Aeroflot Airlines Company
LONDON SOUTH BANK UNIVERSITY
Business Enterprise
AHS Faculty
2011-2012
Coursework 1.
Student name
Student ID
Adelina Dicheva Chumova 2912605
| AEROFLOT AIRLINES |
| Aeroflot Airlines Company |
| Analyses and Strategic Plan |
Aeroflot Airlines Background and History.
OJSC Aeroflot-Russian Airlines is the biggest airline in the Russian Federation .Aeroflot Russian Airlines was also named "The Best Airline Eastern Europe" at the 2011 World Airline Awards, in a ceremony held in the French Air and Space Museum at the Paris Air Show.("SKYTRAX" The World Airline Awards™, 2011).See Appendix 1 for more information.
The company was situated in 1923 and
it is one of the oldest companies in the world. Aeroflot Airlines
are operating domestic and international travelers all around
the world. Nowadays Aeroflot, has became semi-privatised
airline (51% is owned by the Russian Government) and
it is also considered as one of the profitable in the world. This
confirms 2006 financial results, from the August Issue of Airline
Business that says "Aeroflot-Russian Airlines is one of the
world best airlines" . In June 2011 Aeroflot Airline
became 10th member of "THE SKYTEAM".( http://www.skyteam.com/en/
Analyses of the company
SWOT analyses
SWOT analyses are really important
because it can really show the nowadays and future
philosophy, companies strategy and the plan of the company`s development
as it shows the (S) strengthens, (W)weaknesses, (O)opportunities
and (T)threats. It was also confirmed by R.W. Grillin
"The starting point in formulation strategy is usually SWOT analyses"
(2008) The matrix of the Aeroflot Airline company was developed
back in1997 and it shows companies condition as well as it characterise
the point of external environment.
SWOT analyses Table for Aeroflot company.
| (S)Strengthens: 1)Geographic position |
(W)Weaknesses:
2)Old organisational system |
| (O)Opportunities:
1)Russian regions, where local Airlines are mostly used 2)Opportunity to extend the business, because of the demand in air travel around the world; 3)To offer unique experience concentrating mainly on the service culture. 4)Staff training; Increase the quality of service 5)Image improvement 6)Focus on customers 7)Opportunity to make better quality of the product 8)Alliances |
(T)Treats:
1)Low customer power of Russian population (using the airline) 2)Inflation on the traditional, famous places and resorts, taxes 3)Government`s restrictions, laws etc. in their own interests ( as 51% is owned by the government) 4)Competition with other western Airlines 5)Lack of trust 6)Competitors Active actions |
It has been used the open
company information and details from the official web site
(www.aeroflot.com) and Ex General Director of the company V. Okulova`s
comments (http://www.
Analysing the company using "SWOT"
, shows that the company in general has more weaknesses and treats,
then opportunities or strengthens. But it does not mean that company
immediately collapse or that it can not have better future.
Analysing thoroughly and in details the Aeroflot company has one of
the main " trump card " , which is the advantageous geographical
position. E. Huntington and F. E. Williams where also highlighting
the geographic factor as one the most important things running a business
(1992). Russia is the connection between Europe and Far East, Middle
East, South-East Asia, that is why Moscow is like a "transfer"
and "transportation " center, where the capital city meets
passengers from all over the Europe.
To be more critical and fair weakness factors such as service quality
or old, non-upgraded technology and info-structure is pulling the company
many steps down, as sometimes such factors can play the main role, choosing
the service. Especially IT level is important because many mistakes
can be done , as the information is going through different stages.
Similar ideas where discussed by R. Behl in Information Technology
for Management book (2009).
Aeroflot company still has an opportunities to extend their business
locally. Offering more domestic routes, where the company is going to
be able to control and organise their work and service better, dealing
just with domestic travelers. As an example American companies does
more then 50% of their transportation domestically.(according to
bureau of transport statistics http://www.bts.nsw.
The main and the most important threat for Aeroflot company is the competition
with other more well known, global and big companies, that operates
also on the territory of Russian Federation, that can offer better quality
product, variety of customer service and products or cheaper
flights.
PEST analyses
| Facts | Mark and status (0-10) | Importance(0-10) | Total(max 20) | |
| Politics | 1)Russian Government sustainability 2)The character of the political control, struggle |
3.5 4.0 |
8.5 8.5 |
12.0 12.5 |
| Environment | 1)The state of the natural, environmental resources | 5 | 7.0 | 12.0 |
| Socio-culture | 1. Social Security 2. The criminalization of society |
2.0
1.0 |
8.0
8.0 |
10.0
9.0 |
| Technology | 1. Product creation industry innovations 2.Marketing innovation |
3.0 4.5 |
7.0 7.0 |
10.0 11.5 |
PEST analyses are also very important for running any business. PEST involves
Political, Environmental, Socio-Cultural and Technological factors. As
it was said by Anthony Henry
"PEST shows an organization can detect and monitor weak signals
in the hope of recognizing the discontinuities or trends that shape the
environment." (2008).
PEST Analyses Table for Aeroflot Company.
Political
Russian Federation political control and sustainability plays a huge
role for Aeroflot company, because, as it was said before more than
50% is owned by the government and Aeroflot partly depends on what government
decides. Nowadays Russia is a developing government and it does
not give the assurance of sustainability tomorrow.
Environmental
As for environment, Russia is famous for its oil resources, the
mark of the status is only 5, because these kind of
resources are not lasting forever.
Socio-cultural
There has always been a Socio-Cultural barrier with Russia.
It was also discussed in Douglas W. Blum "Russia and globalization
" book, where the authors think that
barrier has been made because of the Worlds History and Russian role
in it (2008).
Technological
Before the USSR collapsed, there has been a lot of factories and
technology made on the territory of the country, it was well known and
USSR where using it (Robert C. Allen "Farm to factory: a reinterpretation
of the Soviet industrial revolution", 2003).
Nowadays, It is a fact that there are no famous Russian technological
products on the market. As it was said by L. Kosals the main problem
of new innovations in Russia can not survive, as the
competition nowadays is too strong and " these explains the frequent
quick demise of useful innovations, as a result of which enterprises
have to revert to old ways" (1994).
Michael Porters 5 forces.
Porters 5 forces
analyses for The Aeroflot company.
1) Rivalry Among Existing Competitors.
From the one side Aeroflot services
and products are unique experience, because these are the biggest
Russian airline that are known for 70 years. From the other
side, there are more better quality service on other airlines,
which are also well known such as British airways, that also offers
similar prices and places (outside Russia) . Today it is also
more "fashionable" to use more budget airlines
, such as Ryanair Airlines or Wizzair. Aeroflot still is able to compete,
as the company offers unique domestic routes with better service
then other smaller local airlines.
2) The threat of new entrants.
The level of new entrants in given segment is quite high, as this segment is quite new and not competitive. But Aeroflot is renovating their system, technology and the airpark, the company is joining new alliances and developing, which makes extra complications to enter the segment of the market. Also, the entry of new airfreight requires significant investments that will only increase in future. Because of the potential growth of Aeroflot company (see Appendix 3 "Aeroflot performances Table") probability of occurrence of new competitors decreases.
3) Bargaining power of suppliers.
As it was mentioned before there are a lot of future plans and strategies of Aeroflot company, that are based on partnership contracts with more other global alliances and different powerful aircraft companies. Such strategy and movement is giving more competitive strengthens to Aeroflot company. Taking into account, that the bargaining power of suppliers are going to be partly monopolised, it complicates the entrance of new competitors on the Russian market, especially, when Aeroflot is the oldest and the biggest Russian company and it has more advantages, cooperating with other airlines.
4) Bargaining power of buyers
From the one side Aeroflot company is offering a huge number of domestic routes, that other companies does not do. That partly reduces the bargaining power of buyers, because there are not a lot of other "players" in this segment. But there are also different local and small air companies on different part of Russia, that can offer cheaper flights.
5) Threat of substitute products or services
The threat of substitute products or
services are the most dangerous for Aeroflot company. Such as
other transportation. Especially the fast express railway
service, that connects Moscow and other large cities in Russia. Here
Aeroflot company can offer faster transportation and easier way of booking.
Strategy and recommendations.
Formula: AEROFLOT - cozier, tastier, dearer!
According to predictions of passenger transport market (see Appendix 4 )Russian Federation has really good future. The indicators are growing and there is a possibility for Aeroflot company to develop. To build better future, the company should forget their past and build new era of modern, well developed national company.
Yesterdays` Aeroflot is reserved, alienated and serious.
Some of airplanes are "older then your granny", Aeroflot company
is just for "people with strong nerves", you will have to
eat your meal or steward will punch you, minimum comfort, minimum
service, Aeroflot is just for extreme circumstances!
Tomorrow Aeroflot is INDEPENDENT experienced, safe, confident,
effective, modern, comfortable, global company with good quality
of comfort and service
(See appendix 5 for more information). Aeroflot
company primarily is focused on their customers. The staff is trained,
friendly and motivated. The technology is modern and progressive
and the product is qualified.
According to appendix 6,
British Airways and Air-France has their brand values, what makes
them one of the most successful companies. It is really important for
Aeroflot company start to believe in themselves and their future and
to create their own values, remembering their better qualities such
as :
*Respect
*Professionalism
*World Class company
*Global company
*Russian company
*From Russia
*Reliability
*Performance
* Security
Aeroflot should also think about
changing from industrial to commercial-production mentality and
to provide a common team strategy of the airline company. Orient all
departments staff on better knowledge of service. To develop connections
with other companies and alliances. To develop and strengthen the companies
leadership position in the Russian Federation. To Provide the delivery
of passengers in most major cities in the
world. To be economically available
and to provide different quality of services for different customers.
To be competitive and to establish an effective system of relations
within the company.
1460 WORDS
List of references
1)Allen, R.C. (2003). Farm to factory: a reinterpretation of the Soviet industrial revolution. Oxford: Woodstock . p34-56.
2)Henry,A (2008).
Understanding Strategic Management
. New York: Oxford University Press. p230-240.
3)Blum,W.D. (2008). Russia and globalization: identity, security,
and society in an era of change
. USA: Woodrow Wilson Center Press. p66-78.
4)http://www.bts.nsw.gov.au/
5)http://www.skyteam.com/en/
6)http://www.aeroflot.com
7)http://www.
8)http://news.bbc.co.uk/1/hi/
9)http://www.kommersant.com/p-
11)http://www.ram.ru/
12)http://www.tpub.com/
14)http://corporate.airfrance.
15)http://aviaforum.ru/
16)http://www.fitchratings.ru/
17)http://www.
18)Kosals,L. (1994). Why doesn't Russian industry work? . London: I.B.Tauris and Co. p44-93.
19)Griffin, R.W. (2008). Fundamentals
of Management . USA: Nelson Education. p50-70.
20)Huntington,E. Williams, F.E. (1992). Business Geography: The Huntington
Geography Series. USA: Wildside press. p34-56.
21)Behl,R (2009). Information Tech For Mgmt
. Delhi : Hill Education. p50-68.
Appendix 1.
*The Trusted & Respected Airline Awards
Known as the Passengers Choice awards
and based on the SKYTRAX global, independent passenger survey of airline
standards.
*The Top Eastern Europe 3 Airlines
at the 2011.
| 1)AEROFLOT
RUSSIAN AIRLINES Aeroflot is Russia's National carrier and largest airline. Aeroflot is among the world's oldest airlines and one of Russia's most recognised brands. Through its hub at Sheremetyevo Airport in Moscow, Aeroflot operates flights to 109 destination cities in 53 different countries. Inside Russia, Aeroflot has six branches - in St. Petersburg, Sochi, Magadan, Krasnoyarsk, Kaliningrad and Vladivostok. |
| 2)
AIR ASTANA
"Air Astana was founded in 2002 and is now the principal airline of Kazakhstan. It flies 24 aircraft on 51 domestic and international routes and has developed a comprehensive network within Central Asia and the CIS from its twin hubs of Almaty and Astana. It is a joint venture between Kazakhstan's sovereign wealth fund Samruk Kazyna and BAE Systems PLC". |
| 3) MALEV HUNGARIAN
AIERLINES Malév Hungarian Airlines is the flag carrier and principal airline of Hungary. its main operations at Budapest International Airport. From there, the airline flies to 50 cities in 34 countries worldwide using a fleet of 22 aircraft. Malév is a member of the One world alliance. |
(SKYTRAX, The World Airline
Awards™ are based on results from 18.8 million questionnaires,
covering more than 200 airlines worldwide,2011. http://www.worldairlineawards.
Appendix 2.
Historical facts
about the Aeroflot company
*The Aeroflot company was the biggest
in the world and main national company to control the aircraft
in the country back in USSR
*Aeroflot is considered as one of the profitable in the world.
(This confirms 2006 financial results, from the August Issue of Airline
Business that says "Aeroflot-Russian Airlines is one of the
world best airlines" ).
* The Russian government - owns 51% of the company and 49% is owned
by other entities.
*The main principals and activities of the company are air
transport on international and domestic routes , the passenger services
such as freight service, Aircraft technical maintenance and repair .
*There are more then 15 thousand employees in the company.
*Aeroflot promises 99,95% of safety using their aircraft.
*The Aeroflot company is also famoust, as the first airline to successfully
operate regular jet airliner services with TU-104.
.
* The company covers 109 destinationscities in 53
different countries, mainly from its main office and hub, at Sherementyevo
International Airport, in Moscow.
*Aeroflot carried 11,3 million passengers in 2011 (30 % increase
compare with year 2009). The total amount of passengers carried by Aeroflot
Group exceeded 14 million.
*Aeroflot was the first Russian airline company to join the International
Air Transport Association (IATA)
in 1989.
* Aeroflot operates code-sharing
agreements with 28 Russian
and foreign airline companies.
*Aeroflot plays an active role in its community through on-going support
of charitable organisations and community events. In 2010, the company
made it to the top 10 in Russia’s Corporate Social Responsibility
Index taking the 4th position on the list. Aeroflot is actively
involved with a variety of social initiative.
*In the early 1990s, crews regularly took on extra passengers for cash,
resulting in dangerously overloaded planes. And in 1994, a pilot allowed
his son to sit at the controls, causing a plane to crash in Siberia,
killing 75 people.
Aeroflot routes maps.
Sources used:
http://news.bbc.co.uk/1/hi/
Appendix 3
The Financial Situation
of the Aeroflot company
From The Airline business financial results:
"The country’s national
carrier, state-run Aeroflot was ranked Europe’s tenth and world’s
39th in terms of the core business revenues. But the company climbed
to the 19th position worldwide if judged by the net profits. Aeroflot
revenues reached $2.983 billion past year and the airlines posted net
profits of $258.1 million." (from
the official news resours http://www.kommersant.com/p-
Aeroflot performances Table.
| Indicators | 2000 Year | 2001 Year | 2002 Year | 2003 Year | 2004 Year |
| Passengers (millions) | 5,1 | 5,8 | 5,5 | 5,8 | 6,6 |
| Post and freight (thousand tones) | 107,4 | 101,6 | 109,5 | 114,2 | 145,5 |
Sourses used: http://www.kommersant.com/p-
Appendix 4.
Development forecast table
of passenger transport market in the Russian Federation.
Source: http://www.ram.ru/
Appendix 5.
Aeroflot yesterday
Aeroflot tommorow
Appendix 6.
British Airways
Characteristics:
•
Professional customer care
• British
• Reliable
• Professional
• Experienced
• Restrained
• Conservative
• Corporate
• Bureaucratic
• Innovative
• Courageous
(Source: http://www.tpub.com/content/
AIR-FRANCE
Characteristics:
• French-style incarnation
• The national carrier
• Professional
• Corporate
• The State
• Good food
• Courageous
(Source: http://corporate.airfrance.
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