Mission and Vision Statements of Alaska Air - Paper Example

Mission Statement: Our mission is to become one of the most respected airlines in the United States. We acknowledge that we can attain the respect through our capacity to provide convenient and safe air transport, maintain a competitive cost structure, providing low travel expenses as well as providing exceptional customer service. We hold much significance to the attainment of these objectives as a company that is socially responsible and not just basing them upon financial gain (Alaska Air: About Our Airline.n.d).

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Vision Statement: Alaska Air is in business to maintain and strengthen its relationship with its customers. It also seeks to provide air friendly, secure, and reliable air transportation services to our clients. The airline is dedicated to making every flight our clients take a unique experience. Your ease, coziness, and security are among our most significant concerns.

Strategic Plan

According to Kacha (2016), Alaska Airline is seeking to eliminate its competition in a strategy that involves the acquisition of already established airlines. The airlines recent acquisition of Virgin Airlines was a response to both Jet Blue Airlines and Delta Airlines. To Alaska Airline, the acquisition is strategic since it enables it to defend its market share in the American west coast thus allowing it to concentrate on its expansion to the east of the United States. The deal will eventually improve its prospects. Another strategy that the company is currently pursuing involves the increase of revenue with ancillary fees. The company has recently raised fees for each checked baggage by $5 for the first checked bags. The move is anticipated to increase the airlines revenue by $50 million yearly. The choice of raising fees on ancillary items and not ticket prices is strategic. Since companies are currently competing by low-ticket prices, it would have been detrimental to increase ticket fares (Sharma, 2015).

Objectives

One of the goals that the company has set itself is expanding to major destinations around the world and moving towards a more sustainable future. The airline recognizes that its operations have an adverse impact on the environment; it is therefore committed to doing all that is necessary to lessen its environmental footprint. The airline acknowledges that the step will make the world a better place and sustainable place for future generations. It has also set among its objective, the desire to drive up sustainable innovation and performance and making decisions that have a better impact on the society it serves (Alaska Air: About Our Airline.n.d).

As the company continues to grow its record of accomplishment, the airline intends to boost its productivity while strengthening its culture of frugality, which will help it in lowering unit costs. Alaska Airlines is also committed to improving customer value and experience a move that will enable it to provide the best value at a low price. It also aims at maintaining its lead in the industry regarding returns on invested capital (Alaska Air: About Our Airline.n.d).

Question 2

Current Financial Condition

For the fiscal year ending 2016, Alaska Air recorded a profit of $911million cementing its seven-year streak of profit making. Its fourth quarter for the year 2016 recorded a net income of $193 million. The airline's purchase of Virgin America airlines brought in the company profits that amounted to $15 million. Alaska Airlines acquisition of Virgin Airlines made the company the fifth largest domestic carrier in the United States and subsequently garnering it 6% of the national market share (Alaska Air Inc. 2017).

In the year 2015, the airline's fourth quarter results increased by 4% compared to the full year financial results grew by 8 %. The results can be translated into a figure of $1.56 per share in the quarterly earnings and $7.32 per share for full year earnings. By the end of trading on February 10 2017, the airline sold stock at $97.35 per share at the New York Stock Exchange. During the release of the end-year financial results, the airline announces that there would be 9% increase in quarterly dividends. The dividend payment would rise to 30cents per share. Compared to the year 2015, the Alaska Airline has and increase of 6% of its operating revenue, which was at $5.9 billion. When reporting the financial results, the company did note that the operating revenue figures included the costs relating to the merger. For the fiscal year, the company noted a 13% drop in the cost of fuel, however during the fourth the cost of fuel-increased by 12% (Alaska Air Inc. 2017).

Thoughts on the Companys Financial Position

The companys financial situation is on a growth trajectory. The rationale for this post is because it is experiencing a seven-year profit streak in its performance as evidenced by its operating cash flow, net income, and gross margin (Berry & Jia, 2010). If the current financial trend continues, the company rise will eventually align itself with its objectives. However, the unpredictable nature of reduction and increase in profit margins do not guarantee the company a steady financial landscape. The growth trajectory is also affirmed by its acquisition that has placed it in a better position to compete with the likes of Delta Air and JetBlue.

Question 3

External Opportunities and Threats

PESTEL Analysis

The Alaska airline operates in a political environment that is highly regulated and is for the passenger. The safety of passengers is given great importance. The airlines economic situation has in the past suffered setbacks from terrorist activities and has never recovered. An assessment of its social environment reveals that there is a trend where millennial consumers have emerged with different demand from other generations of customers thus associating change within the airline's strategic plans. The airline is facing broader social and technological changes, and there are calls from stakeholders such as consumers of the service and administrative authorities to embrace the use of technology to enhance convenience, safety, and efficiency. The airline is at the moment facing pressures by conservationists to become environmental consciousness. It's legal environment is marred by increased and stringent regulation (Gramani, 2012).

Porters Five Forces

According to Seeking Alpha (2015), to Alaska Air, the power of its suppliers is immense since it is subject to fluctuations in global fuel prices. Labor is subject to negotiations and concessions to labor unions. The airlines buying power has been ceded to consumers because of low pricing wars by other airlines. Fliers also have the resources to engage in price discovery thus allowing them to settle for the lowest prices as possible. The industry is one that requires massive capital investment. The occurrence thus creates high barriers to entry since not so many investors have the capabilities to raise the amounts needed to set up an airline. Similarly, the industry has high barriers of exits since an exit the absorption and writing down of many losses to a company. Fortunately, the industry in which Alaska Air operates in does not face threats from substitutes and complementarities since consumers do not take the train or buses. The airline, however, exists in an extremely competitive environment.

List of Opportunities and Threats

Opportunities

O1. It can take begin travel to popular destination that it has not explored

O2. It can leverage on code-share agreements with other airlines

O3. It can take up and provide HD Television for its customers.

Threats

T1. Increasing labor cost.

T2. Fluctuating Fuel costs.

T3. Excessive competition based on pricing

T4. Extreme pressures from regulating bodies and the government

Question 4

Internal Strengths

Gramani (2012) state that an example of internal forces that American Airline's exhibits are its popularity as one of the best onboard entertainment content providers, which is key to retaining customers especially over long distant flights. The airline is also considered to have one of the best customer service programs among carriers in the United States. Due to the geographic location of Alaska, the airline benefits from having air travel as the most commonly used. Additionally, the company has connectivity to almost every domestic route, which gives it a network advantage. Another internal strength is manifested from the fact that after an acquisition it recently had with Virgin Airlines, it made it rise regarding market share as well as size compared to other airlines in the United States in regards to the number of passengers that use its service. Another strength is manifested in the way it has a strong presence in the domestic market.

Internal Weaknesses

Internal deficiencies in the airline are manifested in the way it is too dependent on cheap fuel prices making its income susceptible to fluctuations in fuel prices. The company's international segment is also not fully established compared to its competitors. The airline is also not set up in the Asian market that is very lucrative now. It is also susceptible to concession prompted by labor unions since they have a high bargaining power. Additionally, the airlines approach to its expansion plans remains weak, and it is overly dependent on cheap price fuels (Gramani, 2012).

List of Internal Weaknesses and Strengths

Weaknesses

W1. The airline is too dependent on low fuel prices

W2. Its international segment is not entirely established.

W3. It is absent from the lucrative Asian market

W4. High bargaining power of labor unions

Strengths

S1. Is among the top 10 largest airlines.

S2.Has a strong presence in the Domestic Market

S3. Ranked one of the highest regarding customer satisfaction.

S4. Has one of the best onboard entertainment

S5. Alaskas geographical location makes air travel the largest form of transportation.

Question 5

Revision of the Firms Mission and Objectives

Revised Mission Statement

To develop a force positive local and international change, create better standards for air travel that are safe and responsive to consumer needs and create a better working environment for our employees.

Revised Objectives

The airline should run a financially sound business with organic growth revenue of at least 10% and attain 7% from its competitors of income per available seat mile. The airline should always be vigilant in controlling its costs and strive to maintain industry leading cost-saving levels. The airline should also move away from its strategy that capitalized low-cost jet fuel dependency due to the volatile nature of cost of global fuel.

Restatement of Company Mission and Vision

Mission Statements: Our mission is to become one of the most respected airlines in the United States. We acknowledge that we can attain the respect through our capacity to provide convenient and safe air transport, maintain a competitive cost structure, providing low travel expenses as well as providing exceptional customer service. We hold much significance to the attainment of these objectives as a company that is socially responsible and not just basing them upon financial gain (Alaska Air: About Our Airline.n.d).

Vision Statement Alaska Air is in business to maintain and strengthen its relationship with its customers. It also seeks to provide air friendly, secure, and reliable air transportation services to our clients. The airline is dedicated to making every flight our customers take a unique experience. Your ease, coziness, and security are among our most significant concerns.

Strategy Recommendation

There are three proposals that Alaska Air can apply. The plans include addressing labor costs, pursue fuel efficiency initiatives, as well as enhance international offerings (Loffe, 2013). The...