Business Environment Of Oman Air

Introduction

SWOT analysis is a beneficial tool that takes into account not only for our own business but also our competitor’s events and current industry trends as well. It is a framework for any organization in strategic planning for the factors that affects business be it internal or external. This understanding of business factors will help managers effectively to any changes in the factors and facilitate decision making. Factors can be based on economy and non-economic. By economic factors we understand the fiscal and monetary factors, whereas non-economic factors include socio cultural, educational, political and legal system.

To identify the internal strengths systematically SWOT analysis is an important tool for an organization.

Objective

In this paper we will use SWOT analysis to increase the sales revenue for next five years. SWOT Analysis is a useful method to understand the Strengths and Weaknesses and for detecting both the Opportunities open to the business and the Threats the business will face.

SWOT Analysis for business

SWOT is a very powerful tool in business as with a little thought it can help you discover prospects that you are well-placed to exploit and by understanding the weaknesses of your business, you can manage and remove threats that would otherwise catch you unexpectedly.

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By observing at our own business and our competitors using the SWOT framework, we will start a crafted strategy that will help us distinguish Oman Air from other competitors, so that we can compete successfully in the market. Strength and Weaknesses of an organization are mostly internal whereas the opportunities and threats are often external factors.

The internal factors are mostly the factors that can be controlled internally in a company. Factors like e-commerce, technology and business expansion.

The organizations have to continuously upgrade and adapt to factors if it has to sustain in the market. Internally the company is considered as in conversion machine who takes in input such as labor, money, equipment and material from the external factors and it converts those input into an output such as service, products and goods. The few factors that constitute the internal factors are Vision, missions and objectives, internal power relationship, management structure nature, company image and brand equity, and human resource.

The external factors is a set of complex, rapidly changing and significant interacting institution and forces that effects the organizations ability to serve its customer. This factors conditions interact with strategic decisions and therefore it is important for organizations to understand it's importance. SWOT analysis framework is both simple and powerful tool for strategy development. Analysis of the strength and weakness of the organization and opportunities and threats in the factors is the first step in strategic management process.

Strengths
Direct flights to Europe, far east, Asia, Africa, Indian sub-continent and middle east.
National fuel price
National carrier of Oman
Government support
Weaknesses
Connectivity to far Europe and United States which affects the sales revenue.
High operational cost.
Product
Employee Education and growth
Opportunities
Many award won by the airline helps in better marketing and increase sales High season and low season sales as per class of travel
Our business sector is expanding, with many future opportunities for success. Local government wants to encourage local businesses.
Expansion Plans

Threats
Competitors sales strategies
Connectivity of Flights
Emerging demand for low cost Airlines.

Strengths

Oman air has direct flights to Europe, Middle east, Africa, Asia and Indian subcontinent which is one greatest strength of the company. The sales team uses this to attract tourist, medical tourist and corporate customers. The revenue can increase if we increase the frequency of the fights to Indian subcontinent from 1 flight per day to 2 flights per day to destination to Cochin, Chennai, Mumbai and Delhi. Increasing frequency to flights to Europe will add on to more revenue by increasing from 3 flights to 5 flights per week to Paris, Munich and by connecting the Munich flight via Milan. The Fuel price is another factor which directly affects the cost of per flight. The airline can avoid extra expenditure by using more fuel efficient aircrafts and by using one engine during taxi especially at airports like Dubai where the rush hours are too busy and involves longer taxi. The one engine taxi will help is reducing fuel consumption and will bring extra revenue.

Weaknesses

Oman air been a small organization faces lot of competition from the neighboring countries. Oman air flies to only 47 destinations out of which only 4 European destinations. Airline loses lot of business due to lack of connectivity to other European sectors like to Belgium, Amsterdam and also to America. If Oman air increases its connectivity to US and more European sectors this will increase the sales by attracting more customers from other countries Muscat being the hub and bring more revenue in next five years. The cost of operations in Muscat is high. The basic salary paid to locals is very high compare to other countries and airlines. Due to government involvement in the airline the compulsion to recruit locals is very strict. For example the basic salary paid to a check in staff in Oman air is 350 Omani rials with whereas Emirates pay 300. To reduce this cost company has to increase revenue from other sources as this is inevitable cost.

Opportunities

Oman Air won the best business class seats award for last 3 years, best middle east airline in economy service award in 2014and many others. This achievement can be used more and get more customers by advertising. Investment in marketing and advertisement now will bring more customer and increase in revenue in next coming years. Liaise with corporate and agent customers to frame incentive programs and agreement in order to ensure maximization of business partnership and build strong customer base Airline business is directly affected as per the seasons.

During the high season like June and July the airline can close the lower class fares and sell only the high class tickets. Because of demand in market the sales will be high. Whereas during low peak season the flights should be open for lower classes that will attract more customers and fill the fights and generate more revenue in long run. Constantly checking with corporate customers to promote all frequent flyer programs and enroll them to add business to WY network. Keep our competitors in mind Oman air can plan for fare sales during off season to again boost the sales.

Threats

Oman air being small airline with just 47 destination and 30 aircrafts faces lot of competition from other big airlines around like emirates, Qatar, Etihad, Jet airways etc. and also some low cost airlines like Fly Dubai. Oman Air have few destinations but this big giants in the market give competition to Oman air operations. Better connectivity of other competitors is one of the major factors that effects the load factor on Oman air. Customer prefer to fly on the same airline with a continuity for example if a customer wants to fly to Amsterdam he will prefer taking Emirates or Qatar as they fly direct or via another airport. This results in losing many local passenger as well as international customers. Company can escape these losses by expanding faster and after proper survey of market to retain its customer.

Increasing the connectivity will help in retaining the loyal customer and also to gain new customers which will help in increasing the revenue in longer run. The route factors and the fares on those routes play another important role in the competitive market of aviation. During off peak seasons the competitors as well reduce their fares to get more business. They offer sale prices and other attractive offers to make the customer chose there airline. To avoid this Oman air will do better market study and come out with more attractive offers and incentives for travel agents to sale Oman air tickets and services.

Conclusion

The above findings will therefore increase the revenue of Oman air by 10 percent every year for next five years after meeting all extra costs that the company has to incur. Success of Oman Air depends on the adaptability of the business factors, it is subjected to. The factors are link together and all factors influences policy making in the business. SWOT analysis is an effective tool in examining the business factors. Business should respond to the factors changes and the manager’s approach toward those changes is very vital. With the understanding of this factors that will influence the business Oman Air can save lot of time and bring the difference by using SWOT Analysis.

References

Daniel, C.(2011). Business Factors. http//www.articlesnatcg.com/Article/Business-Factors/252704. Dreze, J. & Amartya, S (1996). Economic development and social opportunity, oxford University press. Menon, A. et al. (1999). "Antecedents and Consequences of Marketing Strategy Making". Journal of Marketing (American Marketing Association Quincy, Ronald.” SWOT Analysis: Raising capacity of your organization” Rutgers School of Social Work. http://www.learnmarketing.net

www.omanair.com