The requested strategic management report will be in the document with details. Please it’s very important to full fill all the requirements
ASSIGNMENT #1 Aviation Strategy (ECM40SE) Guidelines (50% of Module Mark) Introduction The assignment is an important part of this module’s assessment scheme. It counts 50% towards the overall mark. You are required to read carefully the case study provided. To prepare your assignment and on the top of the information provided, you should also read the slides provided in class, and a couple of additional reference materials, as well. Assignments are individual pieces of work that should reflect your own opinions. You should therefore restrain from getting outside assistance or copying and pasting material from the internet or other sources in order to construct your arguments. Assignments are checked for plagiarism as part of the submission process! Background China Eastern Airlines (CEA) is a state-owned enterprise (SOE) in China's aviation industry. To be internationally competitive, and engage in an internationalization strategy, it sought out international investors such as Singapore Airlines in 2007 and Delta Air Lines in 2015. More specifically, what risks do international investors need to consider when investing in a Chinese SOE? Also, how important is the strategy of entering alliances? The case looks into various strategy methods, such as equity-based ownership and M&A deal that inadvertently attracts attention from the public as well as the central government. In addition, this case highlights the intricacies of entering the Chinese market in view of its complex political and industry structures. Key Points Read carefully the case study provided entitled “China Eastern Airlines (CEA): Strategic Pathway to Going Global”. Assume you are in December 2016 and have just been hired as a specialist aviation consultant, to advice the China Eastern Airlines (CEA)’s Board of Directors on a suitable strategy for becoming a global player in the next 5 years (2017 – 2021). Prepare a report with your own views, addressing the following key points: 1) Strategic analysis – Perform: a) A careful assessment of the current strategic positioning of China Eastern Airlines (CEA), identifying the various opportunities, threats, strengths, and weaknesses ahead. Draw your own conclusions. b) What are the main drivers of success for China Eastern Airlines (CEA)? Justify. c) Identify the main critical success factors (CSFs) of China Eastern Airlines (CEA) and explain how to best leverage those to become a stronger global airline in the future. 2) Strategic choices and reflections a) Perform a critical analysis of China Eastern Airlines (CEA) past initiatives to engage on a path of internationalization, highlighting the various positive and negative outcomes of each venture. Explain your thoughts and draw your conclusions. b) Recommend a proper strategy for the internationalization of CEA, highlighting the various pros, cons, risks and expected outcomes. Use some strategic frameworks and justify your thinking. 3) Plan of action for implementation – Assume your recommended strategy has been approved. Prepare a brief and simple 5-year strategic plan of action (from 2017 to 2021) containing a: a) clear mission and vision b) Set your targets/objectives c) Define your priorities d) Organize your actions by focus-areas e) Propose a small number of initiatives with deadlines f) Define some key performance indicators (KPIs) Justify your choices. Learning Objectives This case is designed to assist students to explore and understand the strategy of globalization and internationalization in the airline industry. Students will (1) familiarize with the discussion of internationalization strategies; (2) will understand the stages of M&A deals with state-owned enterprises from the perspective of risks and financial considerations; (3) will understand SOE reforms and changes in the Chinese aviation industry; (4) how foreign airlines can explore the process of managing stakeholders in an industry viewed with strategic importance by the central government. Marking Criteria The marking criteria for this assignment follows the scheme below: # Issues Marks (%) 1 Strategic analysis (Key Point 1) 30 a)Perform a careful assessment of the current strategic positioning of China Eastern Airlines (CEA), identifying the various opportunities, threats, strengths and weaknesses ahead. Draw your own conclusions. 15 b)What are China Eastern Airlines (CEA)’s main drivers of success? Justify. 7 c)Identify the main critical success factors (CSFs)of China Eastern Airlines (CEA) and explain how to best leverage those to become a stronger global airline in the future 8 2 Strategic choices and reflections (Key Point 2) 30 a)Perform a critical analysis of China Eastern Airlines (CEA) past initiatives to engage on a path of internationalization, highlighting the various positive and negative outcomes of each venture. Explain your thoughts and draw your conclusions 10 b)Recommend a proper strategy for internationalization, highlighting the various pros, cons, risks and expected outcomes. Use some strategic frameworks and explain your thoughts. 20 3 Plan of Action for Implementation (Key Point 3) 25 Assume your recommended strategy has been approved. Prepare a brief and simple 5-year strategic plan of action (from 2017 to 2021) containing various important parts. Justify 25 4 Extra Readings 10 5 Report organization, clarity, spelling, presentation, punctuation, page numbers, references, etc. 5 TOTAL 100 Submission and Deadlines Assignments plus cover sheets must be electronically submitted into Moodle’s EAU portal, in accordance with the deadlines and rules setup for this effect. Length In terms of effort, I expect around a 2,500-word written report (6 to 7 pages). The 2,500-word report includes headings and the body text. References, annexes, tables, charts and other additional elements should be counted in addition to that. Penalties can be applied for those exceeding the 2,500-word limit! Assignment Format The assignment should be written in a business report style, rather than following a typical academic essay format. I expect to find, above all, evidence of sound management and good strategic thinking. Your recommendations should be based on sound/logical business arguments as well as knowledge of the contents taught in class. I also expect to find evidence on the use of references or bibliography. Because this module is focused on management practices, I expect students to use tables, charts, diagrams and other visual elements to support their views and analyses, since this is common practice in all business environments. Writing the Assignment The assignment should follow a certain structure, containing, at least, six important parts: 1. Cover Sheet 2. Introduction 3. Objectives 4. Addressing the Key Points 5. Conclusion 6. References or Bibliography Most professional business reports also include an executive summary at the very beginning highlighting the main points in the report. However, since this assignment is quite small (2,500 words), such part should be skipped. At the very end, if necessary, annexes can be added. Tables, diagrams, figures and charts should be combined with the main text when necessary. Do not forget to properly reference your sources. Good luck with your assignment! 2 E du ca tio na l m at er ia l s up pl ie d by T he C as e C en tre C op yr ig ht e nc od ed A 76 H M -J U J9 K -P JM N 9I Research Fellow Jun Jie Yang and Senior Lecturer Clive Choo prepared this case based on published sources. This case is intended for class discussion and learning, and not intended as source research material, or as illustration of effective or ineffective management. COPYRIGHT © 2018 Nanyang Technological University, Singapore. All rights reserved. No part of this publication may be copied, stored, transmitted, altered, reproduced or distributed in any form or medium whatsoever without the written consent of Nanyang Technological University. The Asian Business Case Centre, Nanyang Business School, Nanyang Technological University, Nanyang Avenue, Singapore 639798. Phone: +65-6790-4864/6552, E-mail: asiacasecentre@ntu.edu.sg CHINA EASTERN AIRLINES (CEA): STRATEGIC PATHWAY TO GOING GLOBAL Jun Jie Yang and Clive Choo In 2015, Delta Air Lines (“Delta”) bought a 3.55 per cent stake in China Eastern Airlines (CEA) for 2.79 billion RMB and became its largest foreign investor, a move that promised to take CEA global on a grander scale while paving the way for Delta to make inroads into the Chinese market. This was unprecedented in the civil aviation industry in China, as it was seen as a key strategic sector by the Chinese government. Furthermore, just seven years earlier, an M&A deal with Singapore Airlines (SIA) fell through. As such, granting Delta partial ownership intrigued many in the industry. What might have been the strategic intent of CEA in making this deal? In what ways could CEA and Delta benefit in the long term? Might its experience with SIA have provided the impetus for this internationalization thrust? CHINA’S EVOLVING CIVIL AVIATION INDUSTRY China’s civil aviation industry was dominated for a long time by a few State-Owned Enterprises (SOEs) such as Air China, China Southern Airlines, and China Eastern Airlines. This was largely due to China’s restrictive economic policies, in particular, those that imposed restrictive barriers on foreign ownership. In 2001, the four biggest airlines in the country – that included Air China, China Southern Airlines, and China Eastern Airlines – transported almost 65 per cent of the total number of air passengers that year.1 Since then, China has accelerated the pace of SOE reform with the formation of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), a government investment watchdog, in 2003. In an effort to move away from a SOE-dominated economic structure, SASAC launched new policies to encourage private capital injection (non-governmental equity) that “disrupted” what it considered to be entrenched “monopolized industries and fields”, such as the civil aviation sector.2 The structure of the aviation industry changed noticeably over the following decade. Notably, the market share of the four biggest firms declined to about 55 per cent in 2014.3 1 Zhang, L. & Wei, W. (2016). Study on China civil aviation industry development and market concentration. Journal of Shanghai University of Engineering Science, 3, 195-198. 2 State Council of China. (2005, February 19). Several opinions of the State Council on encouraging, supporting and guiding the development of individual and private economy and other non-public sectors of the economy. Retrieved from http://en.pkulaw.cn/display.aspx?cgid=57051&lib=law 3 Zhang, L. & Wei, W. (2016). Study on China civil aviation industry development and market concentration. Journal of Shanghai University of Engineering Science, 3, 195-198. Ref No.: ABCC-2018-020 Date: 20 August 2018 Distributed by The Case Centre North America Rest of the world www.thecasecentre.org t +1 781 239 5884 t +44 (0)1234 750903 All rights reserved e info.usa@thecasecentre.org e info@thecasecentre.orgcase centre 318-0307-1 U sa ge p er m itt ed o nl y w ith in th es e pa ra m et er s ot he rw is e co nt ac t i nf o@ th ec as ec en tre .o rg Ta ug ht b y P ed ro P in to , f ro m 1 6- M ar -2 02 3 to 3 1- M ar -2 02 3. O rd er re f F 47 34 54 . P ur ch as ed fo r u se o n th e M B A G E N E R A L M A N A G E M E N T, a t E m ira te s A vi at io n U ni ve rs ity . E du ca tio na l m at er ia l s up pl ie d by T he C as e C en tre C op yr ig ht e nc od ed A 76 H M -J U J9 K -P JM N 9I Page 2 ABCC-2018-020 The liberalization of the aviation industry presented several challenges to SASAC and the Civil Aviation Administration of China. The former supervised state-owned assets, while the latter exercised “unified supervision and administration” over civil aviation activities, and essentially served as a watchdog for the civil aviation sector.4 Understandably, SASAC and the Civil Aviation Administration were cautious about allowing private equity in the aviation SOEs. As such, the liberalization of the aviation industry from 2007 to 2010 was a slow process. In 2012, the State Council issued a new policy to encourage internationalization and non-governmental ownership. This paved the way for local and foreign private capital injections in China’s civil aviation sector. As such, Chinese airline companies could explore the global market for expansion opportunities. 5 At the same time, aviation SOEs could improve on their competencies through collaborating with successful international aviation players. In 2013, the Civil Aviation Administration of China further liberated the aviation industry, allowing new entrants into the growing sector. Concurrently, the Third Plenary Session of the 18th Central Committee of the Chinese Communist Party (CCP)6 advocated the development of a mixed