BUS 5117 UNIT 5 CASE Study Assignment ON E- Commerce AT Yunnan Lucky AIR PDF

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UNIT 5 CASE STUDY ON E-COMMERCE AT YUNNAN LUCKY AIR...

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DEPARTMENT OF BUSINESS ADMINISTRATION, UNIVERSITY OF THE PEOPLE BUS 5117 STRATEGIC DECISION MAKING AND MANAGEMENT UNIT 5 DR. KARL THOMPSON 12/16/2020

Introduction The case study is about the cost effectiveness at Yunnan Lucky Airlines and focused on the challenges that the company is experiencing in relation to cost. Significantly, the cost would be analyzed utilizing specifics; also, a cost-centered business strategy will be developed for the Airline going forward as a profitable company. In addition, a tactic will be devised to differentiate the company and support the cost focused strategy that will be developed and how it will be implemented within the general strategy. Key Issues Accordingly, founded in 2004 and four years after the establishment of Lucky Air, the organization had grown into a low-cost domestic airline serving the domestic market with its main office in the Kunming, Yunnan province, a member of the HNA Group, and also a joint venture with the Yunnan Government and Hainan Airlines. Furthermore, Lucky Airlines go to nine countries with over 80 destinations. Notwithstanding, its capitalization has grown from $31.2 million to $104.3 million (Berenguer et al., 2008). Further, the airline had successfully in 2007 lifted over 1.2 million passengers in the region which is twice the number lifted in the preceding year. Moreover, in comparison to the major competitors such as Air China, Lucky Air Company is a small- scale company that uses the low-cost, high efficiency strategy built on an e-commerce platform. Nevertheless, the company competes against low cost rival airlines, which are significant to the organization. Specifically, new entrants can easily imitate Yunnan Lucky Air’s business strategy (Berenguer et al., 2008). Therefore, the company must consider various strategic options in order to have a competitive advantage in the market and industry. Nonetheless, cost control is a very effective way to do business, which means that some organizations suffer from that. Organizations require money to perform operations and functions all over. Cost control remains the practice of identifying and reducing business expenses by looking at and viewing the best options to accept. There is a need to make sure that the best procedures and strategies are seen to cater for all this. Stakeholders Ordinarily, stakeholders as a party that expresses an interest in a company and can affect or be affected by company business (Chen, 2020). In this case, there are internal stakeholders, whose interest is through a direct relationship with the company and these include: The mother company HNA group management, management of Yunnan Lucky Airline and staff and the government of Yunnan who remain a joint partner of the airline. However, in addition, some external stakeholders who do not work for the company but are affected by the company business.

External stakeholders, in this case they are as follow: Management of the Yunnan Airport, The civil aviation authority of China, National Development and Reform Commission (NDRC), and China Aviation Oil is “the sole fuel supplier for Chinese Airlines, Customers, The industry (with its standards), The government of China and Suppliers and contractors of the organization consequently, all listed above are stakeholders crucial to the case study (Chen, 2020). Identifying the Problem An analysis of the case study shows that Lucky Air decided to adopt Southwest Airlines’ low cost and high efficiency business strategy. Low-cost leadership, according to Agyapong and Boamah (2013), is an action plan that a company develops in order to produce goods and services at the lowest cost possible. Producing at the lowest cost allows an organization to price its goods and services lower than its competitors, and in this way control market share. The problem that we consider to present the most important in this study is that, although the approach taken by Yunnan Lucky Air is correct and differentiating, as the same case suggests, one cannot simply expect that the Low Cost strategy will be sufficient to make its proposal to consumers. Therefore, we perfume a SWOT analysis to precisely comprehend its position so as to appropriate the best strategy. SWOT Analysis Strengths Top of the mind airline to its customers. Simple and accessible to all as a result of it’s pricing for its services. Extraordinary patronage or use of their airplanes. Weaknesses More participation in other countries. Limited Communication to customers. Opportunities. Enter emerging markets, developing a new way of doing business. Maximize the market share through new promotions. Threats Existing and new competitors Technology adapted to a new kind of business. Yunnan lucky air has already a position in customers, people know that they are a good company to fly, they retain a good service and their cost is accessible for everyone, but what company should know is that

competitors are always appearing in the market so they need to improve their service and increase their promotions to always have the attention of people. Alternatives Solutions Consumer loyalty expands routes, offer new and novel services and Segment operations according to the strategies. Cost-centered business strategy Lucky Air should seek to create a strategic alliance with a certain group of brands such as "star alliance" to jointly offer an attractive value proposition to the segment of customers who are users of loyalty programs, thus establishing a competitive advantage. Providing them with better attention, preferential rates and seats, exclusive promotions, etc. After a feasibility study, Lucky could incorporate new routes, to have a greater volume of passengers, in order to have a greater presence in the Chinese market. Add upgrade options to your services without losing your low-cost approach. These creative elective attributes to the customer will accept an additional fee but will help improve the customer experience on the flights and the value proposition of Lucky. In this way gain a differentiating advantage with respect to other low-cost airlines. Become a travel wholesaler, segmenting your market in b2b and b2c. Through which you can develop different pricing strategies, communication, service, etc.; depending on which segments you are targeting. Even within the b2b segments, it is possible to divide it by corporate companies, travel agencies, etc. Furthermore, the company must minimize its costs as much as possible in order to maintain adopting the cost leadership strategy. The company can do so by taking advantage of the Internet and operate online. To be specific, it can sell air tickets online. In addition, the company may consider low maintenance cost aircrafts for business operations. The move would reduce the company’s current maintenance cost that accounts for 5 percent of total costs. Currently, flight food cost accounts for 1.5 percent of total cost (Berenguer et al., 2008). The company can reduce the cost of flight food by charging meals rather than providing casual lunch during flights. Moreover, the company can introduce ticketless travels by allowing passengers to book online via email instead of paperwork operations. The company can also reduce costs by introducing a call center that handles passenger booking rather than employing travel agents, who account for 2 percent of total costs (Berenguer et al., 2008).

Differentiation Strategy The company can use its core competencies as a differentiation strategy against its competitors. Agha, Alrubaiee and Jamhour (2012) define core competence as the capabilities that a company emphasizes and perform very well while pursuing its mission and vision. A company can possess a competitive advantage if it uses its core competency to perform key activities better than its rivals do. In the case of Lucky Air, its information technology operation is its core competence. The company can exploit its information technology operations to capitalize on the Chinese e-commerce as well as position itself as a technologically advanced airline. Implementing Competitive Advantage An organization that understands its core competence can distinguish itself from rivals because they are not only hard for rivals to copy and procure. The key factors critical for the successful implementation of Lucky Air’s core competence include critical resource inputs, the output produced, major contextual influences, as well as strategy process factors. Successful effecting of the company’s core competence will embody its collective learning, especially how to integrate multiple technologies for business success. The company can use its core competence to branch into other related businesses and enhance the benefits of its service and product offerings to customers. Recommendations It is recommended to invest more money in marketing to promote new suggestions and strategies for flights. Another serious suggestion is to evaluate the products provided by your competitors in order to entice competitors’ customers and therefore win benefits for the company. It is also recommended that for more than the company proposes a strategy, you must provide training to your staff so that everyone is focused on the similar goal and know the procedures to provide a good quality of care, should employ their employees because the more identified they feel with the largest company will be the level of satisfaction that end customers will have. Conclusion The case of Lucky air proves the need that Companies need to always be on the lookout of emerging trends and that the competitiveness of a company is the ability to adopt emerging processes that attract more customers. Consequently, for Yunnan Lucky air to go back to its initial competitive position, it needs to alter its business model and adopt emerging business practices that have emerged. It should consider the changing tastes and preferences of its customers and implement the changes that most of the customers prefer. To achieve this, the

company needs to embrace and invest in the emerging technological process that would make the E-commerce more effective in contacting customers.

References Agha, S., Alrubaiee, L., & Jamhour, M. (2012). Effect of Core Competence on Competitive Advantage and Organizational Performance. International Journal of Business and Management, 7(1), 192–204. https://doi.org/10.5539/ijbm.v7n1p192 Agyapong, A., & Boamah, R. B. (2013). Business Strategies And Competitive Advantage Of Family Hotel Businesses In Ghana: The Role Of Strategic Leadership. Journal of Applied Business Research (JABR), 29(2), 531. https://doi.org/10.19030/jabr.v29i2.7654 Berenguer, I., Shijun, C., Liang, L., Jing, L., & Wang, N. (2008). Ecommerce at Yunnan Lucky Air | LearningEdge at MIT Sloan. Mit.Edu. https://mitsloan.mit.edu/LearningEdge/strategy/EcommerceYunnan/Pages/ default.aspx Chen, J. (2020, March 4). Stakeholder. Investopedia. https://www.investopedia.com/terms/s/stakeholder.asp...