Professional Documents
Culture Documents
Virgin Airlines
Virgin Airlines
Virgin Airlines
AIRWAYS
SUBMITTED BY
AzimAkhtarKhan(82046)
Deepak Sharma(82059)
Mansuav Arora(82062)
Neha Nagpal(82068)
PriyankaSuredha(82070)
SaurabhSingh(82076)
TanayaWalia(82091)
Case Objective
The case is about the different management strategies in which SAS
was handled when there was financial crisis and stagnant market in
1970-80’s. One approach was technical/production and focused on
technical expertise however the other approach was restructuring
business as market/ service oriented.
It explains how a corporate philosophy can change the way in which
an organization functions operationally, financially, its impact on
human resources and its image.
Events
The SAS was consortium of Danish Airlines, Norwegian Airlines,
Swedish Airlines it was started in 1946 and till 1970’s it had technical
/ production orientation in which ability to produce with least cost
and with best technology was seen as key to success.
However the recession of 1970’s changed the perspective of Airlines
Travel, with lesser people travelling, made it difficult for Airlines
companies to remain profitable, since SAS had technical orientation it
started cutting on its service and reduced the service being provided
to customers produced frustration in consumer as well as staff.
Then came Jan Carlzon who introduced corporate philosophy which
was market / service oriented. He introduced the thought that it’s not
airplane industry it’s actually the service industry, which has to be
promoted and sold.
The organization was decentralized to in order to become more
responsive to the market. Emphasis was given to the business class
or full paying passenger. Rather than operating on unprofitable lines,
cooperation was sought with other airlines at other junctions.This
turned SAS into profitable organization and it also earned the
reputation of top Airline and was named “Airline of The year” in
1983.
BUSINESS ENVIRONMENT ANALYSIS
Political Economical
Social Technological
Ans.
Consumer’s expectations had evolved drastically in the time period of
post WW-II to 1980’s
The evolution in the expectations was the level of service that the
consumer’s expected from an airline i.e from being just a mere
transportation medium to ferry them from one place to another, the
consumers started to feel the need of better quality of service and to
make this travel an experience for them.
The evolution in thechanges in consumer expectations from airlines
services can be seen here
Post W W-II
All customers’ needs were perceived to be same.
Technical/Production orientation.
Airplanes received more attention than passengers
Ans.
Jan Carlzon’s leadership style can be classified as an outgoing &
bold leader who had the will and effort to raise the productivity
and the brand image of the company in the market.
Carlzon transformed the company's culture from a technical to a
marketing force through
Ans.
Carlzon’s main strategy was to become the preferred airline of
the frequent- flying business traveler.
Stagnant airline industry, many competitors, deregulated
&liberalized airline industry, entry of low cost smaller carriers,
passengers’ zone tolerance was getting narrow. Changing people’s
sense of responsibility and authority.
Carlzon chose frequent-flying business travelers because
- Relatively stable segment.
- High yield market
- Business travelers could afford to pay the real cost of providing
an airline seat.
- Business people might prefer to pay higher price for better
tailored service to the specific needs and
Past practices
- Full –fare yet , business people mixed in with discount
passengers
- Business people didn’t receive any additional services.
Change in practices
- Segregating business travelers from discount passengers.
- Evaluating every resource with the criterion “ would the
businessperson be willing to pay for it?” if not, then it should be
eliminated, otherwise should be kept and perfected and made
efficient as possible.
Ans.
“Satisfied customer’s are its biggest asset“
It was apt, considering that SAS was not into buying and selling
aircrafts rather was in into service business.
Service orientation positioning could help SAS to sustain in Future as
well.
What changes to you expect?
Changes /options for retain customer.
SAS should have launched loyalty programmes for frequent fliers;
Point-based schemes tend to influence the behaviour of customers.
The key to good customer service was being able to recognize the
type of customer SAS was dealing with.
Concentrate on Improving on service behavior based on service
encounter themes.
Recovery,Adaptability, Spontaneity & Coping.
Improving on service quality dimensions - Reliability,
Responsiveness, Assurance, Empathy, Tangibles
Kotlersuggests the following steps to customer retention, the
company must:
1. 1st measure its retention rate
4. Calculate the cost to reduce the defection rate, if it less than the
lost profit the company should spend the money to reduce the
defection rate.
ServiceEncounterCascade