It is the national airline of Saudi Arabia. It is the third largest airline after Qatar and Emirates in terms of revenues in the Middle East. The event that mark the start of Saudi Arabia’s civil aviation is in 1945 when president of United State of America, Franklin Delano Roosevelt gave a Douglas DC-3 to King Abdul Aziz Ibn Saud as gift. It’s a fully government controlled agency and controlled by defense ministry. It is operating in both domestic and international flights to more than 85 destinations all over the world. It mostly operates charter flights during the time of Ramadan and the Hajj mostly season to accommodate the Hajj passenger during the times. It is a part of the Arab Air Carriers Organization and become also part of the SkyTeam airline alliance on May 29, 2012.
The economy of country is heavily depended on oil, a non- sustainable resource. Country is investing into other fields to ensure a continuous flow of revenues and income of people in the future. Saudia Arabia is investing on other fields to expand it income sources both as a country and nation. Saudia Arabia has a vision of 2030 to become country move that aim is to move forward in every filed. The vision is to reduce its dependence on oil, diversification of economy and revenues generation sources, formation and strengthening public sector organization, become an investing powerhouse, use of its geographical location to its advantage, development and utilizing the potential of people.
The organization is a vital entity of government thus it will play an important role to achieve this vision. This vision is to transform country into a modern world class economy that has wide explore and invest into new sector and generate sources. This will be done through investing into great deal of projects thus becoming an investment power house as mentioned in the vision. The organization is following the blueprint presented in the vision and expending its operation and transforming into the new phase of development incrementally. It’s a long process and expands over years. The organization took various steps over the years to fulfill the dream.
Organization wants to diversify itself to become a bigger company. It is expanding both in scale and scope. It is expanding its operation and catering both high and low end markets. This will help it to increase its market share and capture various market segments. Organization adopted a transformation strategy to achieve the following outcomes. The following are the steps that it taken to transform and achieves its goals of both expansion and diversification.
On October 8, 2000, Sultan bin Abdul-Aziz Al Saud the prince, and the Minister of Defense and Aviation made a contract to conduct researches to privatize Saudi Arabian Airlines. To carry out the privatization process, the first step it took was to restructure so to transform non-core units such as catering, maintenance and Prince Sultan Aviation Academy into profit centers and commercial units. Also Government announces to end its monopoly in domestic flights in 2005. This helped with giving opportunity to public sector organization and strengthening the economy by healthy competition. This will also helped with improvement in customer satisfaction.
In 2006, the airline started dividing the core- unit functions in to SBU (Strategic Business Units). The first unit that was privatized was catering. In 2007, Council of Minister of Saudia Arabia approved the transformation of Strategic Business Units into companies. The plan is that the services such technical, air cargo, medical and Prince Sultan Aviation Academy will be converted into subsidiaries of the holding organization. This increase the efficiency and effectiveness of the operation as now they are controlled more meticulously. This will
In 2016 it announced the creation of a low-cost subsidiary, Flyadeal creation. It is a part of Group’s SV2020 Transformation Strategy. The aims are to transform this unit of group into world-class company by 2020. Flyadeal operate in both domestic and regional flights. It is targeted towards low income customers. This segment was previously neglected. But the new vision aim on to tapping into this unexplored segment and generate revenues (Ju et al., 2017).There are large hopes that this subsidiary will be profitable and has the potential to grow a great extent and become a world class organization. It is also a part of expansion strategy of airline that is to discover new income avenues.
It selected SITA for its strategic expansion. The expansion aim onto providing services globally through a customized online presence. This will enable the organization to provide service to its international customer anytime and anywhere. SITA is hired to provide airlines with modern, world class IT infrastructure across its 200 offices in 60 countries. This will help to improve customized and quick response time to customers and overall efficiency of the system and will result into improve customer experience with company, Wang and Lestari (2013). The SITA is a top company IT service provider for air transport industry. Working with SITA will enable the company to achieve its goal of expansion as it will prove the necessary IT infrastructure and connect all it outstation with the centre. It will provide the airline with ATI Cloud to manage and distribute its information internationally. SITA will also provide round the clock service centre and infrastructure for it.
The customer of organization is diverse as they are dealing in an international market. The inclusion and acceptance of other culture is important for the success of organization as suggested by research by Chung et al., (2017). This is also important as it has suppliers and working partners and not just customer from different backgrounds. The learning and working with these diverse people can be more comfortable and fruitful if there is a mindset to engage in leaning through diversity and accepting. The organization is working and incorporating that attitude by working with other organization. It also working to provide a more customized experience as it is very important I n air transport business.
The stakeholders are Government, customers, suppliers and employees of organization.
The Government is the governing body as taking the various through the process to carry out the change. The vision 2030 is a clear indication of where it wants the country to go. This will help organization to work towards its goal to archive this vision as it is part of it. The government wants the organization to be a global player in its field through quality service and improve customer satisfaction by investing into high end technology.
Customers of the airlines are the priority as it focusing on providing superior services. It is also tapping into unexplored areas as the creation of Flydeal is to cater low income customers. It is working towards providing a customized experience to its customer all over the world. It is also training its employees and build service centre to provide better services. The heavy investment in cutting edge infrastructure is done to improve customer satisfaction. The organization is working with different companies to restructure its infrastructure, IT decision and construction of an efficient and responsive online system. Organization is working with world class organization such as SITA to carry out the change. The relations with these organizations are base on mutual understanding and trust.
The organization is also rebranding itself by becoming a global name in its industry. An online presence combine with ATI cloud service will help it achieve this goal. This is aim on becoming a lead provide a well reputed name in the countries it is providing services. It is increasing it passenger capacity by buying new planes and engines. It is also working along with government and investing into airport to increase the size and facilities for passengers. These alls steps are taken to give the message of total transformation the customer and to expect a superior experience from the airline.
Employees are going through a lot as this whole process of transformation is carried out. As working with other companies and learning new things such as skills and techniques through training will help employees to take this challenge. This is carried so as to make the process slow and gradual. This will help with changing the attitudes and behavior to adapt to new work setting. The new culture of airline demands a quick and effective response on job to increase the efficiency. The organization is investing into advance technology and infrastructure to increase it responsiveness. This will need to employees to learn working with these technologies and the mind set.
The organization is successful with strategy of expansion and strengthening its infrastructure. This is done through the transformation of core units into SBU’s and investing and working with leading organization to achieve its infrastructure and develop IT departments. This is a very important success as it will help to streamline the processes and increase the revenues. The diversification of scope will help to mitigate risk as dependence one sector will decrees. It also has built a new low cost division, a market segment diversification to increase revenues.
I think the organization did not do well with diversity in term of employee’s attitude and behaviors. The employees are not fully comfortable with the idea of working with a diverse workforce or employees of other organization. This will cause both the lack of understanding diverse of diverse groups’ customer needs and demands and the empathy towards them. But on the bigger level it will result into limiting organization ability to going into new markets. As diversity training helps with understanding a new markets culture and accepting it , Sung and Choi (2014). Also evaluating the need and demand of the market and catering it. The lack of this empathy will result into loss of customer’s satisfaction. There is a need to give diversity training to employees at all levels. As the researchers suggested that into an asset in cross cultural market and help derive revenues by implementing relevant strategies.
Over all the expansion is mostly successful thus far. It has achieved the set targets and going steadily towards its ultimate goals. The organization is doing it thought incremental change and investing in to required infrastructure both online and offline. This will help to attract the attention of international customers and increasing the market share. It is also diversifying in customer and service portfolio and exploring new fields to generate source of income. These will enable the organization to reduce its dependence on one source and this reduced the risk of losing business in unforeseeable future. The future that organization is working towards is working in diverse fields and becoming a global leader in air transport.
Chung, Y., Gully, S. M., & Lovelace, K. J. (2017). Predicting readiness for diversity training: The influence of perceived ethnic discrimination and dyadic dissimilarity. Journal of Personnel Psychology, 16(1), 25-35
Sung, S. and Choi, J. (2014). Do organizations spend wisely on employees? Effects of training and development investments on learning and innovation in organizations. Journal of Organization Behavior 35(3), 393-412
Wang, K. and Lestari, Y. (2013). Firm competencies on market entry success: Evidence from a high-tech industry in an emerging market. Journal of Business Research, 66(12), 2444-2450
Ju, X., Tong, L., Hu, Z. and Sun, B. (2017). Determinants and Consequences of Product Differentiation Strategy: Evidence from Chinese Indigenous Exporters .International Business Research ,10(9), 60-72