Saima mangi

Reg # 1935153
Course: strategic management
Final project report
Organization: PIA Pakistan International Airport
1.INDUSTRY PROFILE
Pakistan International Airlines abbreviated PIA is Pakistan's national flag carrier under the
Secretary for Aviation Administration of the Its main hub Airport is Jinnah International Airport
in Karachi while Allama Iqbal International Airport in Lahore and Islamabad International
Airport serveassecondaryhubs.GovernmentofPakistan.
PIA was established as Orient Airways on 29 October 1946, and was initially based in Calcutta,
British India, before operations to Pakistan’s newly independent state in 1947. To establish the
Pakistan International Airlines corporation (PIAC), Orient Airways has been nationalized.

The new airline began service to London in 1955, via Cairo and Rome. PIA was the first Asian
airline to operate jet aircraft with the introduction of Boeing 707 into commercial service on 7
March 1960, and later became the first non-communist airline to fly to China in 1964.
In 2004, PIA became the Boeing 777-200LR’s launch customer. On 10 November 2005, a
commercial airliner used the Boeing 777-200LR to complete the world’s longest nonstop flight.
On the eastbound route between Hong Kong and London this flight lasted 22 hours and 22
minutes. PIA is Pakistan's largest airline, operating a fleet of more than 30 aircraft.
The airline operates approximately 100 flights a day, serving 18 domestic destinations and 25 in
ternational destinations throughout Asia, Europe, the Middle East and North America. PIA also 
owns The Roosevelt Hotel in New York City and the Sofitel Paris Scribe Hotel in Paris in addition 
to commercial flight operations.
The airline runs a frequent flier system, PIA Awards +, which has many codeshares which intene 
agreements. It is not, however, a member of any airline alliance.

2. COMPANY PROFILE
Status of company:
Pakistan International Airlines Corporation Limited (PIACL) was incorporated as Company
Limited on 04 December 2015 by shares with Karachi business registration office. The
Companies Ordinance, 1984, and the Public Sector Companies (Corporate Governance) Law,
2013 are to control Pakistan International Airlines Company Limited.
Core values:
 Customer Expectations

(Convenience, Care, Affordability)

 Service

(Personalized, Courteous, Passionate)

 Innovation

(New Ideas, Products, Value Added Services)

Cohesiveness

(Respect for Individuals, Teamwork, and Effective Communication)

 Integrity

(Business Ethics, Accountability, and Transparency)

 Reliability

(Loyalty and Consistency)

 Safety

(Passengers, Employees, Environment)

 Social Responsibility

(Welfare, Health, Education)

Subsidiaries:
 PIA Investments Limited
 Sky rooms (Pvt) Limited
 Abacus Distribution Systems Pakistan (Private) Limited-Subsidiaries under Easy Exit
Scheme of Securities and Exchange Commission of Pakistan
 PIA Holding (Private) Limited
 PIA Shaver Poultry Breeding Farms (Private) Limited
 PIA Hotels Limited Associated Companies
Conversion Act 2016 of PIAC:
Pakistan International Airlines Corporation (PIAC) has been converted, through the Pakistan
International Airlines Corporation (Conversion) Act, 2016, from a statutory corporation into a
company governed by the Companies Ordinance, 1984 (Act No. XV of 2016). Pakistan
International Corporation Airlines Limited (PIACL) is the new entity.

PIACL followed all of PIAC's assets, liabilities, responsibilities, and obligations through the PIAC
(Conversion) Act, 2016. Similarly, PIACL now has the right to the benefits of all notifications,
licenses, permissions, sanctions, permits, concessions, decrees, international air service
authorizations, agreements, orders and benefits issued or granted in favor of PIAC. All
employees of each grade and category of PIAC are hereby assured that they will be transferred
to PIACL under the same designation and under the same terms and conditions as they held at
PIAC by the PIAC (Conversion) Act, 2016. Both borrowers (foreign and local, ship and non-fleet)
and other PIAC creditors will continue to enjoy the same contractual benefits and security from
PIACL that they enjoyed. Both assurances provided by the Federal Government to protect the
obligations of PIAC will now be continued to protect PIACL 's obligations. PIACL shareholders
shall be deemed to own and hold the same number of shares with the same rights and
privileges (including class, kind, and face value) as they owned and held in PIAC immediately
before the conversion without any fresh issuance of shares.

3.MISSION AND VISION

Mission:

Employee teams will contribute towards making PIA a global airline of choice through:

 Offering quality customer services and innovative products.

 Using state-of-the-art technologies.

 Ensuring cost-effective measures in procurement and operations

 Developing Safety Culture.

Vision:

PIA’s vision is to be a world class profitable airline meeting customer expectation through
excellent services, on-time performance, innovative products and absolute safety.
4. IFE AND EFE MATRIX
Pakistan International Airlines (PIA): IFE matrix.
Strengths Score Rating Weighted
score
1. Presence of network 0.08 2 0.16
2. Productive use of technology 0.10 2 0.2
3. Leading market position 0.09 2 0.18
4. Operating structure is superior 0.07 3 0.21
5. Having high level professional staff 0.12 3 0.36
6. Ticketing electronically by web and sms 0.08 2 0.16
Weaknesses

1. High oil prices 0.09 3 0.27

2. Worse government rules 0.10 2 0.2
3. Higher operating cost on old fleet 0.05 3 0.15
4. Space on Aircraft is inadequate 0.06 2 0.12
5. Higher fare as compared to competitors 0.09 3 0.27
6. Food quality is poor specially on domestic 0.07 4 0.28
flights

Total 1.00 2.56

Total IEF OF Pakistan International Airlines (PIA) is 2.56 which means PIA’s strategy against
internal elements is average.

Pakistan International Airlines (PIA): EFE matrix.

Opportunities Score Rating Weighted
score
1. Maximum Route and fleet 0.08 4 0.32
2. Shifting needs for customers 0.07 2 0.14
3. Rising demand for low cost Airlines 0.07 2 0.14
 4. Domestic courier service can be international 0.09 4 0.36
5. Can increase number of Airports 0.13 2 0.26
6. Air crashes incidents of other Airlines 0.04 3 0.08
Threats

1. Interest rates high level 0.08 4 0.32

2. Air blue strong competition 0.08 2 0.16
3. Foreign currency fluctuation 0.08 3 0.24
4. PESTLE factors fluctuation 0.12 3 0.36
5. Negative perception about country 0.09 3 0.27
6. Competitors effective adopted strategies 0.07 3 0.21

Total 1.00 2.86

Total EFE of Pakistan International Airlines is 2.86 which means that PIA’s strategy tis average to
face external elements (opportunities and threats)

5.CPM (Competitive profile matrix)

Critical success factor Weight Rating Score

1. Market share 0.09 2 0.18

2. Customer service 0.11 3 0.33
3. Customer satisfaction 0.07 2 0.14
4. Low cost structure 0.13 2 0.26
5. Customer loyalty 0.25 2 0.5
6. Skilled workforce 0.05 3 0.15
7. Brand reputation 0.23 4 0.92
 8. Customer retention 0.07 3 0.21

1.00 2.69

6.INDUSTRY ANALYSIS
Pakistan International Airline was founded in 1955. It is Asia's 16th largest carrier, providing
scheduled services to 73 destinations across Asia, the Middle East, Europe, and North America,
as well as a large domestic network serving 24 destinations.
There are 36 airports that run there. Karachi is the main airport in Pakistan, but at Islamabad
and Lahore significant levels of domestic and international cargo are also handled. Though
facing the competition from private airlines, Pakistan International Airlines (PIA) carries about
70 percent of domestic passengers and almost equal domestic freight traffic. The transport
industry accounts for approximately 10. Five per cent of GDP in the country and 27. Four per
cent of FY06 Total Fixed Capital Development (GFCF). It generates more than 6 percent of the
country 's jobs and earns 12 to 16 percent of the Federal Public Sector Development Plan
(PSDP) for twelve months. The sector is regulated by Government agencies.

A. Threat of substitution:
In domestic and international routes PIA faces a heavy competitive climate. Items
(airfares) that the rivals sell are replacements for PIA goods. Price sensitive consumers
are moving away from PIA and use alternative means of transport. At the domestic level
the prices of the rivals are then low PIA. The other alternative means include Pakistan
Railways and a large inter-city coach transport network enjoying low-cost services.

B. Bargaining power of suppliers:

PIA is an operational operation, which often depends on other organizations to meet
their needs. All airlines are subject to oil price changes: Competitive advantage is gained
from how they handle this transition. Other main suppliers to PIA include airports and
 aircraft manufacturers such as Boeing. It also has the advantage over rivals that the
government works with these vendors to solve disputes and negotiates with the
vendors.

C. Bargaining power of customers:

Prior to 1993 the PIA was a domestic airline. At the time, consumers did not have
alternative options. PIA sells its products to a small number of individual customers. This
kind of business is not going to have strong individual consumers, so PIA will determine
the terms. When purchasing decisions of consumers are made on the basis of quality
rather than functionality, the risk of failing to produce a suitable product is minimized.
The scenario changed after 1993 as government allowed private sector to join the
airline industry which created a competitive climate. PIAs are not too much better for
punctuality and flight completion than competitors particularly on international routes.
It is uncertain if it still performs better operationally than its rivals. The statistics are
aided by its policy of using small local airports with less air traffic, thereby reducing the
risk of delays.
The cost-focus approach means that adding functionality for a minority community is
not conducive to profit making; a regular product relies on the business model.

D. Threat of new entrants:

To enter the airline market depends on having the finances to set up an operation,
possibly requiring support from the investors. Operations can be slowly expanded
though, initially by leasing or purchasing a small aircraft. In the case of PIA, it is very
different because Mr. Ispahani in the name of Orient Airlines was initially initiated
decades earlier.
PIA was created with full government financial backing. It is harder for airlines to gain
some particularly competitive grip on certain routes. The financial problems of PIAs
were primarily exacerbated by aggressive pricing tactics of other foreign airlines that
have operated in the industry for decades.
 In the low-cost carrier industry, it is common to under-cut rivals to push them out.
While lower prices can boost passenger numbers, the resulting drop in profit is not
sustainable in the long run. This limits a very competitive strategy to the biggest
companies that can afford to set new routes with the risk of short-term losses. PIA is not
in a condition of formulating that kind of strategy. Even short-term losses made to
expend on the customer base cannot bear because it is already suffering huge losses.

E. Intensity of rivalry:
PIA is in a relatively good market place, owing to strong government support. The slight
differences between the strategy of PIAs and those of competitors offer them
advantages especially in domestic operations. Through supplying domestic passengers
with affordable fares, PIA will take advantage of government funding through avoiding
frills on short haul routes and also by reducing delays. In addition, domestic operating
rivals aren't too big but PIA's policies help them thrive on the market. PIA lost its market
share to cost-based rivals. There is no effective mechanism for managing operating costs
which are higher than competitors' costs.

7. Internal analysis
a. Capabilities of organization:
 PIA has hit incredible success numbers and is all set to take a more aggressive
path.
 Signs of progress have begun to emerge in PIA in just one year, but several
obstacles still remain to be addressed and more new heights to be reached.
  PIA's revenue had increased by 41 percent over the past six months, seat factor
also improved, and now ranged from 80 to 84 percent, which in the aviation
industry is considered a strong success indicator.
 PIA has also improved its engineering capabilities, and now aircraft maintenance,
i.e. line maintenance, and Lahore and Islamabad Check A can be performed.
Previously this facility was accessible only in Karachi.
 PIA has now introduced a comprehensive aircraft spares inventory preparation
system that was lacking before, which has decreased aircraft downtime and
increased aircraft operability.
 The ground service equipment left as scrape was overhauled using the own
resources of the airline thus saving millions that had previously been given to
other service agencies. This year PIA renewed its IOSA certification and is now in
the process of gaining EASA certification.

b. Core competencies:
 Solving disputes
 Solving Collaborative Issue
 Disclosure
 Facet scores Score Goal setting and management of results
 Coordinated planning and tasks

8.SWOT and TOWS Analysis

SWOT Matrix and TOWS Matrix Analysis:
 STRENGTHS (S) WEAKNESSES (W)
1.Greater access to destination 1.low motivation of employees
world wide 2.corruption
2.finance WHO government 3.union hold
3.huge jet fleet
4.over staffing
4.monopoly at Haj flights
5.high maintenance cost
5.strong brand

OPPORTUNITIES (O)
1.New destinations
2.Mergers and acquisitions
3.Globalization of fed-x
4.Use of alternative fuel
5.Increase travelling in Asia
SO
(S2, O2) Acquire shaheen airways
to acquire shares thereof.
(S1, O3) Focus more on the Asian
market to benefit from the rising
demand and broader access to
destinations around the world.
(S2, S4, O4) Render the haj flights
more profitable by saving on cost
of fuel.
WO
(W1, W3, W5, O2) Merger may be
a way to get rid of outdated crafts
leading to high maintenance costs,
new workers moving in would help
to inspire current employees and
weaken the union grip.

THREATS (T)
1.Weak economic conditions world
wide
2.Terrorism
3.Intense completion
4.Political interference
5.Foreign exchange risk
ST WT
(S2, T2) By adding advance (W4, T4, T4) Introduce merited
practices, protection systems, and culture in HR practices.
equipment, we can overcome the
threat of poor security situation in
our country.
(S5, T3) Properly marketing the
strong brand name will diminish
competition.

9.BCG Matrix

RELATIVE MARKET SHARE

 LHR-KHI ISB-USA

?
INDUSTRY GROWTH

LHR-ISB KHI-DUBAI

CASH COW DOG

10.QSPM Matrix
 Alternative 1 Alternative 2
Acquire competitor Expand internally
Key factors
Weigh Attractiveness Total weigh Attractiveness Total
t score attractiveness t score attractiveness
score score
Strengths
1.presence of network 0.08 2 0.16 0.07 1 0.07
2.productive use of technology 0.10 2 0.2 0.02 2 0.04
3.leading market position 0.09 2 0.18 0.08 1 0.08
4.operating structure is superior 0.07 3 0.21 0.03 0 0
5.having professional staff 0.12 3 0.36 0.01 3 0.03
6.electronically ticketing by web 0.08 2 0.16 0.19 1 0.19

Weaknesses
1.high oil prices 0.09 3 0.27 0.09 2 0.18
2.worse Govt rules 0.10 2 0.2 0.04 0 0
3.higheroperating cost on 0.05 3 0.15 0.05 3 0.15
oldfleet 0.06 2 0.12 0.21 0 0
4.space on Aircraft is inadequate 0.09 3 0.27 0.1 2 0.2
5.higher fare than competitors 0.07 4 0.28 0.11 1 0.11
6.food quality is poor on
domestic
Sum weights 1.00 1.00
Opportunities
1.maximum route and fleet 0.08 4 0.32 0.08 1 0.08
2.shifting needs for customers 0.07 2 0.14 0.12 2 0.24
3.rising demand of low cost 0.07 2 0.14 0.04 1 0.04
airline 0.09 4 0.36 0.06 2 0.12
4.internationally courier service 0.13 2 0.26 0.02 3 0.06
5.can increase no. of Airports 0.04 3 0.08 0.08 3 0.24
6.Air crashes of other Airlines
Threats
1.interest rates high level 0.08 4 0.32 0.07 2 0.14
2.Air blue strong competition 0.08 2 0.16 0.13 1 0.13
3.foreign currency fluctuation 0.08 3 0.24 0.09 2 0.18
4.PESTLW factors fluctuation 0.12 3 0.36 0.21 2 0.42
5.negative perception of country 0.09 3 0.27 0.07 1 0.07
6.competitors effective 0.07 3 0.21 0.03 3 0.09
strategies
Sum weights 1.00 1.00
Sum total 5.42 > 2.86
attractiveness score

11.Grand strategy matrix

 Rapid market growth
Quadrant# 02 Quadrant# 01

LHR – KHI 19%

Strong competitive position

Weak competitive position

LHR – ISB 13%

ISB – USA 16%

Quadrant# 03 Quadrant# 04

KHI – DUBAI -9%

Slow market growth

The growth rate of the four destination routes is as follows with respect to BCG matrix:

DESTINATION GROWTH RATE

LHR – KHI 19%

LHR – ISB 13%
ISB – USA 16%
KHI – DUBAI -9%
12. EXECUTIVE SUMMARY
Pakistan International Airlines Corporation (PIAC) was the Islamic Republic of Pakistan's
national flag carrier, established in 1955 through legislation and subsequent merger of privately
owned Orient Airline. PIA provided both scheduled passenger service and freight service. The
firm is owned by 87 per cent of the state, with the remaining 13 per cent being held privately by
private investors in Pakistan. PIA is the largest domestic and foreign airline operating on
national and international routes. This study reflects an objective view of PIA 's policy through
the application of methods for strategic analysis. I have tried to apply swot, Tows, CPM, BCG,
Grand Strategies, QSPM Matrix Analysis, Porters Five Forces analytics to define market place,
strengths, vulnerabilities, organizational structure and brand awareness.