
which there are around 50 to 120 persons. This will also includes developmental teams
and effective stakeholders (Zona, Minoja and Coda, 2013).
 Portfolio – It can be define as gathering of value streams which has high level of budget
assigned to them. It can be related to the organisational strategies for setting strategic
themes.
CONCLUSION
From the above mentioned report it can be analysed that developing effective strategies is
important for each company. This will help them in identifying their company aims, goals and
objectives. An enterprise can face various strategic issues, competitive strategies that can solve
this problem. They generally try to give competitive advantages to the firm for reducing the cost
value and enhancing the production level within an organisation. This will also describe the
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critical success factors which make firm successful. This is an evaluation which can be done that
has been addressed by organisation, they are able for achieving major targets and goals and also
solve their major issues by using different strategies.
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REFERENCES
Books and Journals
Grinblatt, M. and Titman, S., 2016. Financial markets & corporate strategy.
Hirsch, S., Burggraf, P. and Daheim, C., 2013. Scenario planning with integrated quantification–
managing uncertainty in corporate strategy building. Foresight. 15(5). pp.363-374.
Ingley, C., Mueller, J. and Cocks, G., 2011. The financial crisis, investor activists and corporate
strategy: will this mean shareholders in the boardroom?. Journal of Management &
Governance. 15(4). pp.557-587.
Kim, L. S., 2015. Convergence of Information Technology and Corporate Strategy. Journal of
the Korea Convergence Society.6(6). pp.17-26.
Kleinbaum, A. M. and Stuart, T. E., 2014. Inside the black box of the corporate staff: Social
networks and the implementation of corporate strategy. Strategic Management Journal.
35(1). pp.24-47.
Kreng, V. B. and Huang, M. Y., 2011. Corporate social responsibility: Consumer behavior,
corporate strategy, and public policy. Social Behavior and Personality: an international
journal. 39(4). pp.529-541.
Kruehler, M., Pidun, U. and Rubner, H., 2012. How to assess the corporate parenting strategy? A
conceptual answer. Journal of Business Strategy. 33(4). pp.4-17.
Lamberti, L. and Noci, G., 2012. The relationship between CSR and corporate strategy in
medium‐sized companies: evidence from Italy. Business Ethics: A European Review.
21(4). pp.402-416.
McFadzean, E., Ezingeard, J. N. and Birchall, D., 2011. Information assurance and corporate
strategy: a Delphi study of choices, challenges, and developments for the future.
Information Systems Management. 28(2). pp.102-129.
Rugman, A. M. and Verbeke, A., 2017. Global corporate strategy and trade policy (Vol. 12).
Routledge.
Zhu, D. H. and Chen, G., 2015. CEO narcissism and the impact of prior board experience on
corporate strategy. Administrative Science Quarterly. 60(1). pp.31-65.
Zona, F., Minoja, M. and Coda, V., 2013. Antecedents of corporate scandals: CEOs’ personal
traits, stakeholders’ cohesion, managerial fraud, and imbalanced corporate strategy.
Journal of Business Ethics. 113(2). pp.265-283.
Online
Corporate strategy. 2018. Available through:
<https://corporatefinanceinstitute.com/resources/knowledge/strategy/corporate-
strategy/>.
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