The corporate level strategy also ensures that the values and expectations of stakeholders are understood and taken into consideration when developing a strategy. In the case of Clearsky, stakeholders such as customers and investors expect that the company will take the appropriate risks as it pertains to positioning the company for success. Sixty percent of Clearsky is publicly held while the other forty percent is owned by the Singapore's government. With this understood all of these investors and customers expect the company to make decisions that will secure its future. The recommendation to use the services of another vendor is necessary because the company must remain competitive.
In addition to Corporate level strategies business level strategies must also be taken into consideration.
"Business level strategies are essentially positioning strategies whereby businesses tend to secure for themselves an identity and position in the market. The aim here is to increase the business value or the corporate and stakeholders by increasing the brand awareness and value perceived by the customers. If we understand products or a services offered by a business unit as a deck of cards, then we can safely decipher that businesses do not have many suits to play with."
This level of strategy also necessitates that the company places a great deal of emphasis on wither pricing or product differentiation. Concentrating on these two factors leads to an increase in customer value. This strategy level also requires a great deal of analysis that requires a great deal of skill and experience.
As it pertains specifically to the case study, at the business level Clearsky is seeking to be on par with competitors as it relates to the types of services that are offered to passengers. As such the company must meet the demands of current and future passengers by ensuring hat wifi service is available. In doing this the company will remain in a position that does not cause its market share to be diminished.
The final level is the operational level. This level is associated with "successfully implementing the strategic decisions made at Corporate and business unit level through optimal utilization of resources and competencies of the business unit. This level of strategy is extremely significant in shaping the success of other strategies as it translates strategic decisions into strategic actions by directly impacting the design of operational processes and networks, human and other resources etc."
For Clearsky this final level of strategy involved ensuring that all employees understood the role they would play in the implementation process. Without the work of dedicated employees none of the decisions made at the corporate or business level can be properly implemented.
This recommendation also took into consideration Porter's five forces. These five forces include the following:
The threat of substitute products or services- This force is of significant concern because Clearsky passengers clearly have other alternatives as it pertains to who they choose to purchase airplane tickets from. All other things being equal. A customer might decide to go with another carrier if the attribute that distinguishes the carrier is the ability to access the internet in-flight. As such Clearsky would be at a pronounced disadvantage if it ignored the threat posed by substitute products or services. In fact the entire business could collapse if this threat is not taken seriously. The proposed solution to the problem that Clearsky faces addresses the fact that consumers have alternatives available to them that would exceed the services available to them by Clearsky fails to allow in-flight access to the internet.
The threat of the entry of new competitors- this particular industry is not susceptible to new competitors entering quickly or without prior knowledge because the barriers to entry are rather high. More specifically, entry into this particular market requires a great deal of capital and takes a great deal of planning. As a result this particular threat was less of an issue as it relates to making of the aforementioned recommendation.
The intensity of competitive rivalry- In this industry competitive rivalry is quite strong. A major part of the decision making process for this case involved the strategy of Clearsky's arch rival. Because of the manner pf competition Clearsky has to take the risks associated with using a different vendor. This risk is acceptable because if Clearsky fails to present customers with access to in-flight internet Clearsky's chief rival will likely gain a substantial portion of the company's market share. In some ways the intensity of the rivalry in this case forces Clearsky to make a decision quickly. Too much hesitation will give
The bargaining power of customers (buyers)-the bargaining power of customers is also an issue that has to be carefully considered. Because Clearsky has an intense rivalry it is important to consider what may happen if price changes occur as a result of the implementation of the recommendation. In fact, one of the identified disadvantages of the recommendation is that the bids of the other vendors are higher than that of Surfshop. As a result there may be an increase in costs for passengers. As long as Clearsky can keep the costs within a reasonable range the added expense will not cause customers to choose Darksword or some other competitor.
The bargaining power of suppliers- In this case the suppliers definitely have some bargaining power. This power is present because there are few companies that are capable of providing the service. In addition this issue is compounded by the fact that Surfshop offers superior service when compared to the other companies and it does so at a lower cost. As a result even if the company adopts the recommendation the service that is provided may be inferior to what could have been offered by Surfshop.
Environmental change was also a major reason why this particular recommendation was made. At the current time premium passengers expect to have certain amenities while traveling. One of these amenities is access to the internet. Business travelers need access to the internet in-flight because communication is essential in the business environment. According to Wakefield research 50% of business travelers take red-eye flights so that they can be on the ground during business hours.
In-flight wifi serves the purpose of allowing business travelers to communicate with employees and business partners regardless of whether or not they are in a plane or on the ground. As such Clearsky would be at a disadvantage if it failed to offer such a service.
Need for global expansion
Finally the recommendation considers the reality and need for global expansion. According to Gupta & Govindarajan (2000) there are five reasons why global expansion has become a necessity from many companies. These five factors include:
the growth imperative- Clearsky and other companies that have outgrown their current markets must seek to expand. Expansion means greater profit potential and the acquisition of more of the market. In addition such expansion is necessary if Clearsky want to recruit and keep top talent at the company.
The knowledge imperative-operating a business or business functions on a global scale requires that a company understand the strengths and weaknesses of the market that is being entered. Clearsky must understand the needs of all the customers that it will serve globally as a result of the recommendation. Failure to do so may result in catastrophe.
3. The efficiency imperative- According to Gupta & Govindarajan (2000)"Whenever the value chain sustains one or more activities in which the minimum efficient scale (of research facilities, production centers, and so on) exceeds the sales volume feasible within one country, a company with global presence will have the potential to create a cost advantage relative to domestic player within that industry."
That is companies that do not have a global presence will not realize the profit potential that a company with a global presence will.
4.Globalization of competitors-when competitors are operating on a global scale the refusal of a company to also operate on a global scale can make them less completive. Because Darksword is competing on a level that is global, it would behoove Clearsky to also operate on such a level.
5. Globalization of customers-Customers are becoming increasingly more global. Air transportation has made it possible fro people to fly all over the world and as such consumers have become more sophisticated and aware of the world. Clearsky has to stay in tune with these development and the strategy to implement wifi on flights serves the purpose of addressing the needs of the increasingly global consumer.
All of these factors played a crucial role in the development of the correct strategy for Clearsky.
Advantages of Recommendation outweigh the Disadvantages
The primary advantage of adopting the recommendation is that it places Clearsky in a position which allows the company to remain…