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Operations Strategies in Kenyan Airlines

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Operations Strategies in Kenyan Airlines OPERATIONS STRATEGIES IN KENYAN AIRLINES BY BOSIBORI FAINORA D61/9106/2006 A Management Research Project Presented in Partial Fulfilment of the Requirements for the award of the degree of Master of Business Administration, School of Business, University of Nairobi. OCTOBER, 2012 DECLARATION This research project is my original work and has not been submitted for a degree award in any other university. Signed:……………………………………… Date:…………………………… BOSIBORI FAINORAH, Registration Number: D61/9106/2006 This research project has been submitted for examination with my approval as university supervisor. Signed:…………… Date:………… Signed:……….… Date:………… Mr Nyamwange, S.O. Mr. Mulwa, L.M. Department of Management Science, Departmentof Management Science, School of Business School of business University of Nairobi University of Nairobi i DEDICATION I dedicate this work to my beloved husband and friend Mr. Herbert Ratemo for his tremendous support and patience in the course of undertaking this MBA course. Much love and thanks to my dear daughter Shalom Nyaboke and son Michael Ratemo who endured my busy schedule in support of my vision. ii ACKNOWLEDGEMENTS First and foremost, I would like to thank the Almighty God for enabling me to successfully finish the MBA program. I had many challenges, but His strength and grace carried me through. Special thanks to my loving family who stood by my side supporting me and encouraging me throughout my study period. The University of Nairobi administration that allowed me a chance to further my education to open up my future to the world, many thanks to you. The many times I deferred to undertake my family obligations, you understood and were patient with me. I also appreciate my two supervisors; Mr. Munyao Mulwa and Mr. Onserio Nyamwange whose input was invaluable towards the success of this project. They closely worked with me to ensure that my work was outstanding. Many thanks to my moderator Dr. Okwiri whose contribution was enormous. Profound gratitude to my fellow students and friends for the sharing of experiences and challenges that gave me impetus to move on to achieve this. Special thanks to the management of Kenya Airways and in Particular my immediate line manager Capt. Edward Kamau for his understanding and patience with me. He was able to approve my leave on short notice just to support my vision. My colleagues Scholarstica Adhiambo and Raphael Kangethe encouraged and supported me in many ways, thank you. iii Table of Contents DECLARATION ........................................................................................................ i DEDICATION .......................................................................................................... ii ACKNOWLEDGEMENTS ...................................................................................... iii List of Tables ........................................................................................................... vii List of Figures ........................................................................................................ viii List of Abbreviations and acronyms .......................................................................... ix CHAPTER ONE: INTRODUCTION ........................................................................ 1 1.1 Background of the Study ................................................................................ 1 1.2 Statement of the Problem ............................................................................... 4 1.3 Specific Objectives ........................................................................................ 6 1.4 Value of the study .......................................................................................... 6 CHAPTER TWO: LITERATURE REVIEW ............................................................. 8 2.1 Introduction ................................................................................................... 8 2.2 Importance of Operations Strategy ................................................................. 9 2.3 Operations Strategy Development Process ................................................... 10 2.3.1 The Hayes and Wheelwright Four-Stage Model ........................................... 10 2.3.2 The Five Operations Performance Objectives ............................................... 12 2.4 Challenges of Operations Strategy by Kenyan Airlines. ............................... 14 2.5 Studies in Operations Strategy in Airline Industry ........................................ 15 2.5.1 Knowledge Gap ........................................................................................... 15 iv CHAPTER THREE: RESEARCH METHODOLOGY ............................................ 17 3.1 Research Design .......................................................................................... 17 3.2 Population and Sampling ............................................................................. 17 3.3 Data Collection ............................................................................................ 17 3.4 Data Analysis and Presentation .................................................................... 18 CHAPTER FOUR: DATA ANALYSIS, FINDINGS AND DISCUSSIONS ........... 19 4.1 Introduction ................................................................................................. 19 4.2 General Information ..................................................................................... 19 4.2 The Role of Operations Strategy .................................................................. 23 4.3 The Five Operations Performance Objectives ............................................... 25 4.4 Challenges Faced by Kenyan Airlines .......................................................... 27 4.5 Benefits of an Effective Operations Strategy ................................................ 29 CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS . 31 5.1 Introduction ................................................................................................. 31 5.2 Summary of the Findings ............................................................................. 31 5.3 Conclusions ................................................................................................. 32 5.4 Recommendations ........................................................................................ 33 5.5 Limitations of the Study ............................................................................... 34 5.6 Suggestions for Further Research ................................................................. 34 REFERENCES ........................................................................................................ 36 APPENDICES ......................................................................................................... 39 Appendix 1: Transmittal Letter ................................................................................ 39 v Appendix 2 : List of Airlines in Kenya .................................................................... 40 Appendix 3 : Questionnaire ..................................................................................... 41 vi List of Tables Page Table 2.1: Four stage model of strategic role of operations 11 Table 3.1 Population 18 Table 4.1 Airline experience 19 Table 4.2 Market share 20 Table 4.3 The role of operations strategy 25 Table 4.4 Summary of the role of operations strategy 25 Table 4.5 The performance objectives 27 Table 4.6 Summary of performance objectives 27 Table 4.7 Challenges on operations strategy development 29 Table 4.8 Benefits of effective operations strategy 30 vii List of Figures Page Figure 4.1 Strategy formulation process 21 Figure 4.2 Model for operations strategy formulation 22 Figure 4.3 Environmental protection initiatives 23 viii List of Abbreviations and acronyms AFRAA African Airlines Association ALS Aircraft Leasing Services EU-ETS European Union Emission Trading Scheme IATA International Air Transport Association ICAO International Civil Aviation Organization IOSA IATA Operational and safety Audits JIT Just-In-Time. JKIA Jomo Kenyatta International Airport KCAA Kenya Civil Aviation Authority KLM Koninklijke Luchtvaart Maatschappij, Royal Dutch Airlines KQ Kenya Airways SWOT Strengths, Weaknesses, Opportunities and Threats TQM Total Quality Management USA United States of America WCO World Class Operations. ix CHAPTER ONE: INTRODUCTION 1.1 Background of the Study The business environment is affected by a range of factors including; economic system, political system, legal restraints, industry, labour relations, customer expectations , markets, competition, technology, culture, history, infrastructure, state of the economy, shareholders’ demand, natural environment, labour conditions and so on (waters, 2006). Changes in the environment often happen and cannot be controlled yet they influence the operational decisions made. Organizations strategically respond to any significant changes in the business environment in order to remain competitive. Strategy is described as what the organization wants to achieve and how it will achieve it while operations strategy is the specific actions and decisions that defines the role of operations in achieving the overall goal of the organization. Operations strategy formulation requires an alignment between the market requirements and operational capabilities and these needs to be sustainable in the long-run for competitiveness (Slack, Chambers, Johnston, 2010).
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