Air Canada is Canada's largest carrier, which is one of the founders of the international alliance Sky Team. Today, it is capable of carrying out flights in 98 settlements in the United States, Canada, Europe, Australia and Asia (Aircanada.com). Together with our partners, this company carries passengers to 160 destinations.
Part 1: Enterprise Strategy and Air Canada
1. The airline industry has always been a very high-tech and, therefore, up to date with the developing global trends and requirements. The complexity of the business of air transportation is magnified by high responsibility to air travelers. With increasing passenger flows slightest failure in the processing and transmission of information can cause great catastrophic consequences. Therefore, the industry always has very high requirements to the IT infrastructure of all stakeholders: the carriers, airports, suppliers of vehicles and so on. However, the industry is involved in the global economic processes and in global trends (including the Information).
Air Canada uses front-end and back-end systems for realizing processing systems of the passengers. Aviation strongly depends on IT. That’s why it is especially important that all applications and systems have specials applications for the different mobile platforms and interact with each other (Rivard, 2014).
For example, large airports can be traced to the basic principle of systems for air transport: the modernization of the IT modernization, provided suitable physical infrastructure, and vice versa. Therefore, the attention of the airport equally covers both areas, which often go hand in hand.
The main impetus for innovation is the pursuit of efficient management of traffic flow. This is due not only to the growing prosperity of the country and citizens, but also to the implementation of various government programs aimed at the development of sport, culture, tourism, international relations.
For registration of passengers on flights of specialized systems, the class Departure Control System (DCS) has been designed. Before the registration onto the aircraft starts carriers sent data to the passengers from their reservation systems. This is done by PNL-Telegram (list of passengers who have bought a ticket). It should be noted that such integration of data from the reservation systems in the registration system is not a transfer of data from airlines to the airport. Despite its "location" at the airport, DCS-systems actually belong to the airlines, with the airport staff only delegating work on registration of passengers and baggage.
After completing the registration DCS-system sends the data as a PSM-Telegram (list of unregistered passengers) at the airport following the flight that is the point of arrival side. If you have a full baggage system at the point of delivery is also sent to BPM-telegram that contains information carried baggage. "As a rule, airports and air carriers do not integrate their information systems directly. Data transfer is carried out by generating and sending the standardized IATA-telegrams, which are standard in the aviation market, and often can be recognized by the host system - an airline or airport.
2. What problems did Air Canada face with their decentralization of the IT Department? What structure was ultimately adopted and why? (10%)
The problem of choosing between centralization and decentralization - this is the problem of choosing the optimal structure of the organization. Centralization is different in all organizations. Some have a higher level, some a much lower one. However, most of the power is always in the top management of the company, who then further forward their power and tasks to the management who answer directly to them. This process is called delegation. As is it impossible for one top manager to do all the tasks required, they should and often do delegate many minor and sometimes not too minor tasks to their subordinates.
There is a number of advantages of decentralization:
It is nearly impossible for one person to manage everyone in a large organization. The huge amounts of data and statistics are too much for a human mind. That is why the decision-making process is split between several people.
As the top management is usually best aware of the problems at hand, decentralization allows them to make the correct decisions and lead their company to success.
Apart from top management, there are a lot of other works in an organization. Decentralization gives these very workers enough power to grow, develop, take initiatives. This in itself allows the heads of different departments to manage everything perfectly, no matter how many people they are responsible for. They have total control of the department and their employees. The leaders becomes enthusiastic not only by the management above, but also by the work of his subordinates.
Thanks to decentralization lower personnel has the possibilities to prepare for top management positions and thus grow. This means that there are always people ready to take responsibility, talented people who will be ready to step in place of a leader when needed. Not for nothing do people say that while one may be born with talent, one has to work to become actually talented. Thus, the company ensures that the ambitious and young employees stay with the company as they continue to grow all the time.
Centralization disadvantages lie in the fact that it covers the ways of obtaining the benefits of decentralization, and vice versa.
With the growth of the organization, an increase in the number of units, with an increase in the degree of their independence, the increasing complexity of information and industrial relations between them, to increase exponentially the number of decisions, there is a need for decentralization. Decentralization allows, first, to rapidly develop and make their own decisions, including those involving direct perpetrators; secondly, to accurately reflect the decisions of the objective situation; and thirdly, “to give up detailed instructions from the center, thereby reducing its minor congestion problems and reduce the flow of information” (Rivard, 2014).
3. Explain the term “strategic value.” Discuss, with three specific examples from the Air Canada case, on how information and information systems provide strategic value for the organization. (5%)
Every so often the organization needs to play its strategy. These strategical planning allow the company as well as all of the employees to focus on a only a couple of main goals for a period of time. By focusing on several important tasks, people perform better than trying to do all the little ones as fast as possible. Strategies differ in different fields. A business strategy is very different from a military strategy, which is also far from what the strategy of the government might be. If we talk about the policy - the government will discuss the situation and the support of the electorate, which allows you to purchase the power and hold it in their hands. If we talk about a business - then a strategy that ensures the survival and prosperity of the company.
Here are some principles to follow in order to win for a long time and maintain a strong strategic position.
Firstly, it is necessary to define the goal properly. It should strive for the highest long-term returns on investments. While economic value is usually one of the goals of any organization, in order for a strategy to be successful in increasing this value, the management has to take into consideration such things as the competitive environment, the possibility of clients to pay as well as the price of their product or service. Just aiming at the increase of turnover, market share, or simply profit does not usually make a good and effective strategy. This is just the will of the investors, but a good strategy requires more meaning and thought.
Second, one of the most vital parts of an effective strategy is creating different possibilities of additional value that can be given to client. Thus, the strategy - it is not a search for the best method of competition at all times or the way to please everyone. A good strategy keeps the competition at a constant observation. Moreover, the consumers and their need are also constantly analyzed to make sure the company is moving in the direction of client satisfaction.
The third point that should be included in a good strategy is the exclusive value chain. In order to have a competitive advantage, companies need to do something new, unique and creative. Something that is not offered on the market yet. It is vital to include this in each strategy so the company grows and develops. In order to do this, the company needs to be clear about their production, services, management, marketing, research and development as well as any other parts of the company that work together. By working together, all of these departments need to figure out how to create additional value for clients. It is vital that all of these departments agree on the next innovative approach so that it is specific, measurable, achievable, realistic, and time-bound.
Fourth, it is vital to keep your options open and come up with a good set of alternatives. Sometimes in order to make the product unique and exclusive, the company needs to give up something else, which is not as vital to the operations. The choice of products and the values they decide to put into them makes the companies stand out. If the company does not have alternatives at hand, competitors can easily copy their unique selling point in a blink of an eye and the company just like that loses the competitive advantage that was supposed to carry them through the whole strategy. It is vital to not focus on everyone, but on a specific niche. Just as a person cannot please everyone, so cannot the company. Better focus on a smaller audience but get it right, the focus on everyone and get nothing.
Fifth, the company strategy needs to unite the different departments and their jobs together. The company needs to move forward in the same direction as a whole and not have it split as different departments are running in different directions. This is a very important function of the strategy. The coherence of employees helps improve the product, retain the competitive advantage and, consequently. increase profit. While it may be easy for competitors to copy one thing, it is a lot harder to copy the whole organism as a whole.
Finally, the strategy involves a sequence of development of the company. It is necessary to determine the direction in which to move the company and stick with it even when it is necessary to sacrifice individual capabilities. Otherwise, it will be impossible for the company to grow, develop, gain new skills and with the help of strategic thinking keep the organization together and the clients loyal. Constant growth and development is required, however, it is important that it is all done within the company strategy and it’s requirements (Amber, n.d.).
4. What strategies did Air Canada put in place to create a culture of openness and ongoing communications among its employees, and with its suppliers? (5%)
The modern market has a huge variety of supplies of human resources and material resources. However, the choice of just the right one is vital for successful functioning of the company. It is not enough that a supplier can deliver, it is vital that they can do it on time, with high quality and that the company can rely on them for back up whenever needed.
Supplier selection is done in two ways.
The first method - the analysis of the options and proposals salesperson carries the company in charge of procurement. He chooses a supplier based primarily on the lowest purchase price, making the order, monitors its process and is always ready to step in in case of any emergencies.
The second method is collective choice, which takes into account both the opportunities and the actual demand in the supply. The department responsible for purchases conducts this analysis together with the product, quality control and marketing departments. As it was mentioned before, different parts of a company must work together.
Reevaluation of supplies should be done constantly and systematically, because new information may become available and new, better supplies may help the company earn even more.
5. Does Air Canada demonstrate operational effectiveness or strategic positioning? Why? (5%)
Positioning determines the perception of the brand's target audience. The main objective of positioning - it is primarily a transformation of consciousness in order to give consumers the brand is not just fame, but also differentiation from competing brands, as well as add value in the eyes of buyers.
Positioning allows you to reduce the sensitivity of consumers to price, to offer the market a more expensive product win loyal customers and gain a strategic advantage over its competitors, which is the most important.
In order to realize the strategy of positioning to life, it is necessary to implement certain strategic moves that will determine the subsequent success of the brand in the market. For example, correctly analyze the effectiveness of the campaign, if it was not aimed at those consumers who might buy this product, or if the advertising campaign focused attention on these benefits, which have no value for the consumer.
In the process of positioning is necessary to adopt a number of strategic decisions, defining completely removing the brand and its subsequent behavior on the market.
6. In class, we discussed how the Internet influences industry structure. Apply Porter's Five Forces framework to analyze Air Canada’s competitive strategy based on the information provided in the case and other available information about the related industry. Your discussion must clearly identify how Air Canada used IS to gain a competitive advantage. (25%)
Global Internet originated in the late 80s and despite the fact that it covered the whole civilized world, until now it has followed the path of quantitative rather than qualitative development. Evaluation of the results of its impact on human life, the economy is still ahead, but already today it is possible to outline the trends and opportunities offered by a global electronic network in various fields.
Internet technologies create a social living environment similar to that which exists in a small group or community, all of whom know each other and have direct contact with each other. Human activities are carried in the virtual space, changing the properties. Qualities of personal communication are beginning to converge with the quality of internet-mediated communication. A global community is born, with the number of members of the community committed to the population.
The main problem can be solved with the help of the Internet Service. There are many options for searching the Internet, not only direct but also indirect - through intermediary agencies, labor exchanges, forums, blots The virtual version of the labor market begins to evolve, since each has the ability to appeal directly to the head, if not us, then to the organization as a whole. It becomes possible to direct communication - "employer - applicant".
Consider different ways of attracting and recruiting, online presence today.
Corporate website on the Internet
If a company wants to effectively recruit, build their human resource base, the most direct way is to create your own Internet resource. This allows service personnel to keep their own information channel that provides engaging staff with the necessary qualifications. There is an analogue of the ad, but it is incomparably more advantages associated with the possibilities of complex volume of information premises Company.
The site highlights placed philosophy, the company's mission, goals, place on the market, wages, safety, composition vacancies.
The network is reflected and the work of recruitment agencies providing paid services intermediary on search and selection of personnel from employers to job seekers. The mediator on the Internet - an information portal created for a fee database job postings and resumes. User first detects brand Recruitment, estimates its reliability or unreliability, then decides to purchase the services. A positive decision on the part of the user fee for the recruitment agency acts as an intermediary between the employee and the employer (Vuylsteke, 2011).
Part 2: Future IS Strategies for Air Canada
7. Research, identify, and explain four critical challenges facing the airline industry. For each challenge, identify and justify ways in which IS could provide an innovative solution. (20%)
Aircraft engineering is one of the most innovative, knowledge-intensive, high-tech industries, which integrates the activities of the various branches of science and technology, which stimulates technological development of a number of other industries - metallurgy, machine tools, electronics, petrochemicals and others. Aircraft engineering shows extremely high demands on the technology market. It went through a risky phase of creation and development, but is highly effective in relation to other industrial sectors, covering a quarter of industrial production (which can be seen in the United States and the European Union). This also promotes the deployment of innovative sectors of the economy as the driving force of industrial upgrading.
One of the main reasons for the current situation in the land-based civil aviation is insufficient investment aimed at maintaining and developing airports, the lack of effective demand for the services of airports serving primarily regional and local transport;
The development of new competitive electric motors is a long-term costly process. Practice shows that the average duration of the development of new technologies in aircraft engine takes 10 - 16 years, and their development for use in aircraft - another 5 - 10 years.
At major exhibitions such as Le Bourget and Farnborough, we see that the fantastic advances in technology provided by the creation of specialized companies to develop certain technologies that bring them to perfection reduce production cost to be in demand and, more importantly, want to cooperate. Creating centers of competence is the way to reducing the backlog in the field of technology. It will help to build a rational long-term cooperation of developers and manufacturers of engines that will accelerate the integration processes in the industry.
The solution of problems faced by the aviation industry is possible with the consolidation of efforts of all participants, including the federal authorities, and the presence of responsibility for their actions, while creating a modern system of project management, as well as the necessary funding the work of the state.
In connection with the growth of international trade through the customs border of the Customs Union to move large quantities of goods, containing objects of intellectual property are you, who make up a significant proportion of the cost of goods. In such a way the importance is given to the protection of intellectual property rights. Security and protection of intellectual property rights in the single customs territory of the Customs Union provides a sophisticated mechanism international and national legal regulation.
Improving the management of relations in international trade of goods containing intellectual property would help to solve these problems (Deloitte, n.d.).
8. Refer to this article by Forbes.1 Identify and illustrate how social media could improve Air Canada’s business model. Discuss in sufficient detail and support with appropriate examples. (10%)
The easiest way to understand the impact on the company's information technology is through their operations - through the value chain, which allows them to produce the product and deliver it to the final consumer. There are different parts of an organization, which take part in the value chain and add value to the final product. They are sales, marketing, research and development, quality evaluation, production, delivery. All of these departments interact together, with their supplies, and consumers. The value chain combines all of these actions and shows the value that the company presents to the client in the form of their product or service. These values then help set the price.
Each of the company departments needs to work together, to communicate and to solve problems as a team. This is where information technology comes and and helps coordinate the work of the whole company. Sometimes it means that email is working, sometimes that the CRM system is up and running and sometimes - that the whole factory in one location is successfully guided by a handful of people in a completely different location. This is mostly done through the internet, which allows employees in different parts of the world toc communicate and work together towards the same goal. Another thing that can be done with the help of the internet is the openness of a company.
Nevertheless, the Internet has already been around for a while and most every company is using it to their advantage. Consequently, this will not be the secret of the company’s future success and competitive value. Moreover, there are many other great technologies of the modern age apart from the internet, for example: scanning, 3D printing, relational databases and the wireless communication of clients which is changing the way businesses work and find new clients.
These modern advances all came from the work of previous generations of IT specialists. Some advances require the work of one dedicated scientists, others require that of several generations even. Take the mobile phone for example. When it first appeared, it was heavy, way too expensive, barely comfortable and not at all possible. Now, over 20 years later, we cannot imagine our world without it.
The first day of informational technologies helped reach atomization on the levels of accounting and placing orders. Then, this function was further expanded to control of the work of employees, the work of the global trade, research and development. The third state of IT integration dealt with the internet and the creation of CRMs (relationship management resources), SCM (supply chain management), ERP (enterprise resource planning) which all help different parts of organizations work together as a whole.
In the fourth stage, which is now just beginning, will be integrated all the different processes of the company that together form the value chain. SCM and CRM are beginning to merge as they become fully functional applications that combine orders registration of procurement, production and service.
Soon we will begin the integration of the product development process, which has so far been heavily aside. Internet technologies will allow transfer complex patterns products and electronic trading platforms will be exhibited not only goods, but also the engineering development.
9. Analyze how your proposed use of social media could result in changes to Air Canada’s competitive strategy. (You should reexamine Porter’s Five Forces model in light of the new technology.)(10%)
It is not a secret that the media have a significant influence on the processes occurring in modern life. The press is very important in the political life of the state, and sometimes it is even called the fourth type of power.
However, what could be the connection and why is this sphere of activity special? At a first glance, the aviation industry in the light of interaction with the media is no different from, say, a car or any other. But it is not so. If there were only specialized trade publications (and they certainly exist) for producers and direct consumers of products of the aviation industry, the reasons for the attention given to this aspect would be many.
We have already seen that the average person in most cases is not able to understand the maze of competitive advantages and disadvantages of modern commercial airliners. However, this does not prevent people to shape their subjective opinion on the overall quality of a certain aircraft. As you may have guessed, this is a subjective opinion often significantly at odds with the real situation. In the discussion of aviation technology, a lot of time and in substantial quantities in operation, this discrepancy may be small (but it is still present, as shown in the example above), then the new or not so common technique situation can be quite depressing.
Another feature of the press, is pulling out of any one of the aircraft of the myriad (and it is great) and a comparison of the characteristics of this aircraft with competitors. Besides the fact that such a comparison is pointless (otherwise, for example, airplanes with 4 engines have long ceased to exist), often compared to aircraft not with their competitors and with other classes of aircraft that is doubly aggravated the situation.
Another interesting exercise is the analysis of accident. Only lazy people do not take part in this entertaining game.
"So what?" - You will say. "Discuss-sworn, they scolded, stomped their feet and left. No one was hurt, what is it all?” However, this is not quite true. The aviation industry suffers as a whole. As soon as the noise level reaches a certain limit, it immediately affects the fate of the aircraft, the carrier or the industry. On the one hand, it is even useful. If the noise is raised in a not particularly great case, well, it has an immediate impact, and measures are being taken to remedy the situation (although not always measures are adequate and often lead to opposite results).
Aeronautical engineering of new types, under the influence of this kind of misleading the public opinion, fall into a vicious circle. Public opinion scolds the plane, which loses investment attractiveness (those most important cents per passenger-cost start to grow); the aircraft becomes less competitive and gets less demand on the market. Someone has to receive the blame for the situation, and - the circle closes.
Unfortunately, this is not the only consequence of misleading the public opinion. Often it leads to the reaction of state regulatory agencies or even the government. Nevertheless, most worryingly, under the pressure of public opinion, representatives of the aviation industry themselves do not hold back the tide and are forced to react. Not responding to the actual course of events leads to blurred public opinion (Aviationcv, 2015).
Air Canada - Official Website: Flights, Airline Tickets, Airfare Deals, Car Rental, Hotel & Vacations
Amber, T. The Strategic Value of Values. (n.d.). Center for Simplified Strategic Planning. Web. 30 Jan. 2016.
Aviationcv. Social Media In Aviation – A Helping Hand Or A Slippery Slope?. Aviationcv.com. 30 June 2015.
Deloitte. 4 Critical Challenges Facing HR Leaders Today. (n.d.). Bersin by Deloitte. Web. 30 Jan. 2016.
Rivard, S., Karimi-Alaghehband, F. Air Canada: Flying High with Information Technology. June 2014. Web. 30 Jan. 2016.
Vuylsteke, A. The impact of study of industry structure. A Great Cities Initiative of the University of Illinois at Chicago University Library. 30 Jan. 2011. Web. 30 Jan. 2016.