Introduction
Saudi Arabian Airlines or simply Saudia is the flag carrier airline of Saudi Arabia. Saudia is a fully owned government agency under the direct supervision of the Ministry of Defense. Since 1945, the company has grown to become one of the largest airline companies in the entire Middle East region. Right now, it has scheduled flights to more than 120 destinations worldwide with domestic flights around Saudi Arabia as well.
According to Mills (2005, p.11), effective leadership is a "process by which one person influences the thoughts, attitudes, and behaviors of others" to set a direction for others by helping them visualize what must be achieved through inspiration and encouragement. In today's business environment which fluctuates from time to time due to several factor such as economics and the behavior of the consumer market, change is an essential part of the organization's forward direction to retain competitive advantage and keep a growing base of customers (Huber, 1995). First, change transcends the adoption of new technologies and tools that can be used to increase the productivity of the organization and to increase the performance quality of the organization. Second, change helps the organization to meet changing demands and needs of customers. Third, in today's economy, businesses should always be ready to react to any changes to keep growth. Fourth, changes help the organization to look for opportunities that will help it to grow and expand.
At the top of the challenges faced by Saudi Arabia Airlines is the increased pressure on the airline industry, which leads to the reduction of the revenue of the organization and the loss of expansion opportunities. Due to the fluctuation of the industry and growing competition of the industry erodes the market share of Saudi Arabia Airlines. As such, there are clear challenges and issues that the organization has to directly confront, which are as follows:
- Increased demand of customer for support services that can answer their queries.
- Slow speedy implementation and innovation at the frontline due to the behavior and mindset of members of those in the upper hierarchy.
- Lack of streamlined activities. The thick process of the organization's operations slows down the entire organization, which also leads to reduction of productivity.
The organization is facing threats of market decline due to the current environment of the industry. With the increased competition in the market and the changes of consumer behavior, threats to the organization's success have grown in number. This means that for the organization to maintain its growth and development, it is necessary to run the organization in a different direction and phase. Otherwise, the organization will fail to maintain its market share and it will result to the stagnation and decline of its financial value. The organization's forward direction is to implement organizational changes.
The organization should improve its marketing innovation by crafting a better virtual world that streamlines the activities and tasks of the organization. By establishing a support service section, the organization can keep consumers satisfied to ensure strong reputation. This must also be punctuated on the customer engagement plans of the organization by making its products more available to consumers. Tracing back at the heart of this is the structure of the organization. With a thinner and relaxed organizational structure, those who are bottom part of the organization can easily reach those who are in the upper hierarchy to increase the coordination and cooperation between key players.
In leading and managing change, it is necessary to prepare the organization for the adoption of these changes. There is no short-cut to the change of the organization. It takes time and process to ensure that all aspects of change are taken into account.
SWOT Analysis
Figure 1 12 Month Traffic of Saudi Arabia Airlines
Fahd Baqmi (2013) reports in Asharq Al-Awsat that Saudi Arabian Airlines or Saudi Airlines had almost concluded its privatization program with the agreement signed to privatize the Saudi Aviation Engineering Industries. With the privatization of the airline company, it would be easier for them to increase their capitalization and attract investors that will make the company more engaging and market competitive. Over the years, Saudi Airlines remained in the shadow of the government, but with the privatization the airline company can now pursue its strategies with intervention from the government. As a result, expansions and capitalization are increased and Saudi Airlines can now compete with other international flag carriers.
At the moment, the company has increased its networks with international cities where Muslim communities are present. Together with the increased structure of its networks, the company has also increased its fleet with the acquisition of new carriers, both for their passenger and cargo divisions. Muslims are travelling all around the world and they are flocking to various major cities of the planet. With this trend, Saudi Airlines serves Muslims in terms of travel, either for business or leisure.
| Passengers Carried (National) | |
| 2010 | 20,323,592 |
| 2011 | 23,135,735 |
| 2012 | 26,537,661 |
| 2013 | 28,252,104 |
However, there are weaknesses that should be addressed by the organization. At the top of this is the bureaucratic management system, wherein the structure does not allow streamlined decision making and faster response to situation. As the result of this low organizational structure, it is hard for the organization to respond to cancellation and delays of flights. Decision making is held hostage because those who are in the ground needs approval from the top management in making decision. Rather than allowing those in the ground to make decisions for the airline company, decisions are structured in a very complex manner.
Another problem is the lack of nonstop flights; this means that Saudi Airlines flights have to stop at various airports before reaching their destination. Customers are looking for flights that would bring them directly to their destinations than waste time in airports. Saudi Airlines flights are always en route or connecting to; these flights are very hassle to customers because they will be spending money during en routes or stopovers. Delayed and canceled flights are also causing havoc to the reputation of the airline company.
The gulf region maintains the fastest growing international traffic, the report of the International Air Transport Association (2006) says. With the privatization of most Saudi Arabian airports, the company can see a better future with increased networks. In the same manner, it is also easy for the company to ride with these networks as the petroleum industry revitalizes itself. And of course, with the best of the tourism industry of Saudi Arabia, the airline company sees a good state to position itself in the market. Saudi Arabi's importance to Muslim communities is a great advantage to the company's market advantage.
Together with the privatization of the aviation industry, the competition from both domestic and foreign companies also grows tremendously. Add to this competition is the restriction of the government over pricing of the industry. The airline company has to adhere to the regulations of the government. Nonetheless, the airline company must also face the reality of how hard it is to get a visa in Saudi Arabia. While the tourism industry grows, the restriction of the government puts the entire industry in backburner.
Questions
1. What is the importance of the SWOT analysis provided above?
2. What important factors are affecting the poor management performance of Saudi Arabian Airlines?
3. Analyze the possible actions that should be taken by the company to improve its management system.
4. Describe the relationship of management system and performance.
References
Huber, G. (1995). Organizational Change and Redesign: Ideas and Insights for Improving
Mills, D. Q. (2005). "The Importance of Leadership." Leadership: How to Lead, How to Live. D. Quinn Mills.
