Saa Business Case Study

TABLE OF CONTENTS

1. EXECUTIVE SUMMARY…..        .1

2. INTRODUCTION        .2

3. NEW & IMPROVED VISION, MISSION AND STRATEGIC INTENT             STATEMENT        .2

4. PEFORM A SITUATIONAL AND INDUSTRY ANALYSIS        .4

4.1 INDUSTRY ANALYSIS        .4

4.2 INDUSTRY LIFE CYLE: SOUTH AFRICAN AIRLINE INDUSTRY        .7

4.3 SWOT ANALYSIS        .7

4.4 PESTLE ANALYSIS        .8

4.5 THE FIVE FORCE MODEL OF COMPETITION …        12

5. MITIGATING STRATEGIES………………        14

5.1 9 Ps of MARKETING MIX…………………………        14

5.2 DIFFERENTIATION STRATEGY        17

5.3 SHORT TERM TURNAROUND STRATEGY…………………………………        19

5.4 LONG TERM TURNAOUND STRATEGY………………………        19

6. ACTION PLAN………        23

7. STRATEGY IMPLEMENTATION AND CONTROL………………………        24

7.1 KOBAYASHI 20 KEYS TO WORK PLACE IMPROVEMENT…………        24

7.2 DMAIC MODEL…………………………        26

7.3 LEAN SIX SIGMA………………………………        27

7.4 EIGHT COMPONENTS OF STRATEGY EXECUTION PROCESS………………………………………………        28

8. CONCLUSION………        28

BIBLIOGRAPHY……………………..…………………………………………        29

1. Executive Summary

South African Airways was established in 1934, and is one of the state owed enterprise. SAA had enjoyed government protection since 1952 National Transport Commission Policy, which guaranteed SAA monopoly over the airline industry. Over the years SAA has received a number of renewed guarantees or bailouts from the government, which have caused hysteria in the South African airline industry, due to its uncompetitive stance by organisations such as Comair. In 2015/2016 financial year it made a turnover of about R30.4 billion. Department of Public Enterprise is the government shareholder representative with oversight responsibility for state-owned enterprises in key industry sectors, including SAA, however in 2014 National Treasury assumed control of SAA, amid growing concern about its financial affairs. It provides services of flight and in-flight entertainment systems which also include economy, business, and first classes and operates in domestic, regional and international market.

 SAA has the following subsidiaries and business units under its arm:

• Mango, a global best-practice low cost carrier (LCC) primarily operating in the South African domestic market, also progressively performing a role as a feeder airline to SAA,
• SAA Technical (SAAT), Africa’s largest aircraft maintenance, repair and overhaul (MRO) business.
• Air Chefs, a catering business operating in Johannesburg, Cape Town and Durban.
• South African Travel Centre (SATC), a retail travel business with franchises in South Africa and other African states. A strategic decision has been taken to divest from this business.
• Two major business units, SAA Cargo, a cargo air transportation business with capacity primarily sourced from the belly-space of SAA’s passenger aircraft fleet.
• And Voyager, Africa’s strongest airline revenue-based loyalty programme

(SAA Integrated Report 2015)

SAA operates in 6 continents and 25 countries, it has 4 domestic destinations (from Johannesburg) with 21 African routes, serving 25 destinations and 9 International routes to 7 countries. The average daily flights is 18 between Johannesburg and Cape Town, it has 1,330 Star Alliance destinations with 6 920 697 passengers and employs 10 706 staff members, it has one of the largest tonnes of cargo 114 000 in Africa (SAA Integrated Report 2016)

2. Introduction

This study is aimed at analysing South African Airways operations and propose improvements that could help it to grow in the future by analysing key indicators of growth in the airline industry, which are fuelled by increased competition due to the deregulation of airline industry, changing consumer preferences, which both have compelled airline industry to do introspection and take appropriate long term investment decision. The deregulation of air transport has created a need to re-think all facets of SAA business, due its impact and effect it has had on global and domestic air transport market. The Five Year Strategy outlines the renewed focus on governance, creating value, transforming and investment opportunities, and set out strategic priorities to meet an ever-growing and changing set of new realities.

3. New and Improved Vision, Mission and Strategic intent statement, aligned to 5 year plan

Our Vision, Mission and Strategic Intent Statement has been slightly improved to align to the 5-Year plan ensure, strategic directives have been revised, and our objectives and action plan have been modified to best address the unprecedented air transport market conditions.

VISION

To be a leader in flying Africa to the world

MISSION

Grow our business globally by delivering sustainable profits through safe, reliable and efficient services

Statement of Intent

The purpose of this Five Year Strategy is to set out what needs to be in place to enable us to achieve our four strategic aims which are the core drivers of our future sustainability, these four strategic aims will enable SAA to become a mission-driven leader in airline industry by 2021.

1. To improve customer satisfaction

2. To increase revenue