Strategic Alternatives for the Continued Operation of Kenya Airways

STRATEGIC ALTERNATIVES FOR THE CONTINUED OPERATION OF KENYA AIRWAYS

RAHAB NYAWIRA MUCHEMI

UNITED STATES INTERNATIONAL UNIVERSITY

SPRING 2016

STRATEGIC ALTERNATIVES FOR THE CONTINUED OPERATION OF KENYA AIRWAYS

RAHAB NYAWIRA MUCHEMI

A Project Report Submitted to the Chandaria School of Business in Partial Fulfillment of the Requirement for the Degree of Masters in Business Administration (MBA)

UNITED STATES INTERNATIONAL UNIVERSITY

SPRING 2016

STUDENT’S DECLARATION

I, the undersigned, declare that this is my original work and has not been submitted to any other college, institution or university other than the United States International University in Nairobi for academic credit.

Signed: ______Date: ______

Rahab Nyawira Muchemi (ID 629094)

This project has been presented for examination with my approval as the appointed supervisor.

Signed: ______Date: ______

Dr. Michael Kirubi, PhD.

Signed: ______Date: ______

Dean, Chandaria School of Business

Signed: ______Date: ______

Deputy Vice Chancellor, Academic Affairs

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ABSTRACT

The concept of strategic alternatives has received a lot of attention from scholars for a very long time now. Despite numerous studies in this area, interest has not faded away. To this end, the objectives of this study were to identify the determinants of strategic alternatives to better understand what drives airlines into such alliances and to identify factors that affect the performance of the alliances.

The research was done through descriptive survey design, which involved all airlines with scheduled flights in and out of Kenya totaling thirty six (42). The target population was CEOs or senior managers within the airlines, which had response rate of 92.7%. Key findings of the study showed all the variables under study affected the strategic alternating in KQ.

The study found that the all the variables have a positive Pearson correlation which shows that the effect is direct proportion to the strategic alternatives for continued operation of Kenya Airways. Organization competitiveness have a strong relationship with organization leadership with r = 0.661 which is significant at 0.01 level.

In addition, organization competitiveness had a very strong correlation with industry challenges which had a Peasrson correlation of r = 0.836 where are it was significant at 0.01 level. Further, the correlation between organization competitiveness and organization resources had a Pearson correlation of 0.053 where by it was not significant for strategic alternatives for continued operation of Kenya Airways. The study recommends that competitive in the airline industry can be eliminated by the industries forming alliances that will allow the airline industries to rip the benefit of operating in different destination. In addition, when the airline adopts the right technology and invest on the state of the art air plane that can be able operate in the harsh climatically conditions and different routes.

Also recommends that the board of directors should always put in place the best leaders they can get because best leaders are known to foster growth of the organizations by maximizing the shareholder’s wealth. Leaders should be in front line to identify the best strategic alternatives that the organization can adapt to ensures growth. Further, the study also recommends that the airline industries should diversify their operation in order to curb the rising global oil crisis and also the economic instability of the different countries that they are operating. This will help the organization to rip the benefits even when some of the economy in which the firm is operating is economically unstable.

Finally, the study recommends that the airline industry should withhold the dividends pay out first so that the amount to be issued can be ploughed back to help boost the airline in making profit. In addition, the airline industry can think of mergers in order to eliminate competition

ACKNOWLEDGEMENT

I would like to acknowledge Kenya Airways for continued support they have given me in my quest to acquire knowledge and skills and by availing necessary data and resources required to complete my research.

Secondly I would like to acknowledge Dr. Michael Kirubi, PhD. for his firm but insightful support during the research period. I wish to thank all my lecturers during this past year for their dedication in transferring their knowledge; Fred Newa, Dr. Peter Kiriri and Dr. Paul Katuse.

Finally, I would like to extend my gratitude to my colleagues at work and the University for providing an excellent and stimulating learning and sharing atmosphere.

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DEDICATION

To my parents Dr. Muchemi and Catherine Waturi, may this Master’s project be a symbol of the ripe fruits of your labour to provide me with an excellent foundation through education. My brothers Eliud and JohnPaul thank you for allowing the last to be the first. To my best friend George Ng’ang’a and his lovely parents James Wairire and Jane Wambui and family, thank you for welcoming me with open arms.

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TABLE OF CONTENTS

STUDENT’S DECLARATION ...... iii COPYRIGHT ...... iv ABSTRACT ...... v ACKNOWLEDGEMENT ...... vii DEDICATION ...... viii CHAPTER 1 ...... 1 1.0 INTRODUCTION ...... 1 1.1 Background of the Problem ...... 1 1.2 Statement of the Problem ...... 5 1.3 Purpose of the Study ...... 6 1.4 Research Questions ...... 6 1.5 Significance of the Study ...... 6 1.6 Scope of the Study ...... 7 1.7 Definition of Terms ...... 8 1.8 Chapter Summary ...... 8 CHAPTER 2 ...... 9 2.0 LITERATURE REVIEW ...... 9 2.1 Introduction ...... 9 2.2 Strategic alternatives ...... 9 2.3 Organization Competitive of Strategic Alternatives ...... 12 2.4 Organization Leadership of Strategic Alternatives ...... 18 2.5 Organization Resources on Strategic Alternatives...... 26 2.6 Chapter Summary ...... 28 CHAPTER 3 ...... 29 3.0 RESEARCH METHODOLOGY ...... 29 3.1 Introduction ...... 29 3.2 Research Design ...... 29 3.3 Population and Sampling Design ...... 30 3.4 Data Collection Methods ...... 31 3.5 Research Procedures ...... 32

3.6 Data Analysis ...... 32 3.7 Chapter Summary ...... 33 CHAPTER 4 ……………………………………………………………………………………………………..34 4.0 RESULTS AND FINDINGS ...... 34 4.1 Introduction ...... 34 4.2 Population Data ...... 34 4.3 Data Presentation ...... 38 4.4 Employees satisfaction by the adapted strategic alternatives ...... 40 4.5. Challenges facing the airline industry ...... 41 4.6 Organization competitiveness ...... 41 4.7 Determinant of the strategic alternative ...... 45 4.8 Organization resources...... 56 4.9 Correlation of the variables ...... 61 4.10 Chapter Summary ...... 62 CHAPTER 5 ...... 63 5.0 DISCUSSIONS, CONCLUSION AND RECOMMENDATIONS ...... 63 5.1 Introduction ...... 63 5.2 Summary ...... 63 5.3 Discussions ...... 65 5.4 Conclusions ...... 68 5.5 Recommendations ...... 69 REFERENCES...... 71 Appendix I: QUESTIONNAIRE ...... 76 Appendix II: RESEARCH BUDGET ...... 80 Appendix III: TIME SCHEDULE ...... 81

LIST OF TABLES

Table 3. 1: Sampling ...... 36

Table 4. 1: Designation of respondents ...... 36 Table 4. 2: Short term strategic alliance ...... 38 Table 4. 3: Medium term strategic alliance ...... 39 Table 4. 4: Long term strategic alliance ...... 40 Table 4. 5: Employees satisfaction by the adapted strategic alternatives ...... 40 Table 4. 6: Challenges facing the airline industry ...... 41 Table 4. 7: Effects of competition on strategic alternatives ...... 42 Table 4. 8: Value delivery on strategic alternatives ...... 43 Table 4. 9: Effects of Strategic alignment on strategic alternatives ...... 43 Table 4. 10: Effects of Performance Measurement on strategic alternatives ...... 44 Table 4. 11: Size of the organization ...... 46 Table 4. 12: Organization structure ...... 46 Table 4. 13: Organization spending a percentage of the total revenue ...... 47 Table 4. 14: Alignment of strategies and business goals ...... 48 Table 4. 15: Budgeting and strategic alternatives ...... 49 Table 4. 16: Project Initiation and strategic alternatives ...... 50 Table 4. 17: Project Approval and strategic alternatives ...... 51 Table 4. 18: Staff Hiring and strategic alternatives ...... 51 Table 4. 19: Strategy Development and strategic alternatives ...... 52 Table 4. 20: Performance Measurement and strategic alternatives ...... 53 Table 4. 21: Risk Management and strategic alternatives ...... 54 Table 4. 22: Value Delivery and strategic alternatives...... 54 Table 4. 23: Business Alignment and strategic alternatives ...... 55 Table 4. 24: Outsourcing Initiatives and strategic alternatives ...... 56 Table 4. 25: Strategic alternatives influences organization resources ...... 57 Table 4. 26: Resources determine the strategy ...... 58 Table 4. 27: Resources influences strategic alignment ...... 58

Table 4. 28: Performance Measurement ...... 59 Table 4. 29: Resource Management ...... 60 Table 4. 30: Correlation of the variables ...... 61

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LIST OF FIGURES

Figure 4. 1: Gender of the respondents ...... 35 Figure 4. 2: Age of the respondents ...... 36 Figure 4. 3: Education level of the respondents ...... 37 Figure 4. 4: Work experience of the respondents ...... 38

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CHAPTER 1

1.0 INTRODUCTION This chapter will discuss the background of the study, problem statement, purpose of the study, research objectives, research questions and significance of the study and the definition of terms. The airline industry, the major sector of the world’s infrastructure, has enormous economic significance. In 2003, the world’s 896 scheduled airlines carried 1.657 billion passengers – equivalent to more than 25% of the earth’s habitants – and 34.5 million tons of freight. The industry also carried almost 40% (by value) of the world’s manufactured exports and 45% of the more than 714 million international tourists (Njoya, 2013). It is expected to assume an even greater importance over the coming years, especially in transporting freight which is expected to account for as much as 80% by value of the world by 2014.

1.1 Background of the Problem Njoya (2013) noted that Airlines are under unprecedented pressure to produce sustainable economic results or perish as fuel, labor and asset cost escalates and demand declines. With the industry positioned for recovery from time to time, competition is expected to intensify as low-cost carriers continue to gain market share from full-service carriers by attracting both leisure and business segments. In addition, new operating model, innovative entrants and further airline consolidation will create more difficulties and intense competition. To respond to this airlines have employed a narrowly focused near-term strategy, including reduction in seat capacity and product unbundling (for example, paying extra for a window or aisle seat, or for more exit-row legroom) which could potentially have long term consequences on customer loyalty, experience and profitability from core product. The future of the airline industry will depend on ability to harness emerging technologies to deliver superior customer experiences and secure loyalty in addition to improving operational efficiencies (Lock, Fattah, & Kirby, Airline of the future: Smart strategies that will transform the industry, presented at Cisco Internet Business Solution Group, 2010). Strategic planning and strategic choices for airlines is critical. Typically the planning and strategic choice involve strategic intent comprising one planning and decisions on either global, continental, region, county and specific segment. Second is the strategic is the strategic assessment in relation to demand and supply, SWOT analysis, market decision and choices and forecasting.

Thirdly is the network and fleet planning comprising long term and short term decisions and choices, hub design and fleet planning and choices. Fourth is the business model alignment entailing commercial, operational, subsidiaries and organizational plans and decisional choice. Lastly is business planning and implementation (Serpen, 2014). The current liberalization and deregulation is accompanied by increased privatization of the air industry and this has a significant effect on planning and choice decision. Hence more knowledge on the market is critical and need to be incorporated in strategy plans and strategic choice decisions. Competition in the air industry has forced the airlines to react differently, engaging in productivity optimization, cost cutting, lease arrangements for short term flexibility. Further competition calls for more innovation since airlines run short of customers resulting to a fight for the same. Policy intervention in the form of regulation and deregulation is too affecting the sector, for example the open sky policy to allow for fair competition. Air related charges and taxes to harmonize the market conditions (Mandel, 1999). Airlines have to show great flexibility in adjusting to the situation at every time ranging from supply demand related issues to regulatory framework. This complexity demand good planning and informed strategic choice decisions in response to the dynamic environment and future requirements.

Kenyan airline industry is primarily dominated by one player, which is Kenya Airways. Other players are Five Forty and Jet link which are small compared to Kenya Airways. Strategic alliances provide an avenue for airlines to grow; such growth is seen in the number of destinations an airline is able to service. The need for cooperation arises mostly from the desire of major airlines to offer global services, increase service quality, exploit size economies and gain market power. Studies indicate that managers have become increasingly aware that alliances with other organizations are essential for growth and prosperity.

American Airlines, the third-largest U.S carrier and its parent AMR Corp are filing for bankruptcy protection (Peterson and Daily, 2011). Bankruptcy protection enabled the airline to cut labour costs in the face of high fuel prices and dampened travel demand. On filing for bankruptcy the incoming chief executive officer said “The world changed around us;" Peterson & Daily further state that the Australian Airline Quanta‟s was also heading in the same direction.

Virgin Atlantic is slated to exit the Kenyan market in September 2012; they cite rising cost of fuel coupled with high taxes for European Union carriers has increased the cost of running airlines as the reasons forcing them out of the market. The industry lobby group, the International Air Transport Association downgraded the aviation sector’s 2012 outlook citing high cost of operation.

Deregulation of the airline industry across the world in the 1990’s saw a reduction in the number of airlines globally (Flores-Fillol and Moner-Colonques, 2007). They argued that the reduction in the number of airlines globally could be attributed to the number of strategic alliances. Major international airlines belong to one of the major groups of alliances. Kenyan airline industry is regulated by The Kenya Airports Authority (KAA), which was established in 1991 under KAA ACT CAP, Chapter 395 of the Laws of Kenya, to provide facilitative infrastructure for aviation services and Kenya Civil Aviation Authority (KCAA) that was established by the Civil Aviation (Amendment) Act, 2002 to plan, develop, manage, regulate and operate a safe, economically sustainable and efficient civil aviation system. According to KAA the airline industry business both in cargo and passenger has been growing at a rate of more than 9% from 2005 to 2011. There were 36 international airlines, as at 31st December 2011 operating (Kenya Airports Authority, 2011).

Kenya has four main airports that handle International flights, Jomo Kenyatta, Moi, Kisumu and Eldoret. Jomo Kenyatta International Airport (JKIA) handles the bulk of air travel in Kenya with 20 airlines that operate regularly and 5 seasonal. Moi International Airport (MIA), 10 airlines operate regularly and 4 seasonal. Eldoret airport handles cargo planes with 4 airlines that operate regularly. Kisumu International Airport is the youngest of all, currently has 5 regular airlines. In total there are 36 airlines with schedule flights in and out of Kenya, KAA envisions Jomo Kenyatta International Airport to become the Hub for connection of Eastern, Central and Southern Africa flights for both Private Charter Flight and Commercial Flights.

Kenya Airways Limited, more commonly known as Kenya Airways (KQ) which is the IATA designated code is the flag carrier and largest airline of Kenya. KQ prides itself as the African Airline and hence plans to increase concentration on the African routes and connecting the world to Africa. The company was founded in 1977, after the dissolution of East African Airways. The carrier's head office is located in Embakasi, Nairobi, with its hub at Jomo Kenyatta International Airport (JKIA).

The cargo handling company African Cargo Handling Limited is a wholly owned subsidiary of Kenya Airways; partly owned companies are Kenya Airfreight Handling Limited, dedicated to the cargo handling of perishable goods and 51%-owned and Tanzanian carrier Precision Air (49%owned), (Kenya Airways Report, 2012). The airline was wholly owned by the Government of Kenya until April 1995, and it was privatized in 1996, becoming the first African flag carrier in successfully doing so. Kenya Airways is currently a public-private partnership (Wahome, 2012). The largest shareholder is the Government of Kenya (29.8. %), followed by KLM, which has a 26.73% stake in the company. The rest of the shares are held by private owners; shares are traded in the Nairobi Securities Exchange (NSE), the Dar-es-Salaam Stock Exchange (DSE), and the Uganda Securities Exchange (USE). Kenya Airways is widely considered as one of the leading carriers in Africa-The Pride of Africa. The carrier became a full member of Sky Team in June 2010, and is also a member of the 7African Airlines Association since 1977. As of June 2012, the airline has 4,834 employees. In June 2012 the company announced the issuance of rights worth KSh20 billion, aimed at increasing capital to support expansion plans. Following the allocation of shares, KLM increased their stake in the company from 26% to 26.73%, while the Kenyan government boosted their participation into the company from 23% to 29.8%, becoming the new major shareholder of the carrier. (Data Monitor, 2009) In order to appeal to prospective shareholders, KQ has to become more efficient and competitive. The Airlines' profitability is closely tied to economic growth and trade. KQ has to recognize the need for radical change to ensure its survival and prosperity as the future holds many challenges and effective strategic choices have to be made to successfully continue to tackle high costs and improve their products. Kenya Airways (KQ) operates domestic, regional and long-haul routes from its Nairobi hub (Wahome, 2012). Kenya Airways operates: domestic routes between Nairobi and Mombasa, Kisumu and Eldoret; regional routes to Entebbe, Kigali, Dar es Salaam, Zanzibar and Kilimanjaro, from Nairobi and Mombasa; routes to Southern Africa (Johannesburg, Ndola, Seychelles, Lilongwe, Lusaka and Lubumbashi), North-East Africa (Addis Ababa, Cairo, Khartoum and Djibouti) and Central and Western Africa (Douala, Lagos, Accra, Abidjan and Kinshasa); intercontinental routes to Europe (London and Amsterdam) and Asia (Dubai, Bombay, Bangkok and Hong-Kong). Recently Kenya Airways launched a new low-cost airline called Jambo Jet. It targets the main traffic routes between Nairobi and Mombasa, the largest domestic market, where it is flies alongside its parent, due to the large amount of connecting traffic on the route.

Other domestic routes entail Kisumu and Eldoret. ‘Jambo Jet’ is a new low-cost airline set to revolutionize the way passengers travel by opening up the skies for all to fly for less as it provides affordable air travel fares and because it’s a wholly-owned subsidiary of Kenya Airways, guests can be assured of top quality service and adherence to the highest international safety standards (Kamau & Kavale, 2015).

1.2 Statement of the Problem There are some factors that affect the transportation business in aviation industries in Kenya, the costs of running such business is enormous. There is need to study the strategic alternatives for Kenya Airways so that to determine the continued operations of its activities. Kenya Airways has suffered a net loss of Sh4.8 billion for the half-year period starting March and culminating on September 30, 2012 (Wahome, 2012). Financial statistics for the remainder of the financial year, ending March 30, 2013, show that the airline will post an even lower profit, below 25% of the pre- tax profit it made in the forgoing year (Nderu, 2013). Turnover is down from Sh54B to Sh49B, Net profit for the full year (March 30 2011March 30 2012) Sh1.7B which represents a drop from the March 30 2010-March 30 2011 net profit by 46.7% (Wahome, 2012). Kenya Airways has sent a prior statement foreclosing that its profit for the entire year will be lukewarm, dropping by 46.7% in comparison with the minimal profit made last year of Sh1.7 billion, which was consecutively a poor outcome in comparison with the preceding year’s postings (Wahome, 2012).

According to RoK (2012), in the next 10 to 20 years, Kenya Airways aims to grow into a decidedly dominant carrier in Africa with notable presence in Asia, Europe and the Americas, while operating a modern fleet of 30 to 40 aircraft. Kenya Airways intends to forge strong partnerships and be a respected member of the global airline community (RoK, 2012). The study seeks to fill the existing gap by establishing the influence of strategic alternatives employed by Kenya Airways. Given the importance of these processes, this study also seeks to fill the gap in knowledge by seeking solution to the Influence of survival strategies on the performance of Kenya Airways.

The need to improve safety, reliability, and customer appeal while offering competitive prices is an ever-present challenge. Meanwhile, airlines face the following pressures: Globalization and the trend toward mergers and alliances require the flexibility to adjust accordingly; world financial instability and eroding yields make it more important than ever to streamline processes, reduce

5 redundancies, and simplify system architecture to lower costs; because the industry is so competitive, airline operators must analyze every aspect of their business and that requires fast, flexible, and focused access to information for sound decision making; and quality customer service differentiates one airline from the other and helps secure customer loyalty. Keynes (2009) states how the sector has gone through a drastic change on both the supply and the demand side.

1.3 Purpose of the Study The purpose of this study is to identify the strategic alternatives for the continued operation of Kenya Airways.

1.4 Research Questions

1.4.1 Does organization competitiveness determine strategic for continued operation of Kenya Airways?

1.4.2 How does leadership influence strategic alternatives for continued operation of Kenya Airways?

1.4.3 How do industry challenges determine strategic alternatives for continued operation of Kenya Airways? 1.4.4 How do organizational resources determine strategic alternatives for continued operation of Kenya Airways?

1.5 Significance of the Study

1.5.1 Management The study will benefit the management of Kenya Airways and other airline companies in understanding the effective strategic response to international markets by making the right strategic alternatives. The management would be able to react to international competition by expanding to new markets, diversifying or specialization by looking for new alternatives.

1.5.2 Governments and Policy Makers The study would also benefit the governments and policy makers in the airline industry in that they will be able to provide the leadership that the airline industry needs by formulating policies that will lead to markets liberalization. They would recognize the need to move in the right direction since reform is now necessary to support the long term health of the industry.

1.5.3 The Researchers and Academicians The study would further add literature to the body of knowledge. The researchers and academic community would use this study as a stepping stone for further studies. The students and academics will use this study as a reference and a basis for discussions on the strategic choices to make to propel organizations to their potential limits. The study will also be if great importance to academicians and researchers since it will form basic points and basis for further research.

1.5.4 Strategy Implementers This study findings and recommendations will be of great significance to directors, managers and strategy implementers since it will assist in revealing the underlying factors affecting strategic choices in airlines.

1.5.5 Shareholders The shareholders who are the owners of the Kenya Airways in terms of shares will benefit. They will gain from the study which will explore the strategic alternatives of the airline industry. In that they can be able to invest wisely and maximize their wealth.

1.5.6 Customers The study will also benefit the customers who are the key partners in business. They will be able to gain knowledge on the how the business should expand hence guaranteed of services.

1.5.7 Employees The employees who are the input of the organization and who serve as the memory of the organization will benefit in terms of seeing the company grow. The financial performance of an organization also affects the employees.

1.6 Scope of the Study The researcher will undertake the study of strategic alternatives for continued operation of Kenya Airways. The study will focus on top management, middle level management and supervisory management. This is because they have reliable information in regard to the study. Questionnaires will be used to collect primary data.

1.7 Definition of Terms

1.7.1 Airline alliances Airline alliances – The liberalisation of air services has profoundly modified the strategies of airlines, which are now bent on exploiting their market access potential by forging strategic alliances. The impact of airline alliances on tourism development has been investigated (Durge, 2011).

1.7.2 Strategy A strategy is a unified corporate action plan for the achievement of overall organisational goals and purpose within the resources of the company. It is based on analysis of environment, resources and competencies of the company (Megginson, 2010).

1.7.3 Strategic Alternative These are alternatives to grow, divest, invest, expand, diversify. There are four options in terms of combinations of products and markets: new products and new markets new products old markets (product development) old products, new markets (market development) old products, old markets (Emirates, 2011).

1.8 Chapter Summary This chapter provides an overview of the strategic alternatives for continued operation of Kenya Airways; the aims and objectives of the study; the research questions of the study; as well as the limitations and benefits of the study. It provides brief insight into the research study. In the next chapter, literature review, the researcher will review literature on this study in order to further evaluate previous researches carried out on this topic and to identify the possible gaps in this field of study concerning the strategic alternatives. The research will seek to establish the need for current and future research of this topic. Also the study will discuss the research methodology which will consist of the research design and the data collections and analysis.

CHAPTER 2

2.0 LITERATURE REVIEW 2.1 Introduction Literature review is a critical and in-depth evaluation of previous research; it will contain theoretical literature and empirical literature. It entails reviews of secondary sources obtained from published work such as journals, master’s thesis books, conference proceedings, and other reports.

2.2 Strategic alternatives Literature on strategic choices differs on terminology, emphasis and classification. However, the salient notions are common and scholars state that for an organization to be both effective and efficient; there will be four components to any of its strategy. They name scope, the extent of the organization present and planned interaction with its environment as one significant factor (Clark, 2011). This could be referred to as the organization domain. Secondly, resource deployment is an important aspect of strategic choice. Scholars suggest that the organizations past and present resource and skill deployment will affect how it achieves its goals and objectives. Financial strategy needs to take care of the risk returns. The financial decisions made by management relate directly to added value of the organization. The skill an organization has could enable it deliver a service or a product in a way that no other organization can replicate (Bissessur & Alamdari, 2008). This could also be referred to as distinctive competence. Another component of strategic choice is that which relates to competitive advantage. The use the same terminology and the same accent that any strategic decision in an organization must concern itself with unique position an organization develop against its competitors. It is suggested that achieving competitive strategy is an essential base of strategic business unit of an organization. A strategic choice is an aspect of strategy that is considered before any strategic decision is completed. Any action or achievement that conflicts with other operations in the organization may reduce its value. However, the managers should make a choice to seek for synergy. Synergy refers to the degree to which various resource deployments and interactions of the organizations with its environment reinforce or negate one another (Malingetti, Paleari, & Redondi, 2009).

A major strategic concern of any organization is selecting a strategy to produce a product or offer service would be how the new projects would affect the existing programmes activities. Airlines are under unprecedented pressure to produce sustainable economic results or perish as fuel, labor and asset cost escalates and demand declines. With the industry positioned for recovery from time to time, competition is expected to intensify as low-cost carriers continue to gain market share from full-service carriers by attracting leisure and business segments (Shah, 2008). The strategic choice decision should follow analysis of industry information. In relation to pricing in the airline industry, research shows that the general dynamic pricing intensity is complex. Positive correlation has been identified between fares and route length, route frequency and percentage of fully booked flights (Nielsen, 2007). Air travel remains a large and growing industry in Kenya and Kenya Airways being the national carrier it facilitates economic growth, world trade, international investment and tourism and is therefore central to the globalization taking place in many other industries. The key issues facing today’s airlines are optimization, improved capacity, cost savings and the ability to react quickly to changes. The portfolio of solutions for KQ planning and control ranges from network planning, code share handling and crew management, to pricing, price distribution and revenue management. The portfolio is rounded out by business intelligence services, marketing and sales solutions, and consulting. As a result KQ has to make vital strategic choices to gain competitive advantage. Competition has been on the rise for both profit and nonprofit organizations. This situation called for KQ to be conscious of the strategies they choice to adopt. Managers are compelled to be keen on the strategic choices and decisions they make as this will affect the survival of the company. As a result, the airline needs to respond swiftly to the global changes and amend its strategies for achieving its objectives. A strategic plan is a set of processes undertaken in order to develop a range of strategies that will contribute to achieving the organizational direction (Tapinos et al., 2005). This therefore calls for formulation of a coherent document which will guide the efforts of all the stakeholders, outline what the organization is trying to achieve and how it intends to achieve it. Strategies can be formulated in three levels that is; corporate, business and functional level. At corporate level strategies are formulated by the top level management or the board of directors. At business level strategies are formulated by middle level managers for example; human resource manager, marketing manager, production manager among others (Yabs, 2010).

Strategy formulation at functional level is done by first line managers or supervisors (Sababu, 2007). Strategy implementation has been widely recognized as a key management challenge (Li et al., 2008) yet it remains a comparatively under addressed area in strategic management literature (Hutzschenreuter & Kleindienst, 2006). In addition, Li et al. (2008) describes strategy implementation as dynamic,iterative and complex process which is composed of a series of decisions and activities by managers and employees who are affected by a number of interrelated internal and external factors as they strive to achieve strategic objectives through implementation of strategic plans. Manager’s major task is to assure the continued existence of their organizations. To this end, one of the concepts that have been developed and is very useful to management’s strategy. Various leading management scholars and practitioners have underscored the importance of this concept. Different authors have defined strategy in different ways. The various definitions suggest that the authors gave selective attention to aspects of strategy, which are all relevant to our understanding of the concept. Porter (1980) viewed strategy as building defense against the competitive forces and finding positions in the industry where the forces are weakest. Knowledge of the company’s capabilities and of the causes of the competitive forces will highlight the areas where the company should confront competition and where it should avoid. Strategies need to be considered not only in terms of the extent to which the existing resource capabilities of the organization are suited to opportunities but also in the terms of the extent to which resources can be obtained and controlled to develop a strategy for the future. As a plan, strategy specifies a consciously intended course of action of an organization. The strategy is designed in advance of actions and is developed purposefully. As a ploy, strategy is seen as a maneuver to outwit competitors. As a pattern, strategy is seen as a pattern emerging in a stream of actions. Strategy is seen as a consistency in behavior and the strategy develops in the absence of intentions. As a position, strategy is a mean of location an organization in its environment. Strategy as a perspective consists of a position and of an ingrained way of perceiving the world. It gives an organization identity or a personality. As evidenced in these varied definitions, none can be said to capture explicitly all the dimensions of strategy. Lack of a precise definition of strategy can be attributed to the fact that strategy is a multi-dimensional concept in terms of content and substance which, embraces all critical activities of the organization providing it with a sense of unity, direction and purpose, as well as facilitating the necessary changes induced by its environment.

However, most authors in terms of definition emphasize on the essence and nature of strategy and agree that strategy is a unifying theme that gives coherence and direction to the actions and decisions on an organization. (Jr, 2001). Similarly, strategy helps companies to cope with change. Due to the constant changes in an organization’s operating environment, companies need strategy in order to respond to these changes at all times. Strategy can help to guide the pattern of responses of the companies to changes taking place in their environment. Strategy enables companies to focus their resources and effort. The development of strategy helps managers identify critical tasks that need to be performed and hence helping in defining an organizational strategic thrust. Strategy also helps an organization to outperform the competition successfully. Porter (1980) underscores the role of strategy by arguing that the goal of strategy is to help secure enduring competitive advantage over competitors. A strategy is best implemented if it has a supporting organizational structure. If an organization has developed an appropriate strategy, this becomes a good guideline in designing an appropriate structure to carry out the strategy. In essence, therefore, strategy helps in achieving a more effective organization. Thompson & Strickland (2003) points out that an excellent strategy is the best test for managerial excellence and the most reliable recipe for organizational success 2.3 Organization Competitive of Strategic Alternatives Competition, according to the theory, causes commercial firms to develop new products, services, and technologies. This gives consumers greater selection and better products. The greater selection typically causes lower prices for the products either creating a bigger market share for the company or a smaller one. In the 1970s the strategist’s attention turned from diversification to optimizing the firm’s competitive strategies and the optimizing the firms total business portfolio. Porter (1980) adds that when the different markets of the firm have growth prospects and are mixed and turbulent, before further prospects can be estimated it becomes necessary to segment the firm’s environment into distinctive areas of trends, threats, opportunities. Complexity, uncertainty and turbulence in the resource technology and socio, political environment make it desirable to segment these environments into strategic resource areas, thus the essence of strategy formulation in coping with competition (Porter, 1980). Competition in an industry is rooted in its underlying economic structures and goes well beyond the behavior of current competitors (Obado, 2005).

The level of rivalry or competition in an industry therefore is determined by the concentration ratio of industry. Rivalry is low if the larger proportion of market share is held by a few large firms and high when the industry is fragmented. Porter (1980) argues that the most businesses must respond to five basic competitive forces that drive industry competition. The five forces are; threat of new entrants; threat of substitute products; bargaining power of suppliers; bargaining power of buyers and rivalry among current competitors. Existence of these factors; high exit barriers, slow market growth, high fixed costs, low buyer switching costs and low levels of product diversification intensify rivalry in an industry and forces the rival firms to seek competitive advantage in ways that elicit counter-response from rivals, reducing profitability and industry attractiveness. Porter’s model is a powerful tool for systematically diagnosing the chief competitive pressures in a market and assessing how string and important each one is. Kitoto (2005) confers that a proper analysis of the five forces will help a firm choose one of the generic strategies that will effectively enable the firm to compete profitably in an industry. Managers therefore can only develop and choose winning strategies by first identifying the competitive pressures that exists gauging the relative strength of each and gaining a deep understanding of the industry’s whole competitive structure. The Porters Five Forces Model allows for determination of the attractiveness of the industry. With the knowledge about intensity and power of competitive forces, airlines i.e. Airline industries can then develop options to influence them in a way that improves their own competitive position. In the airline industry it is not clear whether the presence of the airline can critically affect the pricing strategies of low-cost carriers. Pitfield (2005) in the analysis of the routes originating from Nottingham East Midlands airport argues that when it was possible to observe how low-cost in direct competition, results showed a weak influence of the competitive structure in prices.

The historical pattern of the fares offered by each airline seems to play a more important role, as it would be expected in a situation of price leadership. In the study examining the London-Berlin and London-Amsterdam routes, Barbot (2005) found that the low-cost and full-cost markets co-exist on totally complete ‘only’ among themselves, as do full-cost carriers. The study of price dynamics and competition raises interesting questions. Many travelers have probably noticed that prices often tend to increase as the flight date approaches. McAfee and Te Velde (2006) have argued that in the period preceding the flight date, the price trend mainly depend on the tradeoff between the option of waiting for a potential lower price, and the risk of seats becoming vacant.

In this case the functional form of the demand curve, together with its adjustment overtime also helps to determine a series of minimum prices. Malighetti et al., (2009) on the study of low cost business has highlighted the issue of containing cost as a key area in the airlines. They have argued that the issue of containing cost is one of the reasons for success of low cost carrier. Alertness to ‘latent demand,’ characterized by the passenger willingness to pay elastic prices, which is not the attitude of the so-called ‘‘traditional’’ passenger is among key factors.

Competitive advantage refers to what sets the organisation apart from others and provides it with a distinctive edge for meeting customer or client need in the market place, Porter (1996). Strategy necessarily changes over time to fit environmental conditions, but to remain competitive, companies develop strategies that focus on core competencies, develop synergy and create value to customers. One obvious principle determining whether a firm should perform an activity or compete in a business is whether or not the firm possesses resources that provide a competitive advantage in that activity of business (Collins and Montgomery, 2005). The motivation for geographic expansion and diversification across product markets is that the firm’s resources create value in new markets. The seminal work on competitive advantage, Michael Porter's Competitive Strategy (Porter, 1980), presents three basic approaches for gaining competitive advantage:

i. Be the low-cost producer

ii. Differentiate

iii. Fill market niche oblivion

Of these three strategies, becoming the low-cost producer is the riskiest. If price is the only reason customers are doing business with you, lower prices from a competitor will result in fewer customers for you and possibly a price war. Ideally, a company does not want to be vulnerable to such actions from its competition. Competitive advantage can be achieved by some type of product or service differentiation or by filling a special niche in the marketplace. Continental Airlines has used aircraft cabin design to differentiate its product. Several years ago, Continental overhauled its international business class cabin, combining it with first class to create what it dubbed "Business First." Continental priced the cabin at the high end of the international business class range, but far below other carriers' first class sections.

Because Business First was much better than other airlines' business cabins, Continental was able to attract strong bookings and win many quality and satisfaction awards from frequent flyers and independent consumer survey organizations. Although it is the fifth largest of the major full service U.S. airlines, it has been the most consistently profitable over the past few years (Wetherbe and Browne, 2002).

The key difference in applying the Porter framework today is that competitive strategists no longer enjoy the long-term stability that they previously had. Strategies are much more dynamic with shorter life cycles. IT can create competitive advantage through efficiency improvements and other forms of cost reductions, through new channels or channel domination, or through differentiation of product or service. Critics claim that IT alone cannot lead to sustainable competitive advantage because competitors can easily acquire IT and quickly replicate virtually any application. A useful framework must explicitly address the potential for using technology to prevent or delay competitive responses. Technology might, in theory, be easily copied, but it does not follow that strategies based on the use of IT cannot lead to sustainable competitive advantage.

To gain a competitive advantage, an organisation must be able to define when IS is strategic to their business by distinguishing between technology hype, technology capability, useful technology and strategic technology (Feeny, 1989). Strategic technology is that IS if not adopted, would lead to business performance suffering. Collins and Montgomery (2005) interestingly recommends that when efficient markets are available for transactions between each stage of the industry, decisions to participate in a given stage depend simply on whether or not it would be profitable for the firm to do so. This depends on the fundamental attractiveness of the business and whether or not the firm possesses competitive advantage that would enable it to make the product (or perform the service) more efficiently than outside suppliers.

In addition to these propositions, Carr (2003) concurs that what makes a resource truly strategic - what gives it the capacity to be the basis for a sustained competitive advantage – is not ubiquity but scarcity. You only gain an edge over rivals by having or doing something that they can’t have or do.

However, a company can discard investment in proprietary technology for infrastructural technologies in order to achieve even better competitive advantage in addition to scale economies and brand recognition (Applegate, 2007) just like American Airlines with its SABRE reservation system, Federal Express with its package-tracking system, and Mobil Oil with its automated Speedpass payment system.

Although strategic alternatives are necessary for competitiveness, it’s not sufficient. Competitive advantage comes from a firm’s business model, not its use of it (Carr, 2004). Strategic alternatives have become part of the business infrastructure, therefore its management needs to change and focus on three areas: manage the risk, keep costs down and stay behind technology leaders. The logic behind the requirement for consistency between a firm’s resources and businesses is that the resources should create a competitive advantage in the businesses in which the firm competes (Collins and Montgomery, 2005). But Hagel and Brown (2003) are also in concurrence that strategic alternatives alone have not been a strategic differentiator, but it is inherently strategic because of its indirect effects. It enables firms to do things they could not do before. Value comes from strategic alternatives only when it is paired with concurrent innovations in business practices, its economic impact comes from incremental improvements, and strategic alignment emerges over time from the ability to continually innovate around strategic alternatives evolving capabilities.

Porter (1998) from his studies asserts that once a company understands what customers want, analysis should turn to the alternatives they have for meeting their needs which include competitive offerings, substitute products, or customers may simply choose to leave the need unmet. To be competitive, a company must be fast, nimble, flexible, innovative, productive, economical and customer oriented and it must also align its strategy with general business strategies and objectives (Porter, 1990). Collins and Montgomery (2005) identify three fundamental questions raised by multimarket competition as follows: i. The first is whether such competition stabilizes or intensifies rivalry among the players. ii. The second is how a competitor should allocate its resources across the various markets in which it faces a competitor. iii. The third is how the firm should be organized to capitalize on the opportunities for coordinated response.

Firms have to compete for both today and tomorrow (Clark, 2011)and it seems likely that both the content and process of today's strategies differ from those of tomorrow's strategies. There are increasingly more fundamental and lasting economic changes affecting more and more businesses as a result of shift in the basis of wealth creation. Barney (1991) reckons that wealth, once based on tangible and scarce resources such as land, labour, energy and capital, is today increasingly based on intangibles that are not consumed, don’t wear out and don’t depreciate – information and knowledge. When asked on their strategies, the executives outlined many prescriptions from recent management practices including reengineering, team structures, identifying core competencies, outsourcing, value-based leadership, lean and flexible manufacturing and customer relationship management (Zou, Oum, & Yu, 2011).

The relationship between how a strategic alternative is shaping business and how alternatives are supporting business is illustrated in the diagram below. In allocating capital expenditure, the competitiveness cell should far outweigh the basics cell. This is where applications should be classified as either "competitive necessity" systems or "competitive advantage" systems (Baum & Korn, 1996).

The concept of competitive advantage is rooted in the logic of value creation and distribution. A firm achieves competitive advantage when the value it creates in an economic exchange is greater than the value that could be created if the firm did not participate (Clark, 2011). All firms perform discrete but interrelated activities intended to create value; these discrete activities represent "the basic unit of competitive advantage" (Porter, 1991, p. 102).

Firms achieve competitive advantage by performing these activities either at a lower cost than the competition, or in a unique and valuable way (Kipchirchir, 2009). IT can contribute to the creation of competitive advantage by enabling activities to be performed at a lower cost (Kavale, 2007), by changing activities so that they become unique and valuable (Jangkrajarng, 2011), or by improving the linkages among these activities so that, as a whole, they can be performed at lower cost or in unique ways (Porter & Millar, 1985). This perspective views strategy not as the making of a few large moves based on discrete "one-time" decisions, but as the configuration of interrelated and interlocking activities (Goerzen, 2005). Thus, strategic alternatives enabled strategic initiatives do not simply entail building a system that provides superior returns until it is successfully replicated.

Rather, they consist in the configuration of an activity system, enabled by strategic alternatives, designed to create and appropriate value.

Competitive advantage is sustainable when the "firm's competitive advantage resists erosion by competitor behavior ... [this] requires that a firm possesses some barriers that make imitation of the strategy difficult" (Porter, 1985). The ability to sustain a position of competitive advantage therefore requires creating impediments, or barriers, to imitation (Flores-Fillol & Moner-Colonque, 2007), which inhibit competitors from replicating the strategy. The height of these barriers determines the time and cost required for a competitive response and, therefore, the resistance of the advantage to erosion. Strategic alternatives investments, if carefully orchestrated, can help sustain competitive advantage by enabling strategic initiatives that erect and maintain high barriers to imitation over time.

Competitive imitation occurs in stages (Barney, 1991). Once they find themselves disadvantaged, rivals search for the source of the problem. This may involve considerable ambiguity, making it difficult for the imitator to mount a response ( (Baum & Korn, 1996). As competitors identify the sources of the firm's competitive advantage they must decide, first, whether they are able and willing to respond, and if they are, what approach to take (Malingetti, Paleari, & Redondi, 2009). Typically, competitors first seek to imitate the leader by attempting to modify their existing strategies (Zou, Oum, & Yu, 2011), and then by directly attacking the source of the leader's competitive advantage (Yannopoulos, 2011)). Response lag, "the time it takes competitors to respond aggressively enough to erode the competitive advantage," represents the delay in competitive response (Yannopoulos, 2011). The height of barriers to imitation is directly related to their ability to generate response lag and forestall imitation.

Response lag drivers are the factors that determine the magnitude of barriers to imitation. With strategic alternatives development times estimated to generally exceed five years (Bissessur & Alamdari, 2008), the response lag and ensuing barrier to imitation is likely to be very substantial (Clark, 2011).

2.4 Organization Leadership of Strategic Alternatives Good leadership is a vital factor that influences choices made by an organization. It ensures that the organization effort is united and directed towards achievement of its goal.

The leadership of the organization should be at the fore front in providing vision, initiative, motivation and inspiration. The management should activate team spirit and act as a catalyst in the whole strategy implementation process. As much as possible, the organization should fill in relevant position with qualified people committed to change efforts (Bryson, 2012). Organizations need strategic leaders to help it overcome inhibitions on risk taking and resource allocation. A strategic director such as Bill Gates at Microsoft influence strategic decisions in their organization by affecting the components of strategy. The role of leadership in strategic decision making is critical as they set the tone, culture and widens the horizons of the organization. Their interventions affect all components of strategy and leadership of an organization may emphasize different aspects of strategy at different times. As organizations mature and face transition, leadership must be able to respond, identify and recognize the new skills required. More often the skills required during the change period is strategic (Porter, 1980). Leadership is the most essential ingredient in organizational sustainability and is the controlling force in organizational development. It is the key to a realistic assessment of problems and opportunities, establishment of priorities, and the marshalling of internal and external resources to address these priorities. In effective organizations, leadership does not reside only at the top; elements of it are evident at various levels of the organization. Strategic decision takers build routes and guide their response to challenges. It is important to understand the orientation of management when analyzing why they take certain decisions at certain times. The age, education, training and experience of management is indicative of the ability and innovation the management will bring to bear on strategic decisions of their organization. Management is a process that will lead to mistakes or success in strategic planning and implementation. Poor and incompetent managers lead to organization failure (Bissessur & Alamdari, 2008).

Leadership style can be defined as “a pattern of emphases, indexed by the frequency or intensity of specific leadership behaviour or attitudes which a leader places on the different leadership functions” (Li, Guohui, & Eppler, 2010). Alternatively, Malingetti, Paleari, & Redondi (2009) suggest that leadership style is the way in which a leader mobilizes and focuses the group members toward achieving organisational goals.

Group performance relates to how effectively members achieve the overall tasks and functions set for the group (Li, Guohui, & Eppler, 2010), whilst communication is broadly defined by The Cambridge Dictionary of American English as successfully giving thoughts, feelings, ideas or information to others through speech, writing, bodily movements or signals. Leadership styles can be described as either directive or supportive and can be further categorized as Authoritarian, Participative or Laissez-faire, although a number of alternative titles exist (Baum & Korn, 1996)

An authoritarian leader is one who, as the title suggests, runs their group very much as a dictatorship. They hold all of the authority for group and are personally responsible for the actions and tasks performed by group members and hold themselves accountable for the conclusions and recommendations formed by the group (Barney, 1991). It is not often that an authoritarian leader delegate’s responsibility, tasks or leadership responsibilities to other group members but instead remains the central control. Youssef & Hansen (2005) describes how a leader taking an authoritarian view will generally not ask for input from group members and does not encourage group members to think for themselves and become pro-active in meeting the group task. Communication not relating to the task on hand is not encouraged or rewarded within this leadership style and instead, the leader will communicate information to the group members in a one-way only communication stream (Norrgern & Schaller, 1999). The tasks of a group being led by an authoritarian leader are quite often met faster than any other leadership style, as there is minimal time for discussion and debate of ideas and solutions. However, if this method is to be efficient in its recommendations then the group leader must be fully aware and conversant in the task at hand, the possible solutions and must also have the ability to investigate those solutions and make relevant choices and recommendations based on that information (Clark, 2011). Given this, the task may not always be achieved as effectively as it could have been had there been more discussion regarding the alternatives. Zainuddin (2008) states that another symptom of the one- way communication channels adopted by authoritarian leaders is that members are often unaware of the progress or direction of the group. This can lead to poor motivation of members who have no desire to work on a project when they are unsure of its progress and receive little or no attention for their role. People in these groups are less likely to challenge the group leader as they are seen to hold little standing in comparison. Baum & Korn (1996) suggests that it is in times of crises when directive, autocratic leadership behaviour is more acceptable.

In situations where there is only one alternative, this type of leadership may not be successful, as members could spend time looking for alternatives that do not exist. Whilst the time taken to reach group goals may be slightly higher than that of a group operating under an authoritarian leader, the benefit of more detailed investigation and recommendations will normally offset this (Bissessur & Alamdari, 2008). This leadership style may also not be effective if there are pressing time constraints on the project. The time involved in the different stages of delegating, investigating and evaluating options as well as facilitating group members may be too great to the organisation if an immediate solution is required.

The third category of leadership technique is the Laissez-faire model, also known as the permissive style. Unlike the previous two styles, permissive leaders are generally not involved in the operations of the group and instead hold an almost silent role (Lie et al, 2003). This leadership style can be either extremely effective or not effective at all based on the communication flow within the group. If communication is unclear then this can lead to the frustration of group members and ultimately, poor performance. In its most efficient form the communication within the group is clear and purposeful which allows group members to have a sense of direction (Bissessur & Alamdari, 2008). To be effective, communication channels must exist between the leader and the members and vice versa, as well between the group members themselves. A common problem with permissive leadership is that the leader is so undefined that it often appears as if there is no leader at all. Eventually, group members will start to take on leadership responsibilities and characteristics of a leader. If more than one group member does this then there is the potential to cause great conflict. Kamau & Kavale (2015) details how the permissive leader often uses their delegation abilities to depart themselves from any responsibility or accountability of the group’s outcomes and as such the group members themselves may feel overwhelming pressure to perform too highly and take on too much responsibility (Tapinos, Dyson, & Meadows, 2005). There is no right or wrong style of leadership, and indeed many leaders use a combination of styles. The success of a particular group and their ability to achieve the goals of an organisation lies initially in selecting which is the appropriate style of leadership behaviour to adopt in that particular situation (Bissessur & Alamdari, 2008).

This can depend on the time constraints, the group members, the task at hand and many other variables. There are advantages and disadvantages of each and these should be carefully considered when choosing a leadership style. (Malingetti, Paleari, & Redondi, 2009) Discusses how if a leader is only interested in self-promotion then leadership style will be irrelevant as each style can be manipulated for personal gain. Although leadership style can be accountable for some disconcertion, it is the leader who is carrying the style that will inevitably challenge its effectiveness.

2.5 Industry Challenges on Strategic Alternatives

Airlines are operated in an extremely dynamic and often highly volatile commercial environment. The airline industry is constantly undergoing change, and the ability to react and adjust swiftly is imperative. The need to improve safety, reliability, and customer appeal while offering competitive prices is an ever-present challenge. Meanwhile, airlines face the following pressures: Globalization and the trend toward mergers and alliances require the flexibility to adjust accordingly; world financial instability and eroding yields make it more important than ever to streamline processes, reduce redundancies, and simplify system architecture to lower costs; because the industry is so competitive, airline operators must analyze every aspect of their business and that requires fast, flexible, and focused access to information for sound decision making; and quality customer service differentiates one airline from the other and helps secure customer loyalty. Keynes (2009) states how the sector has gone through a drastic change on both the supply and the demand side. Keynes (2009) sates that unlike other industries; airlines are subject to rapid change from customer expectations, competitor moves, supplier developments, government regulations and employee dynamics. Bissessur & Alamdari (2008) state that with increased liberalization in major airline transport markets, the intensity of competition has increased amongst air carriers. Bunz & Manes (2010) state that this is an era in which adopting to change means survival thus management teams need to adapt to smart strategic choices to survive in the industry. Clark (2011) argues that the economic and airline industry conditions of the next few years, including the potential for a slow economic recovery, continued high unemployment, a tight credit market, airline network restructuring related to consolidation and airline alliances, continued oil price volatility and the uncertainty of airport funding sources, present airport operators and airline with unprecedented challenges.

According to Yannopoulos (2011) local companies forced to deal with the entrance of multinational competitors have more options and advantages than may initially appear to be the case. Management often feels coerced to capitulate to one of three options when faced with these circumstances: turning to government for support; subordinating the organization to the multinational; or conceding and selling the business outright.

Competition forces companies to constantly engage in offensive and defensive marketing strategies. Rivalry occurs because one or more competitors either feels the pressure or sees an opportunity to enter an industry or to improve its position within an industry. In most cases, competitive moves by one firm have noticeable effects on its competitors and, thus, may invite retaliation or efforts to counter the move (Lock, Fattah, & Kirby, 2010). Companies respond to competitor challenges by counterattacking with increasing advertising expenditures, cutting prices, increasing innovation, and introducing new products, or even accommodating the entrant by doing nothing or decreasing the level of marketing effort (Karakaya and Yannopoulos, 2011).

Fortify and Defend strategy attempts to build barriers to entry for competitors. The purpose of defensive marketing strategies is to lower the inducement to attack. Firms frequently enter an industry because existing firms earn high profits. The higher the profits earned by incumbent firms, the higher the motivation to enter (Zou, Oum, & Yu, 2011). Thus, the inducement to attack can be lowered by reducing the profit expectations of the entrant. This can be achieved by raising barriers to entry for new competitors. Erecting barriers usually hinders entry by new competitors because they will have to incur costs not born by existing competitors. The most common barriers to entry include economies of scale, product differentiation, capital requirements, switching costs, experience curve cost reductions, proprietary technology or patents, access to raw materials and other inputs, access to distribution channels, and location (Tugores-García, 2012)

Hitt, Hoskisson, & lreland (2002) propose that a company operating with weak pressures to globalize, and assets that are not transferable, should “defend” its market against multinational attack. This broad response would suggest a series of actions that are implemented with the intention of retaining market share in the domestic environment where the firm is accustomed to operating.

If globalization pressures are weak but the company assets are transferable, the company could consider “extending” its success to other prospective markets (Youssef & Hansen, 2005). Covering all bases, also called product proliferation, entails introducing new products to ensure a full product line or to fill gaps in the market. Covering all bases may involve introducing multiple versions of a product in terms of models or product types. Many firms carry full product lines to block access to the industry by new entrants. For example, the leading ready-to-eat cereal companies compete with a full-line, making it very difficult for other companies to enter and threaten their position (Baum and Korn, 1996).

This strategy is also used by chain stores when they rush to expand rapidly and keep competitors out of the market. A firm that floods the market avoids being outflanked by competitors. It is also a way to tie up distribution channels and shelf space. For example, Procter & Gamble dominates retail shelf space with products such as Ivory Soap, Crest, Tide, Pantene Pro-V and many others. A firm that is trying to cover all bases may face one or more of the following difficulties. First, some firms, especially the small ones, may not have the resources to offer a full product line. Second, product proliferation may cause a firm to spread its resources too thinly, violating the principle of concentration of forces at the decisive point (Porter, 1985). Covering too many markets and overextending itself, leaves a firm vulnerable to competitor attacks, as it makes for an easy target. A special case of the cover-all-bases strategy is the introduction of a blocking brand. Blocking brands are used by incumbent firms to block access to the market by potential entrants. The firm introduces a brand designed to fill a niche in the market that could be used as a point of entry by a competitor. The intent of introducing a blocking brand often is to protect an existing profitable brand by precluding competitors from entering the market and stealing market share by undercutting the price of the existing product (Porter, 1985).

When a company enters an existing market its objective usually is to get established first in its chosen market segment, consolidate its position, and then start expanding into other market segments. Upstarts are especially dangerous if they enter the market by breaking the rules of the game with radically new products, or innovations in pricing, distribution, delivery, service, and positioning. New entrants entering markets with radically new products usually come from markets unrelated to that which they are invading (Porter, 1985). For example, the personal computer industry was not invented by IBM but by companies such as Apple and Microsoft - unrelated to the existing mainframe or minicomputer business.

Established firms need to defend their position while their newly entered opponents are small and vulnerable rather than waiting until they become strong and a serious threat. Market leaders, by consistently and swiftly meeting any moves intended to challenge their position, send out a clear message to would-be-challengers that aggressive behavior, such as price cutting or entering core segments, will not be tolerated and that it will be met with a rigorous and painful retaliation. Therefore, such actions would not pay off and would probably make the challenger worse off. In an effort to limit losses, such counter-attacks often are not broadly based, but involve only a market segment of the defending company (Kamau & Kavale, 2015)

Engage in Cross-Parry allows many companies to compete with other companies in more than one market. The degree of multimarket contact between two firms affects the intensity of rivalry and the extent of retaliation amongst these firms. Competitors interacting in multiple markets are less motivated to compete aggressively because of the possibility of retaliation across various markets (Zainuddin, 2008). On the contrary, competitors have an incentive to cooperate since they stand to gain if they allow their rivals to dominate certain markets in exchange for similar treatment in the markets in which they are dominant. If multimarket contact is low, firms have an incentive to enter the market segment of their rivals to gain the ability to engage in multi market retaliation, should they come under attack (Karnani and Wernerfelt, 1985). For this reason, firms prefer to stay in certain markets to maintain the threat of multi market retaliation. Also, as multi market contact increases, firms may avoid entering new markets that are already occupied to avoid provoking any multi-market retaliation and to honor any tacit agreements that they may have made with their competitors (Baum and Korn, 1996).

Cross-Parry is used when a firm that is challenged by a competitor in one area chooses to challenge this competitor in another area. For example, if a company is attacked in one of its core markets or products, instead of retaliating at the point of attack, it counter-attacks in the challenger's area of strength. In a sense, the cross-parry strategy says, “If you hurt me I will hurt you where it hurts most.” By attacking the challenger in its core area, the defending firm diverts attention from its own core area and attacks the challenger where it hurts most. The objective of a cross-parry strategy is often to avoid involving the core brand in a price war. The larger firm stands to lose more than the smaller firm. In addition, such a price war not only leads to lower profit margins but it could permanently tarnish a premium brand’s image. Cross parrying may be also used to send a signal to the challenging firm that it will suffer more than the cross-parrying firm.

For instance, how should a company enjoying a large market share and profit margins respond when a competitor lowers its price in an effort to take market share away from the large market share firm? The natural response would be to go on the counter-attack and attack the challenger with a similar or even greater price reduction. Such a move could be quite costly for the large share firm since it would mean lower margins on a large volume just to recover the small market share lost to the challenger; If the challenger operates in another market segment that is important to its business, but not to its competitor, a smarter move would be to attack the challenger by cutting the price in that segment (Karnani and Wernerfelt, 1985).

Capacity expansion is a credible deterrent strategy if capacity costs are very high. Otherwise, if the cost of adding capacity is low or capacity can be utilized for other purposes, it would be relatively easy for rivals to enter. Manufacturing firms may build excess capacity as an entry deterrent strategy. When a potential entrant realizes that the industry has excess capacity and its own entry will only add to the volume of unutilized industry capacity, it will be reluctant to enter (Masons, 2002).

2.6 Organization Resources on Strategic Alternatives Building on the assumptions that strategic resources are heterogeneously distributed across firms and that these differences are stable overtime, Barney (1991) examines the link between firm’s resources and sustained competitive advantage.

Four empirical indicators are the potential of a firm’s resources to generate sustained competitive advantage and include, value, rareness, inimitability, and non-substitutability. By analyzing the potential of Kenya Airways resources for generating sustained competitive advantages, the airline will be in a better position to make smart strategic choices. (Masons, 2002), firms’ resources include all assets, capabilities, organizational processes, firm’s attributes, information, knowledge and much more that enables a firm to conceive and implement strategies to improve its efficiency and effectiveness. As a result, an organization is said to have competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors and when these other firms are unable to duplicate the benefits of this strategy (Barney, 1991). As mentioned, the resource-based view of the firm predicts that certain types of resources owned and controlled by firms have the potential and promise to generate competitive advantage, which eventually leads to a more superior organization.

Resources can be categorized as tangible resources, namely human, physical, organizational and financial, and intangible resources such as reputational, regulatory, positional, functional, social and cultural). Out of the categories of resources cited above, human resources and intangible resources are deemed to be the more important and critical ones in attaining and sustaining a competitive advantage position because of their natures, which are not only valuable but also hard- to-copy relative to the other types of tangible resources namely physical and financial (Barney, 1991). SHRM in relation to long term decision and choices can be a major source of competitive advantage (Karnani & Wernerfelt, 1985). Resources are the foundation for attaining and sustaining competitive advantage and eventually superior organizational performance. Serpen (2014) argue that physical resources such as machinery, equipment, production technology and capacity contribute positively towards organizational competitive advantage and eventually result in superior organizational performance. In addition, financial resources such as cash-in-hand, bank deposits or savings and financial capital (e.g., stocks and shares) also help explain the level of organizational competitive advantage and performance. Furthermore, experiential resources such as product reputation, manufacturing experience and brand name can account for the variation in organizational competitive advantage and performance. Human resources such as top and middle management, administrative and production employees are also able to elucidate the extent of organizational competitive advantage and resulting to organizational performance.

In short, organizational resources are the foundation for attaining and sustaining competitive advantage. The potential to generate competitive advantage, a firm’s resource must have some certain attributes such as, it must be valuable in the sense that it exploits opportunities and neutralizes threats in a firm’s environment, it must be rare among a firm’s current and potential competition, it must be imperfectly imitable and there cannot be strategically equivalent substitutes for this resource. Competitive advantage is the basis for superior performance and understanding the anatomy of competitive advantage is of paramount importance to general managers who bear the ultimate responsibility for a firm’s long term survival and success. Scholars further advances an integrative framework called “select” to help general managers systematically examine the various facets of the anatomy of organizational resources that contribute to competitive advantage: its substance, expression, locale, effect, cause, and time-span. It has been reasoned that by analyzing the causes of competitive advantage helps a firm create and gain advantage by use of their organizational resources (Baum & Korn, 1996).

2.7 Summary of the Chapter The chapter has identified strategic alternatives decisions can be measured by how well the firm meets its strategic projections set out by management. The set goals in the strategic choice are central in the operational activities of the firm. Various metrics can be used to measure or evaluation of strategic choice decisions. The literature has focuses on the industrial challenges, competitive advantage and organization resources how they can be used in achieving alternative strategies. Standards can also be applied to measure or evaluate strategic choices. In the next chapter the study will focus on the methodology of how the study is going to be conducted.

CHAPTER 3

3.0 RESEARCH METHODOLOGY 3.1 Introduction The chapter gives the research techniques that will be adopted in the study. It covers the proposed research design, the target population, data collection methods and data analysis that will be used during the study. This chapter also describes the methods and procedures that will be used to carry out the research. Further, research design is discussed, with justifications of the preferred research design. The population, sampling methodology and sample size are also discussed. Data collection instruments used in the research are also discussed clearly indicating the methods used. Research procedures explain the steps followed in conducting the study, including the research process, timing and schedules. Finally, the chapter summary provides a synopsis of the key discussions of the chapter. 3.2 Research Design The design for this study will be a descriptive survey design. A cross-sectional survey is an attempt to collect data from members of a population in order to determine the current status of that population with respect to one or more variables (Mugenda and Mugenda, 2003).The study method will give in-depth information on the strategic alternatives to be adopted by Kenya. According to Yin (2003) a case study design should be considered when: the focus of the study is to answer “how” and “why” questions; you cannot manipulate the behavior of those involved in the study; you want to cover contextual conditions because you believe they are relevant to the phenomenon under study; or the boundaries are not clear between the phenomenon and context. Mugenda and Mugenda (2003) gives the purpose of a descriptive survey research a seeking to obtain information that describes existing phenomena by asking individuals about their perceptions, attitudes, behavior or values. Given that the objective of the study is to determine the strategic alliances of airline industry in Kenya Airways, a descriptive survey design is found to be the best to fulfill the objectives of the study. The researcher will apply a case study design. Yin, (1994) said that to refer to a work as a case study might mean that its method is qualitative, small- N; and that the research is ethnographic, clinical, participant-observation, or otherwise “in the field”.

3.3 Population and Sampling Design 3.3.1 Population Cooper and Shindler (2005) define a population as the total collection of elements about which the researcher wishes to make some inferences. The study target population 300 management employees of Kenya Airways, in Nairobi because it will be convenient for the study. The population target will comprise of Top level management of the Airline industries which operate from Kenya Airways and which have offices in Nairobi-Kenya. Nairobi Airport will be selected as the case study due to proximity to the researcher, time available for research and budgetary constraints.

3.3.2 Sampling Design 3.3.2.1 Sampling Frame Mugenda & Mugenda (2003) argues that sampling is that part of the statistical practice concerned with the selection of individual or observations intended to yield some knowledge about a population of concern. The study will use 50% of the target population which will involve 150 respondents. 3.3.2.2 Sampling Technique Stratified sampling will be used and it enabled the population to be divided into three segments called strata comprising the three levels of management in Kenya Airways. The researcher then will apply simple random sampling to draw subsamples from each stratum. Those sub-samples will be added together to form complete stratified samples. Disproportional allocation will be employed, where each stratum that is the management level at KQ contributed to the sample a number that is un proportional to its size in the population. This will enable concentration of more weight to senior level management who are deemed to have more relevant information in relation to the study by virtue of day today encounter with strategic alternative decisions. 3.3.2.3 Sample Size A sample is a small group of objects or individuals selected or drawn from a population in such a manner that its characteristics represent population characteristics (Orodho, 2009). It is that part of research plan that indicates how cases are to be selected for observation (Kombo & Delno, 2011). Out of the staff members of the KQ, stratified sampling will be used to develop the study sample from the management staff that comprised 42 as illustrated in the table below.

Table3. 1: Sampling

Division Population Sample Percentage

Head of Operations 20 10 100.00%

Flight Operations Director 40 20 100.00%

Ground Services Officer, 80 40 100.00%

Chief Financial Officer 60 30 100.00%

Fleet Managers 40 20 100.00%

Sales Director 60 30 100.00%

Total 300 150 100.00%

3.4 Data Collection Methods Primary data will be collected using structured questionnaires which were self-administered to the target population. The instrument will be used because it covers a large number of respondents at a relatively shorter period of time. In addition, it gives the respondent the privacy to give free and independent opinions because of absence of the researcher. In addition, primary data will be collected through a questionnaire which contained both open- ended and closed-end questions and with staff currently working at Kenya Airways. For the secondary data, sources will be employed whereby use of previous document or materials to support the data received from question and information that includes e-resources, books and magazines available in the libraries were visited as well as information from the websites. The study will use primary and secondary data. Primary data will be collected through questionnaire. The respondents will comprise of senior managers at Kenya Airways because of their key role in strategic decision making. Specifically, these included: Chief Financial Officer, Flight Operations Director, Chief Financial Officer, Ground Services Officer, Sales Director, Head of Operations and Control and Fleet Managers.

3.6 Research Procedures The procedure to be followed in undertaking this study included obtaining a research permit from the university authorizing the researcher to collect data. This permit will be used to seek permission from Kenya Airways to administer questionnaires among its member firms. In order to ensure a high response rate, the researcher assured respondents of their confidentiality. The questionnaires will be physically administered by the researcher to the respondents. The data collection phase of this research took two weeks to complete. Before deploying the instruments for data collection, they will be evaluated for validity and reliability. 3.6 Data Analysis Methods Data can be described as a collection of facts and figures relating to a particular activity bunder study. Data analysis is the whole process that starts immediately after data collection and ends at the point of interpretation and processing results which includes data sorting, data editing, data coding, data entry, data processing and interpretation of the results (Leedy, 2005)

Questionnaires will be checked for completeness of entries, consistency and coding. The data will be then coded, entered and processed for analysis using Statistical Package for the Social Sciences (SPSS). The data will be quantitative which will ensure objectivity; this assisted in ensuring the data will be free from any selective perception that could dilute its validity and reliability. The findings are presented in tables and analysis done using percentages and mean scores. A five point Likert scale was used to determine the factors affecting strategic alliances and their extent. Descriptive statistics will be used to analyse the data.

The data analysis will occur both within the quantitative (descriptive and inferential numeric analysis) approach and the qualitative (description and thematic text or image analysis) approach, and between the two approaches. Descriptive and correlation research methodologies will be used to analyse the data. A good rule of thumb for data analysis is to read and analyze the data for three sequential, somewhat overlapping purposes (Yin, 2003).

First, the researcher read and coded the data for a descriptive purpose that is, the telling of the story or stories in the case that best answer the research questions.

At this point, the story will be holistic and chronological; it will be an account that the people in the case could recognize as an accurate portrait of what they had said or done in these circumstances within the time period of the case study.

The final reading will be done for interpretive and explanatory purpose that is to integrate knowledge and insights gained from different kinds of data and data sources in light of the conceptual framework and theoretical purposes of the study.

For the quantitative data, the data analysis will involve developing a frame of analysis based on the variables under study, followed by a computer based analysis. The analysis for the qualitative data will involve content analysis based on predefined themes.

The data obtained from the interview guide was analyzed using content analysis. Nachmias and Nachmias (1996) define content analysis as any technique used to make inferences through systematic and objective identification of specified characteristics of messages.

Kothari (2004) explains content analysis as the analysis of the contents of documentary and verbal material, and describes it as a qualitative analysis concerning the general import of message of the existing documents and measure pervasiveness. The researcher analyzed the information provided by the interviewees against known strategic response strategic concepts and models to describe and determine how Kenya Airways responds to the challenges of global business arena.

3.7 Chapter Summary This chapter has described the methodology that will used to undertake the study. The chapter has detailed the research design, the population and sampling design. Further, it has explained the data collection methods, research procedures and data analysis techniques to be used. Chapter four presents the results and findings.

CHAPTER 4

4.0 RESULTS AND FINDINGS

4.1 Introduction The objectives of this study were to assess the strategic alternatives for the continued operation of Kenya Airways. The data was collected as outlined in chapter 3 and analyzed. Out of a 150 questionnaires which were issued 139 were duly filled and returned for analysis which represented a 92.7%. This was considered adequate for the objective of this study. Primary data was collected in this study through questionnaires. The collected data was entered into Statistical Package for the Social Sciences (SPSS) and analysed using descriptive statistics especially percentages and frequencies. The results are presented as follows;

4.2 Population Data The general information consisted of the gender, age, designation, education level and work experience. The results were analyzed and indicated as follows.

4.2.1 Gender of the respondents The respondents were given the category of either male or female. The results were given in the figure 4.1 below.

Figure 4. 1: Gender of the respondents

Female, 37.3, 40%

Male, 55.3, 60%

Figure 4.1 shows that those respondents who respondent in the airplane industries and were male accounted for 55.3% and those who were female accounted 37.3%. The majority of the respondents were males who gave their opinion about the industry strategic alternatives for continued operations.

4.2.2 Age of the respondents In order to determine the strategic alternatives for the airline industries the respondents were asked to indicate their age. The respondents were given a category of 20 years to above 50 years. The results were given in the figure 4.2 below.

Figure 4. 2: Age of the respondents

62.60%

28.80%

7.20% 1.40%

20 - 29 years 30 - 39 years 40 - 49 years Above 50 years

From the figure 4.2 above it can be noted that respondents who indicated that they were between the age of 20-29 years with 1.4%, 30-39 years with 7.2%, those between the age of 40 to 49 years with 62.6% and those above 50 years with 28.8%. It can be noted that majority of the respondents were between age of 40-49 years respectively.

4.2.3 Designation of respondents The respondents were asked to indicate their position that they hold in the organization. The responses were analyzed and presented in the table 4.1 below. Table 3.1: Sampling

Table 4. 1: Designation of respondents

Frequency Percent Valid Percent Cumulative Percent Head of Operations 8 5.3 5.8 5.8 Flight Operations Director 24 16.0 17.3 23.0 Ground Services Officer 43 28.7 30.9 54.0 Chief Financial Officer 24 16.0 17.3 71.2 Fleet Managers 17 11.3 12.2 83.5 Sales Director 23 15.3 16.5 100.0 Total 139 92.7 100.0

From the table 4.1 it can be denoted that respondents who indicated that they were head of operations with 5.8%, those who indicated that they were flight operation director with 17.3%, those who indicate that they were ground services officer with 30.9%, chief financial officer accounted for 17.3%, fleet managers with 12.2% and sales directors with 16.5%. It can have deduced that majority of the respondents were ground service officers.

4.2.4 Education level of the respondents The respondents were asked to indicated the level of education that is the qualification of the employees who are employed by the airline industries and whether it has effects on the strategic alternatives of the of the industry.

Figure 4. 3: Education level of the respondents

73.4%

8.6% 10.8% 7.2%

Diploma Degree Masters PhD

The figure 4.3 indicates that those respondents who worked for the airline and has a diploma with 8.6%, those with degree rated 73.4%, those with masters with 10.8% and those with PhD with 7.2%. Majority of the respondents had degrees in the airline industry with 73.8%. 4.2.6 Work experience of the respondents The respondents were asked to indicate the number of years they have worked in the airline industry in order to determine the strategic alternatives for continued operation of the airline industry. The results were given in the figure 4.4 below.

Figure 4. 4: Work experience of the respondents

Above 10 years0 -4 years 32% 19% 5 - 9 years 49%

Figure 4.4 shows that those respondents who indicated they have 0 to 4 years in the airline industry and accounted for 19%. In addition, those who indicated that they have been working for the airline industry for 5 to 9years with 49% and those who indicated they have been working in the organization for above 10 years with 32%.

4.3 Data Presentation In order to determine the effects of strategic alternatives for continued operation of the airline industry the respondents were asked to indicate whether it is short term, medium term and long term. The results were discussed as below.

4.3.1 Short term strategic alliance The respondents were asked to indicated whether the strategic alternatives adapted by the airline. The results were shown in the table 4.2 below. Table 4. 2: Short term strategic alliance

Frequency Percent Valid Percent Cumulative Percent Strongly disagree 9 6.0 6.5 6.5 Disagree 10 6.7 7.2 13.7 Neutral 10 6.7 7.2 20.9 Agree 24 16.0 17.3 38.1 Strongly agree 86 57.3 61.9 100.0 Total 139 92.7 100.0

Table 4.2 shows that those respondents who indicated that the airline firm adopt short term strategic alternatives in order to ensure its operation with those who strongly disagree with 6.5%. In addition, those who indicate that they disagree and were neutral on the strategic alternatives adopted by the airline firm accounted for the same results of 7.2%. Further, those respondents who agree and strongly agree that the organization adapt short term strategic alternatives with 17.3% and 61.9% respectively.

4.3.2 Medium term strategic alliance The respondents were asked to indicated whether the medium strategic alternatives adapted by the airline. The results were shown in the table 4.3 below. Table 4. 3: Medium term strategic alliance

Frequency Percent Valid Percent Cumulative Percent Strongly disagree 6 4.0 4.3 4.3 Disagree 3 2.0 2.2 6.5 Neutral 6 4.0 4.3 10.8 Agree 22 14.7 15.8 26.6 Strongly agree 102 68.0 73.4 100.0 Total 139 92.7 100.0

Table 4.3 shows that those respondents who indicated that the airline firm adopt medium term strategic alternatives in order to ensure its operation with those who strongly disagree with 4.3%. In addition, those who indicate that they disagree and were neutral on the medium strategic alternatives adopted by the airline firm accounted for 2.2% and 4.3%. Further, those respondents who agree and strongly agree that the organization adapt medium term strategic alternatives with 15.8% and 73.4% respectively.

4.3.2 Long term strategic alliance The respondents were asked to indicated whether the long strategic alternatives adapted by the airline. The results were shown in the table 4.4 below.

Table 4. 4: Long term strategic alliance

Frequency Percent Valid Percent Cumulative Percent Strongly disagree 10 6.7 7.2 7.2 Disagree 12 8.0 8.6 15.8 Neutral 17 11.3 12.2 28.1 Agree 36 24.0 25.9 54.0 Strongly agree 64 42.7 46.0 100.0 Total 139 92.7 100.0

Table 4.4 shows that those respondents who indicated that the airline firm adopt long term strategic alternatives in order to ensure its operation with those who strongly disagree with 7.2%. Moreover, those who indicate that they disagree and were neutral on long strategic alternatives adopted by the airline firm accounted for 8.6% and 12.2% respectively. Further, those respondents who agree and strongly agree that the organization adapt long term strategic alternatives with 25.9% and 46.0% respectively.

4.4 Employees satisfaction by the adapted strategic alternatives The respondents were asked to indicate the level of satisfaction on the strategic alternatives for continued operation of the airline and the results given in the table 4.6 below. Table 4. 5: Employees satisfaction by the adapted strategic alternatives

Frequency Percent Valid Percent Cumulative Percent Highly Dissatisfied 57 38.0 41.0 41.0 Dissatisfied 38 25.3 27.3 68.3 Neutral 14 9.3 10.1 78.4 Satisfied 1 .7 .7 79.1 Highly satisfied 29 19.3 20.9 100.0 Total 139 92.7 100.0

Table 4.5 shows that those respondents who indicated that they highly dissatisfied with airline strategic alternatives in order to ensure its operation with 41.0%. Moreover, those who indicate that they dissatisfied and were neutral on strategic alternatives adopted by the airline firm accounted for 27.3% and 10.1% respectively. Finally, those respondents who indicated satisfied and highly satisfied with strategic alternatives adapted by the airline firm with 0.07% and 29.0% respectively

4.5. Challenges facing the airline industry The respondents were asked to indicate the challenges facing the airline industries. The results were tabulated and indicated in the table 4.6 below.

Table 4. 6: Challenges facing the airline industry

Frequency Percent Valid Percent Cumulative Percent Resources management 3 2.0 2.2 2.2 Technology advancement 9 6.0 6.5 8.6 Global oil crisis 31 20.7 22.3 30.9 Competition 96 64.0 69.1 100.0 Total 139 92.7 100.0

Table 4.6 indicated that those who rated competition as one of the major cause of the airlines adopting to strategic alternatives in order they can manage to survive and operate with 69.1%. Further, those who indicated that global oil crisis, technology advancement and resource management as drivers for strategic alternatives with 22.3%, 6.5% and 2.2% respectively.

4.6 Organization competitiveness The respondents were asked to indicate how organization competitiveness influences the strategic alternatives for continued operation. The section focuses on the effects of competition on strategic alternatives, value delivery, strategic alignment and performance measurements.

4.6.1 Effects of competition on strategic alternatives The respondents were asked to indicate the influence competition on the strategic alternatives for continued operations. They were given a range of (1) does not meet expectation, (2) somewhat meets expectation, (3) meets expectations, (4) more than meets expectations and (5) greatly exceeds expectations. The results were given in table 4.7 below.

Table 4. 7: Effects of competition on strategic alternatives

Frequency Percent Valid Cumulative Percent Percent Does Not Meet Expectation 10 6.7 7.2 7.2 Somewhat Meets Expectation 12 8.0 8.6 15.8 Meets Expectations 17 11.3 12.2 28.1 More than Meets Expectations 36 24.0 25.9 54.0 Greatly Exceeds Expectations 64 42.7 46.0 100.0 Total 139 92.7 100.0

From table 4.7 it shows that those respondents who indicated that competition influence the strategic alternatives rating that it doesn’t meet expectation with 7.2%. Further, those who indicated that somewhat the strategic alternatives are influenced by competition with 8.6%. Also, those who indicated that competition influence strategic alternatives rating it meet expectation with 12.2%. Those who indicated that there is more than meet expectation on adopting strategic alternative to curb competition with 25.9%. Finally, those who indicated that greatly exceeds expectations when the organization adopt strategic alternatives in order to cope with the stiff competition with 46.0%

4.6.2 Value delivery on strategic alternatives The respondents were asked to indicate the influence value delivery on the strategic alternatives for continued operations. They were given a range of (1) does not meet expectation, (2) somewhat meets expectation, (3) meets expectations, (4) more than meets expectations and (5) greatly exceeds expectations. The results were given in table 4.8 below.

Table 4. 8: Value delivery on strategic alternatives

Frequency Percent Valid Cumulative Percent Percent Does Not Meet Expectation 5 3.3 3.6 3.6 Somewhat Meets Expectation 14 9.3 10.1 13.7 Meets Expectations 13 8.7 9.4 23.0 More than Meets Expectations 33 22.0 23.7 46.8 Greatly Exceeds Expectations 74 49.3 53.2 100.0 Total 139 92.7 100.0

From table 4.8 it shows that those respondents who indicated that value delivery influence the strategic alternatives rating that it doesn’t meet expectation with 3.6%. Further, those who indicated that somewhat the strategic alternatives are influenced by value delivery with 10.1%. Also, those who indicated that value delivery influence strategic alternatives rating it meet expectation with 9.4%. Those who indicated that there is more than meets expectation on adopting strategic alternative on value delivery with 23.7%. Finally, those who indicated that greatly exceeds expectations when the organization adopt strategic alternatives for value delivery with 53.2%.

4.6.3 Effects of Strategic alignment on strategic alternatives The respondents were asked to indicate the influence strategic alignment on the strategic alternatives for continued operations. They were given a range of (1) does not meet expectation, (2) somewhat meets expectation, (3) meets expectations, (4) more than meets expectations and (5) greatly exceeds expectations. The results were given in table 4.9 below.

Table 4. 9: Effects of Strategic alignment on strategic alternatives Frequency Percent Valid Cumulative Percent Percent Does Not Meet Expectation 11 7.3 7.9 7.9 Somewhat Meets Expectation 11 7.3 7.9 15.8 Meets Expectations 16 10.7 11.5 27.3 More than Meets Expectations 35 23.3 25.2 52.5 Greatly Exceeds Expectations 66 44.0 47.5 100.0 Total 139 92.7 100.0

From table 4.9 it shows that those respondents who indicated that strategic alignment influence the strategic alternatives rating that it doesn’t meet expectation and somewhat meets expectation with same results of 7.9%. Also, those who indicated that strategic alignment influence strategic alternatives rating it meet expectation with 11.5%. Those who indicated that there is more than meets expectation on adopting strategic alternative to strategic alignment with 25.2%. Finally, those who indicated that greatly exceeds expectations when the organization adopt strategic alternatives for strategic alignment with 47.5%.

4.6.4 Effects of Performance Measurement on strategic alternatives The respondents were asked to indicate the influence performance measurement on the strategic alternatives for continued operations. They were given a range of (1) does not meet expectation, (2) somewhat meets expectation, (3) meets expectations, (4) more than meets expectations and (5) greatly exceeds expectations. The results were given in table 4.10 below.

Table 4. 10: Effects of Performance Measurement on strategic alternatives Frequency Percent Valid Cumulative Percent Percent Does Not Meet Expectation 9 6.0 6.5 6.5 Somewhat Meets Expectation 11 7.3 7.9 14.4 Meets Expectations 17 11.3 12.2 26.6 More than Meets Expectations 37 24.7 26.6 53.2 Greatly Exceeds Expectations 65 43.3 46.8 100.0 Total 139 92.7 100.0

From table 4.10 it shows that those respondents who indicated that performance measurement influence the strategic alternatives rating that it doesn’t meet expectation with 6.5%. Further, those who indicated that somewhat the strategic alternatives is influenced by performance measurement with 7.9%. Also, those who indicated that performance measurement influence strategic alternatives rating it meet expectation with 12.2%. Those who indicated that there is more than meets expectation on adopting strategic alternative to determine performance measure with 26.6%. Finally, those who indicated that greatly exceeds expectations when the organization adopts strategic alternatives in performance measure with the stiff competition with 46.8%.

4.7 Determinant of the strategic alternative The respondents were asked to indicate the determinant of strategic alternatives used by airline firm. The section focused on the size of organization, the structure, centralized, and decentralized, organization spending as a percentage of the total revenue and alignment of strategies and business goals.

4.7.1 Size of the organization The respondents were asked to indicated the whether the size of the organization determine the strategic alternatives it adapt in order to enhance its operations. The respondents were give the range (1) strongly disagree, (2) disagree, (3) neutral, (4) agree and (5) strongly agree. The results were indicated in the table 4.11 below.

Table 4. 11: Size of the organization

Frequency Percent Valid Percent Cumulative Percent Strongly disagree 5 3.3 3.6 3.6 Disagree 7 4.7 5.0 8.6 Neutral 7 4.7 5.0 13.7 Agree 18 12.0 12.9 26.6 Strongly agree 102 68.0 73.4 100.0 Total 139 92.7 100.0

From the table 4.11 it can be noted that respondents who indicated that the size of the organization affects the strategic alternatives for continued operation for the airline industry with those who indicated strongly disagree with 3.6%. Those who indicated that they disagree and neutral on the that size of organization affects strategic alternatives with the same results of 5.0%. In addition, those who indicated that agree and strongly disagree with 12.9% and 73.4% respectively.

4.7.1 Organization structure The respondents were asked to indicate whether organization structures determine the strategic alternatives it adapts in order to enhance its operations. The respondents were give the range (1) strongly disagree, (2) disagree, (3) neutral, (4) agree and (5) strongly agree. The results were indicated in the table 4.12 below. Table 4. 12: Organization structure

Frequency Percent Valid Percent Cumulative Percent Strongly disagree 8 5.3 5.8 5.8 Disagree 9 6.0 6.5 12.2 Neutral 6 4.0 4.3 16.5 Strongly agree 115 76.7 82.7 99.3 Agree 1 .7 .7 100.0 Total 139 92.7 100.0

From the table 4.12 it can be noted that respondents who indicated that the organization structure affects the strategic alternatives for continued operation for the airline industry with those who indicated strongly disagree with 5.8%. Those who indicated that they disagree, neutral, strongly disagree and agree on the size of organization affects strategic alternatives with 6.5%, 4.3% and 0.07. In addition, those who indicated that strongly agree strongly with 82.7%.

4.7.1 Organization spending a percentage of the total revenue The respondents were asked to indicated the whether organization spending a percentage of the total revenue determine the strategic alternatives it adapt in order to enhance its operations. The respondents were give the range (1) strongly disagree, (2) disagree, (3) neutral, (4) agree and (5) strongly agree. The results were indicated in the table 4.13 below.

Table 4. 13: Organization spending a percentage of the total revenue

Frequency Percent Valid Percent Cumulative Percent Strongly disagree 13 8.7 9.4 9.4 Disagree 9 6.0 6.5 15.8 Neutral 12 8.0 8.6 24.5 Agree 28 18.7 20.1 44.6 Strongly agree 77 51.3 55.4 100.0 Total 139 92.7 100.0

From the table 4.13 it can be noted that respondents who indicated that organization spending a percentage of the total revenue affects the strategic alternatives for continued operation for the airline industry with those who indicated strongly disagree with 9.4%. Those who indicated that they disagree affect strategic alternatives with 6.5%. In addition, those who indicated that neutral with 8.6%. Further, those who indicated that they agree organization spending a percentage of the total revenue on strategic alliance with 20.1%. Further, those who indicated that they strongly agree that Organization spending a percentage of the total revenue on strategic alliances with 55.4%.

4.7.1 Alignment of strategies and business goals The respondents were asked to indicated the whether alignment of strategies and business goals determine the strategic alternatives it adapt in order to enhance its operations. The respondents were give the range (1) strongly disagree, (2) disagree, (3) neutral, (4) agree and (5) strongly agree. The results were indicated in the table 4.14 below.

Table 4. 14: Alignment of strategies and business goals

Frequency Percent Valid Percent Cumulative Percent Strongly disagree 7 4.7 5.0 5.0 Disagree 4 2.7 2.9 7.9 Neutral 7 4.7 5.0 12.9 Agree 3 2.0 2.2 15.1 Strongly agree 118 78.7 84.9 100.0 Total 139 92.7 100.0

From the table 4.14 it can be noted that respondents who indicated that strongly disagree and neutral on alignment of strategies and business goals affects the strategic alternatives for continued operation for the airline industry with the same results in 5.0%. Those who indicated that they disagree and agree with 2.9% and 2.2% respectively. Further, those who indicated that they strongly agree that Alignment of strategies and business goals on strategic alliances with 84.9%.

4.8 Organization leadership This section focused on the budgeting, project initiation, project approval, and staff hiring/retiring is strategy development, performance measurement, risk management, value delivery, IT- business alignment, outsourcing initiatives and business strategy development. The results were given in the following sections.

4.8.1 Budgeting and strategic alternatives The respondents were asked to indicate whether budget determines the strategic alternatives it adapts in order to enhance its operations. The respondents were give the range (1) strongly disagree, (2) disagree, (3) neutral, (4) agree and (5) strongly agree. The results were indicated in the table 4.15 below.

Table 4. 15: Budgeting and strategic alternatives

Frequency Percent Valid Percent Cumulative Percent Strongly disagree 6 4.0 4.3 4.3 Disagree 6 4.0 4.3 8.6 Neutral 10 6.7 7.2 15.8 Agree 30 20.0 21.6 37.4 Strongly agree 87 58.0 62.6 100.0 Total 139 92.7 100.0

From the table 4.15 it can be noted that respondents who indicated that budgeting affects the strategic alternatives for continued operation for the airline industry with those who indicated strongly disagree and disagree with same results of 4.3%. Those who indicated that they were neutral, agree and strongly agree that budget affects strategic alternatives with 21.6%% and 62.6% respectively.

4.8.2 Project Initiation and strategic alternatives The respondents were asked to indicate whether Project Initiation determines the strategic alternatives it adapts in order to enhance its operations. The respondents were give the range (1) strongly disagree, (2) disagree, (3) neutral, (4) agree and (5) strongly agree. The results were indicated in the table 4.16 below.

Table 4. 16: Project Initiation and strategic alternatives

Frequency Percent Valid Percent Cumulative Percent Strongly disagree 5 3.3 3.6 3.6 Disagree 2 1.3 1.4 5.0 Neutral 4 2.7 2.9 7.9 Agree 22 14.7 15.8 23.7 Strongly agree 106 70.7 76.3 100.0 Total 139 92.7 100.0

From the table 4.16 it can be noted that respondents who indicated that project initiation affects the strategic alternatives for continued operation for the airline industry with those who indicated strongly disagree with 3.6%. Those who indicated that they disagree affect strategic alternatives with 1.4%. In addition, those who indicated that neutral with 15.8%. Further, those who indicated that they agree organization spending a percentage of the total revenue on strategic alliance with 15.8%. Further, those who indicated that they strongly agree that Organization spending a percentage of the total revenue on strategic alliances with 76.3%.

4.8.3 Project Approval and strategic alternatives The respondents were asked to indicate whether Project Approval determine the strategic alternatives it adapt in order to enhance its operations. The respondents were give the range (1) strongly disagree, (2) disagree, (3) neutral, (4) agree and (5) strongly agree. The results were indicated in the table 4.16 below.

Table 4. 17: Project Approval and strategic alternatives

Frequency Percent Valid Percent Cumulative Percent Strongly disagree 7 4.7 5.0 5.0 Disagree 6 4.0 4.3 9.4 Neutral 10 6.7 7.2 16.5 Agree 9 6.0 6.5 23.0 Strongly agree 107 71.3 77.0 100.0 Total 139 92.7 100.0

From the table 4.16 it can be noted that respondents who indicated that project approval affects the strategic alternatives for continued operation for the airline industry with those who indicated strongly disagree with 5.0%. Those who indicated that they disagree affect strategic alternatives with 4.3%. In addition, those who indicated that neutral with 7.2%. Further, those who indicated that they agree project approval on strategic alliance with 6.5%. Further, those who indicated that they strongly agree that project approval on strategic alliances with 77.0%. 4.8.4 Staff hiring and strategic alternatives The respondents were asked to indicate whether staff hiring determine the strategic alternatives it adapt in order to enhance its operations. The respondents were give the range (1) strongly disagree, (2) disagree, (3) neutral, (4) agree and (5) strongly agree. The results were indicated in the table 4.18 below Table 4. 18: Staff hiring and strategic alternatives

Frequency Percent Valid Percent Cumulative Percent Strongly disagree 6 4.0 4.3 4.3 Disagree 2 1.3 1.4 5.8 Neutral 7 4.7 5.0 10.8 Agree 35 23.3 25.2 36.0 Strongly agree 89 59.3 64.0 100.0 Total 139 92.7 100.0

From the table 4.18 it can be noted that respondents who indicated that staff hiring affects the strategic alternatives for continued operation for the airline industry with those who indicated strongly disagree with 4.3%. Those who indicated that they disagree affect strategic alternatives with 1.4%. In addition, those who indicated that neutral with 5.0%. Further, those who indicated that they agree that staff hiring affect strategic alternatives with 25.2%. Further, those who indicated that they strongly agree that staff hiring on strategic alliances with 64.0%.

4.8.5 Strategy Development and strategic alternatives The respondents were asked to indicated whether Strategy Development determine the strategic alternatives it adapt in order to enhance its operations. The respondents were give the range (1) strongly disagree, (2) disagree, (3) neutral, (4) agree and (5) strongly agree. The results were indicated in the table 4.19 below Table 4. 19: Strategy Development and strategic alternatives

Frequency Percent Valid Percent Cumulative Percent Strongly disagree 4 2.7 2.9 2.9 Disagree 1 .7 .7 3.6 Neutral 1 .7 .7 4.3 Agree 23 15.3 16.5 20.9 Strongly agree 110 73.3 79.1 100.0 Total 139 92.7 100.0

From the table 4.19 it can be noted that respondents who indicated that strategic development affects the strategic alternatives for continued operation for the airline industry with those who indicated strongly disagree with 2.9%. Those who indicated that they disagree and neutral that strategy development affects strategic alternatives with same results 0.07%. In addition, those who indicated that agree with 16.5%.

Further, those who indicated that they strongly agree that strategy development on strategic alliances with 79.1%.

4.8.6 Performance Measurement and strategic alternatives The respondents were asked to indicate whether Performance Measurement determine the strategic alternatives it adapt in order to enhance its operations. The respondents were give the range (1) strongly disagree, (2) disagree, (3) neutral, (4) agree and (5) strongly agree. The results were indicated in the table 4.20 below

Table 4. 20: Performance Measurement and strategic alternatives

Frequency Percent Valid Percent Cumulative Percent Strongly disagree 7 4.7 5.0 5.0 Disagree 4 2.7 2.9 7.9 Neutral 8 5.3 5.8 13.7 Agree 7 4.7 5.0 18.7 Strongly agree 113 75.3 81.3 100.0 Total 139 92.7 100.0

From the table 4.20 it can be noted that respondents who indicated strongly disagree and agree that Performance Measurement affects the strategic alternatives for continued operation for the airline industry with those who indicated strongly disagree with 5.0%. Those who indicated that they disagree, neutral and strongly agree that Performance Measurement affects strategic alternatives with 2.9%, 5.8% and 81.3% respectively.

4.8.7 Risk Management and strategic alternatives The respondents were asked to indicate whether Risk Management determine the strategic alternatives it adapt in order to enhance its operations. The respondents were give the range (1) strongly disagree, (2) disagree, (3) neutral, (4) agree and (5) strongly agree.

The results were indicated in the table 4.21 below Table 4. 21: Risk Management and strategic alternatives

Frequency Percent Valid Percent Cumulative Percent Strongly disagree 10 6.7 7.2 7.2 Disagree 3 2.0 2.2 9.4 Neutral 8 5.3 5.8 15.1 Agree 32 21.3 23.0 38.1 Strongly agree 86 57.3 61.9 100.0 Total 139 92.7 100.0

From the table 4.21 it can be noted that respondents who indicated strongly disagree, disagree, neutral, agree and strongly agree that risk management affects the strategic alternatives for continued operation for the airline industry with those who indicated strongly disagree with 7.2%, 2.2%, 5.8%, 23.0%, 61.9% respectively.

4.8.8 Value Delivery and strategic alternatives The respondents were asked to indicate whether value delivery determine the strategic alternatives it adapt in order to enhance its operations. The respondents were give the range (1) strongly disagree, (2) disagree, (3) neutral, (4) agree and (5) strongly agree. The results were indicated in the table 4.15 below Table 4. 22: Value Delivery and strategic alternatives

Frequency Percent Valid Percent Cumulative Percent Strongly disagree 10 6.7 7.2 7.2 Disagree 1 .7 .7 7.9 Neutral 2 1.3 1.4 9.4 Agree 29 19.3 20.9 30.2 Strongly agree 97 64.7 69.8 100.0 Total 139 92.7 100.0

From the table 4.22 it can be noted that respondents who indicated that value delivery affects the strategic alternatives for continued operation for the airline industry with those who indicated strongly disagree with 7.2%. Those who indicated that they disagree affect strategic alternatives with 0.07%. In addition, those who indicated that neutral with 1.4%. Further, those who indicated that they agree value delivery on strategic alliance with 20.9%. Further, those who indicated that they strongly agree that value delivery on strategic alliances with 69.8%.

4.8.9 Business Alignment and strategic alternatives The respondents were asked to indicate whether business alignment determines the strategic alternatives it adapts in order to enhance its operations. The respondents were give the range (1) strongly disagree, (2) disagree, (3) neutral, (4) agree and (5) strongly agree. The results were indicated in the table 4.23 below Table 4. 23: Business Alignment and strategic alternatives

Frequency Percent Valid Percent Cumulative Percent Strongly disagree 8 5.3 5.8 5.8 Disagree 5 3.3 3.6 9.4 Neutral 8 5.3 5.8 15.1 Agree 11 7.3 7.9 23.0 Strongly agree 107 71.3 77.0 100.0 Total 139 92.7 100.0

From the table 4.23 it can be noted that respondents who indicated that business alignment affects the strategic alternatives for continued operation for the airline industry with those who indicated strongly disagree with 5.8%. Those who indicated that they disagree affect strategic alternatives with 3.6%. In addition, those who indicated that neutral with 5.8%. Further, those who indicated that they agree business alignment on strategic alliance with 7.9%. Further, those who indicated that they strongly agree that business alignment on strategic alliances with 77.0%.

4.8.10 Outsourcing Initiatives and strategic alternatives The respondents were asked to indicate whether outsourcing initiatives determine the strategic alternatives it adapts in order to enhance its operations. The respondents were give the range (1) strongly disagree, (2) disagree, (3) neutral, (4) agree and (5) strongly agree. The results were indicated in the table 4.24 below Table 4. 24: Outsourcing Initiatives and strategic alternatives

Frequency Percent Valid Percent Cumulative Percent Strongly disagree 11 7.3 7.9 7.9 Disagree 9 6.0 6.5 14.4 Neutral 11 7.3 7.9 22.3 Agree 27 18.0 19.4 41.7 Strongly agree 81 54.0 58.3 100.0 Total 139 92.7 100.0

From the table 4.24 it can be noted that respondents who indicated that strongly disagree and neutral outsourcing initiatives affects the strategic alternatives for continued operation for the airline industry with same results 7.9%. Those who indicated that they disagree affect strategic alternatives with 6.5%. Further, those who indicated that they agree and strongly agree on strategic alliance with 19.4% and 58.3% respectively.

4.9 Organization resources This section focuses on the organization resources and how they help in achieving of strategic alternatives. The results as discussed below.

4.9.1 Strategic alternatives influences organization resources The respondents were asked to indicate the influence Strategic alternatives influence organization resources. They were given a range of (1) does not meet expectation, (2) somewhat meets expectation, (3) meets expectations, (4) more than meets expectations and (5) greatly exceeds expectations. The results were given in table 4.25 below

Table 4. 25: Strategic alternatives influences organization resources

Frequency Percent Valid Cumulative Percent Percent Does Not Meet Expectation 11 7.3 7.9 7.9 Somewhat Meets Expectation 11 7.3 7.9 15.8 Meets Expectations 8 5.3 5.8 21.6 More than Meets Expectations 26 17.3 18.7 40.3 Greatly Exceeds Expectations 83 55.3 59.7 100.0 Total 139 92.7 100.0

From table 4.25 it shows that those respondents who indicated that organization resources influence the strategic alternatives rating that it doesn’t meet expectation and somewhat meets expectation with same results of 7.9%. Also, those who indicated that organization resources influence strategic alternatives rating it meet expectation with 5.8%. Those who indicated that there is more than meets expectation on adopting strategic alternative to organizes resources with 18.7%. Finally, those who indicated that greatly exceeds expectations when the organization adopt strategic alternatives for organization resources with 59.7%.

4.9.2 Resources determine the strategy The respondents were asked to indicate whether resources determine the strategy. They were given a range of (1) does not meet expectation, (2) somewhat meets expectation, (3) meets expectations, (4) more than meets expectations and (5) greatly exceeds expectations. The results were given in table 4.26 below.

Table 4. 26: Resources determine the strategy

Frequency Percent Valid Cumulative Percent Percent Does Not Meet Expectation 11 7.3 7.9 7.9 Somewhat Meets Expectation 14 9.3 10.1 18.0 Meets Expectations 13 8.7 9.4 27.3 More than Meets Expectations 1 .7 .7 28.1 Greatly Exceeds Expectations 100 66.7 71.9 100.0 Total 139 92.7 100.0

From table 4.26 it shows that those respondents who indicated that Resources determine the strategy rating that it don’t meet expectation and somewhat meets expectation with same results of 7.9%. Also, those who indicated that strategic alignment influence strategic alternatives rating meets expectation with 10.1%. Those who indicated that there is more than meets expectation on adopting strategic alternative to strategic alignment with 9.4%. Finally, those who indicated that greatly exceeds expectations when the organization adopt strategic alternatives for strategic alignment with 71.9%

4.9.3 Resources influences strategic alignment The respondents were asked to indicate the Resources influences strategic alignment. They were given a range of (1) does not meet expectation, (2) somewhat meets expectation, (3) meets expectations, (4) more than meets expectations and (5) greatly exceeds expectations. The results were given in table 4.27 below.

Table 4. 27: Resources influences strategic alignment

Frequency Percent Valid Cumulative Percent Percent Does Not Meet Expectation 3 2.0 2.2 2.2 Meets Expectations 4 2.7 2.9 5.0 More than Meets Expectations 10 6.7 7.2 12.2 Greatly Exceeds Expectations 122 81.3 87.8 100.0 Total 139 92.7 100.0

From table 4.27 it shows that those respondents who indicated that Resources influences strategic alignment rating that it doesn’t meet expectation and somewhat meets expectation with same results of 2.2%. Also, those who indicated that resources influence strategic alternatives rating it meet expectation with 11.5%. Those who indicated that there is more than meets expectation on adopting strategic alternative to strategic alignment with 25.2%. Finally, those who indicated that greatly exceeds expectations when the organization adopt strategic alternatives for strategic alignment with 47.5%

4.9.4 Performance Measurement The respondents were asked to indicate the performance measurement influences strategic alignment. They were given a range of (1) does not meet expectation, (2) somewhat meets expectation, (3) meets expectations, (4) more than meets expectations and (5) greatly exceeds expectations. The results were given in table 4.28 below

Table 4. 28: Performance Measurement

Frequency Percent Valid Cumulative Percent Percent Does Not Meet Expectation 15 10.0 10.8 10.8 Somewhat Meets Expectation 15 10.0 10.8 21.6 Meets Expectations 15 10.0 10.8 32.4 More than Meets Expectations 15 10.0 10.8 43.2 Greatly Exceeds Expectations 79 52.7 56.8 100.0 Total 139 92.7 100.0

From table 4.28 it shows that those respondents who indicated that performance measurement influence the strategic alternatives rating that it doesn’t meet expectation and somewhat meets expectation, somewhat meets expectation, meets expectations and more than meets expectations with same results of 10.8%. Finally, those who indicated that greatly exceeds expectations when the organization adopts strategic alternatives involve performance measurement with 56.8%.

4.9.5 Resource Management The respondents were asked to indicate the resource management influences strategic alignment. They were given a range of (1) does not meet expectation, (2) somewhat meets expectation, (3) meets expectations, (4) more than meets expectations and (5) greatly exceeds expectations. The results were given in table 4.29 below.

Table 4. 29: Resource Management

Frequency Percent Valid Cumulative Percent Percent Does Not Meet Expectation 9 6.0 6.5 6.5 Somewhat Meets Expectation 10 6.7 7.2 13.7 Meets Expectations 10 6.7 7.2 20.9 More than Meets Expectations 24 16.0 17.3 38.1 Greatly Exceeds Expectations 86 57.3 61.9 100.0 Total 139 92.7 100.0

From table 4.29 it shows that those respondents who indicated that Resources management influences strategic alignment rating that it doesn’t meet expectation and somewhat meets expectation with results of 6.5%. Also, those who indicated that resources influence strategic alternatives rating it meet expectation and meets expectations with the same results 7.2%. Those who indicated that there is more than meet expectation on adopting strategic alternative to strategic alignment with 17.3%. Finally, those who indicated that greatly exceed expectations when the organization adopts strategic alternatives for strategic alignment with 61.9%.

4.10 Correlation of the variables The correlation matrix of the variables was analyzed strategic alternatives for the continued operation of Kenya airways. The variables were organization competitiveness, leadership influence, industry challenges and organizational resources The results were shown in table 4.30. The following coding was used to represent the variables that is OC = organization competitiveness, OL = organization leadership, IC = industry challenges and OR = organizational resources. The Person Correlation was tested and the results discussed as below.

Table 4. 30: Correlation of the variables

OC OL IC OR OC Pearson Correlation 1 .661** .836** .053

Sig. (2-tailed) .000 .000 .532 N 139 139 139 139 OL Pearson Correlation .661** 1 .559** -.018

Sig. (2-tailed) .000 .000 .834 N 139 139 139 139 IC Pearson Correlation .836** .559** 1 .059

Sig. (2-tailed) .000 .000 .493 N 139 139 139 139 OR Pearson Correlation .053 -.018 .059 1

Sig. (2-tailed) .532 .834 .493 N 139 139 139 139 **. Correlation is significant at the 0.01 level (2-tailed).

Table 4.30 shows that the all the variables have a positive Pearson correlation which shows that the effect is direct proportion to the strategic alternatives for continued operation of Kenya Airways. Organization competitiveness have a strong relationship with organization leadership with r = 0.661 which is significant at 0.01 level. In addition, organization competitiveness had a very strong correlation with industry challenges which had a Peasrson correlation of r = 0.836 where are it was significant at 0.01 level. Further, the correlation between organization competitiveness and organization resources had a Pearson correlation of 0.053 where by it was not significant for strategic alternatives for continued operation of Kenya Airways.

4.11 Chapter Summary The chapter focused on the analysis of the four variables which were under study that is organization competitiveness, leadership influence, industry challenges and organizational resources. The variables were indicated by first doing an analysis of the descriptive statistics whereby the variables were presented in terms of frequencies. These frequencies were represented by the figures and tables. Chapter five indicates the discussion, conclusion and summaries identified in chapter 4.

CHAPTER 5

5.0 DISCUSSION, CONCLUSION AND RECOMMENDATIONS

5.1 Introduction This chapter provides the summary discussion, conclusion of the data that was analyzed in chapter four. It explains the content of the chapter, presenting a summary of the research findings. It then gives conclusions resulting from the study and finally recommends to policy makers on what should be strategic alternatives for Kenya Airways in order to ensure continued operations. The chapter focuses on the four variables which were analyzed. In addition, the chapter attempts to answer the research questions which were outlined in chapter 1. The chapter begins with the summary of the findings.

5.2 Summary The study indicates that the strongly agree that the organization adopt short term strategic alternatives with 61.9% on strategic alternatives for continued operations. Further, the organization also adopts medium term strategies to copy with increased competition and challenges facing the airline industries with the majority of the respondents indicating 73.4%. In addition, majority of the respondents indicated that the airline adopts also long term strategies indicating 46.0%.

Further, majority of the respondents indicated that employee’s satisfaction by the adapted strategic alternatives for continued operation with majority indicating that competition as one of the major cause of the airlines adapting to strategic alternatives in order they can manage to survive and operate with 69.1%. Further, majority of the respondents who indicated that competition influence the strategic alternatives rating with 46.0%. Moreover, majority of the respondents indicates that value delivery influence the strategic alternatives for continued operation with 53.2%. Further, it can be summarized that majority of the respondents rated that strategic alignment influence the strategic alternatives with 47.5%. It can also be summarized that performance measurement influences the strategic alternatives with majority of the respondents indicating 46.8%. Further, size of the organization affects the strategic alternatives for continued operation for the airline industry with those who indicated strongly disagree 73.4%.

It can also be summarized that organization structure influences the strategic alternative for continued operation of KQ with the majority of the respondents indicating 82.7%. In addition, majority of the respondents indicates that spending a percentage of the total revenue affects the strategic alternatives for continued operation for the airline industry with 55.4%. Further, it can be summarized that the strategic alternatives for the continued operations is in line with strategic objectives and goals of the organization with 84.9%. Also the respondents indicated that budgeting affects the strategic alternatives for continued operation for the airline industry with 62.6%.

Further, the project initiation affects the strategic alternatives for continued operation for the airline industry with 76.3% which affects the way the organization respondents to the competition and the major challenges facing the industry. Further, the way the organization approves its project affect the strategic alternatives for the airline industry in Kenya Airways. This can be witnessed by the respondents who overwhelming majority project approval on strategic alliances with 77.0%. Further, those who indicated that they strongly agree that staff hiring on strategic alliances with 64.0%. In addition, it can be noted that strategic development affects the strategic alternatives for continued operation for the airline industry with indicated that they strongly agree that strategy development on strategic alliances with 79.1%. Further, it can be summarized that performance Measurement affects strategic alternatives for continued operation with 81.3%. Majority of the respondents that risk management affects the strategic alternatives for continued operation for the airline industry with those 61.9%. Also, the majority of the respondents indicate that value delivery affects the strategic alternatives for continued operation for the airline industry with 69.8%. From the table 4.23 it can be noted that respondents who indicated that business alignment affects the strategic alternatives for continued operation for the airline industry with those who indicated strongly disagree with 5.8%. Those who indicated that they disagree affect strategic alternatives with 3.6%. In addition, those who indicated that neutral with 5.8%. Further, those who indicated that they agree business alignment on strategic alliance with 7.9%. Further, those who indicated that they strongly agree that business alignment on strategic alliances with 77.0%. Further, those who indicated that they agree and strongly agree on strategic alliance with 58.3%.

Also, those who indicated that greatly exceeds expectations when the organization adopt strategic alternatives for organization resources with 59.7%, Moreover, Finally, those who indicated that greatly exceeds expectations when the organization adopt strategic alternatives for strategic alignment with 71.9%. Further, those who indicated that greatly exceed expectations when the organization adopts strategic alternatives for strategic alignment with 47.5%. Also, majority of the respondents indicated that greatly exceeds expectations when the organization adopt strategic alternatives involve performance measurement with 56.8%. Finally, those who indicated that greatly exceed expectations when the organization adopt strategic alternatives for strategic alignment with 61.9%.

5.3 Discussions

5.3.1 Does organization competitiveness determine strategic for continued operation of Kenya Airways?

On organization competitiveness the study has revealed that strategic alternatives for continued operations are influenced by the competition in the airline industry. In addition, the study has found the value delivery also influences the strategic alternatives for continued operation of the KQ. This concurs with the studies done by first Kitoto (2005) who confers that a proper analysis of the five forces will help a firm choose one of the generic strategies that will effectively enable the firm to compete profitably in an industry. Managers therefore can only develop and choose winning strategies by first identifying the competitive pressures that exists gauging the relative strength of each and gaining a deep understanding of the industry’s whole competitive structure. The Porters Five Forces Model allows for determination of the attractiveness of the industry. With the knowledge about intensity and power of competitive forces, airlines, that is Airline industries can then develop options to influence them in a way that improves their own competitive position. In the airline industry it is not clear whether the presence of the airline can critically affect the pricing strategies of low-cost carriers. Secondly a study done by Pitfield (2005) in the analysis of the routes originating from Nottingham East Midlands airport argues that when it was possible to observe how low-cost in direct competition, results showed a weak influence of the competitive structure in prices. The historical pattern of the fares offered by each airline seems to play a more important role, as it would be expected in a situation of price leadership.

5.3.2 How does leadership influence strategic alternatives for continued operation of Kenya Airways?

On the aspect of leadership in the organization the study has revealed that the way the Budgeting is allocated, Project Initiation, Project Approval, Staff Hiring to execute the strategic objectives, Strategy Development, Performance Measurement, Risk Management, Value Delivery. This agrees with the study done by Kamau & Kavale (2015) where they found that permissive leader often uses their delegation abilities to depart themselves from any responsibility or accountability of the group’s outcomes and as such the group members themselves may feel overwhelming pressure to perform too highly and take on too much responsibility. In addition, Tapinos et al. (2005) concurs that there is no right or wrong style of leadership, and indeed many leaders use a combination of styles. The success of a particular group and their ability to achieve the goals of an organisation lies initially in selecting which is the appropriate style of leadership behaviour to adopt in that particular situation (Bissessur & Alamdari, 2008). This can depend on the time constraints, the group members, the task at hand and many other variables. There are advantages and disadvantages of each and these should be carefully considered when choosing a leadership style. (Malingetti, Paleari, & Redondi, 2009) discusses how if a leader is only interested in self- promotion then leadership style will be irrelevant as each style can be manipulated for personal gain. Although leadership style can be accountable for some disconcertion, it is the leader who is carrying the style that will inevitably challenge its effectiveness.

5.3.3 How do industry challenges determine strategic alternatives for continued operation of Kenya Airways?

Further, the industry is faced with myriad of challenges which are uncontrollable from the industry. The study has found that the industry is capital intensive and is affected by the fast growing technology. This concurs with the study of Clark (2011) argues that the economic and airline industry conditions of the next few years, including the potential for a slow economic recovery, continued high unemployment, a tight credit market, airline network restructuring related to consolidation and airline alliances, continued oil price volatility and the uncertainty of airport funding sources, present airport operators and airline with unprecedented challenges.

He adds that the choices that airport operators and airlines are likely to focus on will focus on: optimizing scarce funding sources, monitoring and evaluating airline industry changes, implementing energy efficiency and sustainability, seeking commercial business development and lastly promoting economic development and community support. Also, Yannopoulos (2011) supports that local companies forced to deal with the entrance of multinational competitors have more options and advantages than may initially appear to be the case. Management often feels coerced to capitulate to one of three options when faced with these circumstances: turning to government for support; subordinating the organization to the multinational; or conceding and selling the business outright.

5.3.4 How do organizational resources determine strategic alternatives for continued operation of Kenya Airways?

Finally, the study has found that strategic alternatives are influenced by organization resources. Resources determine the strategy, strategic alignment, continued operation and resource management. This is supported by the study of Serpen (2014) argue that physical resources such as machinery, equipment, production technology and capacity contribute positively towards organizational competitive advantage and eventually result in superior organizational performance. In addition, financial resources such as cash-in-hand, bank deposits or savings and financial capital also help explain the level of organizational competitive advantage and performance. Furthermore, experiential resources such as product reputation, manufacturing experience and brand name can account for the variation in organizational competitive advantage and performance. Human resources such as top and middle management, administrative and production employees are also able to elucidate the extent of organizational competitive advantage and resulting to organizational performance. In short, organizational resources are the foundation for attaining and sustaining competitive advantage. The potential to generate competitive advantage, a firm’s resource must have some certain attributes such as, it must be valuable in the sense that it exploits opportunities and neutralizes threats in a firm’s environment, it must be rare among a firm’s current and potential competition, it must be imperfectly imitable and there cannot be strategically equivalent substitutes for this resource.

Competitive advantage is the basis for superior performance and understanding the anatomy of competitive advantage is of paramount importance to general managers who bear the ultimate responsibility for a firm’s long term survival and success.

5.4 Conclusions

5.4.1 Does organization competitiveness determine strategic for continued operation of Kenya Airways?

The study concludes that organization competiveness is a key determinant of strategic alternatives for continued operations. The airline industry is a capital intensive investment which requires the organization to muscle it resources in order to gain competitive advantage globally.

5.4.2 How does leadership influence strategic alternatives for continued operation of Kenya Airways?

Leadership in the organization also influences the strategic operation for continued existence of the KQ. The study concludes that leaders are the key players who give direction on the way to the implementation of the strategic plans. In addition, leaders are the major contributors of the strategic management process. The study has found that when the leader embraces the organization strategic objectives then the organization will move to right direction.

5.4.3 How do industry challenges determine strategic alternatives for continued operation of Kenya Airways?

The study concludes that airline industries are faced by various challenges which include the leadership in the organization, financial challenges and economic challenges. Hence when the industry is adopting strategic alternatives for it continued operation. The industry is faced with the challenge of human and technology.

5.4.4 How do organizational resources determine strategic alternatives for continued operation of Kenya Airways?

Finally, the airline is faced with organization resources challenges which affect the strategic alternatives to be explored by the firm. The study has found that if the organization has resources it adopt the most optimal strategic decision in order to ensure growth and survival.

5.5 Recommendations Based on the research findings the following is recommended

5.5.1 Does organization competitiveness determine strategic for continued operation of Kenya Airways?

The study recommends that competitive in the airline industry can be eliminated by the industries forming alliances that will allow the airline industries to rip the benefit of operating in different destination. In addition, when the airline adopts the right technology and invest on the state of the art air plane that can be able operate in the harsh climatically conditions and different routes.

5.5.2 How does leadership influence strategic alternatives for continued operation of Kenya Airways?

The study also recommends that the board of directors should always put in place the best leaders they can get because best leaders are known to foster growth of the organizations by maximizing the shareholder’s wealth. Leaders should be in front line to identify the best strategic alternatives that the organization can adapt to ensures growth.

5.5.3 How do industry challenges determine strategic alternatives for continued operation of Kenya Airways?

The study also recommends that the airline industries should diversify their operation in order to curb the rising global oil crisis and also the economic instability of the different countries that they are operating. This will help the organization to rip the benefits even when some of the economy in which the firm is operating is economically unstable.

5.5.4 How do organizational resources determine strategic alternatives for continued operation of Kenya Airways?

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Appendix I: Questionnaire I am carrying out a research on strategic alternatives for the continued operation of Kenya Airways. Please ensure you do this in your time and not ‘Company’ time. Good luck with the data collection and with your studies.

SECTION A: Demographic Data

1. Gender ( ) Male ( ) Female

2. Age ……………………………………………………………………………………

3. Education ………………………………………………………………

4. Role/Designation ………………………………………………………………………

5. How long have you served in the company? ……………………

6. How many years in the same role? ……………………..

SECTION B: About the Business

8. Does the company have?

1 2 3 4 6 Strongly Disagree Disagree Neutral Agree Strongly Agree [ Variables 1 2 3 4 5 Short-term business strategy? ] Medium-Term business strategy Long-term strategy?

10. In your opinion, what are the challenges to the company’s business?

______

11. What are some of the measures taken by the company on strategic alternatives? ______

SECTION C: Organization competitive

12. To what extent are the following aspects of organization competitiveness?

1- Does Not Meet Expectation 2- Somewhat Meets Expectation 3- Meets Expectations 4- More than Meets Expectations 5 Greatly Exceeds Expectations

Aspect Score a . Strategic alternatives affect competitiveness

b . Value Delivery (That there is Business Return on IT Investments) c . Strategic alignment (That IT Strategy aligns/supports the business strategy and objectives) d . Continued operation

13. How satisfied are you with the strategic alternatives?

[1] Highly Dissatisfied [2] S Dissatisfied [3] Neutral [4] Somehow Satisfied [5] Very Satisfied

14. The strategic alternatives used by the company depend on the:

1 2 3 4 6 Strongly Disagree Disagree Neutral Agree Strongly Agree

Concept 1 2 3 4 5 a . Size of Organization

b .The structure, centralized, decentralized and so- called federal modes c . Organization spending as a percentage of the total revenue d . Alignment of strategies and business goals

SECTION D: Organization leadership

15. In order to deliver the organization leadership and business objectives, there are specialized variables affecting the strategic alliances. Do you agree on the following statements?

1 2 3 4 6 Strongly Disagree Disagree Neutral Agree Strongly Agree Practice/Task 1 2 3 4 5 a. Budgeting b. Project Initiation c. Project Approval d. Staff Hiring/Retiring e. IS Strategy Development f. Performance Measurement g. Risk Management h. Value Delivery i. IT- Business Alignment j. Outsourcing Initiatives m. Business Strategy Development

SECTION E: Organization resources

16. Indicate the extent to which the organization resource helps in achieving strategic alternatives 1- Does Not Meet Expectation 2- Somewhat Meets Expectation 3- Meets Expectations 4- More than Meets Expectations 5 Greatly Exceeds Expectations

Aspect 1 2 3 4 5 a . Strategic alternatives is influenced by organization resources b . Resources determine the strategy c . Strategic alignment

d . Continued operation

e . Resource Management

17. What would you say is the roadmap towards supporting the business to achieve the most desired competitive advantage? ______

______

Thank you very much for your time.

Appendix II: RESEARCH BUDGET

TASKS COST (KSH)

Printing of research proposal 500

Printing of questionnaires 1500

Printing of preliminary reports 3000

Binding of preliminary reports 1,000

Printing of final reports 2,500

Binding of final reports 2,500

TOTAL RESEARCH COST 11,000

Appendix III: Time Schedule

Activities

January February March April May June Review of literature

Draft literature review

Agree research strategy with supervisor

Agree formal access to organizations for collection of primary data

Compile, pilot and review questionnaire

Data analysis and processing

Writing the research report

Oral presentation of the report

Collection of data

Presentation of project