Business Report Writing

developed by Robin Roberts
Department of International Business and Asian Studies

Click a report section below left to view information relating to it.

Sample Report

Letter of Transmittal

Susan Smith
Research Officer
Dept of International Business & Asian Studies
Griffith University
170 Kessels Road
Nathan QLD  4111

1 April 2011

Robyn Black
Operations Manager
Airline Alliance Consortium
Star Alliance
500 George Street
Brisbane QLD 4000

Dear Ms Black

As requested, the Research Unit has prepared a report examining the strategic alliances with the global airline industry. The purpose of this report is to present the findings of the research and provide recommendations for future opportunities.

The findings of the report show that despite the current global challenges it is reasonable to propose that, after reformulating current strategies your organisation can expand its horizons beyond current market share into more lucrative sectors that provide sustainable growth.

Yours sincerely

Susan Smith
Research Manager

Title Page

Assessment Title:





Course Name:

Course Code:

Due Date:





Name:

Student Number:

Executive Summary

The purpose of this report is to provide a strategic analysis of the global airlines industry in terms of the prescribed analytical framework and to provide recommendations. The report overviews the global airlines industry and defines the notion of strategic airline alliances as the principal operating environment and succinctly reviews the Star Alliance network as a leading exemplar.

A literature review was used to gain an understanding of the airlines industry through the structure of strategic airline alliances and to examine key industry characteristics. Porter's Five Forces analysis explores the operating environment to provide an understanding of the industry context. The dynamics of technology, cooperation and chance all play additional roles in shaping the characteristics of the industry. In order to analyse the opportunities that impact on the industry the Value Net framework has been reviewed and applied to industry examples.

The report reveals that competition within the airline industry stems from the drive to gain a greater advantage over competitors by offering consumers superior value or by providing increased benefits and services in order to ultimately deliver economic profitability for the airline and its shareholders.

Five key action recommendations illustrate how the airlines industry and major alliances should aim to sustain and advance its competitive position by changing to a customer-centric approach which will be necessary to meet the challenges of the 21st century. In summary these are:

  • Basic philosophy platform focusing on customers;
  • Business orientation towards relationship building;
  • Product positioning to meet customer needs;
  • Organizational structure with high priorities towards customers;
  • A change to an external organizational focus.

Despite a recent history of financial losses the industry is currently experiencing an upturn which is predicted to continue. It is reasonable to propose that, after reformulating its strategies and adjusting its organisational structure, Star Alliance should expand its horizons beyond current market share into more lucrative sectors of growth.

Table of Contents

Executive Summary i

Table of Contents ii

List of Tables and Figures iii

1.0 Introduction 1

1.1 Background 1

1.2 Aim 1

1.3 Scope 1

1.4 Assumptions and Delimitations 2

2.0 Industry Overview 3

3.0 Industry Analysis 4

3.1 Rivalry among Existing Competitors 4

3.2 Barriers to Entry in the Industry 4

3.3 5

3.4 5

3.5 6

4.0 Industry Dynamics 7

4.1 Technology 7

4.2 8

4.3 8

5.0 9

5.1 9

5.2 10

5.3 10

6.0 Conclusion 11

7.0 Recommendations 12

References 13

Appendices 14

Appendix A - ESL Questionnaire14

Appendix B - Alternative Listening Activities15

Tables

3.1 2006 Global Airline trends 3

4.1 2005 Global Strategic Airline Alliances 7

Figures

3.1 Airline Alliance Operating Revenue Shares 2005 4

4.1 Global Passenger Shares 2005 7

5.1 Airline Alliance Interdependencies 9

5.2 Boeing 767 Aircraft Seating Configuration 10

1.0 Introduction

1.1 Background

The end of the 20th century saw the emergence of a movement from well defined and individual national markets to a single immense market place; this movement is known as globalisation. Positive support for globalisation argues that it provides connectivity, interdependence and integration into the world economy (Hill, 2005).The motivating forces behind globalisation in the airline industry provide the catalyst for strategic airline alliances (Agusdinata and de Klein 2002; Ali 2001). Dynamic factors impacting the airline industry have moved companies away from the informal loose co-operation of the past towards formal contractual strategic alliances specifically designed to maximise their competitive position (Agusdinata and de Klein 2002; Gudmundsson, de Boer and Lechner 2002; Tarry 2003). It has become increasingly evident that the long-term survivability of international airlines with global ambitions will be determined by their affiliation to alliance groups (Agusdinata and de Klein 2002; Delios et al. 2004).

Increased consumer demand for airline travel means strategic alliances represent significant market opportunity for companies to achieve economies of scale and increase their market share as a consequence of operating within an alliance (Delios et al. 2004; Gudmundsson et al. 2002; Tarry 2003; Vowles 2000). Therefore this strategic analysis of the global airline industry is based on alliances which are the standard for the industry. Moreover, the analysis will further highlight the challenges and opportunities facing the industry which may constrain or limit growth whilst seeking to deliver value to customers, investors and the world economy.

1.2 Aim

The purpose of this report is to provide a strategic analysis of the global airlines industry ('the industry') in terms of the prescribed analytical framework. The report is structured in five key parts. Firstly the report overviews and describes the airline industry in terms of globalization effects and principal operating characteristics. The next section applies Porter's Five Forces to provide an understanding of the industry context and highlights the role of government. The third section reviews key remaining dynamics that impact on the industry. The fourth section examines the aspects of the industry through the Value Net framework. The report concludes with five key recommendations identified for the airlines industry and major alliances should aim to sustain and advance its competitive position.

1.3 Scope

To deliver a strategic analysis of the global airlines industry through its major operating environment of strategic alliances, utilising the Star Alliance network as an exemplar owing to its dominant position in the industry and its subsequent need to focus on a global solutions for its customers and shareholders.

1.4 Assumptions and Delimitations

This report highlights the strategies and business platforms employed by strategic airline alliances in a generalised global environment. The analysis is undertaken by reviewing academic journals and texts, websites and other secondary sources. The amount of information was limited and consequently restricted the explanation and analysis contained within this report. Based on the information available the writer has concluded that International Air Transport Association (IATA) is the peak industry body and that Star Alliance is the leading strategic airline alliance at the time of writing this report. The writer assumes that the Porter's Five Forces and the Value Net frameworks are the appropriate models to analyse the global airlines industry and that the available information relating to Star Alliance's achievement of dominance in the industry reflects valid business practices.

4

Conclusion

6.0 Conclusion

From the academic and industry literature reviewed, it is broadly accepted that is better to collaborate than compete in today's dynamic, global business environment. In a highly competitive industry, such as the airline industry, competitive advantage stems from an advantage over competitors gained by offering customers greater value, either by means of lower prices, increased number of destinations or by providing greater benefits and service whilst attempting to improve the carriers' bottom line.

However, strategic alliances are not all plain sailing. Alliances should be entered into when the capabilities and probabilities of the partners are similar, when the power and management expertise are comparable and when the fusion of these elements produces a mutually beneficial synergy.

The range of identified problems, particularly jet fuel expenditure and non-fuel costs, faced by the industry can be better addressed from within the framework of an alliance structure. The network formed by Star Alliance has given members the ability to gain economies of scale and to increase their market share but they must continue to re-evaluate their strategic plans, amend their organisational structure and maintain the trust and confidence of existing customers whilst expanding their customer base.

Future success for the Star Alliance network will depend on the group's ability to better understand and manage factors within the alliance, foresee new opportunities and influence consumer preferences. Superior customer service, optimal flight schedules, quality control and product consistency will continue to afford Star Alliance advantages over its competitors.

Recommendations

7.0 Recommendations

The analysis has revealed the industry and major airlines alliances have a product-centric approach to the way business has been conducted over the last years. The recommendation to change to a customer-centric approach is necessary to meet the challenges of the 21st century. The following recommendations target a customer-centric approach: (Framework adapted from Shah, Rust, Parasuraman, Staelin and Day, 2006):

  • Basic Philosophy Platform
    All customers of airlines need to be served; these commences with all decisions being focused on customer satisfaction and proactively seeking opportunities for competitive advantage.
  • Business Orientation
    Relationship building with all stakeholders to ensure continued loyalty and industry/alliance.
  • Product Positioning
    Market product and service benefits in terms of meeting individual customer needs.
  • Organizational Structure
    Establish organisational structures that reflect a high priority towards customer relationship management .
  • Organizational Focus
    Shift organisational focus from an internal business operation to an external focus on profitability through customer loyalty enhanced by employee understanding of customer behaviour and provision of superior service levels.

References

Agusdinata, B & de Klein, W 2002, 'Dynamics of airline alliances', Journal of Air Transport Management, vol. 8, pp. 201 – 211.

Ali, A 2001, 'Globalization: The great transformation', Advances in Competitiveness Research, vol. 9, no. 1, p 1-10.

Beamish, P 2000, Asia-Pacific Cases in Strategic Management, McGraw-Hill, Boston.

Besanko, D, Dranove, D, Shanley, M, and Schaefer, S 2003, Economics of Strategy, Wiley, New York.

Boehmer, J 2006, 'Airlines Finally Post Profits in Q2', Business Travel News, vol. 23, no. 14, p 3.

Brandenburger, A & Nalebuff, B 1995, 'The Right Game: Use Game Theory to Shape Strategy', Harvard Business Review, Jul/Aug

British Airways 2005, Harmondsworth, viewed 2 October 2006, www.britishairways.org

Collins, J 2001, Good to Great: Why some companies make the leap... and other don't, Random House, London.

Cote, M 2002, 'The future of Air Canada', CA Magazine, vol. 135, no. 3, p 60.

Cravens, D, Merrilees, B & Walker, R 2000, Strategic Marketing Management, McGraw Hill, Sydney.

Culpin, R 2002, Global Business Alliances: Theory and Practice, Quorum , West point.

Delios, A, Inkpen, A & Ross, J 2004, 'Escalation in International Strategic Alliances', Management International Review, vol.44, no.4, pp 457-479.

Gudmundsson, S, de Boer, E & Lechner, C 2002, 'Integrating frequent flyer programs in multilateral airline alliances', Journal of Air Transport Management, vol. 8, pp. 409-417.

Hill, C 2005, International Business, Competing in a global marketplace, 5th edn, McGraw- Hill/Irwin, New York.

IATA, 2005, Economic Results and Prospects Report, viewed 3rd October, 2006, <http://www.iata.org>.

IATA, 2006, 'New Financial Forecast, September 2006, viewed 3rd October, 2006.

International Air Transport Association 2004, Montreal, viewed 2nd October 2006, <http://www.iata.org>.

Porter, M 1990, The Competitive Advantage of Nations, MacMillan, London

Appendices

Appendix A: Global Airlines Industry – Reporting Institutions

List of organisations and national statisticians that participate, prepare and supply statistical information to form global airlines industry reports:

  • African Airlines Association
  • Air Transport Association of America
  • Air Transport Association of Canada
  • Airline Association of Southern Africa
  • Airports Council International
  • Arab Air Carriers Association
  • Arab Civil Aviation Commission
  • Association of Asia Pacific Airlines
  • Association of European Airlines
  • Association of South East Asian Nations
  • Association of South Pacific Airlines
  • Civil Aviation Authority of China
  • European Association of Aerospace Industries
  • European Business Aviation Association
  • European Regions Airlines Association
  • International Air Transport Association
  • International Airline Passengers Association
  • International Association of Latin American Transport
  • Latin American Civil Aviation Commission
  • Organisation for Economic Co-operation and Development
  • Pacific Asia Travel Association
  • United States of America, Department of Transportation
  • Universal Federation of Travel Agents' Association

Source: www.iata.org

Author's details

Date

Details of the person requesting the report

Opening statement

Closing statement

Title Page should include:

  • Title
  • Your name
  • Student ID
  • Course title & code
  • Your lecturer/tutor's name
  • Due Date

The first paragraph is based on the introduction

The second paragraph comes from the body. It is a summary of the key findings or situational analysis.

The third paragraph is a summary of the conclusions.

The final paragraph outlines the recommendations. This can be completed using a bullet point list.

Preliminary section – page numbers in Roman numerals

Headings, sub-headings and minor sub-headings should all be numbered sequentially

Heading

Sub-heading

Be sure to label (number) each table and figure and give it a title indicating what it represents. Indicate the relevant page number.

Please note that graphs, illustrations (pictures), photographs and diagrams are all considered to be figures.

The main body should begin with the introduction.

  • Note how headings and sub-headings are numbered sequentially. It also helps to highlight headings with bold font.
  • Remember to leave at least 3cm margins.
  • Make sure your work is 1.5 spaced.

Once the introduction is complete, begin your discussion making sure you continue to use appropriately numbered headings and sub-headings. As always remember to reference!

Remember you must include a page number!

The conclusion should be a summary of your findings. It should attempt to provide a response to key questions you posed in the introduction. Remember NO NEW INFORMATION!

This section recommends sepcific action that should/could be taken based on your conclusions.

NOTE: It could be done using a bullet-point list.

Remember to list all sources you refer to –in-text in a reference list.

DO NOT number or bullet the sources. Simply place all sources in alphabetical order according to the author's family name.

All appendices must be labelled (numbered)

Appendices present additional material that the reader may need to see to understand your discussion. These are materials that are too large or disruptive to place within the body of the report.

Make sure you place each appendix on a separate page. Each should have a title.