Sabena Belgian World Airlines

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Table of Contents

Introduction
Statement of the problem
Short-term problems included
Causes of the Problems
Decision Criteria and Alternative Solutions
Recommended Solution, Implementation, and Justification
Conclusion
References

Introduction

Sabena Belgian World Airlines was started in 1923, headed by Carlos Van Rafelghem who later suffered a stroke in 1990, calling for a new leadership. Godfroid was later selected to head the airline and his industrial restructuring skills were seen as an added advantage. By this time, the airline had faced major challenges, including losing its monopoly in European routes.

Given the government’s unwillingness to support unprofitable airlines, the industry suffered significantly from unfair competition. However, due to its tendency to higher many citizens, Sabena Airline enjoyed government protection by covering its losses, with an aim of protecting employment.

As a result, this excess number of employees made the company to suffer from inefficiency. Until Godfroid took charge, the airline’s image had been tainted, thus the new leader had a huge task of bringing change and driving the company towards a competitive advantage.

Statement of the problem

When Godfroid took over, the company faced some long-term problems that included:

Excess staff members who did not have the appropriate skills for their positions, as they were employed due to political reasons;
Competent leaders faced hindrance from unmotivated employees, hence unable to play their managerial role appropriately;
The company faced the problem of poor customer service and poor marketing requirements;
The management avoided direct communication with its employees;
Effective supervision was not carried out as a result of poor leadership, while management accountability was absent.

The company also experienced a stream of losses and the national debt was growing; therefore, Godfroid took over a company that was on the verge of bankruptcy.

Short-term problems included

High fuel costs that resulted from the gulf crisis;
Passengers cancelled traveling plans due to the unstable conditions of fuel prices, hence resulting to low profits for the airline;
Low wages for the employees was evident, and due to the poor management, employees were hardly rewarded.

Poor management was evidenced by lack of clear job description and organization chart, resulting to lack of coordination. Godfroid had been put in a challenging position of achieving profitability and a competitive advantage by averting bankruptcy, and eliminating the mismatch between debt and equity.

Causes of the Problems

The financial situation of Sabena continued to deteriorate, a situation that the Belgium government had to take control of for some time. The government had volunteered to absorb small losses until the company was stable enough, as long as the airline provided jobs for citizens; however, the airline could not handle the pressure and made significant losses by 1990, almost heading to bankruptcy.

Primarily, appropriate recruitment and selection process was not followed, as most employees had been employed for political reasons other than qualifications.

Therefore, the skilled leaders ended up being frustrated, resulting to them quitting the company. According to Odden (2011, p.9), recruiting the right personnel for the right job is productive to the company; therefore, the highest performing organizations recruit and retain the most competent employees, as they improve organizational performance.

Therefore, the main reason for the quitting of competent leaders in Sabena Airlines was ineffective human resources, which results to lack of effective management of human capital.

According to Waltson, Gallagher & Armstrong (2005, p.169), organizational charts provide an illustration of work allocation, therefore holding each individual responsible for a certain tasks and reporting obligation. This process enhances communication between employees and their managers, hence increasing coordination and avoiding crisis.

In this case, management is important, as it drives employees towards attaining the company’s objectives and high productivity. Lack of competence in the supervisory level in Sabena Airlines was caused by poor management, which overlooked the importance of employees and treated them like machines. It is evident that the supervisors had not been recruited according to their skills, resulting to poor management of employees.

According to Agarwal (1983, p.4), effective management contributes towards the production of more goods and services, as well as high profitability. Therefore, effective management involves decision-making and control over employees and activities, with an aim of attaining the organization’s goals.

Lack of training of managers could have contributed to the ineffectiveness; therefore, it is important for the managers to develop management skills in order to achieve effectiveness and efficiency.

The quality of a manager may determine the culture of the organization, staff productivity, and the success or failure of an organization. A manager is also required to have the ability of directing, supervising, encouraging, coordinating, and inspiring his team (Francis, 2007).

Sabena Airlines’ financial crisis was because of lack of a competitive advantage, which led to losses over the years. According to Zoephel (2011), competitive advantage is a vital tool towards retaining a company’s market share. A competitive edge should not only be achieved, but it should also be maintained.

Differentiating the company’s product from the competitor’s products may include giving the customers more value and greater satisfaction, by offering unique services or goods. Low-cost strategy is one of the strategies that company had to adopt in order to attain a competitive advantage.

Lack of motivation of employees leads to low morale and low performance, hence low productivity of the organization. Hertzberg’s two-factor theory of motivation explains the need for a company to avoid unpleasantness by considering both hygiene factors and motivator factors.

Hygiene factors include job security, company policy, and working conditions among other factors in the place of work that boost employee’s morale. On the other hand, motivator factors relate to an employee’s need for personal growth, which is affected by recognition, status, opportunity to advance and personal achievement (Evans & Aluko, 2010, p.75).

Decision Criteria and Alternative Solutions

Does the proposed solution align with the organizational strategy?

Sabena Airlines was headed towards bankruptcy; however, with the new leadership of Godfroid, it is expected to rise higher above its current situation. To maintain its market share, the airline must operate profitable in order to attract new partners and customers. In order for the airline to survive in the competitive industry, it must attain a competitive advantage, which should be sustainable.

Cost advantage: When a firm is able to deliver quality products or services at a much cheaper price compared to that of the competitors, it gains a cost advantage over its competitors.

Differentiation strategy involves a firm’s capability to produce products or services that are of a unique nature compared to its competitors; hence, with a competitive advantage, a firm is capable of creating greater value for its customers.

However, a company must have the necessary resources and capabilities to develop and maintain a competitive advantage. Nevertheless, due to the airlines’ current financial situation, the management needs to develop a plan geared towards achieving a competitive advantage.

Since Sabena Airlines has suffered financially, the management can use other company’s capabilities such as developing a quality customer care service, introducing low prices for flights, and improving on employee performance through training in order to be competitive.

These strategies will not require a lot of financing; hence, it is an affordable start for the company. Godfroid should also initiate quality selection and recruitment process, with an aim of recruiting quality staff assigned to relevant positions where they can perform.

McKenzie & Jackson (2007, p.3) emphasize on the importance of selecting the right personnel for a specific position, since the right candidate proves to be a success for the organization, and it should be a leader’s priority.

The right person for the right position enables an organization to run effectively with limited supervision. Indeed, hiring unqualified managers led to lack of management accountability, poor supervision, and poor management of employees at Sabena Airlines.

Is achieving a competitive advantage going to solve the problem?

Competitive advantage creates room for an organization to shine by outweighing others; however, Sabena Airlines must decide on which strategy to focus on, as the wrong choice of a strategy can cost the company dearly. The airline can lower its air prices with an aim of attracting more customers until it regains its glory once again.

The airline can also focus on value creation activities, which add more value to customers compared to their rival competitors. When superior value is created through low-cost strategy of product differentiation, the airline will stand a chance to compete within the industry. Once customers start gaining faith in the airline, partners will be interested and profitability will shoot up, thus restoring the once lost glory of Sabena Airlines.

However, this strategy may be faced by hindrance of financial constraints, as it requires enough resources apart from capabilities. Improving on the recruitment and selection method guarantees the company the right candidate for the job. Therefore, the airline will be confident in paying the employee, as his performance rhymes with the salary and bonuses.

In addition, these employees should be retained, as they are an important asset to the organization. Retention can only be done through motivation, which adds value to the employee’s stay at the organization. According to Ashraf (N.d, p.158), employee motivation can be in various ways, including, job enrichment which involves redesigning a job in order to provide opportunities for an employee’s career growth.

Flexible time can be designed to offer employee control over their work schedule; hence, they have time for their families. Employees can also be motivated by being empowered, so that they can solve their problems without relying on the senior managers.

When employees achieve job satisfaction, their performance automatically improves, thus impacting on the organization’s productivity. In organizations, rewards are vital; however, in Sabena Airlines, employees are seen as machines, making rewards a rare commodity. Job satisfaction can also be achieved through rewarding as a motivational gesture.

Is this solution financially viable?

The proposed solutions are geared towards improving the airline’s current condition; however, the competitive advantage strategies not only require capabilities but also resources.

This may prove to be challenge for the airline, but once in place, the airline will regain its glory and possibly pay off all its debts. Failure to this, the airline can seek government’s assistance financially and contemplate on the best strategy, put efforts in value activities, and start regaining profits.

Conclusion

Sabena Belgium World Airline has experienced years of losses; however, Godfroid has been selected as the leader of the company with much expected from him. The company, which is at the verge of bankruptcy, is expected to improve, which is Godfroid’s major role.

With the above solutions, recommendation and justification, it is evident that the company needs to operate on profits in order to survive the competitive industry. Competitive advantage is the key to profitability, and once the company attains a competitive advantage, it will be in a position of acquiring a large share of the market and operating profitably. Nevertheless, competitive advantage requires both capabilities and resources.

References

Achtmeyer, W. (2002). The southwest airlines corporation. Web.

Agarwal, R. (1983). Organization and management. New Delhi: Tata McGraw-Hill Education Publisher.

Ashraf, T. Organizational behavior. Web.

Evans, L., & Aluko, F. (2010). Teacher Job Satisfaction in Developing Countries: A Critique of Hertzberg’s Two-Factor Theory Applied to the Nigerian Context. International Studies in Educational Administration, 38(2); 73-85.

Francis, M. (2007). Effective Management. Web.

Grant, R. (2001). The resource based theory of competitive advantage: implications for strategy formulation. Web.

McKenzie, J., & Jackson, R. (2007). School of social work; Recruiting and selecting the right staff. Web.

Odden, A. (2011). Manage “Human Capital” Strategically. Phi Delta Kappan, 927); 8-12.

Rice, J. (2010). Adaptation of porter’s five forces model to risk management. Defense Acquisition Review Journal, 17(3); 375-388, 14p.

Waltson, G., Gallagher, K., & Armstrong, M. (2005). Managing for results. London: CIPD Publishing.

Zoephel, M. (2011). Michael Porter’s Competitive Advantage Theory: Focus Strategy for SMEs. Berlin: GRIN Verlag Publisher.

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