Mc Kinsey\'s 7S Model in relation to European Airlines PDF

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McKinsey 7S Model can be harnessed in a change of management strategy...

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Introduction

The European Airlines (in several ways) are facing challenges such as privatization, consolidation, fuel prices and more importantly the effects of COVID-19.

McKinsey's 7S Model can be harnessed in a change management strategy as highlighted below, with all elements interrelated.

Strategy This is the organization's plan for building and maintaining a competitive advantage over its competitors (Aroma & Vu, 2019). For example, Ryanair (in 2019) decided to change their strategy by moving to a group structure to become Ryanair Holdings PLC (with four airline subsidiaries) (CAPA, 2019). European Airlines basically run a strategy of market penetration (Wever, 2016); they try to continuously expand their flight routes, making their services accessible to the generality of the potential customers while increasing their flight locations till their services are almost inevitable for customers. For the European Airlines industry a creation of alliances and code sharing as this can improve airlines to satisfy customer demands for global connectivity (Sargeant, 2015) code sharing (despite limiting cost synergies) can give the European airlines opportunities to know more of each other. This can serve as a way for strategic investment, merger or acquisition. Part of the airlines’ strategy is to invest on technological improvement tools that makes their operation relatively safer and faster than that of the competitors; most invested on installing high quality ground handling management services with well-trained professionals that reduces customers waiting time thereby building customer satisfaction (O’Connell & Williams, 2016). European Airlines within the highly competitive routes sometimes strategize competitive edge by using price promotion and low fare charges; a case study is Ryanair that slashed its fares to compete with Lufthansa and British Airways (Ahmed et al., 2019). British Airways, on the other hand pursues the business strategy of service differentiation. Specifically, the airline differentiates its services via an extensive reliance on digitalization and information technology and a high level of customization of service provision (Karami, 2017). An

aggressive international market expansion is another important element of British Airways business strategy and in 2016 alone; the airline company introduced more than a dozen new routes (Airways, 2017).

Structure This shows the organizational chart of a company and is also one of the most visible and easily to change elements of the model. Most airlines have a hierarchy structure with large cost carriers with group structures e.g. IAG, Lufthansa Group and Air France-KLM (CAPA, 2019). Further example, British Airways (an IAG subsidiary) reorganized their top management team with nine directorate heads led by the Chief Executive. The British Airways has two groups, the management board (responsible for the strategic direction and vision of the company) and the Customer and Operations executive (responsible for customer service, operational performance and safety standards). This (restructuring) has made BA more efficient as it helped in clarifying individual and collective roles along with responsibilities. British Airways now publishes (on their intranet) all of their top managers account abilities (British Airways, 2009).

Style Is the way a company is managed by its top-level management. It can also be described as the company's leader’s management style. Airlines will have to implement leadership styles that will enhance their company's competitive advantage as each airline has different goals. For example, Ryanair has a autocratic leadership style which has been effective for them since their leaders goal is to reduce cost (Nortilli and Wong, 2014). However, this style limits creativity, motivation and commitment from subordinates. Ryanair will need to implement a different style to overcome these limitations in order to compete with their rivals.

Skills This looks at the abilities that the company's staff perform well. The European Airlines will need to research on what skills will be needed to reinforce new strategy or structure to gain competitive advantage. For example in addition to their employees having access to online learning EasyJet (in 2019) introduced 'My Journey' a support tool for performance and personal

development reviews in the management and administrative community. Their managers are also given resources( such as management courses on recognizing and valuing different ce) and advice to help the support the development of their teams. Also in 2019 Easyjet had a development programme for women where middle managers took residential courses (www.corporate.easyjet.com).

Staff Staff refers to the employees and their general capabilities (Guo & Gong, 2018). It is concerned with what type and how many employees an organization will need and how they will be recruited, trained, motivated and rewarded. It is regarded as a soft element by McKinsey (Njeru & Kariuki, 2019) because it is harder to describe and less tangible when being attempted to be measured. However, it is more influenced by a company culture (Shaqrah, 2018). For European airlines, technology has reduced the need for workers; few employees are needed for most European airline organizations. The employees are motivated by successful business growth and rewarded with one of the best industry remunerations to influence performance (Malivan & Thanakunwutthirot, 2019). The airlines have increasing market value which reflects in their staff expectations; the staff requirements keep increasing with improvement in the general airline industry (Egli, 2018). As part of its drive to ensure that customers are always satisfied and treated well, the staffs of Virgin Atlantic are trained to be customer-friendly with the right attitude (Baxter, 2019). They are positioned to automatically help travelers during flights and assist when customers have queries.

Systems This refers to the daily activities and procedures that staffs use to get the work done (Liu, 2020). They reveal business’ daily activities and how decisions are made. They are regarded as part of the hard elements as they are relatively easy to identify while management can influence them directly. Within the European airline industry, the system is formalized with few informal systems to manage relationships between agents and the airlines. The systems are mainly concerned with customer support and order processing (Button, 2017). There is adequate strategic planning to help the airlines maintain competitive advantage over time, the personnel management is formalized

while new business generation systems are not commonplace; the industry is heavily regimented and tend not to be too flexible. Apart from the standard set of organizational systems such as employee recruitment and selection system, performance appraisals system, quality control system, complaint handling system and others, British Airways also maintains a number of industry-specific systems. These include, but not limited to passenger check-in system, baggage handling system, in-flight entertainment system and others (Airways, 2017).

Shared values: This involves the guiding concepts and vision underlying the desired corporate destiny of an organization. The European airline industry is continuously faced with change. To manage this change, the following relevant questions are to be asked: Is the culture helpful to progressive improvements? Do these values in tandem with competitive pressure and strategy? What are the corporate values of the organisation? (Pothiyadath, R. and Wesley, J. R., 2014).

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