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MANAGEMENT: SMALL BUSINESS ENTERPRISE

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Table of Contents

Introduction ................................................................................................................................3
Task 1 (LO1) ..............................................................................................................................3
Comparison with similar organizations using KPIs...................................................................3
Task 2(LO2) ...............................................................................................................................5
Overcoming the weaknesses and make strategies ....................................................................5
Task 4(LO4) ...............................................................................................................................9
Change management .................................................................................................................9
Conclusion ..............................................................................................................................13

Introduction
The overall growth of an industry as well as an economy depends on the performance of the
operating firms, whether large scale or small scale enterprises. Small and medium enterprises
account for more than 60 percent jobs in most developed economies and more or less 95%
companies in most of the industries fall in the category of small and medium enterprises
(Analoui and Karami, 2009). Small enterprises face lot of contemporary issues relating to
management of internal organisational functions, meeting client requirements and business
benchmarks. Such enterprises also face marketing issues such as brand promotion, attracting
more customers, penetrating newer markets etc .It is also necessary that small organisations
implement effective strategies in place to analyse and measure their internal processes and
human resource capabilities.
This assignment intends to highlight the issues faced by small enterprises in relation to
performance management as compared to similar other competitors. The company chosen for
this purpose is Loganair Ltd, a small sized airlines firm based in Scotland, UK. It is a small
company compared to other players in the aviation industry. Being a small scale firm, it does
not have adequate resource capabilities and faces challenges in terms of maintaining a
sustainable performance.

Task 1 (LO1)
Comparison with similar organizations using KPIs
Loganair Ltd. Is small domestic airline in Scotland, UK with a fleet size of 26. It is
headquartered in Glasgow International Airport. It is one of the regional and smaller airlines
in UK which operates majority of low cost flights (Loganair.co.uk. 2014). Loganair Ltd, saw
an increase in in turnover by 20% to 87million in March 2013 and its profit before tax rose
by 24% to 4.3 million. The passenger volume increased by 12% to 592,000 (BBC News.
2014).
Comparison with similar sized company in airline industry in UK is very difficult as each of
them has its own speciality. Every company has different fleet size, different routes of
operations, different vision strategies. Considering all the facts, Loganair Ltd has been
compared with Flybe, another low-cost domestic airline in UK with much bigger fleet size and
greater number of destinations.

Flybe during the same period of time, witnessed an increase of 1.3% in revenue to 328.2
million. This airline saw that passenger volume increased by 5.6% to 4.3million (Flybe.com.
2014). It is the leading domestic airline among the Scottish Airports with a capacity of 80%
deomestic seats provided for the passangers in comparison to the other nine flight carriers on
various routes. Flybe provides services to the passengers in a point-to-point regional hubs by
providing them a better communication to the destination with less time. Flybe claims that
they are the one those who understand the basic needs of the airlines should provide to the
passangers. Upto 2008, Flybe ran a franchisee arrangement with Loganair Ltd. Later the Flybe
brand started their flights across 28 routes including the island communities Shetland, Orkney
and other islands that are transport isolated.
Key Performance Indicators (KPIs) of Loganair Ltd:
In order to measure the performance of a company in any industry,certain performance
indicators are used (Dobson, 2009). These indicators consider all the facts relevant to that
industry finacial outcomes, customers feedback or response (e.g. total number of customers
for the product or service), brand value, market share and some others. In case of airline
industry, the KPIs are total revenue, operating profit, market share, efficiency (cost per
passenger, fuel burned per passenger-mile, load factor ), passenger volume , customers
feedback etc.
KPIs are connected with the goals and objectives of the organisation, i.e. Loganair Ltd. it is
generally used in operating the organisational strategies, thus focusing upon the improvement
and evaluation; again to track the performance against key success factors. KPI is not a static
process, it varies as per the objectives and business focus. So the indicatores for Loganair as
followedEfficiency is one important KPI for airline industry. Efficiency measures include cost per
passenger (the cost incurred by the airline for each passenger,which follows economies of scale
and that is why larger aircraft is pereferred, fuel consumed per passenger per mile). Other
important efficiency measure for airline industry is load factor. It measures the utilization of
the total capacity of an aircraft. Load factor is defined as the proportion of seats occupied to
the total number of passengers that the aircraft could have accomodated.
Next comes the KPI of total passenger volume. This the total number of passengers is refferred
to as many passengers are travelling in one flight, one day, one week. It does not reveal the

actual picture until it is being compared with other information like fleet size or number of
destination or total number of flights it operates etc.
In any business, customers feedback is very important to make chages in strategies of the
company. So, customers feedback is the third major KPI for Loganair. Now-a-days almost all
companies use round the clock customer service to know their grievences and others. Loganair
also has 24 hours customer service to enable the customers to lodge the complaints and enquires
and feedbacks for the services. Fourth indicator is the finacial outcomes that include the total
revenue, profit before tax and after tax, profit growth rate that is issued to the organisation.
The advantages of the KPIs are discussed above. But there are some disadvantages also. The
efficiency as a performance indicator does not have any connection with the database. The
other KPI disadvantages of the Loganair organisation are that measures are not measured
properly, in a proper manner so that it can improve in future. Again, the data of all the indicators
like passenger volume and customer feedback are collected in a frequent manner to understand
the current sitiation. But it grows a problem of short term data collection which limits the span
of the organisations developement.

Task 2(LO2)
Overcoming the weaknesses and make strategies
The weaknesses of Loganair Ltd. are efficiency, passenger volume, customer feedback and
the revenue related problems. Revenue is the major weakness that harasses any organisation
most. To improve the revenue problems and the other above mentioned weaknesses,
Loganair should follow some basic strategies to improve their situation.
Firstly, Loganair should follow a particular and effective business plan that is enough flexible
to change as per the requirement. As the passengers of Loganair is not enough satisfied with
their services, they should re-assess the market they accessing. Also, there should be certain
plans regarding low cost of ticket and other services that would attract the customers towards
Loganair. Again by maintaining customer supports that are continuously innovating, helps the
organisation to commit best to the customers and creating customer loyalty. This will help the
organisation to compete better with customers and compare. Again, a strong management team
helps any organisation in improving the business success, and Loganair Ltd is no different to
that. They identify the business plan, improve it, and emphasises upon the marketing and sales
section. Management team also is responsible for the weakness and shortcomings of the

organisation that is never meant to hide. This can affect the competition around Loganair. Any
this type if step is considered suicidal because ultimately it hampers the business, reputation,
market and customers.

Task 3 (LO3)
Achieving the organizational objectives
Loganair is limited to a small portion of UK it does not even include the capital city London
and bigger cities like Birminghum or Leeds. It has always maintained its image as a low profile
domestic airline and did not try much to expand. Its limited geographical boundary did not
allow it to be a large brand like British Airways or even Flybe. It operates flights only to 31
destinations, that does not even include some major cities in the UK. Its fleet size is only 26
which does allow it to exapnd more (Loganair.co.uk. 2014). As the immediate result of lower
fleet size and less number of destination, it does not have substantial market share.
Its main objectives that should follow the problems are-

Increasing market share by at least 2%

Expand the operation domestically for the time being, as it only operates in domestic
sector

Increasing the profit by 5%

To achieve these objectives, Loganair Ltd is required to follow a SMART goal thet will help
in develope the performance and prepare in planning future objectives to improve the business.
SMART goals are an abbriviation of Specific, Measureable, Achieveable, Relevant and Timebound goals that will define the accomplishments.
So for Loganair, the specific goals are to focus upon the complex goals to break into sub-goals;
gain they should offer a clear and specific objective to reach the goals. Any vauge action is not
allowed in the SMART model. Next comes the measurable element in the model. These
includes the measurements that are achieved from a certain measure like quantitive, qualititive
and timely performances. These measure the output of results and any job that is to be done in
what particular way. For Loganair, it can be said that these measures will help the organisation
in achieving better customer feedback and provide a better service while flying. If Loganair
follows the above mentioned elements, it will be easy for them to attain the goals, i.e.
associated with the expectations of the internal and external customers. The unit goals are will

be significant enough so that can be achieved easily and work upon accelerate performance.
Again a relevant step to business expectations and customer needs will value the goals and
helpful in increasing the profit as well as the market. Again time based and timely framed goals
help any organisation like Loganair to ensure active approach towards the results and its ways.
For the analysis regarding the market, there are so many tools available. But the most useful

Star

Question
marks

Business
growth
rate

Cash
Low

Dogs

cow

High

one is the BCG Matrix (Adcock, 2010).

High

Low

The BCG matrix is supported upon the following four factors:


Star Stars indicate high growth rate and high market share. This is the most impprtant part
for any business. The company needs to concentrate on this part most than others. For Loganair,
Scotland is the area where it has always enjoyed high market share and high growth rate. So it
needs to strengthen that area.
Cash Cow Cash cows mean low growth but high market share. This indicates the market has
seen many new entries to eat into the market share it used to enjoy and now its business is
grwoing much in this region.Loganair used to enjoy high market share in northern England but
now as the result of too many new domestoc airlines, it is not experiencing any major growth.
It is the cash cows for Loganair.
Dogs Dogs mean low market share and low growth. It indicates that that market is not good
at all for the industry. Therefore, it is not to invest much in that market. Loganair has
experienced this experience in some part of Ireland.
Question Marks - If the company has a low maket share in a particular market but the market
shows high growth rate, then that markert becomes a real area of concern for the company.
Loganair experienced that southern England has very much potential for future growth in this
industry but it did not get any significant market share here.
By this anlysis, the company can realize in which markets it should concentrate more and
which market it should pull out or at lease divest some amount to cut down losses (Baker,
2007).
Scanning the environment is another way to assess the situation. The PESTEL analysis
identifies the forces that can hinder the progress of the business (Fifeld, 2007).
So to improve the market share, total turnover, profit and brand value Loganair have to work
upon the Dog part, i.e. the Ireland problem. As this segment is yeilding no profit to the
organisation, Loganair Ltd. should try to convert the dogs into the Cash Cow part.
Business Plan to implement change

A cash cow in business delivers continious flow of money. So, Loganair can improve some or
the other services that would attract the customers in the Ireland flights (dogs) to convernt the
segment into cash cows.
Extensive Brand promotion -- They can introduce special fare packages to attract the
passengers, or can try a new offer in the travelling season. An offer in the Christmas season
can play wonder. Or any offer that is not tremendously profitable to the organisation at primal
level,but can offer a continious money flow among the company that will survive the Ireland
portion in existing and make business. Loyalty cards can be offered to regualar service users
in the Ireland area.
Strengthing the service quality Loganair can enhance its service quality in terms of better
internal infracture, better customer services, promptness in service delivery, relaibility of offers
etc. The use of advance technogly such as cloud computing can be used to maintain an
extensive database of customers who must be incentivised to give their long term custom. Cross
cultural training must be provided to support staff to take care of customers coming from
international destinatons.

Task 4(LO4)
Change management
For a small organization like Loganair, constant change is much more essential in order to
make the organization grow. This change may be in anything reshaping the organizational
structure, overhaul change in its team, change of base (increase or decrease of the number of
locations where it operates as per the management decisions), operational change (change in
the number of fleets, the type of fleets being used, change the number of routes it is operating
right now, change in the pricing, adapting sustainability in its operation etc.), change in its
overall image (e.g. change in the name, logo or any other significant change).

Create a sense of urgency

Form a guiding coalition

Create a vision

Communicate the vision

Empower others to act the vision

Create quick winks

Build on the change

Institutionalize the change

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(Source: Singh and Waddell, 2004, pp 117)

Change management theory: Kotlers eight-step model


The application of this theory has been proved to successful in many businesses including some
large companies and several small ones (Singh and Waddell, 2004).
1. Urgency for change
The first step is to create urgency for change. The operational level employees such as the cabin
crew must be trained on providing better customer services and technology and must be
counselled about such urgency. The necessary process to feel that urgency includes --Identification of the cost (monetary and non-monetary) and consequences if the proposed
changes are not implemented right now.
If Loganair does not increase the size of operations i.e. number of routes and frequency of
flights in some of the busy routes, the airline is very likely to fall behind of others. It may even
lose its existing customers, not to mention about new customers. The management should come
up with the evidences showing the potential of the proposed changes. Loganair employees may
resist the decision of closure of a route and introduction of a new route instead. It is the
responsibility of the management to come up with the probable positive impacts of this
decision.
- Clear communication: Only a clear communication can persuade the employees to accept the
change.

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- Using all the outside support and evidences to justify the change
Loganair management needs to use the data available in the market to justify the closure of an
existing route and introduction of a new one.
2. Form a guiding coalition Until the management and the employees understand the need
of change, no change can see the light of reality. Changing something major in a company is
not easy but it needs commitment and agreement from all the team members. The management
needs support from all of them to implement the changes be it at strategic level or operational
level. That is why management needs to form a coalition for making the changes (Green, 2007).
Open communication must be implemented to ensure timely information exchange and
feedback sharing. Team should be formed in the way keeping in mind that without the
appropriate team with a mix of people in different departments, it is impossible to work on the
changes (Pugh and Mayle, 2009).
The entire process of guiding coalition should confirm that the team has
Position power Sufficient number of key players on board to ensure smooth operation
Expertise The team members should be assigned work as per their expertise in the appropriate
departments.
Credibility The leaders chosen by the management for the implementation of change, should
be respected by team members
Leadership After all, the leaders should prove that they are true leaders.
3. Create a vision When the decision for changes are taken, there are many such ideas of
changes will be seen available. But not all of them are ideal or none is useless. So there is a
need for linking the best ones to create the vision (Pugh and Mayle, 2009). Longanair managers
must implement transformational leadership to create a visionary change.
4. Communicate the vision The team members need to be communicated about the new
vision of the company to enable them cope with that at least mentally. Sending out the clear
message regarding the vision to the right people is one of the initiatives of the change process.
Loganair employees must be communicated that now it wants to go international, no longer
wants to be considered as a domestic airline.

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5. Empowering others to act on the vision According to Singh and Waddell (2004),
execution of the change vision starts with empowerment of employees to act as they think
keeping in mind the objectives and vision. This gives a kind of ownership to the employees.If
Loganair wants to increase the profitable routes, the operation management should start the
process of closure of some non-profitable routes.
6. Check quick winks Loganairs decision of increasing the profit value in the profitable
routes calls for usage of larger aircrafts to reduce the per unit cost. Initially the number of large
aircrafts will be less; but the favourable report from those will result in usage of greater number
of large aircrafts.
7. Build on change Significant changes do not happen overnight, they take time. So, there is
a need for constant change. The management should check the outcome of one change and then
go for it continuously to for a sufficient time period.Any significant increase in profit value
may not been seen immediately but constant efforts will make it possible.
8. Institutionalize the change Changes in one department or part of a department cannot
impact much. If the efforts for change be adopted in many other departments or functions, then
only company can see an overhaul change (Singh and Waddell, 2004).

Conclusion
This assignment focused on the internal organisational and external marketing issues faced by
small companies such as Loganair. Through situational analysis such companies can analyse
their competitive position in the market and formulate effective strategies to counter threats
and overcome weaknesses. The implementation of appropriate marketing strategies as per
changing business environment, globalisation, technological progress and changing consumer
demands is essential along with maintaining a strong organisational behaviour.

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Comments:

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