Air National is the biggest Europe airline company and in 1990’s the company managed to make profit and to be very productive through the efforts of that time CEO Bradley Smith. Bradley Smith tried to keep AN a competitive air line company in the market but was privatised by Britain’s Conservative government. However in 2000 the company reported $ 93 million a pre-tax loss which forced new CEO Clive Warren to overtake a significant change in Air National and to take a strategic approach to the business and to adopt an empowering –development approach to HRM.
AN is affected from internal and external factors which will help us to analyse company’s business. The internal factors include strengths, weaknesses, opportunities and treads known as SWOT analyses. Aslo we will be looking at the external factors which are social,economic,political,technological,international,legal and environmental known as SEPTILE. Strengths Air National is the best airline in the world and had resources and government intervention which led them to huge revenue. Weakness
The weakness which Air National suffered from is when in 1980’s the low cost strategy was applied but failed and that led to 7% of passenger slum contributed with a pre-tax loss of $ 93 million. AN had a cost reduction policy and between 1996 and 2000 the company applied nearly 25% reduction in the work force. Job cuts were made of voluntary severance and reassignment to other department. The requirements to sustain and improve performance while reducing the number of employees was a challenge for the management of AN which provoked conflicts. Opportunities
GoJet’s failure to succeed in the airline market was an opportunity for AN to gain more profit and more customer demand. Threads In 2002 a new discount airline company start operating in the air line services and led to a costly battle between AN,HopJet and Tango Airlines. The reason why senior management has to take a strategic approach to its business and to adopt an empowering-developmental approach. Social factors Changes in social trends can impact on the demand for a firm’s products and the availability and willingness of individuals to work.
In the UK for example the population has been ageing. This has increased the costs for firms who are committed to pension payments for their employees. Consumer’s behavior is influenced by social factors such as consumer’s small groups,family and social roles. When companies planning their marketing strategies they has to pay attention on the social factors as they can influence consumer responses(Frances Brassington & Stephen Pettit,Priciples of marketing,2006).
According to Frances Brassington and Stephen Pettit AN was faced with a social problem because many European and North American passengers start using more low cost air line services. Due to the expansion of EU Air National may experienced another social problem. Economic factors These factors include interest rate,taxation changes,economic growth,inflation and exchange rates. Higher interest rate may deter investment because it costs more to borrow. A strong currency may make exporting more difficult because it may raise the price in terms of foreign currency.
Inflation may provoke higher wage demands from employees and raise costs. Higher national income growth may boost demand for a firm’s product. In 1990’s the global recession which caused a significant increase in the level of unemployment also affected buyer’s behavior to invest or spend money for all types of products. All these factors affected AN and the number of passengers significantly dropped down . In time of recession when the cost of living was affected customers couldn’t afford to spend too much money for travelling.
Political factors According to Brassington and Pettis political factors refer to government policy such as the degree of intervention in the economy. The types of goods and services which the government would like to provide. Political decisions can impact on many vital areas for business such as the education of workforce,the health of the nation and the quality of infrastructure of the economy. In 1986 when AN was privatized this potentially reduced the political influence of the old corporation and exposed the new company to ompetitive forces. Air National’s business was successful during the early 1980’s because the civil aviation was a highly regulated market and the relationships between airlines with their competitors and governments was managed. Also following the attacks in 2001 in New York and Washington in which two planes were crashed killing almost 3000 people which led to increase in international air travel bookings. Unfortunately the attacks caused 100 000 loss of air line jobs around the world.
According to Oxford University Press:”Choice and strategic choice refer to the process of selecting one option for implementation. ” Air National and its strategic human resource management is an approach to the management of human resources that provide a strategic frame work to provide long-term business goals and outcomes. Human resource strategy is the patterns of decisions regarding human resource policies and practices used by management to design work and select, train and develop, appraise, motivate and control workers.
For Armstrong, strategic human resources management presents an integrated approach of human resources strategies elaboration in order to achieve the goals of the organization. This concept is corelated with the strategy concept which is “direction and the action of organization on long term period in order to create perfect corelation between the resources and changing environment organization, particularly the markets, the customers and the beneficiaries, in order to achieve the shareholders expectations. ”Under new management AN made a strategic choice to offer a high quality customer service to its passengers.
The newly appointed CEO Clive Warren invested in customer service training seminars as long as training and development to every employee in AN. These improvements and investments in AN suppose to help employees to improve their knowledge and skills. AN develop new brand names and introduce new cabin crew uniforms and point a service staff. AN decide to suspend all unprofitable routes. Also Air National took a strategic choice to prioritize highly on re-engineering the company and the management structure was reorganized to provide a tighter focus on operational issues beneath corporate level.
This strategic option pursued by AN in the wake of restricting are congruent with the company’s competitive and HR strategies that emphasizes on employee empowerment and comitment. These strategic approach about the products,markets,services and affordable fares for traveling enables Air National to be different from its competitors and to achieve successful long-term goals. Also an alliance strategy with the unions has been developed by AN’s managers. The main human resource planning issues in AN was to reduce company’s expenses and to develop the overall of human resource management.
This fact enables the company to be competitive and company’s objectives will be achieved. GoJet’s product to offer planes with more seats but with less room between the seats may cause a problems and loss of customers. Passengers will prefer to travel at the same price but with more space. The disadvantage of GoJet is that the company don’t offer a business class. GoJet low fares may offer a poor customer service against their competitors and GoJet may lose customers.
Armstrong,Michael,2002,Strategic Human Resource Management
Brassington,Frances,2006,Principles of Marketing
Oxford University Press(1983)