Strategy

GROUP 5
Business Policy and Strategy
Submitted To, MR. Ahmed Rana Section A
FINAL PROJECT REPORT
GROUP MEMBERS
FAHAD IQBAL ZOHAIB BASHIR YASMEEN SADDIQ FATIMA AWAN AFZIA FAROOQ EHSAN AKHTAR AYESHA RAFIQUE L1F07MBAM2175 L1F07MBAM0085 L1F07MBAM2226 L1F07MBAM0071 L1F07MBAM2256 L1F07MBAM0115 L1F07MBAM0062
PAKISTAN INTERNATIONAL AIRLINE
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PREFACE
All praise is to Almighty Allah for bestowing us with the wisdom to accomplish my task. The main purpose of the project is the fulfillment of the requirements of the Business Policy & Strategy course, which is the part of our study work. PIAC is the national airline of Pakistan. The information has been gathered from different sources including the web site, web pages related to the airline, personal discussion with employees, telephone discussion representatives and visit to the branch office situated in The Mall Road, Lahore. We have included all the information obtained from the mentioned sources and no part of this project has been added from own. As regards the preparation of this project, all the topics are added in a proper sequence, starting with the table of contents, including the history, overall view, company information, management hierarchy, everything that was required for the completion of the project.
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ACKNOWLEDGEMENT
We would like to offer our humble gratitude to Allah Almighty, the most Gracious and the most Merciful, who gave us strength and enabled us to achieve our goals. The topic of our project was the complete Strategic Analysis of PAKISTAN INTERNATION AIRLINE (PIA) and its impact on Pakistan. During our Project, we had to face some difficulties as data was not readily available; we had to go to PIA office to collect data after having some solid reference and then sort out relevant data for our project. We would like to thank our kind Prof. G.AHMAD RANA for his continuous and pre-emptive and continuous support. Without his help we would not have been able to complete our project on timely manner. We are grateful to employees of various departments of PIA that helped us during our field work and helped us in making our project successful.
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TABLE OF CONTENTS
INTRODUCTION Brief History............................................................................. 08 Situational Analysis.................................................................. 12 Number of Employees.... .......................................................... Organizational Hierarchy......................................................... 15 Location of Office.................................................................... 16 Nature of business................................................................... 19 Type of ownership.................................................................... 19 Key players-Board of Directors.................................................. 19 MISSION / VISION STATEMENT GOALS & OBJECTIVES EXTERNAL ASSESSMENT STEPLE Analysis........................................................................ Porters 5 forces model............................................................ BCG.......................................................................................... SWOT Analysis.......................................................................... EFE Matrix................................................................................. Competitive Profile Matrix......................................................... CORE COMPETENCIES ANALYSIS & KSF CORPORATE CULTURE STRATEGIES UNDERTAKEN AT THE Corporate Level......................................................................... Business Unit Level.................................................................... Functional Level......................................................................... MANAGEMENT STRATEGIES HRM......................................................................................... Administration......................................................................... Decision Making (Centralized Vs Decentralized)........................ Motivational & Incentive Techniques........................................ MARKET ANALYSIS Segments & Target Market...................................................... 7 Ps.......................................................................................... Market Share............................................................................ USPs......................................................................................... Competitive Analysis................................................................. Main Marketing Strategies and Marketing Positioning.............. 21
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FINANCIAL ANALYSIS Statements................................................................................ Costs / Expenditures................................................................. Profits........................................................................................ Revenues................................................................................... Ratios........................................................................................ OTHER STRATEGIES R&D........................................................................................... Procurement.............................................................................. CONTROL PROCEDURES Marketing control.................................................................... Production control................................................................... Quality control......................................................................... HR control................................................................................ Finance control......................................................................... PROBLEM SECTION Main problems according to the management.......................... Main problems according to your analysis................................ Sub problems............................................................................ STRATEGIC ALTERNATIVES Solutions to solve the problems................................................ Evaluation of the solutions........................................................ IMPLEMENTATION PLAN............................................. CONCLUSION RECOMMENDATIONS REFERENCES
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INTRODUCTION
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BRIEF HISTORY Birth of a Nation, Birth of an Airline Air transport has probably never been more important to the development of a new nation than in the case of Pakistan. In June 1946, when Pakistan was still in the offing, Mr. Mohammad Ali Jinnah, the Founder of the upcoming nation, instructed Mr. M.A. Ispahani, a leading industrialist, to set up a national airline, on a priority basis. With his singular vision and foresight, Mr. Jinnah realized that with the formation of the two wings of Pakistan, separated by 1100 miles, a swift and efficient mode of transport was imperative. Orient Airways Takes to the Skies On 23rd October 1946, a new airline was born. Initially registered as a pilot project in Calcutta, Orient Airways Ltd. had at its helm Mr. M.A. Ispahani as Chairman and Air Vice Marshal O.K. Carter as General Manager. The new carrier's base remained in Calcutta and an operating license was obtained in May 1947.
Four Douglas DC-3s were purchased from Tempo of Texas in February 1947 and operations commenced on 4th June 1947. The designated route for Orient Airways was Calcutta-Akyab-Rangoon, which also happened to be the first postwar international sector to be flown by an airline registered in India. Within two months of Orient Airways' operational beginnings, Pakistan was born. The birth of a new nation generated one of the largest transfers of population in the history of mankind.
Orient Airways, along with the help of BOAC aircraft which had been chartered by the Government of Pakistan, started relief operations and
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transportation of people between Delhi and Karachi, the two capitals. Subsequently, Orient Airways transferred its base to Pakistan and established a vital link between Karachi and Dacca, the two capitals of the two wings of Pakistan. With a skeleton fleet of just two DC-3s, three crew members, and twelve mechanics, Orient Airways launched its scheduled operations in a fairy-tale manner. The initial routes were Karachi-LahorePeshawar, Karachi-Quetta-Lahore and Karachi-Delhi Calcutta-Dacca. By the end of 1949, Orient Airways had acquired 10 DC-3s and 3 Convair 240s which were operated on these routes. In 1950, it had become increasingly apparent that additional capacity would have to be inducted to cater to the growing needs of the sub-continent. A New National Flag Carrier for Pakistan Orient Airways was a privately owned company, with limited capital and resources. It could not be expected to grow and expand independently. It was then that the Government of Pakistan decided to form a state-owned airline and invited Orient Airways to merge with it. The outcome of the merger was the birth of a new airline, through PIAC Ordinance 1955 on January 10, 1955. In addition to transport activities, Orient Airways had established the nucleus of overhaul and maintenance facilities and acquired trained pilots, engineers and technicians, measures which proved to be a great asset for PIA during its teething phase. PIAs First International Service The year 1955 also marked the inauguration of the fledgling airline's first scheduled international service - to the glittering, glitzy capital city of London, via Cairo and Rome. Initially, there was much criticism, as the public could not comprehend or justify the need to operate an international route when, in their opinion, other projects vital for a developing country should have been given a higher priority. However, PIA's focus was, and continues to be, to serve the Pakistani community at large. The provision of transportation to expatriates has remained one of the foremost priorities of the national airline. Moreover, PIA earned
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substantial foreign exchange through international services, which it invested in the purchase of aircraft and spare parts, as fleet expansion was a grave necessity for the airline.
New Planes, New Directions, New Management In 1956, orders were placed for two Super Constellations and five Viscounts which were to be delivered in 1959. At this juncture, PIA possessed a small fleet which comprised of Convairs, Viscounts, Super Constellations and DC-3s. While Mr. M.A. Ispahani was the first Chairman of the new dynamic airline; it was the first Managing Director of PIA, Mr. Zafar-ul-Ahsan, who in his 4 year tenure, got the ball truly rolling and set the shape of things to come. The PIA Head Office building at Karachi Airport, which houses the entire major departments of the airline, was the brain-child of Mr. Zafar-ul- Ahsan. In fact, on his departure from the airline, the employees presented him with a silver replica of the building with the caption, "The House You Built". In 1959, the Government of Pakistan appointed Air Commodore Nur Khan as the Managing Director of PIA. With his visionary leadership, PIA 'took off' and within a short span of 6 years, gained the stature and status of one of the world's frontline carriers. In aviation circles, this period has often been referred to as the "golden years of PIA". Development, expansion, and growth were keywords that the new management was committed to. In March 1960, PIA launched its first Boeing 707 jet service on the London-Karachi-Dacca, route which later proved to be very successful. This trail-blazing accomplishment resulted in PIA becoming the first Asian Airline to operate a jet aircraft, setting trends for the future. In 1961, the airline took on the mammoth task of initiating a cross-Atlantic service from Karachi to New York. By this time, PIA had placed orders for more new aircraft, which included Fokker F-27s, Boeing
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720Bs and Sikorsky helicopters. Helicopter services in East Pakistan had gained momentum by 1962 and expanded to include Sylhet, Chittagong, Dacca, Comilla and Ishurdi. PIA's helicopter services carried over 70,000 passengers during the first year of operation. At the time, it was regarded as a stellar operation, equal to any other in the world. Unfortunately, due to two mishaps, the service was discontinued in 1966.
Historic Firsts and Unbroken Records In 1962, finding the upper winds forecast favourable, PIA set out to break the record for the fastest flight between London and Karachi. With representatives of FAI (Federation Aeronautique International) on board to monitor the official timings, PIA completed the flight in 6 hours, 43 minutes, 51 seconds, a record which remains unbroken to this day. In 1964, PIA achieved another historic first, regarded as major milestones in the chequered history of the airline. On 29th April, 1964, with a Boeing 720B, PIA earned the distinction of becoming the first airline from a noncommunist country to fly into the Peoples Republic of China. PIA's first service to China was from Karachi to Shanghai via Canton. In 1964-65, PIA expanded its fleet further with the addition of a fourth Boeing 720B and two Fokker F-27s. Serious development had become a reality and the PIA team continued to move ahead with ambitious plans and goals for the national flag carrier. A collective pride and joyous buoyancy was pervasive within the PIA family. Riding high on the crest of success, PIA became a household name in Pakistan in the mid sixties. The war between India and Pakistan, during 1965, further tested the national airline. PIA played a major role in providing logistical support to the Armed Forces by operating special flights using Boeings, Super Constellations, and Viscounts. The Founder of the Nation, Mr. Jinnah had predicted that the Pakistan Air force would need the support of a civil airline in special circumstances, and this came into evidence during the war. In 1966, a system of feeder services linking eight new points in West Pakistan was introduced. By this time, the airline's Viscounts were proving inadequate owing to traffic growth, and had to be replaced by Tridents. The airline continued up the growth curve, receiving two Fokker F-27s, two Boeing 707s and one Trident in the following year. Style, Glamour, and Charisma Around this time, the airline saw a change in the top slot. Air vice Marshal, Asghar Khan took over the reins of PIA for a tenure of 3 years. A number of highpoints are attributed to this period. The most colourful, if not the most significant, occurrence for PIA was the introduction of a new airhostesses' uniform designed by none other than the renowned French designer, Pierre Cardin. Taking the aviation world by storm, this move, more than any other single factor, imprinted PIA's name on the
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international market. The uniforms were an instant hit, both at home and abroad. Safety Management System at PIA PIA is the first airline to get certified (initial certification) on Safety Management System (SMS) by Civil Aviation Authority CAA - Pakistan. CAA Air Navigation Order (ANO 91.0032 issued in September 2008) binds all airlines operating in Pakistan to have SMS. Well before the issuance of this ANO, PIA initiated SMS awareness and implementation in July 2008. PIA awarded initial certification on SMS in 27th February 2009 by CAA. The Pursuit of Excellence Through Technology and Quality Control Not content with a number of historic firsts under its belt, PIA made history yet again, by installing Pakistan's first computer, an IBM1401, in 1967. PIA's first Engine Overhaul Shop, located near the Head Office building, was also completed and commissioned around this time. The Ground Training School (GTS) now known as the PIA Training Centre, was first conceived and developed during 1961-62. Interestingly, training was initially imparted in the T-shaped building which has now become the PIA Dispensary, close to the Head Office building. Besides visible development and growth in traffic and revenues in the sixties, PIA added additional destinations, new equipment, and cuttingedge technology to support its ever expanding operations. A new Jet Hangar for Boeings with a supporting airframe overhaul shop was completed and commissioned in 1968. In 1970, PIA set up its own Flight Kitchen in Karachi, which caters, even today, to the national airline as well as other carriers. Over the years, with the airline's expansion and increased capacity, the need for a second Flight Kitchen became imperative. Ushering In a New Era of Growth and Development PIA heralded the nineties by donning a bright new corporate identity. Oldtimers may remember the flutter that the earlier green and gold livery had created when it was first introduced in 1974. However, in keeping with the changing times, PIA introduced a smart, sporty 90's look. The familiar PIA green was reinforced with moss green and pale blue stripes were incorporated into the new corporate identity. The stripes, a universal symbol of sport, highlighted PIA's active participation and sponsorship of a diverse range of national games. PIA's players have always been at the forefront of Pakistani Cricket, Hockey, Squash, Football, Chess, Bridge, Polo and Table-Tennis teams. The nineties also saw the expansion of PIA's massive Hajj and Umrah operations to Pakistan's smaller cities, in addition to the major cities of Islamabad, Peshawar, Lahore, Quetta and Karachi. PIA's growth continues unabated and the airline now operates globally, covering the entire domestic landscape and international destinations spread over 4 continents. Impressive statistics for a comparatively young airline, since its inception in 1955, PIA has indeed, come a long way.
PAKISTAN INTERNATIONAL AIRLINE Page 13
SITUATIONAL ANALYSIS
Where the Company is coming from? Air transport has probably never been more important to the development of a new nation than in the case of Pakistan. In June 1946, when Pakistan was still in the offing, Mr. Mohammad Ali Jinnah, the Founder of the upcoming nation, instructed Mr. M.A. Ispahani, a leading industrialist, to set up a national airline, on a priority basis. With his singular vision and foresight, Mr. Jinnah realized that with the formation of the two wings of Pakistan, separated by 1100 miles, a swift and efficient mode of transport was imperative. Where is the company standing? PIA's growth continues unabated and the airline now operates globally, covering the entire domestic landscape and international destinations spread over 4 continents. Impressive statistics for a comparatively young airline, since its inception in 1955, PIA has indeed, come a long way. Where is the company heading in future? PIA tremendously towards a bright future in a positive manner. is heading
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i.
Organizational Hierarchy
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LOCATION OF A OFFICE HEAD OFFICE KARACHI PIA BUILDING JINNAH INTERNATIONAL AIRPORT KARACHI - 72500
REGIONAL OFFICE LAHORE PIA BUILDING NEAR WAPDA HOUSE, MALL ROAD LAHORE 44000
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PIA Booking Office Location

City KARACHI Contact details Sidco Centre, Stretchen Road, Phone 9206721 - 15 lines Fax # 5680050 Cargo Phone 5689631 - 20 lines PIA Cargo Booking Office, Shafi Court, Club Road Phone 5689631 Fax 5677106 Cargo Phone 2904/2908/2140 Quaid e Azam International Airport Phone 9043721/9042011/111-222-742 PIA Building, 49 Blue Area, Islamabad Phone 9209911 Fax 9209966 Cargo Phone 5591071 Ext. 385/9209969 Ext. 285 PIA Building, Khalifa Shujauddin Road, Lahore Phone 9036999 Fax 9202321 Cargo Phone 9202325 Cargo Fax 9202307 Opp. Sethi Masjid, Mansehra Road Phone 0992-9310254/9310256 Fax 0992-9310255 Noor Mansion, Noor Mehal Road Phone 882303/885989 Fax 0621-882305 13 Defence Officer's Colony Bannu Cantt. Phone 9270121/9270122 Polo Ground, Chitral Phone 2863/2963/2563 Cargo Phone 2863/2963/2563 London Road, Dalbandin Phone 210519 Cargo Phone 25519 11 Khan Market, Block No. 15, Quaid e Azam Road Phone 62146/64172
KARACHI KARACHI ISLAMABAD
LAHORE
ABBOTTABAD
BAHAWALPUR BANNU CHITRAL DALBANDIN DERA GHAZI KHAN
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Fax
62546
DERA ISMAIL KHAN
FAISALABAD
GWADAR
Circular Road Phone 9280246/9280248 Fax 9280247 Cargo Phone 9280249 26 New Civil Lines, The Mall. Phone 634131/634132/634133 / 111-786-786 Fax 677875 Cargo Phone 626001/626214/626215 Airport Road, Gwadar Phone 2222 Cargo Phone 2222 PIA Booking Office, GSR Plaza, Gilgit Phone 3390 Cargo Phone 3390 PIA Booking Office, Civic Center, Thandi Sarak. Phone 9200566 Cargo Phone 9200080 Email hdduupk@piac.com.pk Station Road, Jacobabad Phone 3686/512996 Cargo Phone 3686 Main Bazar Phone 289 Cargo Phone 289 PIA Booking Office, G.T. Road, Kharian Phone 2904/2908/2140 Cargo Phone 2904/2908/2140 Khurk Road, Khuzdar Phone 412225/412580 Cargo Phone 412225/412580 PIA Booking Office, Mianwali Phone 32887 Cargo Phone 32887 65 Abdali Road. Phone 9200937/9200938/111-786-786 Fax 9200071 Cargo Phone 9200069/9200626 PIA Booking office, Chattar, Muzaffarabad Phone 6299 Cargo Phone 6299 Kutchery Road, Nawabshah Phone 4613/4614 Fax 0241-4615 Cargo Phone 4614 Aziz Market, Ormara Phone 510/547 Cargo Phone 510/547 Tull Road, Parachinar Phone 2461/2099 Cargo Phone 2461/2099 Aslam Shah Market, Pasni Phone 210501 Cargo Phone 210501
GILGIT
HYDERABAD
JACOBABAD JIWANI KHARIAN KHUZDAR MIANWALI
MULTAN
MUZAFFARABAD
NAWABSHAH
ORMARA PARACHINAR PASNI
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PESHAWAR
QUETTA
RAHIM YAR KHAN RAWALAKOT RAWALPINDI
PIA Building, Arbab Road, Peshawar, Cantt Phone 271178/270214 Cargo Phone 271178/270214 17 Hali Road, Quetta, Cantt Phone 820901/820861 Fax 820871 Cargo Phone 820861/820441 Iqbal Complex Phone 5032 / 75432 Cargo Phone 5032 / 71132 PIA Booking Office, Rawalkot Phone 3156 5, The Mall, Rawalpindi. Phone 9272211/111-786-786 Fax 9272244 Cargo Phone 5567011 S.G.T.C. Ltd. Sui Phone 071-83092 Cargo Phone 071-83092 Faizabad Road Phone 0936-711092 /711137 Fax 711148 Cargo Phone 812053 Cargo Fax 710651 Jinnah Islamia College Road, Sialkot Phone 583701-5 Cargo Phone 583709 Address Station Road, Shikarpur Phone 512800 Cargo Phone 512809-114 Khusho Bahg, Skardu Phone 2941/3325 Cargo Phone 2291/3325 Address Khan Plaza, Minara Road, Sukkur Phone 071 - 9310494 Fax 071 - 9310491 Cargo Phone 22125 Email skzuupk@piac.com.pk Commisionery Road, Turbat Phone 413355 Cargo Phone 412322 11-A Market Road, Zhob Phone 2875/3366 Cargo Phone 2875
SUI
SAIDU SHARIF SIALKOT SHIKARPUR SKARDU SUKKUR
TURBAT ZHOB
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Jinnah International Airport Karachi
Allama Iqbal International Airport Lahore
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PIA Domestic Network
PIA International Network
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Total Number of Employees

There are total 18,500 employees working in Pakistan International Airport (PIA) which includes Board of Directors, Corporate secretary, Head of Internal Audit, Executive Management and Auditors under different departments.
Nature of Business
The nature of Pakistan international airlines is transport & services though air, and by road
Type of Ownership
They are semi- government organization. That is 80% government & 20 & private.
Board of Directors
1.
2. 3. 4.
5.
6. 7. 8. 9.
CH. AHMAD MUKHTAR Minister of Defence & Chairman PIA SYED NASEER AHMAD MALIK NAZIR AHMAD MR. JAVED AKHTER LT. GEN (RETD.) SYED AKTER ALI Federal secretary Defence CAPT. MOHAMMAD AIJAZ HAROON Managing Director PIA PROF. MIAN IJAZ UL HASAN MR. MUBASHIR IFTIKHAR MR. HUSAIN LAWAI
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10. 11.
MR. SHAUKAT ALI RANA MR. SALMAN SADDIQ UE Federal Secretary Finance
Corporate Secretary
1. MR. MUHAMMAD SHUAIB
Head of Internal Audit

1. MR. S FAZAL AHMAD
Executive Management
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. CAPT. MOHAMMAD AIJAZ HAROON Managing Director PIA MR. ARIF MAJEED CHEIF FINANCIAL OFFICER MR. IMRAN AHMAD KHAN Director procurement, logistics and Food services MR. M HANIF PATHAN Director HR, Administration & coordination MR. SHAHNAWAZ REHMAN Director Corporate Planning MR. SALAHUDIN Director Marketing AVM MUHAMMAD KAMAL ALAM SIDDIQUE Director Precision Engineering Complex CAPT. SHUJA NAQVI Director Flight Operations MR. SHAHID SARWAR Director Information Technology MR. MUHAMMAD ZIYAD A SYED Director Finance MR. DILAWAR FAREED BEG Director Training & Development MR. MAQSOOD AHMAD Director Engineering & Maintenance MR. S KAMRAN HASAN Director
Auditors
1. MESSRS. ANJUM, MR. ASIF, MR. SHAHID, MR. RAHMAN 2. MESSRS FORD, RHODES, SIDAT, HYDER & CO.
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Vision & Mission
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Vision
PIAs vision is to be a World class airline, meeting customer expectations through excellent services, ontime performance, innovative products and absolute safety
Mission
Employee team will contribute towards making PIA a global airline of choice through: Offering quality customer service & innovative product. Using state-of-the-Art Technologies Ensuring cost effective measures in procurement and operations Developing safety culture
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Goals & Objectives
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GOALS & OBJECTIVES

According to PIAC Act 1956, following are the main objectives of PIA Corporation. To provide and further develop safe, efficient, adequate, economical and properly coordinated domestic as well as international air transport system. To operate any air transport service or any flight by aircraft for a commercial or other purpose, and to carry all forms of aerial work. To acquire, own, run, manage or participate in the running management of, any hotel or business connected therewith. To provide for the instruction and training in matters connected with aircraft or flight by aircraft of persons employed or desirous if being employed either by the corporation or by other person.
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To promote any organization outside Pakistan for the purpose of engaging in any activity of a kind which the corporation has power to carry out. To acquire, hold or dispose of any property, whether movable or immovable, or any transport undertaking.
To repair, overhaul, reconstruct assemble or recondition aircraft,
vehicles or other machine parts, accessories owned by the corporation or by any other person.
External Assessment
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STEPEL ANALYSIS
Social Factors Ethnic traffic is present on PIA Language barriers are not present Act of patriotism High traffic on social event or Tehwars like Eid, Basant, Independence Day etc Technological Factors Supply chain is not present Logistics issues are there Sales teams are not updated No coordination of departments
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Economics Factors Increase fuel prices increase tickets prices Inflations creates problems Market slump Decreasing in middle class
Political Factors Political instability Political pressure Flying at low cost Bilateral promises Non profit routes Environmental Factors Fuel emission Green fuel Legal Factors Liquor cant be served Firing of employee (court issues)
PORTERS FIVE FORCES MODEL
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Social Forcesfactors THREATS factors BARGAINING A THREAT OF BARGAINING Intensity OF Economic Macro Technology Political Model Portersof PIA ( High)ENTRANT: SUBSTITUTE POWER OF NEW POWER OF competitive environment PRODUCTS: SUPPLIER: BUYERS: rivalry:
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THREAT OF A NEW ENTRANT: Barriers to entry Capital requirements are
High
Low
There is high threat of potential entrants to the in this business. Even there are no barriers to entry but when we look towards the capital requirement these is very high and its risky business INTENSITY OF COMPETITIVE RIVALRY: Number of competitors is Industry growth rate is Fixed cost are Storage costs are High Low
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Product differentiation is Switching costs are
There is high threat of existing rivalry. This is because exit barriers are high, fixed and storage costs are high and product differentiation is low. Another factor that strengthens the threat of existing rivalry is that the corporate stakes are high
THREATS OF SUBSTITUTE PRODUCTS: Profitability of industry producing substitute is Rate of improvement in priceperformance relationship of substitute product is
High
Low
The There is a huge threat of substitute products. There are many other companies such as air Arabia by Sharja, some by Saudia like Marhaba, Thai air ways low cost carriers and many more
BARGAINING POWER OF SUPPLIER: Importance of customer to the supplier is Differentiation of the supplier product and services is Concentration relative to buyer industry is Switching cost of the buyer are
High
low
The bargaining power of supplier is only high when we talk about the prices of fuel which is highly important for an air
industry otherwise the remaining ingredients are not effecting this industry as highly as to some other business BARGAINING POWER OF BUYER Product differentiation of supplier is Switching cost are Product differentiation are High low
The power of buyer is very high. They buy tickets form there near available point and they also buy ticket of air line which cost less to them.
BCG MATRIX FOR PIA
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Business growth rate
Pakistan air lines
This is a strategy tool that guides resource allocation decision on the basis of market share and growth rate of SBUs. The B.C.G matrix divides organizations into four different categories. These are as follows: Cash Cows: Which have high market share but low opportunity for growth Stars: Which have high market share and high opportunity for growth Question marks: Which have high opportunity for growth and low market share Dogs: Which have low market share and low opportunity for growth. Based on these assumptions, Pakistan air lines have been classified as a cash cows because it does have a high market share which is 67 percent in the air line industry domestically and 30 percent internationally and low business growth opportunity.
SWOT ANALYSIS
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Strengths
Point to point frequency (Lahore to London) High quality services People oriented Organization (No language problem)
Govt. sponsored organization Perfect timings Abroad Pakistanis prefer PIA (patriotism) Healthy internal environment Weaknesses Less international traffic Liquor is not served so less traffic Weak rewards & appraisal Less effort in the field of marketing High Fares Over staffing (over burdened employees) Lack of professionalism Low salary of engineers Opportunities Traffic ethnic Better recruitment policy Big markets available that are un served Speed ex, courier service domestically can be internationally Low cost carriers Better training programs Have an opportunity to grow and expand throughout the country
Threats All domestic and international carrier Fluctuating petrol prices Government changing Barriers to investment for abroad due to country conditions Time taken by embassy to accept visa Terrorism Busy flight schedule Open sky policy High amount of loan
EFE Matrix
Key External Factors Opportunities 1. Traffic ethnic 2. Big markets available that are un served 3. Speed ex, courier service domestically can be internationally 4. Low cost carriers 5. Have an opportunity to grow and expand throughout the country Threats 6. All domestic and international carrier 7. Fluctuating petrol prices 8. Government changing 9. Barriers to investment for abroad due to country conditions 10. Time taken by embassy to accept visa 11. Restricted vise system 12. Visa rejection cases 13. Economic slump Total
Weight s
Rating
Weighte d Score
0.13 0.09 0.05 0.04 0.09 0.08 0.03 0.05 0.07 0.08 0.07 0.10 0.12 1.00
4 3 2 2 4 4 3 2 2 2 2 3 3
0.52 0.27 0.10 0.08 0.36 0.32 0.09 0.10 0.14 0.16 0.14 0.30 0.36 2.80
Competitive Profile Matrix

PIA Critical Success Factors Service Quality Market Share Advertisement Customer Expectation Safety Reliability Social Responsibility Patriotism Total Weight s 0.13 0.15 0.07 0.20 0.15 0.10 0.09 0.10 1.00 Rating 3 3 2 2 3 3 3 4 Score 0.39 0.45 0.14 0.40 0.45 0.30 0.27 0.40 2.80 Aero Asia Rating 1 1 1 2 3 2 2 3 Score 0.13 0.15 0.07 0.40 0.45 0.20 0.18 0.30 1.88 Shaheen Rating 2 1 1 1 2 1 2 3 Score 0.26 0.15 0.07 0.20 0.30 0.10 0.18 0.30 1.56
SPACE MATRIX
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Strategic Position & Action Evaluation (SPACE) Matrix is another management tool used to help analyze a company. It can also used to determine what sort of strategy the company should undertake. The SPACE Matrix is broken down into four quadrants as being aggressive, conservative, defensive, and competitive. Additionally, the SPACE Matrix analysis functions upon two internal strategic dimensions which are financial strength (FS) and competitive advantage (CA). Besides, the SPACE Matrix methodology also studies two business external strategic dimensions such as environmental stability (ES) and industry strength (IS). The CA (values from -1 to -6) and IS (values from +1 to +6) are representing by the X-axis of the Cartesian graph whereas the FS (values from +1 to +6) and ES (values from -1 to -6) are representing by Y-axis. After drawing these SPACE matrix graph, the overall strategic positioning of a company can be determined.
SPACE MATRIX FOR PIA

Internal strategic position Y-axis Financial Strength (FS) (score: +6 best, +1 worst)] +1: Return on Investment +1: Leverages Total y-axis score: +3.20 -1.60 = +1.60 X-axis Total x-axis score -2.40 + 3.75 = +2.00 +3: Liquidity +2: Working Capital +1: Cash Flow Average: +1.60 Competitive Advantage (CA) (score: -1 best, -6 worst) -2: Market share -2: Service Quality -2: Customer Loyalty & reputation -5: Management Experience -1: Direct Flights Average: -2.40 External strategic position Environmental Stability (score: -1 best, -6 worst) -5: Barriers to Entry -2: Inflation rates -3: Technology Changes -2: Competitive Pressure -4: Demand Variability Average: -3.20 Industry Strength (IS) (score: +6 best, +1 worst) +5: Growth Potential +2: Financial Stability +5: Ease of Entry into Markets +3: Technologies Know-how Average: +3.75
PIAS SPACE MATRIX GRAPH
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+3 + +2 +6 +5 +4 +1 -6 -5 -4 -3 -2 -1 (2.00, Aggressive Conservative Defensive Competitive 2 1.60)
According to the graph above, we noticed that PIA falls into the aggressive quadrant of the SPACE Matrix. It is located at the coordinates of 2.00 for xcomponent and a y component of 1.60. It shows that PIA has a strong competitive position in the market with rapid growth. It is also indicates that PIA should adopt an aggressive strategy. It needs to use its internal strengths to develop a market penetration and market development strategy. Other possible strategies include product development, integration with other Airlines and also concentric diversification.
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SPACE MATRIX CONCLUSIONS
PIAs high reputation helps in attracting customers loyalty Compete in an unstable environment PIA should develop new market to various area of Pakistan as well as overseas
They should expand its services and products for better improvement Eliminate inefficiencies and improves services quality. It can be done by doing market research to investigate unfavorable performance. Then, make full use of the resources to improve it.
Seek Integration Opportunities such as merger in different areas Hire potential employee either from competitors or from other sources to get bigger improvement
Seek new and good management staffs to get a better company direction
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CORE COMPETENCIES & KEY SUCCESS FACTORS
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CORE COMPETENCIES & KEY SUCCESS FACTORS
CUSTOMER EXPECTATION CONVENIENCE, CARE, AFFORDABILITY SERVICES Personalized, Courteous, Passionate INNOVATION New Ideas, Products, Value Added Services COHESIVENESS Respect for Individuals, Team work & Effective Communication INTEGRITY Business Ethics, Accountability & Transparency RELIABILITY Loyalty & Consistence SAFETY Passengers, Employees, Environment SOCIAL RESPONSIBILITY Welfare, Health & Education
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Corporate culture
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CORPORATE CULTURE
PIA is driven by the highest standards of corporate governance and social responsibility. As a public sector organization and a business leader, PIA believes in building strong relationships with customers, partners, employees, and the communities in which it operates. The organization's values are exemplified in a range of corporate initiatives designed to impact positively on the lives of multiple stakeholders. PIA practices active corporate citizenship through social services, support for non-profit organizations, medical services for employees, the promotion of sports, and educational initiatives. PIA has institutionalized the practice of good governance by establishing a Corporate Social Responsibility Committee. The Committee provides a platform to evaluate, update, and recommend best practices as PIA continues on its mission to adhere to business ethics and stamp out corruption. Corporate Social Responsibility (CSR) is woven into the fabric of daily operations at PIA. Our employees wholeheartedly contribute to our commitment to develop the organization, the communities in which we function, and the country. PIA is proud of its human resource as they in many ways initiate & actively participates in welfare missions. PIA is gifted with teams of professionals who pursue excellence and deliver confidence. With a Leadership that understands the true meaning of Social Accountability, PIA has been able to realize vision of social accountability.
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Strategies Undertaken
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STRATEGIES UNDERTAKEN AT THE
Corporate level strategy

According to the PIA management, policies and strategies are made by corporate level people either related with any department of PIA. The Managing Director (MD) and Chief Financial Officer (CFO) make the strategies on long term basis and make plans about PIAs future. They identify companys overall vision, mission & objectives and develop synergies at the corporate level. These strategies are made at the Head Office, so no single employee is aware of, what is being done or not. They keep these strategies confidential and secret. They are centralized at corporate level.
Business Unit Level Strategy

At this level, When PIA have to implement their strategies then they involve Business level people and they belong to the related department whose strategy is going to be implemented and discuss about developing & sustaining the competitive advantage for the products and services they have produced or offering. All Directors, General Managers are involved in developing the business level strategies. At this level, they are decentralized.
Functional Level Strategy

At the functional level, all the managers of different departments discuss the issue relating to functional business processes and value chain. All the departments like R&D, Marketing, Finance, HR, Operations are involved so that it is decided that how the strategies will be executed efficiently &
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effectively. Functional units of PIA are involved in higher level strategies by providing input into the business unit level and corporate level strategy, such as providing information on customer feedback or on resources and capabilities on which the higher level strategies can be based. Once the higher level strategy or strategic intent is developed, the functional units translate them into discrete action plans that each department or division must accomplish for the strategy to succeed.
MANAGEMENT STRATEGIES
HRM
Proper recruitment process Training & development Specialized people are hired Head office in Karachi Proper organization structure
ADMINISTRATION
Head office is in Karachi so every single operation is done in head office and offices in other cities, they are performing the duties as assigned by the head office
DECISION MAKING
All the decisions are taken at higher level. CEO, Managing Director makes decision and all the operations are done at head office Karachi. The employees, manager in Lahore and Islamabad office dont even have the authority to take any decision. If there is some conflict or issue, they will have to consult at head office and wait for their decision. So they have CENTRAILZED decision making, which is not a positive sign in any organization.
MOTIVATION AND INCENTIVES

PIAs only motivation is in the form of handsome salary with respect to their competitors and monetary bonuses and a yearly increment of salary from 100% to 200% of salary for executives. But due to crisis, PIA is not focusing on motivation and incentives which is affecting the employees and the passion for the organization.
MARKET
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MARKET ANALYSIS
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MARKET SEGMENTATION OF PIA

1. Demographic Segmentation of PIA: Income Segmentation Occupation Segmentation 2. Geographic Segmentation In this segmentation PIA focuses both on segments domestic and international 3. Behavioral Segmentation Occasion Segmentation Hajjs Occasion. Eids Occasion. New Years Occasion. Loyalty Status
4. Psychographic Segmentation of PIA Social Class Tourists Religious Travels Pakistani Expatriates The existing market segmentation strategy of PIA is reasonable enough because it covers all necessary parameters that are to be focused in doing market segmentation for Airline Company.
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TARGETING STRATEGY OF PIA
PIAs Existing Target Audience 1. From the Demographic Segmentation, PIA is targeting the income and occupation oriented people. The classification of both categories is as follow. Income Segmentation From income segmentation of PIA, those who falls under the category of upper class and upper middle class Occupation Segmentation From occupation Segmentation that PIA is taking in to account, there are two main sub heads of working class and business class. The working class includes all those who are working as an employee inside and outside the country. In business class all those people are included who are having business. 2. From Geographic Segmentation of PIA all the audience from the domestic and international regions are included in domestic people within the country are included and people residing outside Pakistan. From the Behavioral Segmentation PIAs target audience is categories as follow. Occasion Based Market Segmentation of PIA. Hajjs Occasion When Hajj operation in going all those people flying from different cities of Pakistan to Saudi Arabia for the performance of Hajj. Eids Occasion When Eid occasions are near people within the cities and outside the country move to their homes for having Eid Occasion together with family New Years Occasion Now people prefer to have New Year with their family thats why all those people coming back to Pakistan from different countries or moving outside Pakistan to different countries and also all those people moving within the country are targeted over here.
3.
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Loyalty Status PIA gives different benefits to the fliers. But all those who travel a lot get the benefit of frequent fliers which carries few discount rates on the tickets. To such audience PIA not only gives the discount facility but also the facility of pick and drop to them. 4. From the Psychographic Segmentation of PIA, the target audience of PIA will be the following. Social Class In Social Class PIA targets the tourists, religious travelers and Pakistani Expatriates. Tourists All the tourists from different regions of the country or from different countries come to Pakistan for tourism purpose or go outside the country. Because PIA is having highest rate of linking the remotes areas of Pakistan Religious Travels All the religious travelers for example people going for Hajj etc are targets over here. Pakistani Expatriates As PIA is a national flag carrier airline thats why people residing outside the country feel a unique sort of feeling to get into the National Airline. PIA is not just and Airline but also acts as the ambassador of Pakistan in the whole world.
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MARKETING MIX (7 Ps)

Marketing Mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market. There are literally dozens of marketing mix tools. McCarthy popularized 7 factor classifications of these tools called 7 Ps: Product, Price, Place, Promotion, people, process and physical evidence. So these 7 Ps of PIA are discussed as follows:
PRODUCT
A product is anything that be offered to a market for alteration, acquisition, use, or consumption that might satisfy a want or need. Most products we think of are physical products, but it also includes services. PIAC is also providing services to the nation, which can be categorized as follows: Seat service (for passengers) and Space service (for cargo)
The characteristics of the services provided by PIAC are depicted in the following lines. INTANGIBLITY Services provided by PIA are intangible. Unlike physical product, they cannot be seen, tested, felt, heard or smelled before they are bought. Therefore, the buyer cannot see the result before the purchase. To reduce uncertainly, the buyers will look for signs and evidence of the service quality. They will draw interface about the quality of the service from place, people, equipment, communication material, symbols and price that they will see. Therefore, PIAs task is to manage the evidence, to tangibles the intangibles. INSEPARABILTY Services are typically produced and consumed at the same time. If the service is rendered by a person, then the person is a part of service. Since the client is also present as the service is being produced. VARIABILITY
Services are highly variable, as they depend on who provides them and when and where they are provided. Service firm can take two steps towards quality control. The first step is investing in good personnel selection and training. PIA spends substantial sums to train their employees in providing good service. Second step is monitoring customer satisfaction system and PIA also do not properly monitor customer satisfaction. PERISH ABLITY Services cannot be stored and they have no self life. When demand fluctuates, service firms have difficult problems, like PIA has to apply much more equipment because of peak period demand on a specific route than it would, if demand, was even throughout the year. PIA use following strategies for producing a better match between demand and supply. On the demand side Differential pricing to shift some demand from peak to off peak periods Non peak demand can be cultivated Reservation system is one way to manage the demand level, and PIA employ it extensively On the supply side Peak time efficiency routines are introduced. Employees perform only essential tasks during peak periods Shared services are developed by interline agreements.
PRICE
A profit organization faces the task of setting a price on their product / service. Price is the amount of money that customers have to pay for the service. How are prices set? PIA has to deal with pricing aspect in two types of situation. 1. Pricing of passenger tickets 2. Pricing of Cargo Airways Bill For two types of routes, domestic routes and international routes, different pricing policies are used by PIA. DOMESTIC ROUTES Prices for domestic routes are fixed by government of Pakistan for PIA. The cost plus method is used to set prices at domestic level. The PIAs
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management estimates the price by using following six steps procedure and sent to the government for final approval: 1. 2. 3. 4. 5. 6. Selecting the price objective Determining Demand Estimating costs Analyzing competitors prices & offers Selecting a pricing method Selecting the final price
INTERNATIONAL ROUTES The prices for international routes are set by International Air Travel Association (IATA). The IATA does not allow any discount on any international routes, ticket shows the full price for the route while airlines charge discounted fare by cutting their prescribed share of profit. However, PIA establishes the pricing strategies on different international routes keeping in view the following points: 1. 2. 3. 4. Demand for seat, greater demand tends to no discount Competitors price Cost of operation Type of Aircraft used
On the other hand PIA has three categories of their pricing as below, they also vary by season to season and at peak time. Higher prices Shoulder prices Low prices
COUNTRIES UK DUBAI
HIGHER PRICES RS. 67,450 57,650
SHOULDER PRICES RS. 53,750 49,550
LOW PRICES RS. 45,500 42,500
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PLACE
Marketing channels can be viewed as sets of independent organizations involved in the process of making a product or service available to use. A distribution system is a key resource. PIA has partially owned distribution system. LEVEL OF CHANNEL PIA uses two levels of channels, which are described as below: ZERO LEVEL CHANNELS It is also known as direct marketing channel. Here PIA sells the tickets directly to final users, through its ticket counters. In Lahore, PIA has ticket and booking office (see page 17-19) to sell directly to the customers. All such offices of PIA are computerized and directly linked with the head office at Karachi. ONE LEVEL CHANNEL Here travel agents, as intermediaries, are involved in selling of tickets to the customers. Many travel agents are provided with the auto ticketing and reservation system. There are two types of agents which are defined as follows: IATA Agencies There are 30 IATA approved travel agencies which deals with PIA. These agencies can also be stocked and sell the tickets of other airlines. Commission of these agents is as follows: International sector = 9% Domestic sector = 5% DISTRICT SALES AGENTS These are the agents who exclusively deal with PIAs ticket and cannot deal in other airlines. Normally, these are located, where PIA does not have sales point.
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However, there is one in Lahore. The commission provided to General Sales Agents is: International sector = 12 % Domestic Sector = 5 %
PROMOTION
PIA is not investing much in this area. They just use brochures, newspapers and some TV commercial when peak season is not there. Agents play an important role in promotion as they convince traveler to travel through PIA. Some brochures are listed below: BROCHURES UMRAH MADE EASIER PIA offers more flights to Jeddah in May, June and July for Umrah
These additional flights will not only provide more travel options to Umrah Pilgrims but will also enable more people to perform the holy ritual.
Pilgrims can now enjoy comfortable and luxurious journey in Boeing-777s
PIA 'BUDGET FLIGHT' - ENJOY UP TO 39% DISCOUNT ON REGULAR FARES
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PIA introduces Budget Flight between Karachi, Lahore, and Islamabad. Fly PIA's new ATR Up to 10kg hand baggage allowed No checked-in baggage Condition apply
PIA FLEXIBLE FARES - PLAN AHEAD & PAY LESS
Book International or Domestic flights as early as possible because the earlier you buy, the cheaper you fly. A variety of discounts in Business, Economy Plus, & Economy Classes.
The benefit of even lower fares in the lean travel period.
Flexible Fares are applicable on sectors where Revenue Management is implemented.
Conditions apply
FLY BUSINESS CLASS WITH A FREE TICKET

Buy three tickets and get one FREE Buy one ticket and pay ONLY 50% for your companion The offer is available on International routes only This offer is not available on UK, USA & Canada sectors This facility is only valid for the sectors where RM is not implemented
DISCOUNT TO STUDENTS ON INTERNATIONAL AND DOMESTIC SECTORS
25% discount offered to students on Domestic routes. 10% discount on International routes is valid only on the routes where RM is not implemented Offer can be availed exclusively from PIA Booking Offices or the PIA counters at the airport. The offer is available only for Economy Class passengers
PIA SPEEDEX DELIVERS WITH SPEED, RELIABILITY, AND AFFORDABILITY
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PIA Speedex delivers documents and parcels to your doorstep, with a vast domestic network, cutting-edge technology, and the highest standards of customer service. PIA Speedex offers a range of flexible delivery options to suit your budget and your needs. Same Day Speed Overnight Speed Second Day Speed Seasonal Products (New)
CLICK 'N' FLY WITH PIA WEB TICKETING
Secure online credit card transaction Convenient accessibility from home or office
FREE PICK & DROP SERVICE
PIA now offers the free pick and drop service from your door to airport. PAKISTAN INTERNATIONAL AIRLINE Page 60
This offer will be offer only for Business class.
MAGAZINE PIA will give advertisement in different magazines once after two month with a coupon of 15% off in the following magazines.
Times Magazines Spider Aurora
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1. Newspaper Advertisement
PIA will frequently give the advertisement in the most readable newspapers, mentioned as below: Jung Dawn Business recorder We have planned to enlighten our future plans to our cherished customers in the upcoming month.
PEOPLE
An essential ingredient to any service provision is the use of appropriate staff and people. Essential if the organization wants to obtain a form of competitive advantage. Consumers make judgments and deliver perceptions of the service based on the employees they interact with. Staff should have the appropriate interpersonal skills, aptititude, and service knowledge to provide the service that consumers are paying for. Many British organizations aim to apply for the Investors in People accreditation, which tells consumers that staff is taken care off by the company and they are trained to certain standards. There are total 18,500 employees working in Pakistan International Airport (PIA) which includes Board of Directors, Corporate secretary, Head of Internal Audit, Executive Management and Auditors under different departments. .
RANK BOARD OF DIRECTORS CEO HEAD OF AUDITOR PILOTS CO PILOTS ENGINEERS MANAGERS AUDITORS CORPORATE SECURITY OTHERS
No Of Employee s 11 1 1 78 189 243 13 2 1 17,961
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PROCESS
In PIA the process is time when the customers buy the tickets and the time of their landing to their destination. Ticketing offices are available for customers at all there near destination. In Pakistan PIA have airports in different cities. Its up to the services receiver from where they want to fly.
PHYSICAL EVIDENCE
It is the material part of a service. Strictly speaking there are no physical attributes to a service, so a consumer tends to rely on material cues. There are many examples of physical evidence, including some of the following: Packaging. Internet/web pages.
Paperwork (such as invoices, tickets and dispatch notes).
Brochures. Furnishings. Signage (such as those on aircraft and vehicles). Uniforms. Business cards. The building itself (such as prestigious offices or scenic headquarters). Mailboxes and many others . . . . . . The existence of aircrafts, ticket offices, environment, air buses, air ports are the evidences for customers of PIA
Market Share
The market share of PIA as domestically and internationally is as
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PIA
Other Unique Selling Preposition (USPs) POINT TO POINT FRQUENCY They offer direct flights like Lahore to London etc.
Domestic
67%
33%
Internationa l
30%
70%
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FINANCIAL Strategies
Balance Sheet
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Balance Sheet
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Profit and loss account
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Statement of Cash Flow
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Statement of Equity
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COSTS / EXPENDITURES COST OF SERVICES December 31 2008 Rupees in 000 Salaries, Wages & Allowances Welfare & Social security cost Retirement benefits Compensated absences Legal & professional charges Stores & spares consumed Maintenance & overhaul Flight equipment rental Landing & handling Passenger services Crew layover Provision for slow moving parts Staff training 7,938,243 83,531 853,456 148,218 6,850 1,547,138 3,829,943 1,032,138 9,123,722 2,833,399 2,196,650 286,466 89,855 December 31 2007 Rupees in 000 6,921,590 68,723 375,208 97,800 7,879 2,188,619 3,267,244 3,124,857 7,690,712 2,848,517 2,004,869 334,519 80,743
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Utilities Communication Insurance Rent, rate & taxes Printing & stationary Depreciation Amortization Others
5,170 66,930 1,112,775 362,134 96,597 7,809,239 2,461 283,005 39,707,920
4,909 65,016 1,038,143 318,927 132,361 5,395,614 2,532 272,554 36,241,336 December 31 2007 Rupees in 000 1,440,391 177,831 192,492 30,022 1,595,112 14,905 73,566 8,782 33,543 373,332 35,959
DISTRIBUTION COSTS
December 31 2008 Rupees in 000
Salaries, Wages & Allowances Welfare & Social security cost Retirement benefits Compensated absences Distribution & advertising expenses Legal & provisional charges Repairs & Maintenance Insurance Printing & stationary Communication Staff training
1,482,987 177,376 437,376 45,500 2,101,761 24,498 87,046 12,958 36,037 384,325 45,521
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Rent, rate & taxes Utilities Depreciation Amortization Others
329,766 35,694 72,440 1,706 114,505 5,389,632
276,196 31,942 69,111 1,604 93,886 4,448,674
ADMINISTRATIVE EXPENSES
December 31 2007 Rupees in 000 1,633,976 699,819 379,371 33,178 289,658 242,155 23,234 77,250 44,149 371,650 429,006
Salaries, Wages & Allowances Welfare & Social security cost Retirement benefits Compensated absences Legal & provisional charges Repairs & Maintenance Insurance Printing & stationary Staff training Rent, rate & taxes Utilities
1,774,714 872,112 551,162 50,282 223,562 289,066 14,967 62,175 61,408 371,005 510,906
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Auditors remuneration Communication Depreciation Amortization Donations Others
10,828 538,364 133,431 19,804 2,899 331,533 5,818,218 REVENUES
10,631 522,963 152,470 30,459 3,288 313,443 5,256,700
REVENUE - NET
December 31 2007 Rupees in 000 62,002,315 4,849,735 865,657 163,806 718,733 712,686 305,265 7,546,179 1,390,107 78,554,483
Passengers Cargo Excess baggage Charter Engineering services Handling & related services Mail Room, Food & Beverages sales Others
79,817,592 5,458,688 875,530 183,806 936,578 686,755 263,215 9,205,365 1,744,157 99,171,686
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COMPLETE FINANCIAL ANALYSIS As a cumulative result of our endeavors, PIAs traffic performance in the last quarter of 2008 has been quite promising. This, together with the drop in oil prices and recent relative stability of Pakistani Rupee, has had a salutary effect for the 4th quarter. The airline has moved closer to the breakeven point in the 4th quarter of the current calendar year and they are poised to eke out a modest profit in the coming year.
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As you can see in the above table, the loss in 2008 was mainly caused by two extraneous factors both of which were outside PIAs internal control. Firstly, the Pak Rupee lost its value against US dollar, contributing to a net exchange loss of PKR 24.1 billion chiefly because of the accounting requirement of having to book the exchange difference on the entire amount of outstanding US dollar loans. Secondly, the crude oil prices skyrocketed in 2008, reaching the highest ever level of US $ 147 / barrel in July & contributing an increase of PKR 15.5 billion in the fuel expense over last year. In actual fact, the fuel expense would have increased by PKR 18.4 billion owing to increase in prices alone had it not been for savings realized through fuel efficiencies and capacity/route rationalization during the course of year. It is evident from the preceding points that based on a constant US$/PKR parity of 2007 and constant oil prices of 2007, PIAs loss would have been less by around PKR 39.6 billion. Consider that the average price of crude oil was on average US$ 73/barrel in 2007 and US$ 98/barrel in 2008 while currently it is hovering around US $ 50/barrel, there is ample reason to nurture realistic hopes of changing the color of PIAs bottom line in 2009. It is noteworthy that the 2008 net loss figure also includes PKR 2.0 billion on account of exceptional / nonrecurring costs / provisions.
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Ratios
Liquidity EPS Turnover ratios ROI
Liquidity Ratio: Current ratio Acid test ratio Working capital Cash ratio
Pakistan International Airline Liquidity ratio Current ratio Quick ratio Cal. 2007 Cal. 2008
13,251,331 52,049,542 13,251,331-3,251,940 52,049,542
0.25
15,039,282 71,707,905 15,039,2823,726,940 71,707,905
0.21
0.19
0.16
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Working capital
13,251,331-52,049,542
-38,798,211
15,039,28271,707,905
-56,668,623
Cash ratio
1,975,459/52,049,542
0.038
789,555/71,707,905
0.011
PIA is in loss so we are not able to calculate the ratios. In which we need net profit and sales of company.
OTHER STRATEGIES
Procurement Is the acquisition of goods or services at the best possible total cost of ownership, in the right quality and quantity, at the right time, in the right place and from the right source for the direct benefit or use of corporations, individuals, or even governments, generally via a contract. Complex procurement could involve finding long term partners or even 'co-destiny' suppliers that might fundamentally commit one organization to another. Pakistan International Airline procurement lists the various tenders, or needs, for the divisions of Pakistan Airlines and subsidiaries of the Pakistan Airlines Group Commercial Supplies PIA purchase in-flight amenities, in-flight equipment, in-flight sales/mail order products, beverages, wines and spirits, uniforms and office supplies and equipment. We welcome Companies that manufacture quality products. IT Products & Services Information technology plays an important part in our airline systems, and as such we welcome vendors who are able to provide quality IT products and services to participate in our tenders . Engineering Supplies
The Engineering Supplies Department of PIA is the Purchasing Authority for procurement of aircraft parts, non-aircraft parts (e.g. simulator spares) and services to support our aircraft maintenance and operations. We invite companies that meet our product/service specifications to participate in our tenders. R&D According to the Management of PIA, They dont have R&D in their process so; we are not adding the information regarding R&D.
PROBLEM SECTIONS
MAIN PROBLEMS ACCORDING TO MANAGEMENT PIA is a large public organization like other organization PIA is also facing some serious problems. Some of them are as followed: POLITICAL INFERENCE Executives are the people who can improve or fail any business. They should know their basic jobs authorities and responsibilities. In PIA, major problem is that there is high political inference in the appointment and selection area. Managing director is appointed from outside the organization. Nowadays, chairman of PIA is a PMA political person cant have as much knowledge of a commercial organization as prompted, talented persons. These executives then select their favourite person for new vacancies weather they have technical knowledge about job or not so, this effects the overall efficiency and business of organization. UNION INFERENCE PIA employees have their unions. They use their power mostly for low level appointments so the upper and lower appointments affect the rest of proportion. BUREAUCRATIC STRUTURE
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Character of the organizations is more like on elite govt. Set up and less like an efficient forward looking organization. GOVERNEMENT HURDLES As PIA is under 80% of government, so they are facing govt hurdles like: Operations on non economic rates Purchaser of insurance policies from Insurance Corporation PIA functioning under ministry of defence instead of ministry of communication or aviation Most of govt. Departments delay payments. Govt. Department working at airport irritates the customers. Employees sometime misuse the PIA transport
MAIN PROBLEMS ACCORDING TO OUR ANALYSIS Lack of coordination Lack of expertise Poor Management Centralized culture Out dated technology Weak HR department Lack of Check & Balance No delegation of authority Poor Strategic decisions Government interference Favouritism Non profitable routes Weak Marketing strategy Old Aged Fleets Refund process is not satisfactory Highest employee ratio per airplane Complaints of employees are not properly facilitated SUB-PROBLEMS
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Sometimes, agency sale agents dont realize airport taxes which make complication in realization of revenue At some areas, jobs are not clearly defined which effect efficiency and working relation of employees Rate of motivational campaigns for employees very low For refund, customers have to come to the office which create problem for them Over booking and mishandling also creates trouble Misappropriation of work is one of the main problems like engineer work as accountant. This is because of political inference Delay in computer up gradation also effect output.
STRATEGIC ALTERNATIVES
SOLUTIONS TO SOLVE THE PROBLEMS POLITICAL INFERENCE Executives are the people who can improve or fail any business. They should know their basic jobs authorities and responsibilities. The elements of nepotism and jobbery are present in PIA. There is element of favouritism from the government side. As the company is in financial crisis there is a need to privatize PIA along with this, financial crisis, jobbery and nepotism should be reduced to favourable extent. UNION INFERENCE In PIA the salary packages are not designed in a way that satisfy the whole organization, so as a result of this, the employees has created labour unions, management unions etc in order that the corporate level accept their proposals. They have less association with their work and more towards anti organization activities. GOVERNEMENT HURDLES The government has created bundles of hurdles for PIA. Where ever a new government rules, they promises to the people to provide jobs, in different sectors. PIA being a government organization, government provides jobs to those candidates who are actually not eligible for that post. So,
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government influence on PIA should be reduced in order to provide strong footing in transportation industry. Other than these problems that are at managerial level there are also many problems which require solutions. Lack of coordination There is lack of coordination among employees. They dont know a single thing done at head Office and within the same office. They just perform the tasks assigned to them by the Head office without knowing what is happening in HO. So there is a need to coordination between and HO and Employees in other offices.
Lack of expertise In PIA, they dont have expert employees in each department, whether it is HR, Marketing or Finance. The departments are running by outdated staff. The element of favoutitism is also present in this category. Because if you hire the staff just on the basis of relationship rather than education it always create problem for an organization, so smooth running of an organization experts are always required. Poor Management The management of PIA is very poor. The hiring of the fresh graduates is not present in PIA which is the requirement of new age. So, the organization must have contacts with business schools, so that they get the updates about coming graduates and hire them according to their requirement. Centralized culture The culture of the organization is so much centralized. Employees are working around a single point. They dont have the authority to take any decisions and thats why they are not interested in the progress or success or prosperity of the organization. So, there is a need to extend their networks of decision making. So they feel their self in actual a part of PIA.
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Out dated technology In PIA, we didnt found any latest technology whether we talk about their airbuses they are not using any advance technology. And when we talk about departments we cannot find MIS, SAP, AMS, etc. all these mentioned system are necessary for a successful organization. So, PIA should introduce these technologies for further improvement. Weak HR department In this era, strong & efficient HR is considered the backbone of any organization. PIA has a very weak HR department. They just have limited HR officers with limited authorities. They are busy in their routine works and are not concerned more with HR system. So, Head office should take notice and create strong HR department
Lack of Check & Balance As there is not coordination in the departments, so there is no proper check & balance on the employees, staff, and on overall functions of the PIA. So there must be a person or authority that has the right of check & balance on the employees, and who can listen the problems from the employees side & having authority to solve them. No delegation of authority There is no delegation of authority in PIA. It must be present for the success of PIA. Poor Strategic decisions The strategies are formulated at the HO and have centralized decision making process, so we didnt found any proper strategic decisions happening in other offices. So, they must improve their strategic decision by making decentralized environment. Government interference
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As PIA is under 80% of government, so the government interference is there which affects the performance in PIA. So, the government interference must be reduced to make PIA stronger and better in future. Favoritism There is a lot of favoritism in PIA. Most of the employees are hired by the orders of government and where government is involved, favoritism exists. So, this is the duty of a CEO to exclude the favoritism and give chance to deserving candidates. Non profitable routes Whenever Government delegations visit to some other country they make some agreements with that country that to start their services in that country. Whether it is favorable for PIA or not such agreements should not be made which are against the favor of PIA. And do nothing but increases the worry of organization.
Weak Marketing strategy PIA should adopt good marketing policies so that it will bring higher profit and maximum utilization of its available resources, Business sector should be attracted to operate at full potential. Old Aged Fleets PIA should upgrade its fleet as its causing the airline higher operating cost and PIA is incurring loss .PIA should purchase new Airplane with twin engines these will reduce the operating cost of PIA. Refund process is not satisfactory Airline should focus on the customers satisfaction, refund process should be quick so that customer remains loyal to brand.
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Highest employee ratio per airplane PIA should not induct new employees till the time they are needed on the basis of my personal observation at Rawalpindi station I have seen that a task which can be performed employees for that. Complaints of employees are not properly facilitated PIA should facilitate employees complaints so that whatever the complain is, it must be facilitated so that the problems occurring to employees be resolved soon. by person PIA had 3
IMPLEMENTATION PLAN 2009 - 2015
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CONCLUSION
It has been concluded that PIA is in big crisis mainly due to the varying structures, economic problems and leadership styles. As mentioned on various accounts, PIA has a centralized structure that has caused higher conflicts and poor management of employees as decisions are made by the top level management without involving the employees. In addition, this leads to complexities in employee tasks as it takes more time to reach the information from top to bottom. Due to this bureaucratic nature
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of PIA, inefficiencies have crept in and morale of the employees has plummeted over the years. Delegation of tasks is minimal at PIA. The current status of employees is less control and authority over different tasks apart from their own assigned tasks, so employees feel distant as far as other issues and problems of the departments are concerned. PIA have centralized hiring processes. However, PIA emphasizes on experience but as it is under 80% government there is a lot of favouritism while hiring any employee. Therefore, the organization has unskilled and non-active employees who may lack in experience as well as in the operations. This has decreased productivity of the employees and consequently of the organization.
Relatively effective channels of expressing dissatisfaction are present at PIA. The meetings and suggestion boxes at PIA are ineffective; employees feel reluctant to voice their concerns in a meeting amid others and complaints in the suggestion boxes take time to reach bosses and therefore, action is postponed. It has been observed that Pakistan International Airlines (PIA) fears change. They fear that the system will become unstable, their security will be lost, and they will not understand the new process, therefore, will not know how to respond to the new situations. PIA turned its attention on
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employees when it faced competition. Otherwise, it was concentrating more on expansion and profitability: an outcome oriented approach. At the end of the conclusion, we have some recommendations for PIA which we hope will be implemented in the near future. We have included questionnaire analysis which shows the overall performance and
reputation of PIA.
No doubt PIA, is still a strong Brand name in Pakistan but due to some economic and other variable issues PIA is facing crisis which is making PIA down. But we all hope that in the next few years, PIA will show up with a positive change
RECOMMENDATIONS
PAKISTAN INTERNATIONAL AIRLINES
DECENTRALIZATION PIA should decentralize its structure that would lead to the easy management, increased motivation, easy access to information and resolution of the conflicts (as they would be resolved by the immediate manager time span would then reduced). Since employees issues regarding their behaviour would lessen, so it
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would ultimately lead to more satisfied employees that would result in enhanced productivity of the organization.
EMPLOYEE EMPOWERMENT PIA should make efforts towards empowering the employees that is going to lead to more employee participation in the decision making process and also result in more employee satisfaction and enhanced motivation. Apart from this, employees would feel more independent to discuss the issues explicitly without hesitation. This would also enhance team work process at PIA as quality team and cross-functional his/her fullest teams. due to The employees will work with more with commitment and dedication and every employee would work to increased motivation. However, empowerment comes accountability, so it is suggested that while they empower their employees, there should also be a controlled check on them to ensure the correct usage of power delegated to every employees within their circumscribed limits.
OVERHEAD COSTS
PIA should also reduce its overhead costs that is it should manage its resources: labour more effectively, so that with less input, more output can be achieved and the saved resources can be utilized in other areas such as introducing more training courses for the employees so that the quality of the workforce could be increased. Hiring the services of expertise can improve the efficiency of their
services, so by saving the overhead costs, they can utilize that money for the expertise services. So by analyzing the various segments of the organization and making the right corrections, it can substantially improve the standards of Organizational behaviour.
TWO-WAY COMMUNICATION The suggestions of the employees can prove to be very effective in improving the operations as they are the ones who manage them. Therefore, a top-down approach should be replaced with two-way communications. In this way, the employees would feel motivated and valued as they would be included in decision-making.
TOTAL QUALITY MANAGEMENT Total quality management should be catered to within the work groups and implementation of various skill enhancement programs for quality and productivity improvements such as Six Sigma should be provided to its executive employees.
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STRATEGIC BUSINESS UNIT PIA should make its different departments into Strategic Business Unit. Every SBU should have a defined business strategy and a manager with sales and profit responsibility. As PIA is a large organization, so it must be convert into SBUs. Different factors should be determined for the success of SBUs which as follows:
The degree of autonomy given to each SBU manager The degree to which an SBU shares functional programs and facilities with other SBU's The manner in which the corporation evaluates and rewards the performance of its SBU managers
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QUESTIONNAIRE ANALYSIS
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Pakistan International Airline Questionnaire

PLEASE SHARE YOUR EXPERIENCE, VIEWS AND COMMENTS WITH US 1. How often do you take airline travel? Less than 1 month 2 month to 3 month 1 month to 2 month Or __________________________. 3 month to 4 month
2. Which airline you always/usually select to travel (domestic)?

Pakistan International Airline PIA Aero Asia Shaheen Air International Or Any Other ___________________________.
3. Is there any particular reason why you usually choose that Airline? Service Price Other, please specify below
4. How did the selected airline price compare to your expectations? 1 (Excellent) 6 (Very Poor) 2 (Very Good) 3 (Good) 4 (Fair) 5 (Poor)
5. How did the selected airline Value for Price Paid compare to your expectations? 1 2 3 4 6
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6. How would you rate the overall value of the selected airline? 1 2 3 4 5 6
7. What are good aspects of selected airline that attract you?
8. What are some aspects of selected airline that can be improved?
9. Do you think that all the above qualities exist in PIA, did you agree? If no, so please specify it below.
10.How do you consider the price of PIA? Very Expensive Expensive Very low
Average
Low
11.When I have a problem with travel arrangements, the airline shows sincere interest in solving it? Yes No Never had experience like this.
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12.How will you compare PIA with different airlines in the following services? (Please fill the table according to 1 for Excellent, 2 for Very Good, 3 for Good, 4 for Fair, 5 for Poor and 6 for Very Poor.) Attributes Destinations Punctuality Quality of Food Hospitality/Customer Service Economical Technological Advancements Services Corporate Image Safety of luggage PIA Aero Asia
Shaheen Air
13.What are some important strategies that you would like to recommend?
COMMENTS
Thank You So Much for Filling Questionnaire
Name: __________________________ Age: ___________ Sex: Male
Female
Occupation: __________________________ Qualification: _________________ PAKISTAN INTERNATIONAL AIRLINE Page 94
RESEARCH ANALYSIS
After conducting research from different MBA students of our University, the following results have found which follows as bellow:
Selection of Airline
According to research, 60% people utilize the services of PIA, 30% people utilize the services of Aero Asia and only 10% people utilize the services of shaheen International Airline.
Reason for Selection of Airline

According to research, 50% people selected the service of airline taking into consideration the price, 30% people selected the service of airline taking into consideration the service, and 10% people selected the service of airline taking into consideration on many grounds which are related to their desired destination.
Comparison of PIA with Different Airlines

After conducting the research students have rated the different airlines in the following manner.
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Attributes Destinations Punctuality Quality of Food Hospitality/Customer Service Economical Technological Advancements Services Corporate Image
PIA 6 5 5 6 5 5 5 6
Aero Asia 5 6 6 5 5 5 5 3
Shaheen Air 4 4 5 5 5 5 4 4
Total Points
43
40
36
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Business Policy and Strategy

Submitted To, MR. Ahmed Rana Section A

FINAL PROJECT REPORT

PAKISTAN INTERNATIONAL AIRLINE

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PIA Booking Office Location

KARACHI KARACHI ISLAMABAD

BAHAWALPUR BANNU CHITRAL DALBANDIN DERA GHAZI KHAN

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DERA ISMAIL KHAN

JACOBABAD JIWANI KHARIAN KHUZDAR MIANWALI

ORMARA PARACHINAR PASNI

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RAHIM YAR KHAN RAWALAKOT RAWALPINDI

SAIDU SHARIF SIALKOT SHIKARPUR SKARDU SUKKUR

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Jinnah International Airport Karachi

Allama Iqbal International Airport Lahore

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PIA Domestic Network

PIA International Network

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Total Number of Employees

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Head of Internal Audit

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Vision & Mission

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Goals & Objectives

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GOALS & OBJECTIVES

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PORTERS FIVE FORCES MODEL

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THREAT OF A NEW ENTRANT: Barriers to entry Capital requirements are

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Product differentiation is Switching costs are

BCG MATRIX FOR PIA

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Business growth rate

Pakistan air lines

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Competitive Profile Matrix

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SPACE MATRIX FOR PIA

PIAS SPACE MATRIX GRAPH

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