Value Chain Analysis: Cathay Pacific Airways

Value Chain Analysis The value chain analysis describes the activities the organization performs and links them to the organizations competitive position. Value chain analysis describes the activities within and around an organization, and relates them on analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular activity adds to the organizations products or services (Recklies !!"#. Value chain analysis can be used to describe the activities within and around the organization, and relate them to the competitive strength of the firm (its ability to provide value for money products and services#. Thus, the approach rests upon the need to identify separate organizational activities and assess their value added. The importance of organized activities and systems becomes clear. The various resources (people, machinery, information, etc.# must be deployed into activities, routines and systems that produce the necessary value. The ability to perform particular activities and manage the linkages between activities is the key source of competitive advantage ($owson !! #. %ctivities that add value are divided into two categories. These are primary and support.

Primary Activities &rimary activities are primarily concerned with the creation or delivery of a product or service. They can be grouped into five main areas' Inbound logistics (receiving, storing and distributing the inputs to an organization# Operations (transforming inputs into outputs# Outbound logistics (storing and distribution and delivery of product and service combinations#
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Marketing and sales (means by which consumers are made aware of an can purchase products and services#

ervice (activities that enhance the value of a product or service#

upport Activities (ach primary activity is linked to support activities, which help to improve their effectiveness or efficiency. &rocurement (the process of ac)uiring the resource inputs to all the primary activities across the whole organization#
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Technology development (all activities have a technology * including know+how and knowledge, whether concerned directly with products and services or processes#

,uman resource management (those activities involved in recruitment, managing, training, developing and rewarding people#

-nfrastructure (systems of planning, finance, )uality control, information management and others#

Cathay Pacific!s Value Chain .athay &acific %irways is a ,ong+/ong based airline that has a comprehensive network of flights to over 0! destinations around the world. -t is considered as one of %sias biggest and most regarded airlines. The company was founded in "012 in ,ong /ong. The company since then has continued to develop ,ong /ongs airline industry and supported ,ong /ongs position as a ma3or transportation center in the region. The airline company was founded by (%merican# and (%ustralian#. .athay &acific was founded in ,ong /ong on the 1th of 4eptember, "012.

.athay pacific is one of the most well known airline company in the world. -t competes with different airline companies for prestige and notoriety in the airline industry. Recently the company underwent a change in image and strategies to counter the problems its industry has. -t shifted the focus of its strategy into making sure that there will be an increase of clients who demanded their services, it also made sure that the services and technologies they use can be competitive to other airlines company.

Operations .athay &acific believes that their business is selling e5perience to the passengers. The emotional bonding with the passengers is the key to building loyalty and one of the ma3or factors that encourage the customers to repurchase the airline products. The biggest difference of .athay &acific to its competitors is its people. The employees at .athay &acific are the ones who bridge the gap between product development and customer e5pectation. The passengers in .athay &acific always feel welcomed, appreciated and reassured. &assengers that travel with .athay &acific know that they are in good hands. 4ervice 4traight from the ,eart is a programme that aims to develop cultural change within the airline focused on improving customer service. 4ervice is the principal means of differentiating between airlines and is highly influential in customer choice. .athay &acific has e5pressed within its programme its understanding of the importance of the people within the organization and its recognition of the contribution of those people to its success. .athay &acific provides e5cellent customer service by'

". Creating a climate for positive behaviour .athay &acifics corporate culture instills in the employees the understanding of the companys big picture. The corporate culture that the company has encourages innovation, constant improvement and personal responsibility. The service philosophy of .athay &acific * 4ervice 4traight from the ,eart, encourages the employees to render )uality service with human touch . "ecruiting the right people and offering proper #raining .athay &acific uses a holistic approach for managing its people. 6etter understanding and continuous learning are achieved by involving the staff in the 3ob rotation scheme. (ach employee in .athay &acific is a flag barer of the company. (very member of the .athay &acific family can represent the whole company 7. Continuous Improvement ervice 8ore and more corporations throughout the world are adding value to their core corporate offerings through services. 8odern corporations are increasingly offering fuller market packages of consumer focused combinations of goods, services, support, self+service, and knowledge. .athay &acifics goal is to deliver superior service and value to its customers and to become the worlds most admired airline. The organization recognizes that the )uality of service sets it apart from its competitors. The organization is committed to meeting on+time performance

goals, maintaining and growing international route network, and increasing flight fre)uencies to meet market demand. .athay &acific strives to deliver 4ervice 4traight from the ,eart and takes pride in making its customers feel safe, welcome, comfortable and above all, reassured. .athay &acific anticipates the customers needs and aims not 3ust to meet, but surpass their e5pectations. .athay &acific go beyond ensuring satisfaction in order to strengthen customer loyalty and enhance the profitability of the airline (.athay &acific %nnual Report !!2#. .athay &acific uses 9ifferentiation as its target market positiong strategy. %ccording to &roctor ( !!!#, a differentiation strategy is one where wide product ranges and higher )uality products are offered for the convenience of customers as well as added services. % differentiation strategy in which a product offering is different forms that of one or more competitors in a way that is valued by the customers. The emergence of cheap long+haul airlines does not bother .athay &acific %irways. The company maintains that they cater to a different market which values service and product features more than price. .athay &acific offers )uality service and lu5urious features and amenities. -nterior layout and configuration of the aircraft is %nother competitive advantage of .athay &acific is the services offered to passengers on the ground. .athay &acifics super hub at ,ong /ong -nternational %irport offers a wide range of services and benefits aimed at making the passengers arrival, departure and connections as smooth, convenient and pleasurable as possible. :ther intangible aspects of comfort and source of differentiation that .athay &acific is offering are efficiency, helpfulness and friendliness of staff, both the cabin crew in the air and the ground staff at check+in, in the airline lounges and at the boarding gates.

#echnology $evelopment .athay &acific become %sias leading e+business airline by implementing ambiguous strategy and fully harnessing state+of+the+art technology. The company is determined to provide their customers and business partners with greater ease and convenience, as well as to create new business opportunities for business growth and to enhance efficiency and economic benefits. The company has unveiled a series of e+business initiatives in the areas of passengers, cargo, procurement and internal procedures. ;or e5ample, .athay &acific was the world<s first airline to offer an online air ticket auction in late !!!, allowing fre)uent flyer members of its 8arco &olo .lub and %sia 8iles program to bid for e5citing offers through the =eb site. %nother innovative service was introduced by .athay &acific in >anuary of !!", this is the comprehensive :nline .heck+in 4ervice, which allows passenger to check in for flights and reserve their favorite seat by using the -nternet. Today, .athay pacific is the leading %irline .ompany in %sia, and respected around the world. .athay &acific %irways is known for its leadership in the adoption of new technologies. The airline was the first in the world to announce plans to install in+flight e+mail, the first to link %irbus aircraft to its maintenance centers electronically, and the first in the world to auction air tickets online. .athay &acific also invested over ? @! million in e+business as part of its plan to become %sias leading e+business airline. % key element in this strategy was the development of a company+wide e+learning environment that .athay &acific calls $earners =orld . .athay &acific made rapid progress towards its aim of becoming %sias leading e+6usiness airline. The passengers en3oy state of the art services throughout their 3ourney. %mong the technologies that .athay &acific introduced in order to enhance passenger e5perience are'

". Online Check%in &assengers can check in and select their seats on .athay &acific flights from the comfort of their home with the airlines comprehensive :nline .heck+-n service from 1A hours up to 0! minutes before departure. . &oti'ly 6y registering for .athay &acific noti;$B &aging service, travelers can have the latest flight information sent directly to them via mobile phone or email account. They can also check the latest flight status on .athay &acific website. 7. Airport (ounges .athay &acifics lu5urious airport lounges in ,ong /ong offer free internet access and wireless -nternet access for travelers with laptop computers. 9esktop computers at The =ing are installed with broadband, high speed internet access. These facilities have been introduced at .athay &acific lounges around the world (.athay &acific %nnual Report !!!#. 1. In%flight )%mail ystem =ith .athay &acifics in+flight email system, passengers are able to send and receive emails on board using their lap top computers. &assengers are able to surf net. -n+seat power keeps laptop batteries charged throughout the flight. Technology refers to the employment of mechanical means especially scientific and computer related, to perform tasks and manage information (9avenport "000#. .athay &acific

has decided to -nternet+enable its entire global business operations. This advancement in technology is e5pected to provide a global internet platform for .athay &acifics e+business applications in the future. The new internetworking infrastructure that .athay &acific uses will provide a cost+effective platform with global connectivity. The infrastructure will also support the companys e+business strategy and will make .athay &acific the ma3or e+business airline in %sia. The new technological advancement will initiate the companys development and deployment of e+business initiatives that will improve the )uality of passenger services and increase its efficiency and effectiveness. .athay &acific uses the power of the internet to reduce communication costs and increase the fle5ibility of its operations. The delivery of supporting technology across .athay &acific has been improved by a more ade)uate -T infrastructure.

*uman "esource Management ,uman resources or human capital is the intangible resources of abilities, effort, and time that workers bring to invest in their work (9avenport "000#. The people at .athay &acific are the ma3or contributors of strategic capability to the company. :ne of the advantages of .athay &acific over its competitors is the )uality of service that the staff provide to its customers. 4ervice has a big impact on the customers perceptions about the companys product. 6ecause of the importance of its people, .athay pacific formulated an employee development strategy through proper and effective training. This strategy is e5pected to strengthen .athay &acifics position in the marketplace. (mployee development can be an essential ingredient of an organizations competitive advantage. (mployee development includes all of the education and training that organizations might invest in their employees such as training employees to perform

effectively in their current 3obs, orienting employees to the workplace, developing them for advanced positions or programs, and building organizational capability for future success. .athay &acific promotes a working environment wherein the employees are free to act in both the companys and passengers best interests. :ne of the keys to successful competition in the global market is the effective deployment of human resources to achieve strategic capability and competitive advantage. ,uman resources as an internal resource of a firm are one of the sources of strategic capability. ,uman resources are among the top contributors to .athay &acifics strategic capability. (ffective management of an organizations human resources according to 4ims ( !! # is a ma3or source of competitive advantage and may even be the single most important determinant of an organizations performance over the long term.

What is a Critical Success Factor?

Critical Success Factors (CSFs) are the critical factors or activities required for ensuring the success your business. The term as initially used in the orld of data analysis! and business analysis. Critical Success Factors have been used significantly to "resent or identify a fe #ey factors that organi$ations should focus on to be successful. %s a definition! critical success factors refer to &the limited number of areas in hich satisfactory results ill ensure successful com"etitive "erformance for the individual! de"artment! or organi$ation'.

There are four basic types of critical success factors .4;s

". (ndustry critical success factors (CSFs) resulting from s"ecific industry characteristics) . Strategy critical success factors (CSFs) resulting from the chosen com"etitive strategy of the business) 7. *nvironmental critical success factors (CSFs) resulting from economic or technological changes) and 1. Tem"oral critical success factors (CSFs) resulting from internal organi$ational needs and changes. Things that are measured get done more often than things that are not measured. *ach critical success factors (CSFs) should be measurable and associated ith a target goal. +ou dont need e,act measures to manage. -rimary measures that should be listed include critical success levels (such as number of transactions "er month) or! in cases here s"ecific measurements are more difficult! general goals should be s"ecified (such as moving u" in an industry customer service survey) *,am"les of Critical Success factors Statistical research into CSFs on organi$ations has sho n there to be seven #ey areas. These CSFs are. ". Training and education . /uality data and re"orting 7. 0anagement commitment! customer satisfaction 1. Staff 1rientation

@. 2ole of the quality de"artment 2. Communication to im"rove quality! and C. Continuous im"rovement These ere identified hen Total /uality as at its "ea#! so as you can see have a bias to ards quality matters. +ou may or may not feel that these are right or indeed critical for your organi$ation. The Critical Success Factors e have identified and use in the BIR "rocess are ca"tured in the mnemonic PRIMO-F ". -eo"le 3 availability! s#ills and attitude . 2esources 3 -eo"le! equi"ment! etc 7. (nnovation 3 ideas and develo"ment 1. 0ar#eting 3 su""lier relation! customer satisfaction! etc

@. 1"erations 3 continuous im"rovement! quality! 2. Finance4 cash flo ! available investment etc

*,am"les of Critical Success factors These CSFs are. ". Training and education . /uality data and re"orting 7. 0anagement commitment! customer satisfaction

1. Staff 1rientation @. 2ole of the quality de"artment 2. Communication to im"rove quality! and C. Continuous im"rovement These were identified when Total Duality was at its peak, so as you can see have a bias towards )uality matters. Bou may or may not feel that these are right or indeed critical for your organization. The Critical Success Factors e have identified and use in the BIR "rocess are ca"tured in the mnemonic PRIMO". -eo"le 3 availability! s#ills and attitude . 2esources 3 -eo"le! equi"ment! etc 7. (nnovation 3 ideas and develo"ment 1. 0ar#eting 3 su""lier relation! customer satisfaction! etc @. 1"erations 3 continuous im"rovement! quality! 2. Finance4 cash flo ! available investment etc.

*,am"les of Success Factors. 5nderstanding of 0ar#et. Sensitivity to changing mar#et needs 5nderstanding of ho and hy customers buy (nnovative res"onse to customer needs Consumer loyalty 6in#age of technology to mar#et demand 6in# mar#eting to "roduction (nvestment in gro th mar#ets 6ong4term vie of mar#et4develo"ment and resources

%bility to target and reach segments of mar#et -roduct4line coverage Short time to mar#et for ne 6ac# of "roduct4line overla" "roducts

(dentification and "ositioning to fulfill customer needs 5nique "ositioning advantage Strong brand image and a areness 5nderstanding of com"etitors ca"abilities and decision rules

0ar#eting 7ariables. 8istribution coverage! delivery s"eed! and "rominence Co4o"erative trade relations %dvertising budget and co"y effectiveness -romotion magnitude and im"act Sales force si$e and "roductivity Customer service and feedbac# 9igh "roduct quality -atent "rotection 6o "roduct cost

%bility to deliver high value to user 6arge mar#eting resource budget

8ecision ma#ing. 0ar#eting research quality (nformation system "o er %nalytic su""ort ca"ability 8evelo" human resources %ttract the best "ersonnel

+hat are the most important management functions, +hat kind of cost management function information is needed for these functions, Within every business structure are managers. No matter the type of business, a managers job is essentially the same across the board but there are four functions of management to consider regardless of the leadership style. In short, those four functions are to plan and implement plans to achieve the organizations goals, to organize those plans while directing employees in their

own roles and ultimately controlling the plan to function as an effective manager.
8anagement is the process of reaching organizational goals by working with and through people and other organizational resources. Planning

&lanning is deciding in advance what to do and how to do.-t is one of the basic managerial functions. 6efore doing something, the manager must formulate an idea of how to work on a particular task. Thus, planning is closely connected with creativity and innovation. -t involves setting ob3ectives and developing appropriate courses of action to achieve these ob3ectives.

Planning $efinition
:-lanning bridges the ga" from here e are to here e ant to go. (t ma#es it "ossible for things to occur hich ould not other ise ha""en: (m"ortance of -lanning -lanning "rovides directions -lanning reduces the ris#s of uncertainty -lanning reduces overla""ing and asteful activities -lanning "romotes innovative ideas

Organi-ing : :rganizing is the process of defining and grouping activities and establishing authority relationships among them to attain organizational ob3ectives.
" rganisation is the process of identifying and grouping of the wor!s to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to wor! most efficiently". (m"ortance of 1rganising 1rganising hel"s 1rganisations to rea" the benefit of s"eciali$ation. 1rganising "rovides for 1"timum utili$ation of resources.

$irecting
.ommunication, leadership and supervision and last but not the least motivation are the elements come under the function of management, directing. 9irecting is nothing but guiding and leading the people in an organization. -t is not 3ust giving instructions by a superior to the sub+ordinates but also is a process of supervising, guiding and motivating the latter to achieve the organizational goals. -t is a comple5 function of management that ensures the employees work effectively and efficiently

taffing
The process of making out, assessing, appointing, evaluating and developing the employees at work in an organization is staffing. -n here the characteristics of a 3ob are determined primarily. -t is followed by ensuring of the right number of and kind of employees are placed at the right places and at the right time when organization is in need of them. 4taffing function of management begins with

Controlling :
The managerial function controlling always ma5imise the use of scarce resources to achieve the purposeful behaviour of employees in an organisation. -n planningstage, it is decided that how the resources would be utilised but where as in the controlling stage it is observed that whether the resources are being utilised in the same way as planned or not. Thus, control completes the whole se)uence of management process.
:Controlling is determining hat is being accom"lished 4 that is! evaluating "erformance and! if necessary! a""lying corrective measures so that "erformance ta#es "lace according to "lans:.

(m"ortance of Controlling Control system acts as an ad;ustment in organisational o"erations. (t mainly chec#s hether "lans are being observed and suitable "rogress to ards the ob;ectives is being made or not! and if necessary any action to control the deviations. -olicies and other "lanning elements set by the managers become the basis and reason for control. Through control it is monitored hether the individuals adhere to those frame or#s or not so that organisation and management can verify the quality of various "olicies. *,ercising some authority and forming su"erior4subordinate relationshi" throughout the organisation can be established through controlling. With the "resence of authority or control the individuals ill or# "ro"erly and e,hibit better "erformance to reach the targets set for them. Control system ensures the organisational efficiency and effectiveness. When -ro"er system e,ists the organisation effectively achieves its ob;ectives.