Talon-PAL-final - Talon PAL PDF

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Talon PAL...

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EXTERNAL FACTOR EVALUATION MATRIX (EFE) KEY EXTERNAL WEIGHT RATINGS FACTORS OPPORTUNITIES Increase internal Markets New Destinations Research and Development Technological Advances Internet Advertising Increase in the Philippine Tourism Emerging trends among companies on building good public image Increasing number of Overseas Filipino Workers (OFW) Increasing Environmental Awareness

WEIGHTED SCORE

8%

4

0.32

3%

3

0.09

5%

1

0.05

7%

4

0.28

5%

2

0.10

4%

2

0.08

5%

4

0.20

5%

3

0.15

2%

2

0.04

KEY EXTERNAL FACTORS Global Economic Downturn Strong Competition

WEIGHT

RATINGS

WEIGHTED SCORE

10%

3

0.30

6%

2

0.12

6%

3

0.18

Government Intervention Airline security cost have increased Fuel Price Fluctuations

2%

1

0.02

11%

4

0.44

Hedging Currency risk

8%

3

0.24

Terrorism Attacks in the Philippines Natural Calamities

4%

1

0.04

5%

3

0.15

Global Warming

4%

2

0.08

TOTAL

100%

2.88

Analysis: The EFE matrix allows strategies to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information. These are the factors that PAL is facing in the external market or environment within the industry that they are in. Among the opportunities identified in the EFE Matrix, Increase in international markets gained the highest weighted score, because of the open sky policy of the Aquino administration as President Aquino said, “By promoting an open competitive international aviation sector that enables Philippines and foreign carriers to expand their operations, maintain a strong Philippine-based aviation industry, and ensure international connectivity in order to allow Philippine and foreign air carriers to plan and make long-term investments in the Philippine market”. Next in line is the technological advances, this means that there are still improvements that can be implemented to the airline industry or in the plane itself. In terms of threats that PAL is currently facing, fuel price fluctuations is the biggest threat in the airline industry since fuel cost comprise a large part in the operating expenses. Global economic downturn comes as the second biggest threat in the airline industry because of the fact that when there is an economic crisis, less opportunity will be given to people to work abroad. Also, this makes foreigners hesitant to spend their resources for their luxuries. In the EFE Matrix, as shown above, it visualizes and prioritizes the opportunities and threats that a business is facing, PAL got a score of 2.88. This means that PAL has an above average ability to respond to external factors that affects the operations of the company.

Critical Success Factors

Philippine Airlines

Cebu Pacific

WEIGHT

RATINGS

SCORE

RATINGS

SCORE

RATINGS

SCORE

Advertising

0.06

3

0.18

4

0.24

2

0.12

Service Quality

0.20

4

0.80

4

0.80

3

0.60

Price 0.14 Competitiveness Management 0.12

3

0.42

4

0.56

3

0.42

4

0.48

4

0.48

4

0.48

Financial Position Customer Loyalty Global Expansion Market Share

0.05

2

0.10

2

0.10

2

0.10

0.09

3

0.27

4

0.36

3

0.27

0.07

4

0.28

3

0.21

1

0.07

0.08

3

0.24

4

0.32

2

0.16

Organization Structure Fleet Capacity

.0.06

4

0.24

3

0.18

3

0.18

0.04

4

0.16

3

0.21

2

0.08

E-Commerce

0.09

3

0.27

4

0.36

3

0.27

TOTAL

1.00

3.44

SEA Air

3.73

2.75

COMPETITIVE PROFILE MATRIX (CPM)

Analysis: CPM is used to compare the competitors with your company. It shows where you stand as compared to your direct competitors. As shown in the matrix the company has two major competitors: Cebu Pacific and SEAIR. These competitors have shown a great deal of competencies in the airline industry in the Philippines. They have been the closest rivals of PAL in different terms. The critical success factors are extracted after deep analysis of external and internal environment of the firm. Obviously there are some good and some bad points for the company in the external environment and the internal environment. The higher rating shows that firm strategy is doing well to support this critical success factors and lower rating means that firm strategy is lacking to support the factor. The factors are advertising, service quality, price competitiveness, management, financial position, customer loyalty, global expansion, market share, organizational structure, fleet capacity, and e-commerce. With these, the managers had rated the different airlines as to their response in the factors enumerated. They had been weighted according to the weight of the aviation industry in the Philippines. The highest weight was given to the product quality since the product itself is the main factor that affects companies to be successful. With these, we come up with the weighted score and then sum it up to get the total weighted score.The result of the CPM analysis show that Cebu Pacific got the highest total weighted score having

3.73 next to this is PAL which has 3.44 and the third is SEAIR having 2.75. PAL has shown that it has a good product quality, management customer loyalty, global expansion and fleet capacity. Cebu Pacific has advertising, product quality, price competitiveness, management, customer loyalty, market share and e-commerce as its best factors. SEAIR has only management as its best factor. With this analysis PAL has a great product that it offers in the aviation industry as well as its management since it provides wonderful services to its regular and potential customers. PAL also has customer loyalty since it has been tagged by the reader’s digest as the most trusted airlines in the industry. It has also a good fleet capacity since it has good and big planes. The matrix also shows lack of advertisement and a good financial position to beat Cebu Pacific in the market. The Company should be aggressive with the critical success factors to be successful in the airline industry.

INTERNAL-EXTERNAL MATRIX (IE) Strong 4.0 High 3.0-4.0

3.0-4.0

Average 3.0

2.0-2.99

Weak 2.0

1.0-1.99

I

II

III

IV

V

VI

VII

VIII

IX

1.0

3.0 Medium 2.002.99 2.0 Low 1.0-1.99 1.0

Analysis: On the x-axis of the IE matrix, PAL has an IFE weighted factor of the 2.73 which falls on the average internal position having a range of 2.0 to 2.99. On the y-axis, PAL has an EFE total weighted score of 2.88 that falls on the medium part which ranges from 2.0 to 2.99. Philippine Airlines falls on region 5. This means that they should either hold on to their current position or grasp an opportunity to grow. The most effective way to do such is though market penetration and product development strategies.

Specific product development action that could be done by PAL may include service quality development and including more amenities such as freebies that will be given to the passengers. On the other hand, market penetration can be done thru stringent and effective marketing efforts which may include sponsorships, event organization and different forms of advertisement in different media such as televisions, radios and print ads....