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Factors to be considered in this regard are; product situation, competitive situation, distribution situation, environmental factors both internal and external, opportunity and issue analysis. The situation analysis helps to identify problem areas and the viability of any business venture. It enables marketers to diagnose critical areas which could require more focus thus assist in minimizing of risks. In order to profitably satisfy customer’s needs and wants, the organization has to understand its internal and external situation. The firm’s capabilities, its customers and the environment in which it operates in should be well mastered.
In addition, marketers should be in a position to forecast trends in the ever changing environment in which it operates. It has been noted that hen conducting a situation analysis, the following elements has to be assessed; company, collaborators (distribution), customers, competitors, business environment [Situation Analysis n. D]. Situation analysis or SOOT analysis as it is sometimes called should not replace the manager in the decision making process. Its purpose as noted by Farrell and Hairline (2011: 80) is to empower managers with vital information for more effective decision making.
A detailed situation analysis empowers the marketing manager since it encourages both analysis and synthesis of information. When conducting a situation analysis, an organization has to first kook at its history and then objectively assesses its current strengths and weaknesses relative to its competitors. The planning process should include an analysis of the potential threats and opportunities posed by the changes in the firm’s external environment as viewed by Reid and Bosnian (2010:35). The situation analysis provides background information crucial in the making of decision regarding the future direction of the firm.
The situation analysis which is referred to as a situation audit by Guppy and Runaway (2008:158) is a tool used to determine where the organization is at present and to recast where it will be if current strategies is pursued. It answers the questions, “Where are we now? ” and “How did we get here? ” A better understanding of this can be found by studying the organization’s background including its history (Green & Williams, 1996:274). The situation analysis can be summarized in a diagram as illustrated on fig 1. 1 below.
The diagram shows the situation analysis or the SOOT analysis, favorable and unfavorable scenarios. On the diagram, it is clear that strengths and weaknesses fall under the internal factors which implies that the organization has control over them. This is because they are factors within the firm which give it more advantages than of rival businesses whilst weaknesses are the company’s challenges or shortfalls. Guppy and Runaway identify internal factors being influenced directly by the business own strategies and this includes competition, suppliers and customers.
Threats and opportunities are the external factors and the organization has little control of them and adapts the company strategies to remain 3 Internal factors surviving. Pinions and Jennet (2006:4) argue that businesses do not need experts to start up but a realistic understanding of strength and weaknesses s imperative. Favorable (+) unfavorable (-) Strengths Minimize or avoid Weaknesses Convert weaknesses to strengths Match External Factors Opportunities The retreats Convert threats to opportunities Fig 1. 1 Illustrates a SOOT matrix indicating how the marketer needs to respond to both internal and external environment (Pierce: 2002).
An assessment of a companyњs resource strengths and weaknesses and its external opportunities and threats is known as the SOOT analysis (Hough, Arthur, Thompson, Strickland & Gamble, 2011:97). This provides an overview of the companyњs status in terms of whether is healthy or unhealthy. The aim of this research is to conduct a situation analysis for Kulak. Com using different analytical tools for example; SOOT, value chain, benchmarking and competitive strength assessment will be looked at in this assignment. Both internal and external situations will be analyses in detail. 2. About Kulak. Com Kulak. Mom is a low cost domestic airline which entered South African market in August 2001. Kulak. Com is wholly owned subsidiary of Coma and it was set up as a low cost airline. The launch of this airline started with Johannesburg Cape Town route and later on because of increasing demand or a low cost airline, expanded to Durban. This low-cost provider was launched to offer an easy travel to its clients from booking to boarding the flight, this aim is embedded in its name Kulak which means easy[l in Zulu language. Different marketing strategies were employed by Kulak. Com during its launch and afterwards to penetrate the market.
The most effective tool that was used is the low cost option which encouraged all people to fly and more importantly those who could not afford to use flights as a means of travel. Coma operates under franchise agreement with British Airways which has such industry experience and knowledge based on the fact that it is an internationally recognized brand. Coma managed to make profits over the past years despite the adverse environmental influences therefore as a way to strengthen itself, it set up a low cost airline for the budget conscious resulting in the birth of Kulak. Mom. Kulak. Com]s brand has been very effectively established and as such awards have been won for instance the Southern Africaњs prestigious 2002 Tusk “Service Launch of the Yea’ award and the Airports Company of South Africans “Domestic Airline of the Year’ Ann al customer survey award for 002 (Townsend & Pick, 2011:2). The launch campaign was a powerful successful strategy leading to an overwhelming demand for a cost effective travel 4 for example as highlighted in the case study that there is a shift of business clients now preferring low-cost airlines to mainstream ones. 3.
Low cost model airlines The international airline industry and in particular, the established airlines got into a heavy crisis in the aftermath Of the September 1 lath 2001 terrorist attack (Gross & Schroeder, 2007:32). This event led to a dramatic drop in demand however, the low cost airlines were able to record high growth rates s noted by Gross and Schroeder (2007:32). The low cost airlines organizes all business activities under the aspect of optimizing or reducing costs in order to achieve strategic success position thus gaining competitive advantages Low cost airlines cut out all the frills so as to minimize cost of operation.
This has an advantage to consumers since they would pay a lower fare than on a mainstream carrier. The South African low cost model has been developed from the European low cost approach. In trying to reduce costs by any means possible, low cost airlines has relied on some of the following approaches. Selling of services through few channels mainly directly through the internet or booking machines (direct self distribution) and through centralized call centers established at competitive locations. Offering a paperless operation, in this case a flexible information technology system is used.
The use of one kind of airplane has an advantages or reducing costs since new aircrafts may mean that the crew including pilots would be required to get training on how the new aircraft works. Gross and Scooter (2007:35) argue that costs can be further saved on aircrafts when outsourced or leased planes are used. Selection of the most appropriate airports No free meals served on-board 4. Resource strength Organizational resources include capabilities involving production, marketing, finance technology and employees (Needled, Transfixed, Coles, Harris & Rawlins, 1999:10).
By evaluating these resources, an organization can easily identify its strengths and weaknesses. Strengths assist organizations to define core competences, formulate objectives and formulate strategies to meet objectives. Kulak. Comes strategy revolves around capitalizing on its resource strengths in addressing the South African marketing opportunities. A source strength is something an organization is good at doing or an feature that enhances its competitiveness (Hough et al. , 2011:97). The following are resource strengths for Kulak. Com which has been extracted from the case study. . 1 Skills and expertise Kulak. Com has highly experienced staff at senior level and these play a huge role in the development and management of Kulak. Comes brand.. This offers a proven managerial skill since many years have been spent working with Coma brand thus effective managerial work is guaranteed. Service experience on the part of staff is vital in the delivery of quality service. This notion has been supported by Shaving (2003:34) who views employees as an integral part of the service experience. Staffs are used between the two brands, British Airways and Kulak. Mom therefore resulting in further reduction of costs such as having to train staff. In addition pilots are cross- utilized with British Airways thereby reducing costs and ensuring a safe travel since the pilots already have known skill in flying British Airways flights. One of the strengths of Kulak. Com lies in its strong and well crafted mission which explicitly describes its customers as superheroes and assurance of easiness in everything from booking paying and flying. In addition, Kulak. Com is operated by Coma which is a well established brand hence it is perceived as perfect Kulak. Mom has a positive image emanating from its association to Coma a British Airways franchisee. This makes it to enjoy benefits of its brand. Kulak. Com managed to get awards for two consecutive years as the best domestic airline of the years in 2002 and 2003. 4. 2 Advanced technology Most bookings are done via internet which further cuts distribution cost since just a few intermediaries (travel agents-10% booking are through agents) are involved. Kulak. Com]s website is user-friendly making bookings to be easier. Internet booking system enables Kulak to save its costs; it is the greatest cost saver for the airline.
Most airlines use the complicated reservation programmers such as Amadeus and Galileo which are very expensive to use. The website now allows customers to purchase other tourism products such as accommodation, car hire and even restaurants. Internet allows customers to purchase tickets, check for availability and search information within the comfort zones of their homes. Online sale Of flights helps to keep distribution sots down, a good way to cut costs. It has been generally noted that travelers are price sensitive to airline when it comes to travel (Kumar, 2010:316).
Most often, a low cost carrier stimulates demand for travel even though prices for other tourism products are increasing. Kulak. Com has managed to stand competitive forces since it was launched at time when the currency was devaluation, a time when other airlines were increasing their fares and Kulak. Com was able to keep its costs as low as possible. This was a big move for the carrier since it became renowned as the market leader in low-costs. The ability to cut costs enabled it to attract number of passengers as compared to mainstream airlines. Despite the rand’s decline towards the end of 2001, Kulak. Mom managed to keep its fares low as compared to other airlines. 4. 4 Simple fare levels Kulak. Com does not have complicated fare levels, it only have five as indicated in the case study. Some mainstream airlines have numerous fare levels, may have up to one hundred between the lowest and highest fare. This makes in complicated when deciding on which fare to sell at. Resource weaknesses and competitive deficiencies A resource weakness is something an organization lacks or does poorly as compared to its rivals or a scenario that puts it at a disadvantage on the marketplace (Hough et al. 2011 : 104).. Weaknesses are seen as limitations or deficiency in resources, skills and capabilities that seriously impedes effective performance (Raw, Shakespearian & Raw, 2008:159). An organization’s competitiveness is affected by internal weaknesses which is alternatively termed competitive liabilities since they inhibit an organization from gaining a distinctive advantage. Below are situations which put Kulak. Com at a equidistant: 5. 1 Problematic internet operation Internet bookings are at times slowed down by internet lines and speed which would therefore restrict potential bookings.
Since the majority of Kulak. Com]s bookings are done 6 via website, the operation speed is not good therefore travel agents find it difficult to use the website. Most travel agents use Amadeus and Galileo reservations systems which are very fast as compared to Kulak. Comes system hence loss of sales from potential clients. Kulak. Com does not have feeder airline for international travelers, thus it relies on only the domestic arrest which is Johannesburg, Durban and Cape Town. If there is someone coming from other countries, they usually connect to a carrier which is international. This is because; Kulak. Mom does not have inter-line agreements with some international carriers. Kulak. Comics main market is domestic, it lacks resources to target the market aimed for by the mainstream airlines for example SAA; this limits the potential revenue it could get when such markets are exploited. 5. 2 No linkages with tourism organizations Kulak. Com is not linked to any tourism organizations and tourism marketing bodies which limits its exposure. The number of routes taken is few as compared to some airlines, and this limits potential revenue from being generated unlike when many routes are considered. 5. Controversial adverts One of Kulak. Comњs advertisements caused stir and in the case has been labeled as offending. N Looking at the target market for Kulak. Com, the young (14-28) and seniors (5580) which form of advertisement indicates that Kulak. Scorns lack Of respect. Additionally, its mission Statement has some parts such as … There is no bullwhip. D which can be viewed as swearing. In this regard, Julia. OMG]s marketing campaigns can be viewed as inconsiderate. 6 Market opportunities A company[]s market opportunities are the industry opportunities that an organization is equipped to capture.
The anticipated growth of global tourism means that more people would need to travel. The growth of tourism in South Africa presents an opportunity for the travel industry to expand in order to capitalist on the huge travel market. The following are some identified opportunities for Kulak. Com.