PEST and SWOT Analysis and Change Management in Eagle Air
Riding the Waves of Change
The Case of Eagle Air
Eagle Air is a UK-based airline that used to specialise in long haul flights to a wide range of destinations across the world. Originally a publicly-owned state enterprise, Eagle Air (EA) was privatised and floated on the stock market eight years ago. This event drew a lot of attention from large companies and individuals alike who rushed to buy shares. Other important changes also happened in the wake of EAT’s privatisation and floatation, including a revision of the terms and conditions of employment for all staff. The salaries of pilots and cabin crew were substantially increased – where they benefitted from a hefty 30% rise in pay and could respectively earn up to £180, 000 and £60 000 per annum. As for ground crew and other support and frontline staff, their terms and conditions were unrivalled across the industry as they were paid 25% more than their counterparts in other airlines alongside a reduction in working hours.
An Alarming Financial Situation
However, this rosy picture has been exacerbated by changes in the tourism industry brought on by the recent pandemic, which inevitably has had adverse effects on all airline operators, with a sharp fall in demand for travel. Last financial year during the height of the pandemic, the airline reported a £200 million loss. The loss for the last three months of the current year was over £90 million and the figures for the rest of the year look like being just as bad, with losses running at over £120, 000 a day. Several other factors also served to bring about this alarming situation.
These include continued uncertainty with respect to the travel situation and continuing low passenger numbers, an escalation in fuel prices, a substantial rise in airport tax, and a general increase in the prices of commodities related to passenger travel (such as food and beverages, toiletries and other passenger comfort items) – resulting in a persistent fall in revenues and profit margins. The situation is compounded by increasing competition with other airlines offering less generous terms and conditions of employment, and the pressure to invest in ‘green technologies’ to reduce carbon emissions and become more eco-friendly, whilst sustaining service modernisation.
A Twofold Strategy to Deliver Competitive Advantage
In response to the financial crisis facing the company, top management called for an urgent board meeting to carry out a fundamental review of the current situation and develop a new business model that can deliver unique value and long-lasting competitive advantage. After careful deliberation, top management voted in favour of a twofold strategy: (i) a merger with Air Fast which operates short haul flights within the UK and across Europe and (ii) joining the Proxima Alliance, a huge global partnership that brings together some of the most reputed airlines in the world.
Top management believed that their twofold strategy would bring about the following benefits:
· The newly formed venture would retain the company name, Eagle Air, which already carries considerable ‘brand power’ and would become one of the largest airlines in the world in terms of both fleet size and route network.
· EA would enlarge its service portfolio by targeting both long-haul and short-haul markets; and with offices in desirable locations such as Edinburgh, London, Paris, New York, Singapore, Sydney and Johannesburg, the new company would be able to carry passengers to any of its destinations in less than two days.
· The merger would enable a major restructuring exercise and the implementation of significant cost-cutting measures. The number of staff would need to be reduced by about 10%. Moreover, the salary structure of Air Fast would be applied across the new organisation. As a result, the existing terms and conditions of employment would be brought closer to those applied across the wider airline industry – enabling the company to achieve massive cost savings and make up for the severe losses it has incurred over the past two years.
· Joining the Proxima Alliance would enable EA to leverage its capabilities and resources in providing a more comprehensive end-to-end service for its clients and develop a range of benefits such as smoother transfers and faster journeys, priority check-in, boarding and baggage handling, upgrades and airport lounge access worldwide, and more flexible frequent flyer programmes.
In view of the above anticipated benefits, top management were confident that their twofold strategy would transform the company into a larger yet leaner and fitter organisation, well equipped to deliver competitive advantage and greater shareholder value in the longer term.
A Mixed Response from the Union and a Deadlock for Management
Top management are now faced with the challenging task of detailing and implementing their newly developed strategy. Their first action was to call a meeting with the union to present the strategy with a view to implementation as soon as agreement could be reached. The union’s reaction was one which combined approval and anger: approval of the multiple benefits that the merger could bring to the company and anger at the proposed levels of compulsory job cuts and changes in terms and conditions of employment. The meeting broke up without any agreement.
The union questioned the unilateral decision of management to change the existing terms and conditions of employment without any room for negotiation. They also deplored the fact that management could terminate the contracts of so many employees without even thinking about the disastrous effects this could have on staff morale and commitment, let alone their personal lives. They also invited top management to go back to the drawing board and reflect on how a strike action could cripple the implementation of their new strategy.
Top Management were quite ‘shaken’ by the union’s reactions and felt that they had reached a deadlock. They realised that expert opinion was urgently needed and decided to hire the services of a top consulting firm to conduct a review of the proposed strategy and advise on the best course of action to ensure its successful implementation.
Questions:
1. An analysis of the change context taking into account both the internal and external drivers for change. This should include both a PEST and SWOT analysis. (500 words)
2. An analysis of the nature of change facing Eagle Air using key theory (500 words).
3. A critical examination of the possible types of employee reactions to the proposed change, again using the key theory to underpin the discussion and giving consideration to the different types of employees employed by Eagle Air (800 words).
4. Recommendations should be provided to advise management on how to plan and execute the proposed change so as to ensure its successful implementation. Please compare and contrast change models detailed in the course and choose one that would be appropriate to manage the change, then utilise this this model to formulate your recommendations, based upon your analysis. Please also note that this section using the theory should be context specific (700 words).
Your report should include the following
Introduction: 200 words
Body: 2500 words (accounting for the 4 parts detailed above)
Conclusion: 300 words
3,000k words total
Questions and headings aren’t included in the total word count. (Only the answer will be counted)
Please state your word count on the assessment front cover.
● Q1. 500 words +/- 10%
Briefly explain what the PESTEL and SWOT are and how they are created. Remember, they are regularly reviewed and updated by management teams.
Produce a PESTEL and SWOT for Eagle Air prior to the change based on data from the case study.
The contents of the PESTEL and SWOT presented in tables are excluded from the word count.
The elements / drivers for change identified in the PESTEL impact on the opportunities and threats sections of the SWOT.
The internal factors in the case study impact the Strengths and weaknesses sections.
● Q2. 500 words +/- 10%
Nature of change display Nadler’s (1995) model and insert where you believe Eagle Air is.
You would then include a discussion with regards to the differences between incremental and transformational change.
● Q3. 800 words +/- 10%
The theory is Kirkpatrick’s reactions to change (2001) – positive, negative and mixed and the other model is Carnall’s coping cycle (2003).
● Q4. 700 words +/- 10%
Lewin’s forcefield analysis (1951) and Kotter’s 8 step model (1996), both need to be applied to Eagle Air.
● Create your introduction last as it explains, briefly the approach you have taken to answer each question.
● Remember, to number each question Q1, Q2 etc.
● Provide a table of contents with page numbers to help signpost your response.
● Cite sources by consistently applying APA 7th ed.
● Provide a reference list in alphabetical order by main author’s surname e.g, Hayes would appear before Johnson et. al. .
● Use appendices, if you wish, but always refer to the appendices in the response.
● Write in 3rd person, e.g. This report will …. OR According to Lewin (1951)… .
● Use font size 12 and Ariel
● Apply double line spacing and ensure your spell checker is set to UK English.
● Left hand justification is preferred.
● Please do not use a text box, simply create a word document.
● Pictures are not required.
● Tables and charts should be inserted into the response where they are referred to. In addition to the table / chart title always provide a source. Enter (adapted by author) if you applied to Eagle Air.
● Avoid pagination, which is straddling a page mid-sentence.
● Use the draft checking facility to help you reduce the similarity index score.
● Do not use quotations, always try to para-phrase in order to display YOUR knowledge and understanding of the concepts.
* using 3rd person
* You are required to present using a clear coherent structure which is outlined in the introduction. A typical format will include an introduction, conclusion, recommendations, full reference list, and any appropriate appendices. Please also use headings to segment your discussion.
Please use the core text book (all editions are helpful) but expectations are you will read much more widely than that, utilising the suggested further readings contained within the units.
***Please ensure you have at least 10 citations in evidence.***
Organizational Change Management
Student’s Name
Institutional Affiliation
Organizational Change Management
Introduction (200 Words)
The recent pandemic has upset the tourism industry, leading to an intense travel demand decline. Eagle Air, a UK-based airline, used to focus on long-haul travel to various international locations. During the pandemic’s peak in the previous financial year, the airline incurred a £200 million loss. The airline’s loss was influenced by various variables, such as the growing rivalry from other airlines offering favourable employment terms and conditions and the need to invest in “green technologies” to lower carbon emissions and become more environmentally friendly while maintaining service modernisation. The airline’s top management convened an urgent board meeting in response to the company’s financial crisis (Wood, 2012). The conference aimed to thoroughly analyse the situation and create a new business model that may provide distinctive value and long-term competitive advantage. The combination would make it possible to carry out an effective restructuring exercise and put in place considerable cost-cutting measures. The difficult task of outlining and putting their freshly formed plan into practice now rests with top management. Accordingly, the union questioned the management’s unilateral decision to alter the current terms and conditions of employment without allowing for negotiation.
1 An analysis of the change context taking into account both the internal and external drivers for change. This should include both a PEST and SWOT analysis. (500 words)
PEST is an abbreviation for political, economic, social, and technological. The PEST analysis is a framework businesses use to access significant external elements that may have a long-term impact on their performance and operations to increase their market competitiveness (PESTLE analysis Contributor, 2016). The abbreviation SWOT stands for strengths, weaknesses, opportunities, and threats. The SWOT analysis is a strategic planning and management technique used to determine the market’s competition’s strengths, weaknesses, opportunities, and threats and how to develop a strategy for the future. The PEST analysis for Eagle Air revealed the following case study factors:
Political – This section examines rules, laws, global issues, and politics that could impact Eagle Air’s operations. The pandemic has been a significant factor in Eagle Air’s decline. Various nations have decided to seal their borders as a result of efforts to halt the spread of the virus by many nations. The pandemic has impacted Eagle Air and other airlines because they cannot travel to specific countries.
Economic – Taxes, inflation, stock markets, currency rates, and interest rates are all examined in this section. Eagle Air has been adversely affected by rising fuel costs, rising airport taxes, rising costs of goods used in passenger travel, and declining sales due to the pandemic’s widespread cancellation of flights.
Social – This component focuses on customer purchasing patterns, consumer confidence, attitudes, growth rate, and geographic dispersion. Sales have decreased because most consumers avoid outdoor trips because of the virus.
Technological – The last component is access to technology advancements, research, and development activity.
The following elements were found in the SWOT analysis for Eagle Air:
Strengths
* Eagle Air has a substantial level of brand power.
* The company would merge to form one of the biggest airlines in fleet and routes.
* The airline would be better positioned to generate long-term shareholder value and competitive advantage.
Weakness
* Staff reductions and wage cuts may have an impact on workers’ productivity.
Opportunities
* By concentrating on both the long- and short-haul markets, the corporation could increase the scope of its service portfolio.
* The airline could transport passengers to any of its destinations in less than two days if it had offices in more desired nations.
Threats
* Potential reduction in insurance capacity.
* Another economic downturn will occur if the pandemic’s current status does not improve.
* A decline in market share.
2 An analysis of the nature of change facing Eagle Air using key theory (500 words).
Change management is a strategy for ensuring that changes are carried out entirely, without a hitch, and that the long-term benefits of change are realised. The focus is on the more significant implications of change, particularly on people and how they, as individuals and teams, move from one circumstance to the next. Management has chosen a two-pronged approach to consolidate this merger with Air Fast. Therefore, it is crucial that Eagle Air’s management fully appreciates the value of the right strategy for successfully implementing the change needed to reach the overall objective. Choosing the path and a plan for getting there would be the first step. Change can be categorised in two primary ways: forced from the top down or naturally occurring from the bottom up. Since it was decided to create a global partnership to tackle the various factors hurting the company due to the pandemic, this kind of shift would be intentional in the case of Eagle Air. Eagle Air might be going through a changeover. Transition management is known as adopting change through systematic planning, coordinating, and implementing change to attain a desired future state while preserving business continuity. The following are the three aspects of transitional management:
Endings: Embracing new procedures or ways of acting after letting go of the previous.
Transitions: The transitional period is characterised by uncertainty, ambiguity, or neutrality.
New Beginnings: Returning to the present and concentrating the energies on handling the shift positively.
Thorough planning, analysis, and sensitive execution stages can all help organisational transformation. Dawson asserts that it is crucial to acknowledge that uncertainty, unpredictability, and chance will always play a part. Management must evaluate internal and external elements that impact the shift in directions outside their control, such as the relative power of various interest groups, the distribution of knowledge, the political environment, the economy, competitors’ actions, and competitor conduct. Identification and exploration of the difficulties underlying the initial decision to merge are two crucial factors that management would need to consider to manage this change effectively. The second important factor is that the process should be facilitated by carefully planning and analysing a sensitive implementation of the phases.
3 A critical examination of the possible types of employee reactions to the proposed change, again using the key theory to underpin the discussion and giving consideration to the different types of employees employed by Eagle Air (800 words).
People are typically averse to change. Organisational changes frequently happen when a firm expands or contracts (Jisc, 2006). Although some employees may be apprehensive or even opposed to the change, others may view it as a chance for new growth. According to Kirkpatrick, people can exhibit three fundamental sorts of reactions to change, which accounts for his now-famous typology of responses to change:
* Positive Reactions
* Negative Reactions
* Mixed Reactions
Kirkpatrick’s (2001) typology of change can be a valuable tool for identifying initial responses to change. Still, it is essential to remember that these responses can and often change over time because people are not static or fixed in their responses. Therefore, there could be a combination of positive, negative, and mixed reactions to Eagle Air. Many of the issues the airline faced because of the pandemic, such as the decline in revenue (fewer flights = less work since people were not travelling), may motivate some staff to react favourably and become enthused about the change. Although some employees may welcome the new shift in strategy, others may respond adversely because this recent tactical change would need restructuring of the current organisational structure. Employees who have worked for the airline for a long time may resist change since they have adapted to the current system. When employees feel unable to live up to the expectations of new management, stress levels might also rise among them due to higher workloads. The merger with Fast Air will require Eagle Air to cut the number of employees by 10 per cent and offer lower salaries following Fast Air’s financial structure. Arguably, this is another example that can elicit negative responses. The uncertainty of one’s career future after losing work can traumatise the employee.
Employees opposed to change may also spread false information about the change. The most recent response to the merger by employees might be mixed, meaning they may not care how it turns out because they believe the benefits will outweigh the costs. Despite the possibility of sending some staff home, others might continue working during the...
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