PAKISTAN INTERNATIONAL AIRLINES, PIA

STRATEGIC REPORT

VISION STATEMENT

‘’PIA aims to carve the utmost flying experiences consistently.’’

MISSION STATEMENT

‘’To set the standard of excellence for flying across the globe by always striving hard to provide unmatched services to all our prestige guests when it comes to safety, entertainment and punctuality and the most state of the art airplanes gives us an extra edge to meet our customer needs consistently and to grow more’’

COMPONENETS OF MISSION STATEMENT

.CUSTOMERS• People who want their flying experience to be memorable each time.

.SERVICES• Taking guests from one destination to another with safety, punctuality and entertainment.

.TECHNOLOGY• State of the art airplanes.

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.PHILOSOPHY

• organization believes in giving utmost flying experiences on consistent basis to the guests and by reaching out an extra mile to meet their needs.

.SELF CONCEPT

• The determination to set excellence standards covers the self-concept aspect.

.CONCERN FOR GROWTH

• That part consistency shows that the organizations survival and profitability depends upon it, if we lose we will lose it all.

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.PUBLIC IMAGE

• That their needs will be met and for that the organization is willing to take an extra mile.

.MARKET

• Across the globe.

STRATEGY FORMULATION

• IFE• EFE• CPM

INPUT STAGE

• SWOT• SPACE• BCG• IE• GRAND STRATEGY

MATCHING STAGE

• QSPM MATRIXDECISION STAGE

INPUT STAGEINTERNAL FACTOR EVALUATION MATRIX:

STRENGHTHSPoint to point frequency 0.07 3 0.21Broader target market 0.08 3 0.24First movers (experience advantage) 0.02 4 0.08Brand Image 0.2 4 0.8Huge destination coverage 0.04 4 0.16State to the art fleet 0.07 4 0.28Financial resources 0.08 4 0.32Competitive staff 0.02 3 0.06Monopoly 0.06 3 0.18

WEAKNESSES Corruption 0.05 2 0.1Dysfunctional structure 0.04 2 0.08Strong domestic competition with airlines 0.04 1 0.04Non professionalism 0.05 2 0.1Strong union hold 0.04 2 0.08Bad allocation of resources 0.05 1 0.05Government influence 0.06 2 0.12Over staffing 0.05 1 0.05Low awards and appraisals 0.04 2 0.08Debt 0.05 1 0.05TOTAL 1.00 48 3.08

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EXTERNAL FACTOR EVALUATION MATRIX:OPPORTUNITIES WEIGHTS (W) SCORE (S) W*S

• Subsidy on oil prices 0.04 4 0.16• Ability to have maximum fleet and route 0.03 3 0.09• Increasing number of airports 0.05 4 0.04• Air crashes of other airlines 0.2 4 0.08• Changing customer trends 0.03 3 0.09• Low cost barriers 0.07 3 0.21• Industry recovery predicted 0.08 4 0.32• Better recruitment policy 0.06 3 0.18• Globalization of speed-ex 0.05 3 0.15

THREATS

• Increase in interest rates 0.05 2 0.1• Increasing oil prices globally 0.04 3 0.12• New entrants 0.04 2 0.08• Inflation 0.05 2 0.1• Privatization 0.06 3 0.18• Terrorism threat 0.05 3 0.15• Time consumed by embassy for the visa 0.04 2 0.08• Devalue of currency 0.07 1 0.07

TOTAL 1 46 2.2

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COMPETITIVE PROFILE MATRIX: PIA Air Blue

FACTORS Weight (W)

Score (S)

W*S Weight (W)

Score (S)

W*S

Advertising 0.05 2 0.1 0.05 1 0.05Market Share 0.30 3 0.9 0.30 2 0.60Safety 0.10 3 0.3 0.10 2 0.20Punctuality 0.15 4 0.6 0.15 2 0.30Fare charges 0.05 1 0.05 0.05 3 0.15Customer Expectations 0.10 3 0.3 0.10 2 0.20Management 0.05 2 0.1 0.05 1 0.05Reliability 0.05 3 0.15 0.05 1 0.05Resources 0.10 4 0.4 0.10 2 0.20Technology 0.05 4 0.2 0.05 2 0.10

TOTAL 1 30 3.1 1 17 1.9

MATCHING STAGE

MATCHING STAGE

SPACE MATRIX BCG

MATRIXSWOT

MATRIXIE

MATRIXGRAND

STRATEGY MATRIX

SPACE MATRIX

INTERNAL STRATEGIC POSITION

EXTERNAL STRATEGIC POSITION

Y- AXIS

FP+SP = -1.8

FINANCIAL POSITION (FP)

ROI = +2

ROE = +2

Liquidity ratio = +3

Leverage ratio = +1

Working Capital = +1

Average = +1.8

STABILITY POSITION (SP)

Barriers to entry = -1

Inflation = -4

Technology Advancement = -3

Competitive pressure = -6

Poor law and order situation = -4

Average = -3.6X-AXIS

CP+IP = +1

COMPETITIVE POSITION (CP)

Market share = -3

Huge fleet = -1

Service quality = -4

Direct flight = -2

Management Experience = -1

Average = -2.2

INDUSTRY POSITION (IP)

Growth potential = +3

Fuel price stability = +1

Government support = +5

Entry-exit barriers = +5

Financial stability = +2

Average = 3.2

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BCG MATRIX

DESTINATION INDUSTRY GROWTH

MARKET SHARE

PROFIT % PROFIT

LHR-KHI 19% 1.00 50 50/100 =50%

LHR-ISB 10% 0.65 10 10/100 = 10%

KHI-DUBAI -9% 0.44 5 5/100 = 5%

ISB-USA 16% 0.75 35 35/100 = 35%

TOTAL 100

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INTERNAL EXTERNAL (IE) MATRIX

The IE matrix is based on the following two criteria:

• Score from the EFE matrix is plotted on the y-axis i.e. 2.2• Score from the IFE matrix is plotted on the x-axis i.e. 3.08

IE RESULT:Having a look at the graph of IE MATRIX on the next page, PIA falls in the 4th cell which suggests grow and build strategy for PIA so the strategies available for them are, intensive integrative strategies and intensive market penetration, market development and product development.

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SWOT MATRIX STRENGTHS-S

1. STRONG BRAND2. MONOPLY AT HAJ FLIGHTS3. GREATER ACCESS TO DESTINATIONS WORLD WIDE4. FINANCE W.H.O GOVERNMENT5. HUGE JET FLEET

WEAKNESSES-W

1. HIGH MAINTENANCE COSTS2. OVER STAFFING3. CORRUPTION4. UNION HOLD5. LOW MOTIVATION OF EMPLOYEES

OPPORTUNITIES-O

1. USE OF ALTERNATIVE FUEL2. INCREASED TRAVELLING IN ASIA3. MERGER AND ACQUSITIONS4. NEW DESTINATIONS5. GLOBALIZATION OF FED-X

SO(S4, O3), Acquire Shaheen airways to get its share.

(S3, O5), Focus on the Asian market more to benefit from increasing demand and wider access to worldwide destinations.

(S4, S2, O1), Make the haj flights more profitable by saving on fuel costs.

WO(W1, W4, W5, O3), Merger could be a way to get rid of aging crafts resulting in high maintenance costs, new employees coming over would help the existing employees in getting motivation and to weaken the union hold.

THREATS-T

1. FOREIGN EXCHANGE RISK2. WORLD WIDE WEAK ECONOMIC

CONDITIONS3. TERRRORISM4. INNTENSE COMPETITION5. POLITICAL INTERFERENCE

ST

(S4, T3), the threat of poor security situation in our country can be overcome by adding advance security systems and equipment.

(S1, T4), Marketing the strong brand name properly can reduce the competition.

WT

(W2, T5, T2), Introduce culture of merit in HR practices.

GRAND STRATEGY MATRIX

• With reference to BCG matrix the growth rate of the four destination routes are as follows: • DESTINATION GROWTH RATE• LHR-KHI 19%• LHR-ISB 10%• ISB-USA 16%• KHI-DUBAI -9%• • And the competitive position with reference to space matrix is -2.2

Quadrant 2 Quadrant 1LHR-KHI 19%LHR-ISB 10%ISB-USA 16%

Quadrant 3 Quadrant 4KHI-DUBAI -9%

Strong Competitive position

Weak Competitive position

Slow Market Growth

Rapid Market Growth

-2.2

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THE END

QUESTIONS AND QUERIES