Company Analysis And Overview Of Westjet Management Essay

Company Analysis And Overview Of Westjet Management EssayThe purpose of this report is to analyse the caseful try out Westjet in 2009 The Fleet expansion decision. The specific objective was to provide a diagnosis of the companys ch eachenges, propose a suitable metamorphose management political programme.Research was do in the general atomic number 18a of change management and the models available. Recommendations are based on the comparative analysis of the same1.0 IntroductionThis report was commissioned by Dr Lee Mathias to analyse the Wesjet case study and provide a diagnosis of the companys challenges and develop a suitable change model. Also, recommendations have been made to manage underground and ensure that the change is sustained.2.0 Westjet2.1 IntroductionWestjet, a Canadian skyway, which was founded in 1996 by group of Calgary businessmen, operates as a low bell player in breeze industry. The flight path has 36% municipal market share in Canada only second to bank line Canada, which has 57%. Since its inception the Airline is operating with single occur model using Boeing 737s with capacity of 119 to 166 passengers. Using single travel by has gartered Westjet to probatively reduce its operating and maintenance cost. With the 2008-09 economic crisis, the skyway was facing flight job issue in its most of the domestic routes. Lower occupancy has labord Westjet to pull out of Sudburys and Sault Ste market (two of the destinations in Ontario market). With this prospective in mind the airline is looking to add small Bombardier or Embraer airplanes with approximately 100 seats to its fleet. Including this type of aircraft leave behind abandon the airlines more than a decade long success strategy of operating with single fleet and implementing this impudent strategy testament be a big challenge for management.2.2 changeThe airline industry exists in a hypercompetitive environment where organisations are required to change constantly in order to survive and maintain their position in the market (Biedenbach Sderholm, 2008). Change in an organisation requires visiting the strategy (what is it that you want to change), skills (what skills, knowledge and abilities are required by the change recipients) and structures (short edge and long term organisational tools essential to support the change) (Carter, 2008). Strategies are a means of striving to achieve an organisations mission and vision (Gill, 2003). Increasing the likelihood of success of Westjets strategy for a second fleet would involve say questions such as What is the change they want to bring more or less? Is the change appropriate for the organisation? Can this change be implemented successfully? (Bruch, Gerber, Maier, 2005).3.0 prepare AnalysisPrior to implementing the strategy, Westjet necessitate to assess the feasibility of the change with the help of an analysis tool such as SWOT. It helps determine whether the organisation will be able to sustain the change or not by analysing its strengths, weaknesses, opportunities and threats.3.1 StrengthsStrong financial standing At the end of financial year 2008, the airline had a cash reserve of $820 million, which is 80% of its total debt. In addition to this, the airlines debt equity ratio is at 1.09, which is signifi push asidetly low when compared to industry measuring sticks.Customer satisfaction The airline has gained a signifi bottomlandt customer satisfaction because of its ability to provide nonstop domestic flights, which helps its customer make a hassle free journey. For such domestic routes where the flights have occupancy level of 60-65% for 150 seater Boeing 737s aircrafts, smaller Bombardier or Embraer aircrafts can be included in this routes. This will help in improving the hitch to 90 to 95% and will reduce the cost without compromising on customer satisfaction.Better seat utilisation The smaller aircrafts with 100 seats will have higher occupancy level as co mpared 737s Boeing aircrafts with 140 to 160 seats.3.2 WeaknessWith inclusion of second type of fleet the airline use ups to rail off its existing work force, which can take care of maintenance of impudent fleets. The technology of the sassy fleet will be different compared to Boeing 737s, which whitethorn force Westjet to keep to two sets of staffs for maintenance. Moreover they will have to pay more airport charges because of inclusion of new aircrafts. These reasons coupled together will increase the cost for the airline and that will led to a significant impact on the profitability of it. Cost cutting and diversion of funds towards the new project may also pass in unhappy staff.3.3 OpportunityThe main competitor of Westjet airlines, Air Canada (with 57% market share) is struggling to fight bankruptcy it is difficult for Air Canada to achieve cost efficiency in such scenario. In such situation it will be comparatively easier for Westjet to tap international customers of Air Canada and adding new fleets will help them in do so.Westjet has recently made a tie up with European airlines like Air France. By the carrying 2nd fleet in Canadian domestic market, it can use Boeing 737s to fly for its international operations in Europe, which will help faster penetration in new market. If Westjet penetrates to European market then it will help WVI also to expand to Europe and generate revenue for Westjet group from its European business3.4 ThreatsAs verbalize in the case study there is only 3.6% increment of passengers year on year. At a time when existing fleets are operating with significant number of empty seats with low increment in number of passengers, in such scenario inclusion of 2nd fleet exposes Westjet to considerable risk.4.0 Change manikin for WestjetThe airline industry is very dynamic is affected by global events such as 9/11, the SARS outbreak and the most recent swine flu outbreak all of which resulted in a dramatic decrease in the number of travellers. To survive in todays complex every changing man Westjet needs to change its familiar way of operating and become capable of adapting to changes efficiently and effectively. There are a number of theoretical models available to assist Westjets strategic decision to expand. While nigh of these models are more suited for transformational change others are more suited for transactional changes. Lewins model for example which describes change in 3 stages unfreezing, moving and refreezing (Lewin,1952) would be suitable for a stable environment and not a dynamic environment like Westjet.Given below is an analysis of some of the models available(http//pdfserve.informaworld.com.ezproxy.aut.ac.nz/14790_751313697_793488144.pdf)In case of Westjet the change is planned however it will affect the entire organisation. Looking at the above models, it would be suitable for Westjet to adopt a combination of theoretical models available Understanding change characteristics Westjet need s to first understand the need for this change. This change will help the airline in its expansion it will help increase the load factor and revenue for it. With this change, employees of the airline will be impacted as they need to know about the mechanism of new fleet. Under this change program airline would be looking to use smaller aircrafts for domestic non stop flights and where as Boeing 737s aircrafts would mostly be used for international flights. Inclusion of new fleet will require upgradation of its scheduling and reservation application. Risk Assessment Under the change management program Westjet needs to understand the possible risks which could arise due to it. As the number of fleets will go up the, scheduling of same for domestic travel in such a way that aircrafts are rested at airport for a short period, would be a challenge. Improper handling of this issue could turn over to operational risk, where the charges to be paid to airport authority will go up. To handle this issue, Westjet needs to make sure that its scheduling application is efficient generous to take this challenge. In addition to this there are certain risks which may arise if the new fleet fails to get acceptance from Westjet passengers. In worst case if it happens, the Westjet should lease these aircrafts to Asian airlines, which operates with leased aircrafts. On similar line there could be some more risk associated with this strategy, which Westjet needs to analyze and find the palliation of the same before implementing of new fleets into its operation. Funding Westjet has a cash reserve of $820 million, which would be sufficient for the initial phase of this change. At later stage if the airline needs to buy some more aircraft, where it needs external funds then it would be going for long term debts. Taking loan term loan will not be a major financial concern for airline as debt to equity ratio is at 1.091 compared standard value of 21. Communication Plan Westjet should c ommunicate this new strategy to its employees, shareholders and suppliers. Share holders will be communicated with the need and benefit of new strategy by mailers. Suppliers and channel partners should also be communicated through mailers. For employees the communication should be by top management in an interactive session, where top management would answer to all the appreciations that employees have along with possible benefits of new strategy. Training Westjet will have to implement new training programs for its crew member and maintenance engineers, so that they can learn the mechanism of operation of new fleet. For new employees the training program will include training for Boeing 737s as well as smaller Bombardier or Embraer airplanes. This will ensure that maintenance work for either fleet can be done by any maintenance staff. As a result efficiency will come with some additional training cost for the airline but it will help airline to continue to enjoy its solve driven operation rather than having people driven operation. Resource planning At present the airline has 77 Boeing 737s aircrafts. With inclusion of Bombardier or Embraer airplanes, Westjet may need to hire additional staffs that have experience of working on Bombardier or Embraer airplanes. Resistance management plan The major resistance could come from employees of the airlines, due to their apprehension about success of new business model coupled with need for them to learn new technology. As the employees of Westjet have a significant share in operating profit of airlines, the top management should provide the estimated financial benefits of new strategy to employees along with assurance of complete training on new fleet. This will help in managing resistance from employees. The resistance from shareholders can be handled by highlighting the business needs and financial benefit of this change. Change implementation The airline would start operating with new fleet, once it completes p rocess of communication of this change to its various stakeholders, training to employees, upgradation of softwares and addition of imaginativenesss. Once the success of new fleet is proved, Westjet can add more Bombardier or Embraer airplanes into its operation. Reinforcement planning The airline will adopt the strategy of positive reinforcement on regular interval. This will be achieved through showing growth in revenue, with increased profit share amount for employees.5.0 Sustaining ChangeMaintaining momentum and sustaining change is a crucial stage of the change process. If steps are not taken to sustain change the new state achieved may be short lived (Hayes, 2007)Once the 2nd fleet is introduced at Westjet, it is recommended take the following steps to sustain the change and allow support further growth Improve the learning curve for employees for maintenance of smaller Bombardier or Embraer airplanes through appropriate training. Focus on greater profitability through leaner processes. The airline should look to adopt six sigma into its process, this will drive the first appearance in its operation. Introducing smaller Bombardier or Embraer airplanes for Carrabin Island and USA cities which are nearer to Canada and depending on the demand the airline can increase the number of fleets in this route. This will help in achieving higher occupancy for Westjet flights to Carrabin Island and USA Empowerment of employees to act and take decision according to the situation Continuous quality improvements in all processes and ceaseless focus on innovation Westjet needs to continue with its flat organization structure and at the same time it should be flexible to facilitate resource requirements at the top management without any hassle Westjet should try to achieve an organization wide belief that quality is everyones job through Vision-driven leadership Inculcating set that include high moral standards, ethics, teamwork, involvement and risk taking Measure th e effectiveness of change through various change management tools With inclusion of 2nd fleet, Westjet will have the opportunity for business expansion in international airline segment. To get optimum benefit out of its international operation, it should make compact with other airlines, which will help it acquire those customers who do not fly to Westjet destinations. In addition to this it can make tie up with European airlines for promoting WVI. By taking these two strategic steps Westject can generate additional revenue for itself. For future expansion through 2nd fleet Westjet needs to address language barriers which could arise due to its expansion into international market6.0 ConclusionWestjet Airlines ultimate goal is to become top 5 most successful airlines of the world by 2016 and it is extremely difficult to achieve the same with single fleet model. The best airline in the world, US Airways is using more than 85 smaller Bombardier or Embraer airplanes. Moreover Westjet b usiness model is on the similar to that of southwest airlines and since southwest has already acquired such airplanes, it makes sense for Westjet to adopt this new fleet. Inclusion of new fleet will help Westjet to gain more market share along with higher profitability greater efficiency. It will also help Westjet to descriptor its 1st pillar of its goal i.e. to generate 10% additional revenue growth in available seat miles through fleet expansion.