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Increasing the Competitiveness of Cathay Pacific Airways Ltd

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Presentation on theme: "Increasing the Competitiveness of Cathay Pacific Airways Ltd"— Presentation transcript:

1 Increasing the Competitiveness of Cathay Pacific Airways Ltd
Increasing the Competitiveness of Cathay Pacific Airways Ltd. in the FCC Air Travel Industry

2 Objective, Scope and Limitations
Project Objective To Increase the Competitiveness of Cathay Pacific Airways Ltd. in the FCC Air Travel Industry Project scope Cathay Pacific’s passenger transportation service Limitations Covers only passengers sector of CX’s various businesses Initiated out of personal interest and is not authorised by CX Based only on publicly available information

3 Methodology Gathering of primary and secondary data
Performing macro-environment and micro-environment analyses Identifying the key findings and suggesting strategic options Evaluation of the selected strategic options Recommendation on the strategies Recommended strategies’ benefits that are leading to increased Competitiveness

4 Introduction: The Airline Industry
FCC and LCC Capital Intensive Extremely Vulnerable to External Environment CX is FCC and targer customer group is premium travelers (1st and business classes) Main capital expenditure 1) fleet (CX 54% of Total Asset is fleet and related equipment) Boeing and Airbus 2) Fuel major operating expense – 27% (ExxonMobil, Shell, BP)

5 Introduction: Cathay Pacific’s History
24 September 1946 Roy C. Farrell & Sydney H. de Kantzow Douglas DC-3 – ‘Betsy’ In 1948 partnership was restructured In 1959 Merger with HK Airways

6 Introduction: Cathay Pacific Today
5-Star Airline In 2009 ranked as ‘Best Airline of the Year’ Headquarters in HKIA

7 Introduction: Cathay Pacific Today
110 Destinations worldwide

8 Introduction: FCC Sector Competitors
Singapore Airlines A flag carrier of Singapore Established in 1947 HQ in Changi International Airport Asiana Airlines South Korean No.2 Airline Established in 1988 HQ in Incheon International Airport Qatar Airways A flag carrier of Qatar Established in 1993 HQ in Doha International Airport.

9 Findings: Primary Data
To test whether Core Competencies are actually underpinning Competitive Advantages and lead to Competitiveness, Questionnaire has been developed and survey results show: Hypothesis No. 1 Tests the importance of Superior Quality (Supported – 62%) Hypothesis No. 2 Tests the Importance of Superior Innovation (Supported 57%) Hypothesis No. 3 Tests the importance of Superior Customer Responsiveness (Supported 56%) Hypothesis No. 4 Tests the importance of Superior Efficiency (Supported 70%)

10 Findings: Macro-environment
Key Findings Market growth due to economic recovery and fast growth of developing Asian countries Hyper-competition in the industry with strong, government-supported rivals. 5 star airlines competing on service quality and their offers have little differentiation Suggested Strategic Option Growth Strategies Capitalize on Asian market growth Market Penetration Widen customers’ database to increase market share Product Development Create unique offers and services to differentiate itself

11 Findings: Macro-environment
Key Findings Low Cost Carriers is a growing substitute on short and medium haul air traffic Suggested Strategic Option Branding Create relational value to strengthen ties with existing and attracting new customers

12 Findings: Micro-environment
Key Findings Strong financial position Sophisticated and innovative products and processes (e.g. virtual tour, self-check-in kiosk) Suggested Strategic Option Growth Strategies Invest in growing market visibility to enjoy more profits and gain bigger market share Market Penetration Strengthening ties with existing customers and attract new

13 Findings: Micro-environment
Key Findings CX is a recognized airline which receives numerous awards yearly Suggested Strategic Option Branding ‘Best Airline of the Year’ in the industry should work for the firm and grow customers’ database

14 Evaluation: Strategic Options
Growth Strategies Branding Market Penetration Product Development Forward Integration Horizontal Integration

15 Evaluation: Strategic Options
Suitability Feasibility Consistency Acceptability Branding Yes Market Penetration Product Development Forward Integration No Horizontal Integration

16 Recommendations: Corporate +Business Level Strategies
Branding + Differentiation Market Development + Differentiation Product Development + Differentiation

17 Recommendations: Resources required
Financial Technological Innovation Marketing Human Resource

18 Recommendations: Resources Need to be Developed
Marketing Target Marketing Iconic Brand Image Market research Leveraging on Social responsibility Human Resource Select and develop ‘Best People” Develop training Programs Regular training for all employees Promote unique service in adds

19 Conclusion: Benefits of Branding + Differentiation
Building brand equity benefits customers and CX Enhances customers’ confidence in their purchase decision Increases travelers’ satisfaction Reduces cognitive dissonance Provides a basis for differentiation Attracts new customers and helps retain existing Protects market share Distances CX from competitors Allows for charging a higher premium Increases or at least secures margins Secures bigger market share All of the above benefits are leading to Increased Competitiveness

20 Conclusion: Benefits of Market Penetration + Differentiation
‘Selling more’ of the same products/services to the present market Increases market share and pushes out competitors Widens customer base and increase the market share Lowers costs per passenger Improves capacity utilization Increases margins All of the above benefits are leading to Increased Competitiveness

21 Conclusion: Benefits of Product Development + Differentiation
Targets existing market with new or re-designed products (services) Attracts more travelers by unique and creative products/services Creates customer loyalty Increases revenue Sustains profits Widens the gap with rivals These benefits are increasing overall CX’s Competitiveness

22 Any Questions?

23 Thank You For Your Attention!!!

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