A1- REPORT
STRATEGIC MANAGEMENT
TH6GO02O
WORD COUNT:
STUDENT ID NUMBER: 21517519
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1)EXECUTIVE SUMMARY
The following report examines the internal and external environments and gives
recommendations for more strategic management growth. This report's external review is based
on evaluating Spicejet's present, performance analysis, and potential strategy micro and macro
environment.The VRIN/VRIO analysis is an important tool for assessing and evaluating a
company's resources, as well as establishing its strategic advantage and competitiveness. The
McKinsey 7s model is being used to improve its performance and implement continuous quality
improvement processes.Porter's five-force system was used to investigate the essence of its
competition and its possible future for strategic advantage. The pestle study has been used as a
strategic tool to investigate the airline's external influences.
having a more precise economic and political view This paper has evaluated the organization's
finances, competencies, required skills, and strategic advantage. The five forces of Porter check
into the danger of entry, suppliers' negotiating leverage, buyers' bargaining power,
competitiveness, and competitive advantages.
Pestel framework is a tool for analysing the outside world, with an emphasis on policy,
economic, and legal factors. And then there is the most recent industry trend. The report
concludes with a discussion of policy alternatives and findings relevant to business and state
organisations.
marketing channels Regardless of the fact that Spicejet is a profitable airline, global investors
are attempting to avoid it owing to high airport costs, which are primarily influenced by high gas
prices; hence, improving strategic planning efficiency would assist build on the conclusions of
these assessments.
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TABLE OF CONTENTS
Sr.no. Content Page
1) Executive Summary. 2
2) Introduction. 4
3) Internal Analysis.
A) Vrio Analysis. 5
B) Mckinsey 7s Analysis. 6
3.1) External Analysis
A)Pestel Analysis. 9
B) Poter Five Forces. 11
3.2) Conclusion. 12
3.3) Reference list. 13
3.4) Appendices. 14
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2)INTRODUCTION
SpiceJet is an Indian low-cost carrier based in Indira Gandhi International Airport, New Delhi,
owned by Sungroup, Karanishimaran, and promoted by Kal Airways Pvt Ltd for personal gain.
53.48% stake in the airline. It is the second largest airline in India in terms of domestic
passenger share. We offer over 340 daily flights to 49 destinations. SpiceJet, which includes 41
cities in India and 8 international cities, currently owns 23 Boeing 737 800/900ER aircraft and
approximately 15 Bombardier Q400 aircraft. In addition to low fares, SpiceJet also offers
SpiceMax. This is a bundle offer from the airline, including priority check-in and additional seats
at your feet. In addition, the Spice
add-on offers a variety of benefits such as domestic travel insurance, in-flight meals, excess
baggage, bag out first, SpiceMax, student discounts and more. ( Shivakami rasappan Rajan.,
2015). SpiceJet's mission is to become a popular low-cost carrier in India, providing budget-
conscious customers with the lowest fares with the highest customer value. (SpiceJet, 2015)
The airline began international flights in October 2010 and now offers flights to overseas
destinations, including cities in the Asia Pacific and Middle East. Founded in 1994 as an air taxi
provider, Modi Luft was acquired by Indian entrepreneur Ajay Singh in 2004 and renamed
SpiceJet. The airline operated its first flight in May 2005. Indian media king Karanishimaran
acquired a majority stake in SpiceJet through Sun Group in June 2010 and sold it to Ajay Singh
in January 2015. (IBEF., 2019).The international airline industry serves almost every nation on
this planet and has played an essential role in the development of the global economy. The
airline industry is a significant economic force in term of both its own operations as well as the
impact has on other industries such as aircraft production and tourism. Few other industries
have garnered the same level of attention as airlines. It piques the interest of not only the
industries immediately involved in aviation operations, but also of policymakers, news media,
and billion of customers. An unique, positive or negative flight experience.(Peter P Belobaba.,
2015)
3)INTERNAL ANALYSIS
A) VRIO ANALYSIS
1)Valuable
● SpiceJet's Success Strategy' brand image is already built across time and through
continual work and the availability of quality products.
● The strong brand emphasises trust and honesty as part of SpiceJet's Effective Tactics.
● A high level of brand knowledge is important not only for sales but also for the value of
the company.
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● The brand image is the product of long-term brand investment and can be replaced by
competitors in the sector.
● Additionally, the corporation has successfully provided products by making them
extremely accessible in countries where no operations exist.
● The innovation contributes to the performance of the company's processes.
● During the COVID 19 epidemic, the company provided in-flight entertainment on digital
phones in as well as provide contactless procedures to airports.c (ET Spotlight., 2021)
● the company's operational costs are much lower and economies of scale are realised.
● As a result, the company's proclivity for innovation has proven to be a significant
resource in managing environmental concerns and capitalising on opportunities given by
the environment.
2)Rare
● SpiceJet has an international footprint and works in a number of countries and regions.
Because of their global presence, SpiceJet's Successful strategies were able to increase their
core audience and create revenue across numerous countries
● This skill is essential for a company's capacity to grow and expand, especially with new
regions and countries.
● Localization is important for an organization to gain a presence in multiple local markets.
● Localization, from the other hand, is typically guided by a specified global strategy to aid
various managerial duties in performing effectively.
3)Inimitable
● These unique attributes contribute to an organization's competitive edge and long-term
viability. Competing players find it extremely difficult and costly to replicate these
resources and competencies.
● SpiceJet's Successful Turnaround Strategies are implemented through a network of
outlets in various nations and locations.
● Most of the locations where SpiceJet's Successful Strategies stores its items are easily
accessible and raise the band's profile.
● The company has also used tech to reduce costs and improve internal operational
processes.
● In comparison to competitors, this cost-cutting feature allows SpiceJet's Successful
Strategies to maintain competitive pricing.
4).Organization
● These technologies were created specifically for SpiceJet's Successful Strategies,
though they can be used by competitors in the market too. Because these resources
have no alternatives, they are utilized by firms other than SpiceJet's Successful
Strategies, helping companies to capitalise on opportunities and effectively use
resources for business growth.
● SpiceJet's Successful Strategies' technological advancements and integrations also are
key tools to achieve market edge.
● The organisation provides in-house training to new staff that is specialized to certain job
tasks and job designs, supporting them in performing out their desired job duties.
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● Workers are refined by the company's training not only for their job obligations and
professional advancement, but for self development.
B)MCKINSEY 7S ANALYSIS
1)Strategy
● The strategic direction of SpiceJet's Successful Strategies and the company's current
plan are carefully documented and communicated to all workers and partners. It helps
companies manage performances, direct operations, and establish various approaches
that are aligned with business plan..
● The strategic vision for SpiceJet's Successful is also important in directing the behaviour
of employees, staff, and investors toward target fulfillment and achievement. SMART
Goals with short- and long deadlines are set in accordance with business plan.
2) Structure
● All departmental coordination is smooth and very well. SpiceJet's Successful Strategies
includde a methodical method to beginning and evaluating departmental collaboration to
guarantee seamless work activities – and goal attainment.
3) Systems
● SpiceJet's Successful Strategies include well-defined methods to ensure that company
operations are effectively handled so that there are no problems or disputes. Successful
Turnaround Strategies processes at SpiceJet are often departmental in structure,
depends on other factors such as human resources, accounting, sales, operations,
marketing, supply chain management, public relations, and leadership.
● The corporate culture at SpiceJet's Successful TStrategies also supports creativity and
innovation by giving the public and teams autonomy for growth – therefore supporting
them in improving their careers and identities. Finally, SpiceJet's Successful strategies
offers support leadership that aims to improve visibility and accessibility in order to
increase staff motivation and work satisfaction.
4) Style
● SpiceJet's Successful Strategies are defined by a coordinated approach. By using a
participative style, SpiceJet's Successful Strategies is capable of participating and
including its staff in judgement processes and managerial decisions. This also allows the
leadership to interact with employees and various managerial groups on a regular basis
in order to identify the potential problems and to provide feedback on strategic strategies
and operations. .
5) Staff
● SpiceJet's uses an adequate number of personnel across its global operations.
Employees for multiple job types and roles are recruited both within and externally,
depending on the extent of need and skill involved. Based on the this, it is clear employ
people are educated about their job duties and roles. On-the-job training is provided to
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the employees in order for both of them to become familiar with the company and its
ideals. To raise skill levels, external as well as in-house training is given.
6)Skills
● SpiceJet's include an excellent bunch of individuals with exceptional abilities and
talents. All workers are recruited based on their ability and qualifications. SpiceJet's
Successful Turnaround Strategies takes pride in hiring the best developing and retaining
them to help them grow and develop.
● SpiceJet's define tasks and roles, and then recruits and teaches workers for the right
skill levels. The company makes sure that all labor conditions are satisfied and that staff
have the essential abilities to fulfill their respective jobs in accord with SpiceJet's
Successful values and culture, as well as the company‟s goals and strategy.
3.2)EXTERNAL ANALYSIS
A)PESTEL ANALYSIS
1)Political factors
SpiceJet's include an excellent set of individuals having outstanding talents and capabilities. All
employees are hired based on their abilities and skills. SpiceJet's Strategies takes great pride in
hiring the right people and building them to help them learn and expand.
SpiceJet's define tasks and career paths, and then hires and teaches employees for the
appropriate skillsets. The goal is to guarantee that all labor conditions are met and that workers
have the key skills to accomplish their respective duties in accord with SpiceJet's Successful
values and culture, and the company`s goals and strategy.
2) Economic factors
The economic prosperity of a country has a direct effect on organizational culture. SpiceJet's
Successfu have a lot of opportunities in growing economies. Similarly, recognizing the industry
lifecycle stage is important. Due to the market congestion, entering mature industries may be
more challenging than joining enterprises in the growth stage.. A very well infrastructure
improves business environment and increases the likelihood of development the sector in a
certain country.
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3)Social factors
Within any society, the power distance demonstrates the acceptability of hierarchy and income
disparity. SpiceJet must change its business management procedures when entering markets
having high or low power distance. Growing inequality in many nations is reshaping the state
apparatus, which has major ramifications for international commercial organisations such as
SpiceJet's Successful Turnaround Strategies.
SpiceJet must carry out research on previously assigned gender norms in order to properly
match communication and marketing methods. Advertising and human resource tactics would
differ in a traditional, patriarchal system with very well gender roles against one with less gender
stereotypes.
4)Technological factors
The use of new marketing tactics to improve consumer collaboration have resulted from
advancements in information and communication technologies. Social media is widely used
during today's business sector. SpiceJet can gain form social marketing attempts to enhance
business success. Technological improvements can be used to launch new facebook ads
targeted at fostering online brand communities.
5) Environmental factors
Growing environmental degradation, together with technological advancement, has pushed
corporations to adopt unique collection and disposal solutions. In many countries, recycling has
practically become such a corporate need.
Some governments offer incentives to help development in green technologies. It can benefit
SpiceJet's , as well as investments in green technologies to ensure long-term sustainability. This
investment will help strengthen customer satisfaction and grow the client base as a result of the
improved brand image.
6) Legal Factors
SpiceJet abides with employee/labor health and safety regulations, as certain nations have
stringent guidelines in order to protect safety at work. SpiceJet's are committed to protect
working environment for its employees on a moral and ethical level. Similarly, anti-discrimination
laws (like equal employment) must be rigorously taken into account when developing hr
strategy, as discriminating claims against employers damage the organization's image and
undermine firms' able to attract and retain talent.
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B)POTER FIVE FORCES
1)THREAT OF NEW ENTRANTS
● Significant capital investment is required: Without a minimum capitalization of Rs.30Cr,
takeoff is not permitted. Expected retaliation: Because the market is put in the hands of a
few firms, any new entrant would face severe rivalry. Legislation or executive action:
Along with the equity limits for launching an airline, they also force the airlines to operate
on unprofitable routes. Inadequate airport infrastructure makes it difficult for existing
airlines to operate properly, discouraging new ones.
● Pilot shortages and high gasoline prices
2)POWER OF BUYERS
● Switching costs are kept to a minimum, and alternatives are available.
● There is no differentiation among players in the same market, for example, the
distinctions between Air Deccan and Spice Jet are minor. Transparent Web-based
comparisons of fare structures are available, giving customers more ability to choose the
best offer. The role of intermediaries such as travel brokers is dwindling.
3)POWER OF SUPPLIERS
● Only two key critical suppliers enjoy a duopoly and jealously control their market shares:
aeroplane suppliers. A severe scarcity of pilots has made the sector reliant on them.
Forward integration: Airlines are also threatened by forward integration because
suppliers have or know about the majority of the industry's technological aspects. Airbus
and Boeing have significantly different perspectives on civil aviation's future needs,
which is reflected in their innovative products. Boeing has concentrated on medium-
capacity long-distance aircraft.
● High fuel expenses-Gasoline accounts for almost 35% of overall costs, and the cost of
fuel is continuously rising, posing a danger.
4)AVAILABILITY OF SUBSTITUTES
● Product for goods substitution- Customers have a variety of airlines to pick from. They
may also use other forms of transportation, such as road and rail. Substitution for need-
With the introduction of technology choices such as videoconference and conference
calls, the need to travel is reduced, and so the option of substitution for need exists at
the moment, but it is marginal because it is not possible to completely eliminate travel.
5)POWER OF COMPETITORS
● Intense There is competition between low-cost and full-service airlines. Apex fares and
promotional plans given by all full-service carriers, with costs lower or comparable to
low-cost ticket fares, are a significant competitive force. Additional players are being
added. Mergers and acquisitions occur here as well, increasing competitive competition
between airlines. The risk of switching increases when there is little contrast between the
services supplied by different airlines. High costs and input limits contribute to the
industry's competitive difficulties.(Hemant kumar.,2019)
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3.3)CONCLUSION
SpiceJet, as we all know, is India's leading and most popular low-cost airline. The brand's social
media marketing were a huge success. It had its own set of marketing strategies.
SpiceJet has garnered numerous honours and has risen to remarkable heights. Aside from that,
and the need for improvement in various areas, such as airline punctuality, airport greeting,
welcoming of passengers, seating, and call centres.
SpiceJet is currently dealing with capital inadequacy issues and has had to cancel many flights
due to lease renewal issues. On the other hand, it performs admirably in terms of most
operational KPIs, such as OTP, PLF, RPKs, and departures, to name a few. This shows that it
has good operations and sales teams, but it needs to address its financial and other concerns in
order to be a viable contender in the Indian market. As all indicators indicate to robust growth in
the local market, SpiceJet must find a means to do it in an integrated and cost-effective manner.
Their operations team should be able to support ongoing expansion, and the airline should
strive for at least a 20% market share by the fourth quarter of 2018. Airlines are naturally capital
intensive, and access to appropriate finances by promoters is critical in order to fund growth and
scale up operations. LCCs operate on razor-thin margins, and any additional outlay for cost of
capital or poorly planned acquisition plans can make or break an LCC. SpiceJet's management
should prioritise resolving this strategic challenge.
3.4)REFRENCE LIST
1. IBEF., (2019) India's aviation sector has become the third largest domestic aviation
market in the world in terms of handling domestic traffic. Available at
https://www.ibef.org/industry/indian-aviation/showcase/spice-Jet ( Accessed March 28
2022)
2. Peter P Belobaba., (2015) p.1 The Global airline industry, 2nd edn. ( Google books)
Available at https://books.google.co.in/books?
hl=en&lr=&id=HwBhBgAAQBAJ&oi=fnd&pg=PA99&dq=the+global+airline+industry&ots
=c2fMttKud5&sig=c-blUckGGbato_Xo_si-Sm8wC_c#v=onepage&q=the%20global
%20airline%20industry&f=false (Accessed March 28 2022)
3. Shivakami rasappan Rajan., (2015) A going concern's growing concerns: a case study
on spice jet India. P.69
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4. Matthew Harvey., (2020) VRIN/VRIO Analysis Of SpiceJet S Successful Turnaround
Strategies. Available at https://www.essay48.com/case/49710-SpiceJet-s-Successful-
Turnaround-Strategies-VRIN-VRIO-Analysis ( Accessed March 28 2022)
5. Matthew Harvey., (2020) Mckinsey 7s Framework Of SpiceJet S Successful Turnaround
Strategies. Available at https://www.essay48.com/case/49710-SpiceJet-s-Successful-
Turnaround-Strategies-Mckinsey-7s (Accessed March 28 2022)
6. Zander Henry., (2018) SpiceJet s Successful Turnaround Strategies PESTEL Analysis.
Available at https://www.case48.com/pestel-case/49710-SpiceJet-s-Successful-
Turnaround-Strategies (Accessed March 28 2022)
7. Spicejet.,(2015) Corporate overview. Available at
https://corporate.spicejet.com/corporateoverview.aspx#:~:text=SpiceJet's%20mission
%20is%20to%20become,fulfill%20everyone's%20dream%20of%20flying! (Accessed
March 28 2022)
8. Hemant kumar.,(2019) Swot and Porter Analysis of Spice Jet. Available at
https://pdfcoffee.com/swot-and-porter-analysis-of-spice-jet-pdf-free.html (Accessed 29
March 2022)
9. ET Spotlight., (2021) Technology enabled us to double down on customer service
through the pandemic: Ashish Vikram, SpiceJet. Available at
https://www.google.com/amp/s/m.economictimes.com/industry/transportation/airlines-/-
aviation/technology-enabled-us-to-double-down-on-customer-service-through-the-
pandemic-ashish-vikram-spicejet/amp_articleshow/83399823.cms
10.
3.5)APPENDICES
A) Mckinsey 7s B)Vrio
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C) Pestel D)Poter five forces
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