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Achieving Sustainable competitive advantage Organization Capability Profile (OCP) and Strategic Advantage Profile (SAP) Strategic capabilities

s and core competences are critical to developing competitive advantage for every company. Capabilities are defined as complex bundles of skills and accumulated knowledge that enables firms to coordinate activities and make use of their assets (Day, !!"#. $n organi%ation needs to have a wide range of capabilities in several areas in order to create profitable value which results in strategic advantage. &hey are the outcome of organi%ation's activities leading to rewards in terms of economic parameters, such as profit of shareholder value and(or non financial parameters, such as market share or reputation. )ence, the value of human capital in developing and using capabilities and, finally, core competencies cannot be overstated. Different firms need different capabilities and all firms will not involve the same capabilities. (*enedetto et al, +"",#. -or example a big company would have better financial capability strength compared to a small company and similarly would differ in responding to changes too. )ence the strategists should be able to identify the strengths of their functional capabilities which lead an organi%ation to its competitive advantage ()arrison, !!.#. &he core functional capability factors of any organi%ations are/

&he Strategic $dvantage profile will therefore help examine the organi%ation0s strategic capabilities. &he above analysis on flydubai0s capability factors is interpreted using a rating scale of 12 (3eaknesses#, " (4ormal# and 52 (Strength# which has helped us identified the strong and weak capabilities. Analysis of the capability factors of flydubai

Capability Factor

3eaknesses 12

4ormal "

Strength 52

Financial Capability Factors (a) Sources of Funds (b) sage of Funds 52 52 52

(c) !anagement of funds !ar"eting Capability Factors (a) Product related (b) Price related (c) Promotion related (d) #ntegrated and Systematic Operations capability factors (a) Production system (b) Operations and control system (c) $%& system Personnel Capability factors (a) Personnel system (b) Organizational characteristics (c) #ndustrial relations #nformation management capability factors (a) Ac'uisition and retention of and employee " " "

52

52

52

52

5, 52

"

56

Organization Capability Profile &he 7rgani%ation Capability 8rofile defines the resources, abilities and knowledge that helps a firm to offer 9uality goods(services to its customers. :t therefore helps analy%e the nature of impact which helps determine the areas an organi%ation have competitive strength or weakness and can accordingly improve on those areas. :n short, alliance of both strategic planning and generic capabilities is essential for high performance. (;egan et al, +""6#

Capability Factor Finance

(ature of #mpact

Competitive Strengths or )ea"nesses Competitive strength is its capital structure which is fully owned by the government and shares the same shareholder like <mirates. )ave good relations with other banks which have high confidence in us. Since the company is owned by government it doesn0t face difficulty in laws and regulations as it is booming through the process of liberali%ation.

!ar"eting

:t offers value for money products at an affordable price but at the same time they are expensive for additional services like excess baggage and date change fees. =imited promotional techni9ues. -irst low cost airline of its kind which has explored different business avenues.

Operations

>ood production system as it has added state of the art device to run its flights and operations. >ood ; ? D system which provides digital news update with the help of touch screen. <xpansion of terminal + Disadvantage is the on1 time delivery from its supplier *oeing which can affect the

company0s profits and reputation.

*ased on flydubai0s 7C8, below are the opportunities identified/

*ased on flydubai0s 7C8, below are the gaps identified and recommendations provided/

@ore geographical development since flydubai is constantly working on

Delay in delivery of aircrafts since they have a very limited choice of suppliers which can lead to loss of revenue, customer dissatisfaction ? impact route extensions. )ence they should try looking for other suppliers like $ir *us Delay in resolving :& related issues due to limited staff in :& department. )ence they should hire more staff so that employee0s concerns are resolved and doesn0t result in loss of productivity.

increasing more destinations to its portfolio. <xpansion of &erminal + is a huge opportunity in terms of its airport capacity which is important for the growth of any aviation industry. )igh goodwill of company has led to attracting more customers

=ack

of

managers

understanding

towards employees leads to employee dissatisfaction and low morale which in turn affects their productivity. )ence they should hire more staff to have a good control on work load to ensure employee benefits are not sacrificed.

Fly &ubai*s +alue creation and Sustainable Competitive Advantage Firm*s capabilities Are the Are the Are the Are the capabilities Are the capabilities

capabilities capabilities capabilities valuable, rare, costly to imitate, Finance capabilities -es -es (o

organized for strengths or usage, -es )ea"ness, Strength and distinctive competence

@arketing capabilities Operations capabilities

Aes -es

4o -es

4o -es

Aes -es

Strength Strength and sustainable distinctive competence

8ersonnel Capabilities Aes :nformation management capabilities >eneral @anagement Capability Aes 4o

4o 4o

4o 4o

Aes Aes

Strength Strength

4o

4o

Aes

Strength

Appendi. / Organizational capabilities of Fly &ubai OCP Fly &ubai Capability Factors Functions related to capability factors

Finance capability factors B relates to the availability (where a company receives its sources of finance#, usages (how the funds are utili%ed # and management of funds

(how well the funds are managed for investment purposes# &he Company ac9uires sustenance from a variety of sources to ensure that the company0s revenues are stable and ade9uate for goals and mission of the organi%ation. &hese include availability, usage and management of funds. :n terms of sources of funds the capital structure of -ly Dubai is very satisfactory due to it being fully owned by government and shares the same shareholder0s like <mirates since the capital is provided by the government. &he organi%ation has the capability to raise capital in the market but no need has arisen so far. &he financial affair of the corporation is controlled by our treasury department who monitors the overall re9uirements of cash flow and fund transfers to meet the overall obCectives. -urther on also helps to enhance the capital structure and manage the long term capital cost. &he company shares a very healthy financing pattern as discussed above due to it being fully capitali%ed by the government which also results in a healthy reserves and surplus position. :n terms of usage of funds ample no of investment opportunities are available due to -ly Dubai0s expansion which drives investment and economic growth between D$< and -ly Dubai destinations including ;ussia. -ly Dubai0s fresh and current air links will play an important role in not only increasing investment opportunities in both the countries but will also open up grounds for partnerships, including oil ? gas, mass media, manufacturing and general trading which will help ;ussia to reach out to audience worldwide. $s compared to other airlines our company pays rich dividends to its shareholders and maintains a very cordial, strong and healthy relationship (Sheikh

$hmed *in Saeed $l @aktoum chairman and chief executive <mirates $irlines and -ly Dubai# as the company has already achieved its first full year of profitability for the financial year +" +. :n terms of management of funds the company has a very strong and effective accounting system which provides well1timed and precise analysis of financial, budget reports as well as financial developments indicating the overall proficiency and effectiveness using the E8: and benchmarking approach which helps in achieving the overall organi%ational goals. &heir financial ratios indicate the company0s strong cash flow since it is owned by government and there is no difficulty at all in managing the funds. &he company also takes into consideration the inflation rate which has been beneficial as the company0s cost in crude oil will reduce with an expectation of fall in D$<0s inflation rate. :t also benefits from taxes since the currency of D$< has been stable and it has been pegged to DSD which has been the strongest currency in the world. @oreover they have a lot of upcoming proCects including the expansion of terminal +, launching of business class, and new aircrafts in the pipeline. !ar"eting capability factors 1 relates to the product (offering wide variety of products to customers#, pricing (value that will purchase a set 9uantity of a product or service#, promotion (various channels(medium re9uired for promotion of a product(service#, and distribution of products or services (performance of the marketing department in terms of the company0s image compared to the competitors# &hese factors relate to the price, product, place and promotion of the goods and services. $ very important aspect in analy%ing the business includes analy%ing the market in several ways which will help the company identify their areas of weakness

and develop further ways for improvement. &he product factor includes examining those products and services which -ly Dubai offers to its customers. :t offers value for money products at a very affordable price and therefore is dedicated in providing high 9uality on inflight products which offer an ama%ing menu with an extensive range of duty free items which satisfies overall market re9uirements. -ly Dubai also adopts a differentiation strategy from its other competitors by adding extra flights to the famous destinations that have a great response from their target market. @oreover they offer a great airline service and technology for all classes and have also won appreciation for their excellent service 9uality. &he price factor of the low cost model consists of everything what a customer would need while travelling which is the seat price, inclusive of all taxes ? hand baggage. &he passengers also have an option to pay for the additional services such as extra baggage, extra leg room, inflight entertainment and meals served on board. )owever the date change fees and excess baggage is proven to be expensive compared to other airlines. &he place factor includes their operations which are run from their main location which is in Dubai. Despite of them being profitable they still have a scope for expansion within D$< and >CC countries. $s we all know Dubai has been known for its business hub and -ly Dubai can exploit this opportunity to have a strategic advantage over its competitors. &he promotion factor of -ly Dubai used various methods to manage the expectations of the customers related to its experience. -lydubai tries to introduce innovative

advertising techni9ues but they don0t develop a large marketing campaign since they are a low cost airline which can be a disadvantage for them in order to reach out to its potential customers since it mostly relies on word of mouth. &he Integrated & Systematic factors include flydubai ensuring that the product is the brand itself. &he foundations for their brand values are honest and uncomplicated. -lydubai C<7 says flydubai tries to make travel a little less complex, a little less stressful and a little less expensive.F :t has a very effective marketing management system where they have asked Splendid which is a Dser Centered Design methodology to design and build a complete new online experience for web and mobile including an evolution of the flydubai digital brand. Operations capability factors1 relate to the production of products or services (various methods used to produce products(services from different resources#, operations and control system (designed to confirm that the daily activities are in line with the planned obCectives#, ;?D system (developing new products or processes which is beneficial for the company0s future growth#. :n terms of its production system, their work systems are fully integrated with all the departments that support efficiency and productivity. &he company has a good production system as it has added state1of1the1art device to run its flights ? operations. @oreover it has also added destinations 9uickly in order to receive remarkable results in short time which will help in capacity expansion. &he time when flydubai started its operations there was recession1hit Dubai in +""!. &he company took it as a challenge and brought up1to1date systems, processes and highly 9ualified personnel to ensure the

dependable carrier service. :n terms of its operations & control systems, they spend good amounts of their financial plan on further development of human resources which results in a high service 9uality and helps improve customer satisfaction. @oreover they do have a fair reliable supplier *oeing which is fuel efficient, cost effective, provide logical and technical support, and repair manufacturing defects. &he only disadvantage is the on1 time delivery which is not very effective. :n terms of its R & D, it has built collaborations with D&: solutions ? 4ewspaper direct which provides passengers digital news updates on all local and international flights through a touch screen facility. )ence the technology partnership has benefited the organi%ation since this is a value added feature which leads to customer satisfaction. :t however doesn0t possess any patent rights. Personnel capability factors 1 relate to the existence and use of human resources and skills and the factors relate to personnel system (the type of candidates decided by the )uman resource department on the basis of their experience#, organi%ational and employee characteristics (determine the relationship between organi%ation structure and employee characteristics#, industrial relations (employment relations between employer and employee#. :n terms of its personnel system, it has high 9ualified personnel to ensure the company0s operations run smoothly. &he ); carefully selects the candidates on basis of their experience which best suits the Cob vacancy. :n terms of its organizational and employee characteristics, the company offers

benefits such as increments, bonuses on the basis of their hard work and overall profits generated for the company. :n terms of its industrial relations, employee working conditions are fair since the company is a low cost airline which has limited staff which results in more work, putting in more working hours and not getting leave approvals which results in low morale ?demotivation for the employees. #nformation !anagement capability factors 1 relate to the design and management of the flow of information from outside into, and within an organi%ation for the purpose of decision making and factors relate to ac9uisition and retention of information, processing and synthesis of information (conglomerate all the ideas into a complex whole#, retrieval and usage of information (information need from a pool of resources of information#, transmission and dissemination (two way communication without any delay and how much is the real time response allowed#, and :ntegrative, systematic and supportive factors (understanding between top management and :& and if efficient :& professionals are available in the organi%ation#. :n terms of acquisition and retention of information, processing &synthesis information, retrieval and usage of information and transmission and

dissemination of information they have good availability and widespread use of the information system since people do online booking. $ll the members have an optimistic approach in sharing information with others. :n terms of integrative, systematic and supportive, it has identified weakness in terms of having limited staff working in the :& department where they are unable to address

employee 9ueries in a timely fashion which leads to loss in time ? productivity. &hese further result in issues between top management and :& due to 9ueries not being handled on time. 0eneral management capability factors 1 relate to the integration, coordination and direction of the functional capabilities towards common goals. -actors related to the general management system (overall capability of how liable is the general management system in terms of day to day activities#, general managers, external relationships and organi%ational climate. :n terms of general management system, it has clearly identified its mission and vision which are well aligned with the organi%ation0s obCectives. &he company offers good benefits for top managers for accomplishing these obCectives. :n terms of factors related to general managers1 the drawback is the understanding between the employee and the manager since in certain areas employee expectations are not met especially in terms of getting their leaves approved and also the distribution of work needs to be more fair and done on an e9ual basis. :n terms of external relations, as the company keeps increasing its destinations, this factor plays a very important role in developing and managing its public(external relations well. Since it shares the same shareholder like <mirates it holds a strong advantage with respect to its public image compared to its competitors.