Macro and Microenvironmental Factors

Prepare a strategy report for a business unit on Flight Center.

Company Flight Center Travel Group is the largest retail travel outlet in Australia. The company is providing a variety of services at cheap and low cost to the customers. The company is giving the edge to its competitors. The company does not only offer the fantastic deals on domestic hotels in Australia, Canada etc. but also to the worldwide hotels and resorts. The company is also providing other services such as travel insurance to the public, car rental, car hire, and cruises.

Methods

The research has been done on the basis of secondary data. The data collected in the analysis is extracted out from the business documents, online sites, and interviews. The method used in the analysis is found to be relevant. The industry in this market is not so flourishing and expanded. So to get the information is quite a cumbersome job. To done the evaluation correct, the data is taken from the annual report also.

PESTEL Analysis

Political factor

The political environment in Australia is stable and flexible. Flight centre can operate its business easily there as there is less legislation. The trade barriers and regulations are also less and they can provide service to the large consumer without any restriction.

Economic Factor

The macro and microenvironment factors such as interest rates, inflation, savings rate, demand, supply and economic cycle are operated in the market. Flight centre has a comparative advantage in terms of infrastructure as they are working in Australia, where all has been developed. There is stability in the exchange rate stability in the market and less of government interventions.  In Australia market, the skilled and trained labor is also easily available which lowers the cost of training for the company (Morris. and Metternich, 2016).

Social Factor

The society and culture impact the working of the Flight center. If the business is operating is business while following all the customs acceptable in the country then the business has more chances to flourish in the market (Flourish and Oswald, 2016).

Technological Factor

Technology adopted by the Flight centre is found to be new and updated all the time and customers are impressed by this. Transportation is the best industry too set an example in the development of technology. Technology also affects the selling capacity of the company. If a company is using new technologies then the customer is more prone to take the services.

Technological Advancements and Innovation

Environmental Factor

Environmental factor includes the climatic change in the country and how it impacts the organization. The aviation industry is the one which is highly affected by the climatic change in the environment. But these factors cannot be changed so Flight centre has to face these challenges (Vittek, Lališ, Stoji?, and Plos, (2016).

Legal Factor

In every country, there are different legal frameworks is working and each and every company has to follow those rules and regulations. In Australia, there is Anti-trust law in consumer service which has to be followed by businesses. Flight Centre has to follow the employment laws, health and safety laws and data protection law in the business.

From the above discussion, it is seen that the main driver of changing the future is the economic factor. The economic factor is the one which affects the earning capacity of the company, the profits, and losses of business depend on the economic cycles run in the country. AS now there is a time of inflation, so flight centre is earning a handsome amount. If the time period changes and the country suffer from the recession period, then there will be less earning, less customer to the company. In the recession period, there are fewer chances of people to travel around the world, so there are fewer customers too. Ultimately company will have to face the downfall in the profits and earnings. So the economic factor is the most crucial element in deciding the Flight centre future.

Another factor which affects the working of Flight centre is the technological factor. Flight centre is working in the industry in which updating the technology is a must. First and foremost the connectivity provided to the customers at large. The multitasking feature provided by the Flight centre influence the customers to have ticket booking there only. Hyper-connectivity is offered by the Flight Centre, which increases the use of devices to travelers while traveling. Flight centre is working on improving the security by focusing on the cybersecurity. Flight centre is also offering a new innovation of Cloud solution in the airlines. As airlines are growing there is a vast need to meet the customer’s demand. Flight centre is also facing challenges but is coming up with new technologies and updating to remain competitive in the market and have sustainability in its business (Setiawan et. al, 2018).

 Porter’s five forces

Porters have used the five forces to know the market attractiveness and industry needs. Porter’s five forces talk about the rivalry among the competitors, bargaining power of suppliers, bargaining power of customers, threats of new entrants and substitutes available in the aviation industry. The main force affecting the Flight centre is the availability of the substitutes and bargaining power of customers.

Legal Frameworks

Competitors of Flight Centre include Ctrip, AmaWaterways, Untours and Blue Bay Travel. Flight Centre Travel Group is the oldest company in the aviation sector. As these competitors are selling the same type of services to the customer at lower or equivalent price so it will be a force which induces the company to work more effectively and efficiently. There is intense competition between these competitors in the industry. Each and every company follows different techniques and strategy to remain competitive in the market (The National Law Review, 2016).

Another force which majorly affects the workings of the flight centre is the bargaining power of the customer. The customer is the person who is much demanding and wants to get the product and service at the least cost. So it’s the job the company to satisfy its customer and earn a profit as well from them. Customer negotiates a lot in booking the tickets from the dealer. This factor of Porter’s model affects the working of Flight centre (Narayanan and Fahey, 2005).

Canvas Model

Key Partners ·         Corporate travel managers ·         Activities provider ·         Business travel partners ·         Travel manager ·         Investors/venture capitalists	Key Activities ·         Engage with participants ·         Designing and engineering ·         Innovation ·         Manage network effects ·         Customer Experience ·         Customer Support ·         Enhance technology	Value Proposition ·         Cheapest price ·         Amount of choice ·         Customer service ·         Useful travel content	Customer Relationships ·         Trust and loyalty ·         Easy and feasible Customer-friendly and self-service ·         Direct selling ·         Brand Awareness ·         Mobile application for services ·         No booking, no pay ·         Customer service	Customer Segments ·         Seat type ·         Amenities and Facilities ·         Star and user ratings ·         Locations
Key Resources ·         Number of flights ·         Number of locations ·         User data ·         User experience ·         Skilled staff ·         Global network ·         Creative and innovative team ·         Diversified open minded people ·         Brand portfolio	Channels ·         Online site of Flight centre ·         Referrals ·         Advertisements ·         E-mail marketing ·         Social media websites ·         Dealers
Cost Structure ·         Raw material ·         Software Application developers ·         Parts production ·         Selling expenses ·         Technology ·         Maintenance cost ·         Employee salary ·         Taxes ·         R&D expense	Minimum Viable Product ·         Translatic service ·         Hyper-connectivity	Revenue Streams ·         Insurance and financing ·         Sale of spare parts ·         Franchises and licensing ·         Component ·         Credit/debit cards

The first most critical success factor is value proposed by the flight centre. The company is offering the cheapest price and lots of choice to their customers. Satisfied service given to the customers is the prime aim of the company.

Another success factor for the company is the channels used by the company. Flight centre is using the online site, advertisements and doing email marketing as well. Flight centre also contacted customer through dealers and distributors.

Last critical success factor for Flight centre is found to be resources used by the company. The company is using resources in such a manner that they are able to achieve the economies of scale in its business operations. The company is providing a vast variety of flights and locations options to the customers.

Influence of innovation

Innovation done in the aviation industry affects the working of the employees (Digitalist, 2017). The employees are now more active and prone to work to satisfy their customer. In this industry, innovation not only comes in the technology but also in the development of human resources. Human resources are the mediator of the company, as they are linked to the company and customers. And talking about the technological innovation, the aviation industry has introduced the cloud solutions, improving security, Virtual reality, tracking technology, biometrics, and sensor.

VRIO
VRIO falls in the internal analysis of the company. This analysis talks about the resources and capabilities a company has, regardless of what strategic model company is using.

Customer Segments

The value of a firm here indicates that the firm’s ability to exploit the resources of the company in order to grab the external opportunities available in the market. Flight centre is also grabbing the opportunities from the market like giving the flight booking at a large in low cost so that the people can explore the world (Flights, 2018).

Rarity talks about whether the resources of the company are utilized properly or not. Flight centre is using the resources in the right way as there is having the profit trends in their annual statements and customer are highly satisfied with the services given by them.

Imitability means the company should make a product or service which our competitor cannot copy easily and firm should have the advantage to make money from it. Flight Centre is giving such leisure treatment and facility to the customers that are highly satisfied with the service and flight centre services (Craft, 2018).

The organization is the element in which all the above workings are reflected and done. If the above activities are done in a right way then the organization will enjoy the competitive advantage in the market. Flight centre is earning high and achieved sustainability in its business.

Strengths

There are many competitors for travel agencies in Australia but Flight centre is the one who is found to be the leader in this industry. Flight centre has a multi-channel distribution strategy and company is providing the customized services to their customer so it makes the more demanding brand in the travel industry. They also provide the car rentals, cruise rental, and rail rental services to the customer, so the customer gets each and everything that they need for traveling purpose (Cruises, 2018).

Weakness

All organizations have some weakness. Flight center weakness is that the websites of it are available in the English language only and those who don’t know read and write English, they would not be able to buy the flight tickets or any travel service from them (McManners, 2016). 

Opportunity

Flight centre has an opportunity to explore its business anywhere in the globe. But expanding business in the U.S. give more benefit to society and business too. US rural market lacks this type of travel services and no business is ready to expand their business in that area.  So it’s a good opportunity for the fight centre to operate and expand its business there.

Critical Success Factors

Threats

Flight centre is not the only Company who is providing unique travel services around the globe at low cost to customers. In Australia, there are many other service providers who are providing the same services at the low cost to the customer. There are other agencies which are trying to enter the Australian market and cover the large share of the market (About us, 2018).

The relation between the culture and strategy in the Flight centre can be understood by using the Cultural web. This web talks about the following:

Rituals and Routines

Flight centre has a ritual that the air hostess greets their passenger when they are entering. There is time to time meeting organized in the company with the employees and other members.

Stories and myths

Stories and myths are the daily behavior and actions of people that the signal acceptance behavior. Stories and myths determine the expectations of the management to be done in a given situation.

Symbols

The visual representation of the company including logos, design and dress code followed in the organization. Logo of Flight centre organization depicts that the workers are working with full enthusiasm and energy as it is of black color and there is a sign of airplane in that which depicts the fastness.

Power Structures

Power is the tool for decision making in the organization. In-flight centre, the power is divided among all the level of management equally so that the fast decision making in the organization can be done (Mehta, Rice, and Rao, 2016).

Control System

Control system here refers to the processes which should be following in the organization. In-flight centre, the top level management has organized the control, decisions, operations and strategic directions.

Organizational Structure

Organizational structure is the reporting hierarchy followed in the organization. In Flight Centre, all the authority relationship has been established between the employer and employee so that there will be no confusion in reporting. There is the use of unity of command in the organization (Jifri, 2016).

References

About us. (2018) Flight Centre. Available on: https://www.flightcentre.com/about-us.[Accessed on 22^nd April 2018]

Craft. (2018) Flight Centre competitors. Available on: https://craft.co/flight-centre/competitors.[Accessed on 22^nd April 2018]

Cruises. (2018) Flight Centre. Available on: https://www.flightcentre.com/cruises.[Accessed on 22^nd April 2018]

Digitalist. (2017) Emerging Technology in the Airline industry. Available on: https://www.digitalistmag.com/customer-experience/2017/08/14/emerging-technology-in-airline-industry-05226935.[Accessed on 22^nd April 2018]

Flights. (2018) Flight Centre. Available on: https://www.flightcentre.com/flights.[Accessed on 22^nd April 2018]

Flouris, T.G. and Oswald, S.L. (2016) Designing and executing strategy in aviation management. London: Routledge.

Jifri, A.O.A. (2016) Dynamic capabilities” now we see them” in the airline industry.  Tuscaloosa: The University of Alabama.

McManners, P.J. (2016) Developing policy integrating sustainability: A case study into aviation. Environmental Science & Policy, 57, pp.86-92.

Mehta, R., Rice, S. and Rao, N. (2016) Traveller Perceptions of Trust in Air Traffic Controllers: A Cultural Comparison between India and the United States. International Journal of Social Science Research, 4(1), pp.98-114.

Morris, A. and Metternicht, G. (2016) Assessing the effectiveness of WEEE management policy in Australia. Journal of environmental management, 181, pp.218-230.

Narayanan, V.K., and Fahey, L. (2005) The relevance of the institutional underpinnings of Porter’s five forces framework to emerging economies: An epistemological analysis. Journal of Management Studies, 42(1), pp.207-223.

Setiawan, M.I., Surjokusumo, S., Ma’soem, D.M., Johan, J., Hasyim, C., Kurniasih, N., Sukoco, A., Dhaniarti, I., Suyono, J., Sudapet, I.N. and Nasihien, R.D. (2018) Business Centre Development Model of Airport Area in Supporting Airport Sustainability in Indonesia. In Journal of Physics: Conference Series (Vol. 954, No. 1, p. 012024). Bristol: IOP Publishing.

The National Review. (2016) Travel Agent Flight Centre is a Competitor to the Airlines in Australia: It is the Reality of the Commercial Relationship That Counts. Available on: https://www.natlawreview.com/article/travel-agent-flight-centre-competitor-to-airlines-australia-it-reality-commercial.[Accessed on 22^nd April 2018]

Vittek, P., Lališ, A., Stoji?, S. and Plos, V. (2016) Challenges of implementation and practical deployment of aviation safety knowledge management software. In International Conference on Knowledge Engineering and the Semantic Web (pp. 316-327). Springer, Cham.