Turkish Airlines: Company Strategic Analysis

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Table of Contents

Introduction
Strategic Objectives
Internal Audit
External Audit
Suitability of the Current Strategy
Reference List

Introduction

Civil aviation is one of the central forces driving the globalization of the modern world and the improvement of the international discourse. It ensures the fast rise of the sector and high revenues generated by companies functioning in it. Multiple carriers focus on conquering the market and attracting new clients. The substantial demand for such services also promoted the rise of numerous airlines, for instance, Middle Eastern carriers, and the increased rivalry peculiar to the sphere. Under these conditions, the correct understanding of the internal and external environments is vital to holding stable positions and generating competitive advantage (Capon, 2008). The presented report revolves around Turkish Airlines and offers its strategic audit along with recommendations.

Strategic Objectives

Turkish Airlines has established strategic objectives and goals influencing its functioning and development. Its current mission implies becoming a leading European carrier with the developed global network attained due to compliance with the flight strategy, reliability, and service quality. As the flag carrier of the Republic of Turkey, it wants to continue its rise and achieve the following objectives:

Attain higher satisfaction levels among clients
Increase market share up to 2,5% of the market as a whole
Attain a total revenue of $10.5 billion by the end of 2021 (Vision & mission, n. d.)

These statements are used as the guidelines for the future evolution of the company.

Internal Audit

The internal audit of Turkish airlines is performed using the value chain model with a focus on primary and support activities. It will help to show the sources of the competitive advantage and how the company achieves its current goals. By adopting the model, it is possible to investigate the existing company’s environment and formulate its strengths and weakness that might be addressed to attain better results (Iskan and Klaus, 2013). That is why all aspects of the value chain framework are analyzed.

Inbound Logistics

Inbound logistics include catering products, specific products, and delivery of aircraft. Turkish Airlines uses Airbus and Boeing models to ensure a high level of comfort and safety for all passengers (McFadyean et al., 2019). The planes are delivered following the existing international agreements with strict terms, making the process more effective and helping to avoid delays (Turkish Airlines, 2020). The company has already acquired half of 25 new Boeing 787-9 planes by air which creates the basis for further growth (Meet our fleet, n. d.). Catering products are purchased in cooperation with local producers, which simplifies logistics and is more effective (Joyce and Woods, 1996). It can be viewed as the firm’s source of advantage.

Operations

Turkish Airlines devotes much attention to improving the high quality of its goods and services offered to clients. Operations include control of the suggested food, provision of a set of diversified services to clients, such as booking, selecting the menu, and ensuring the high safety of flights (Thompson, Scott, and Martin, 2017). It presupposes aircraft maintenance, analysis of current states, and personnel checks to ensure they meet existing standards (Kasahara, 2015). It ensures that customers will enjoy the flight, which is the central service offered to them.

Outbound Logistics

Outbound logistics implies providing goods to the final user in ways ensuring high levels of their satisfaction. Turkish Airlines assists in transporting the luggage at the point of destination safely to avoid any claims (McFadyean et al., 2019). Moreover, it uses online channels to improve communication systems and ensure passengers can acquire information about services they need and book a flight (Turkish Airlines, 2020). The existing framework also guarantees that clients might enjoy services offered to them in a way convenient for them, which helps to attain a competitive advantage.

Marketing

Turkish Airlines also employs effective marketing strategies focused on popularising its products and attracting new clients. For instance, the carrier has a solid online media presence, using existing networks as the platform to promote its services (McFadyean et al., 2019). Second, it uses TV campaigns in various regions to expand its target audience. At the same time, the company cultivates public relations by offering bonuses to loyal clients and encouraging them to use the carrier’s services again (Turkish Airlines, 2020). The strategy helps to generate a competitive advantage and succeed.

Post-Sale Services

The carrier also ensures that in case the quality of the provided services is not satisfactory, a client can report it, and the complaint will be handled appropriately 0. This approach to post-sale services ensures that the company can constantly improve its image by supporting the offered products during their life cycle (McFadyean et al., 2019). At the same time, it reduces the number of dissatisfied clients, which is another advantage coming from this method. At the same time, Turkish Airlines analyze the target audience’s experiences to improve the quality of post-sale services and avoid numerous claims.

Human Resources

The company views people as one of its most valuable assets. For this reason, it devotes much attention to recruiting the right people and training (Turkish Airlines, 2020). The existing program presupposes the attainment of a high level of effectiveness through the constant examination of the staff’s preparedness levels, competence, and provision of appropriate courses. The ground and flight personnel are provided with strict instructions regulating their functioning, work with clients, and delivery of services (Turkish Airlines, 2020). This approach helps to minimize the negative influence of the human factor, improve safety, and avoid claims related to the low quality of service.

Technology and Development

The constant improvement is achieved by the carrier through innovating its fleet and integrating new technologies into its work. At the moment, it has a contract with Boeing for the delivery of 25 new planes as part of its innovation (McFadyean et al., 2019). Additionally, Turkish Airlines digitalizes its environment to allow passengers an opportunity to use online services and enjoy the increased convenience of offered services (Turkish Airlines, 2020). The scope of renovations remains high, and one of the company’s goals presupposes the continuous improvement of its technologies to be competitive (Turkish Airlines, 2020). It serves as the basis for generating a competitive advantage.

Procurement

Turkish Airlines has several procurement strategies employed in different situations. First, it uses tenders to select a reliable partner to cooperate with and acquire needed goods and products (Reuters Staff, 2020). Second, it supports already existing bonds to create effective collaboration with trusted partners (McFadyean et al., 2019). It leads to the practical procurement approach and helps to ensure the company possesses all needed materials and goods to introduce the basis for its work (Johnson et al.,2017). At the same time, the diversity of partners results in the increased sophistication of procurement practices, meaning that need for additional management is needed to avoid confusion or deficit of the demanded product.

Altogether, it is possible to conclude that the internal environment of Turkish Airlines can be viewed as one of the factors leading to the generation of additional competitive advantage. The company focuses on improving the quality of services offered to clients through innovating all aspects of its functioning, training staff, and using effective strategies to acquire needed products and deliver services to final users. The value chain provides the carrier with multiple benefits, which might allow it to evolve in terms of the fierce rivalry peculiar to the existing market.

External Audit

Porter’s Five Forces

Analyzing the external environment, it is vital to emphasize that Turkish Airlines functions in a highly competitive environment with multiple giant corporations struggling for clients. Currently, the market is divided into the most powerful carriers, such as Emirates, Etihad Airways, and Saudi Arabia Airlines (ICAO, 2021). The European region is also shared by Lufthansa, Aeroflot, Air France, and British Airways (ATM Team, 2020). It means that the threat of new entrants remains low as these corporations control the segment. At the same time, some companies, such as Air Arabia and Etihad Aviation Group, plan to launch a new budget carrier focused on allowing cheap services to different clients (ATM Team, 2020). It might be viewed as a direct threat to Turkish Airlines and demand appropriate actions.

The bargaining power of consumers is another vital aspect influencing the work of a carrier. At the moment, passengers have diversified demands on airlines. First of all, the number of economy passengers increased, which is associated with pandemics and their aftermath. At the same time, there are still first and business-class clients who are ready to use Turkish Airlines’ services (Turkish Airlines, 2020). The company offers different types of booking to meet diversified needs (Turkish Airlines, 2020). At the same time, due to the restrictions, the company introduces additional measures which might influence customer flow, and the way seats are configured (McKeegan and Ranieri, 2018). These factors might limit the company’s ability to evolve because of the reduction in income.

Industry Analysis

The airline industry is characterized by fast growth, competitiveness, and a tendency towards cooperation. Currently, the three main alliances, such as Star Alliance (Turkish Airlines belongs to it), Sky Team, and Oneworld, function to provide clients with safe and high-quality transportation to different destination points (Crail and Lupini, 2021). At the same time, there are some dominant carriers, such as Lufthansa and Air France, holding the biggest market shares globally (ATM Team, 2020). It influences the work of other companies and the way they operate in the existing environment.

Market Opportunities

Turkish Airlines might also benefit from the growing market opportunities. At the moment, the number of flights increases because of the rising interest in global travel (ICAO, 2021). The new generation views civil aviation as a fast and safe way to reach various destinations (ICAO, 2021). Additionally, the growing income of representatives of the Gulf Region also transforms them into clients who might help the carrier to acquire additional benefits. The market also recovers after the pandemic, which means the company can attain the planned goals.

In such a way, Turkish Airlines has specific micro opportunities for its further evolution. First, the comparatively low threat of new entrants makes its positions stronger, while the strong bargaining power of clients means they will continue using civil aviation for their needs. Moreover, the market trends are favorable for raising revenue via cooperation with new groups of clients. Turkish Airlines can also benefit from the growth of the industry and its participation in strategic alliances.

PESTEL Model

The current political environment is overall positive and promotes the development of civil aviation. The Middle Eastern and global forces support carriers, especially in terms of the pandemic, by offering subsidies and regulations, helping to avoid unfair competition and protect strategically important partners (Hodgkinson and Johnston, 2016). The Middle East Civil Aviation authority views the development of the sphere as the central factor vital for the evolution of the region (MEASRM, n.d.). For this reason, carriers have multiple opportunities to operate within the area. The global forces also promote the stable, safe, and effective work of airlines.

The socio-cultural factor is another element influencing Turkish Airlines. For instance, passengers with high-income value comfort and space, meaning that the company has a chance to increase the number of first-class seats (Pereira, Lohmann and Houghton, 2021). It might also help to generate an additional income. At the same time, the stable and significant number of economy flights helps to create the basis for improvement (Turkish Airlines, 2020). The company’s values, such as premium service and safety, meet the current demands of carriers, which makes the sociocultural factor one of the issues stimulating the rise of the company.

In such a way, these forces analysis shows that Turkish Airlines has macro opportunities that can be employed to evolve. The favorable political and socio-cultural factors can be utilized to enter a new development stage and become more influential in particular regions. At the same time, it is vital to monitor the market, and the environment as the change in demands or some restrictions from the government might influence the company and precondition a significant reduction in income.

Suitability of the Current Strategy

Using the results of the analysis performed above, it is possible to cogitate on the peculiarities of the current strategy employed by Turkish Airlines. In general, it suits the existing market and industry conditions. The focus on innovation, using a new fleet, safety, and high quality of services might guarantee successful development and the ability to compete with the closest rivals. It considers the current passengers’ demands to comfort and might provide them with additional services, such as food, luggage transportation, and online booking (Logothetis and Miyoshi, 2018). The goals introduced by Turkish Airlines consider both internal and external environments, and their achievement will create the basis for future growth.

Acceptability

For this reason, it is possible to conclude that the strategy is acceptable and can be followed by Turkish Airlines. The recent changes in the environment and industry make it more powerful. For instance, the growth of the Middle Eastern region provides the carrier with additional opportunities for generating revenue. Additionally, the growing demands for safety and diversity mean that the company’s focus on training its staff, introducing new technologies, and their integration into critical operations ensure the ability to remain effective and function regarding the new challenges emerging today. Under these conditions, the strategy is acceptable, though it is possible to offer some improvements coming from the outlined weaknesses of the carrier.

Feasibility, Weaknesses, and Strengths

The company’s major strengths include its correct consideration of existing trends, focus on innovations, customer service improvement, upgrading the fleet, and operating within a favorable external environment. At the same time, Turkish Airlines’ strategy has some weaknesses outlined in the course of the investigation. These include the disregard for the growing number of low-cost carriers, the high level of rivalry threatening the future of the company, and its dependence on new planes’ arrival. At the global level, Turkish Airlines is one of the reliable carriers recognized by clients, which helps the organization acquire benefits. At the same time, its positions in the Middle Eastern region are vulnerable because of the Emirates, Air Arabia, or Etihad. For this reason, it is vital to focus on entering this market as it is highly attractive for airlines because of the growing bargaining power of clients.

Sustainability and Recommendations

Altogether, the current strategic position of Turkish Airlines can be viewed as sustainable. The selected course might ensure the future development of the carrier and its substantial role in global transportation. The company has reasonable goals and a value chain that might promote its achievement. However, results can be improved by focusing on adding low-cost transportation services (Lynch, 2018). It will help to expand the client base and acquire new passengers contributing to the substantial growth in income (Flouris and Oswald, 2006). Additionally, the company overlooks the threat coming from direct competitors, such as Emirates or Etihad. It means that Turkish Airlines should have a specific plan focused on retaining clients and their acquisition by offering new services unavailable to other companies (Deveci, Ciftci, and Akyurt, 2020). It can also be performed by using an enhanced pricing strategy for bonuses for loyal and new passengers (Itani, O’Connel, and Mason, 2014). Following these recommendations, Turkish Airlines can eliminate the existing drawbacks and create a new, modified, and new practical approach to its evolution (Shaw, 2011). Otherwise, there is a high risk of failing to cover a fast-growing market segment and suffering from reduced income.

Reference List

ATM Team (2020) ‘Low-cost carriers to boost Middle East aviation market’, WTM Global Hub, Web.

Capon, C. (2008) Understanding strategic management. Harlow: Pearson Education Limited.

Cole, G. (2003) Strategic management: theory and practice. 2nd edn. London: Thompson Learning.

Crail, C. and Lupini, C. (2021) ‘What is an airline alliance?’, Forbes, Web.

Deveci, M., Ciftci, E. and Akyurt, Z. (2020) ‘Strategical analysis and the impact of Istanbul airport on Turkish Airlines’, Journal of Economic and Social Development, 7(1), pp. 71-81. Web.

Flouris, T. and Oswald, S. (2006). Designing and executing strategy in aviation management. Aldershot: Ashgate.

Hodgkinson, D. and Johnston, R. (2016) International air carrier liability: safety and security. London: Routledge.

Iskan, S. and Klaus, P. (2013) Transport, logistics, and supply chain services in Turkey. Web.

International Civil Aviation Organization (ICAO) (2021) Effects of novel coronavirus (COVID-19) on civil aviation: economic impact analysis. Web.

Itani, N., O’Connel, J. and Mason, K. (2014) ‘A macro-environment approach to civil aviation strategic planning’, Transport Policy, 33, pp. 122-135.

Johnson, G. et al. (2017) Exploring strategy. 11th edn. Harlow: Pearson.

Joyce, P. and Woods, A. (1996) Essential strategic management from modernism to pragmatism. Oxford: Butterworth Heinemann.

Kasahara, E. (2015) Practical strategic management: how to apply strategic thinking in business. New Jersey: World Scientific Publishing.

Logothetis, M. and Miyoshi, C. (2018) ‘Network performance and competitive impact of the single hub – a case study on Turkish Airlines and Emirates’, Journal of Air Transport Management, 69, pp. 215-223.

McFadyean, D. et al. (2019) A strategic marketing plan on air cargo expansion for Turkish Airlines. Web.

McKeegan, G. and Ranieri, W. (2018) A handbook on aviation law. New York, NY: American Bar Association.

MEASRM : The Middle East aviation safety roadmap (no date) Web.

Meet our fleet (no date) Web.

Lynch, R. (2018) Strategic management. 8th edn. Harlow: Pearson.

Pereira, B., Lohmann, G. and Houghton, L. (2021) ‘The role of collaboration in innovation and value creation in the aviation industry’, Journal of Creating Value, 7(1), pp. 44–59.

Reuters Staff (2020) ‘Turkish Airlines may delay delivery of Airbus, Boeing planes: report’, Reuters, Web.

Shaw, S. (2011) Airline marketing and management, 7th edn. Farnham: Ashgate.

Thompson, J., Scott, J. and Martin, F. (2017) Strategic management: awareness & change. 8th edn. Hampshire: Cengage Learning.

Turkish Airlines. Annual report 2020. Web.

Vision & mission (no date) Web.

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