Strategy development in olympic airways in the air transport liberalisation era
thesisposted on 2011-01-28, 14:38 authored by Konstantinos N. Malagas
Liberalisation, commercialisation and technological advances have forced organisations to adapt. Successful adaptation depends on the ability of senior managers to formulate and implement strategies that ensure services respond to the needs of today's industry. Few industries are as competitive as the airline industry. Moreover, the development of the airline industry is increasingly interlinked with the global economy. All airlines have introduced a range of strategies in an attempt to ensure their long-term competitiveness. The historical analysis of the implemented strategies in conjunction with performance may assist firms to avoid the mistakes of the past and improve their choice of strategies in the future to optimise performance. The thesis investigates the implementation of Porter's generic strategies and market orientation concept within Olympic Airways for the period 1990-2001, including the inter-relationship between these groups of strategies, and the resulting impact on airline performance. Olympic Airways has been selected because it presents interesting peculiarities as an airline. It is a nationalized carrier that enjoyed a monopoly in the domestic market for about forty years until European aviation liberalization changed the framework of operations. It has also had to cope with strong unions and much Government intervention. The literature review highlighted Porter's (1980) concept of generic strategy and Market Orientation concept, as epitomised by the work of Kohli & Jaworski (1990) and Narver & Slater (1990) as key strategies to implement. The adoption of appropriate combinations of these strategies by Olympic Airways could enable it to overcome some of its long-term inefficiencies and enable it to offer a competitive advantage over its domestic and international competitors. However, the literature also identifies that the effectiveness of a specific strategy depends on the time period that the strategy is applied, hence the research into the period 1990-2001. The data collection consisted of gathering secondary statistical data and conducting a number of qualitative interviews with senior managers at Olympic Airways. The results of the combined quantitative and qualitative analysis lead to useful conclusions regarding the application of Porter's generic strategies in conjunction with Market Orientation concept in the airline context and the resultant impact on Olympic Airways performance. The lack of any clear strategy for the whole of the period 1990-2001 has decisively affected the carrier's commercial and financial performance. Future management should emphasise low cost strategies, which exploit the opportunities that Greece, as a host country, provides. More emphasis should be placed on minimising the carrier's high labour costs. In addition, the carrier should focus on specific geographical areas (domestic and European routes, along with a few strategic long haul destinations) and strengthen its presence in these markets. The carrier must improve its product offering by following some less expensive market orientation strategies (e.g. internet sales, common advertising campaigns, etc.). Also, a radical improvement in interfunctional coordination is necessary. This would give Olympic Airways a competitive advantage in order to achieve survival in the increasingly fierce and deregulated marketplace.
- Business and Economics