BUMGT5976 Strategic Management

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The Faculty of Business
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COURSENAMEStrategic ManagementCOURSE CODEBUMGT5976
ASSIGNMENT
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Assessment Task Two – Group report
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Student’s Statement
I have read and understood the information provided on this assignment coversheet relating to plagiarism and
other unacceptable behavior and therefore declare that the attached work is entirely my own, except where work
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quoted is duly acknowledged in the text, and that this work has not been submitted for assessment in any other
course or program.
CRICOSProviderNo.00103D The Faculty of Business
ASSESSMENT OF SUPERIOR PERFORMING FIRM
DEVELOPED FOR: DR ABDUL MOYEEN, MBA LECTURER
SUBMITTED ON: 28 OCTOBER 2017
WORD COUNT: 3492
STUDENT STUDENT ID EMAIL
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1 EXECUTIVE SUMMARY
Superior performing companies over time must build and create a competitive advantage. The
aim of this report is to investigate the competitiveness of the Australian market leader Flight
Centre Travel Group. An analysis of the literature was combined with strategic management
tools from strategy research leaders Porter and Mintzberg; to shed light on Flight Centre’s
reasons for success. The results indicate that Flight Centre’s competitive advantage is
primarily based on a combination of superior efficiency and innovation. Having undergone
major structural changes due to globalisation and digitalisation and facing an increasingly high
intensity of competition, the Australian travel agency and tour arrangement industry is quite a
tough terrain. However, Flight Centre seems to embrace the challenge and has followed an
aggressive international expansion strategy, building on horizontal and vertical diversification
on a corporate level. On a business-level, they perform a hybrid strategy constantly diversifying
their product portfolio to offer unique travel packages while making sure to stay true to their
best-price promise. In total, Flight Centre seems to be well set for further challenges ahead.
However, it is recommended that they would benefit from enhancing architecture with network
of suppliers, distributors and customers; and an increased focus on innovation to stay ahead
of competitors through improving distinctive capabilities. As a result, linking this with research
within their Transformational Program, Flight Centre can stay clearly one step ahead of their
competition.
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CONTENTS
1 EXECUTIVE SUMMARY ……………………………………………………………………………………. 3
2 BACKGROUND ……………………………………………………………………………………………….. 5
2.1 Scope……………………………………………………………………………………………………….. 5
3 FLIGHT CENTRE TRAVEL GROUP …………………………………………………………………… 6
3.1 The Business ……………………………………………………………………………………………. 6
3.2 History ……………………………………………………………………………………………………… 6
3.3 Services……………………………………………………………………………………………………. 6
3.4 Structure…………………………………………………………………………………………………… 7
4 THE MARKET ………………………………………………………………………………………………….. 8
4.1 Market Analysis ………………………………………………………………………………………… 8
4.2 External Analysis – Macroeconomic Forces ………………………………………………. 9
4.3 Competitor Analysis………………………………………………………………………………… 10
5 FLIGHT CENTRE – STRATEGIC APPROACHES ………………………………………………. 13
5.1 Business-level Strategy …………………………………………………………………………… 13
5.2 Corporate-level Strategy………………………………………………………………………….. 14
6 FLIGHT CENTRE – FUTURE STRATEGY …………………………………………………………. 15
7 DISTINCTIVE CAPABILITIES DEVELOPMENT …………………………………………………. 17
8 CONCLUSION – STRATEGY EVALUATION ……………………………………………………… 19
9 REFERENCES ……………………………………………………………………………………………….. 20
10 APPENDIX …………………………………………………………………………………………………….. 23
10.1 PESTLE Analysis…………………………………………………………………………………….. 23
10.2 Competitive Forces Analysis …………………………………………………………………… 24
10.3 SWOT Matrix …………………………………………………………………………………………… 26
10.4 TOWS Matrix …………………………………………………………………………………………… 27
10.5 Competitive Advantage Analysis……………………………………………………………… 28
10.6 Scenario Analysis……………………………………………………………………………………. 30
11 CLASS PRESENTATION …………………………………………… Error! Bookmark not defined.
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2 BACKGROUND
The Flight Centre Travel Group (Flight Centre) has been chosen as a superior performing
company operating on the Australian Securities Exchange (ASX). Their vision is ‘to become
the world’s most profitable retailer’ (Flight Centre Travel Group, 2017c); and values that match
focussing on people, customers and a bright future (Flight Centre Travel Group, n.d.) has led
to them being an industry leader in the travel and tourism industry within Australia.
2.1 Scope
The study of why certain companies achieves a sustained period of superior performance is
multi-dimensional. For this analysis, Flight Centre’s growth over time will be assessed
commencing with the external forces that influence the company’s capabilities and resources.
Furthermore, how the corporate and business level strategies that have been chosen to
develop distinctive capabilities / competencies as sources of competitive advantage (as seen
in Figure 1). Following this, an exploration of process improvements that can enhance
distinctive capabilities will also be considered. Whereas, the data outputs provide insights to
increase the perceived value of the organisations products and services in the eyes of the
consumer, thus giving rise to superior profitability. Furthermore, consideration of probable
future scenarios will be surveyed and potential strategies recommended.
This report will explore the whole company when discussing the business and strategies
undertaken over time. However, the market analysis has been reduced in scope to only the
Australian travel and tourism market.
Figure 1. External forces that influence resources and capabilities; and the strategies that build and shape competitive
advantage as adapted from Hill, Jones, & Schilling (2015, pp. 70‐85)
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3 FLIGHT CENTRE TRAVEL GROUP
3.1 The Business
Flight Centre Travel Group is amongst the world’s largest travel agency groups, with companyowned operations in 23 countries and a travel sales network that extend over 90 countries
(Flight Centre Travel Group, 2017b). Flight Centre employs more than 19,000 people globally
and has a total of 2800 businesses, consisting of more than 40 brands.
An analysis of Flight Centre’s 2017 Annual report (Flight Centre Travel Group,
2017c), recognises that they are a superior-performing firm, with 21 years of
sales growth in 22 years; and a current net value of more than $1.5 billion
(AUD). Furthermore, in FY17, they generated $329.5 million profit and
averaged between 16-20% return on equity for the past 5 years, with
Australian operations accounting for two thirds of sales and growth (pp. 4-6).
3.2 History
The company was co-founded in 1981 by Graham Turner and Geoff Harris commencing with
one retail shop in Sydney in 1982. Over the course of the 1980’s, Flight Centre proffered from
their ‘discount airfare’ strategy leading to increasing sales from $4.4 million in the late 80s, to
$43 million in the early 1990’s (Flight Centre Travel Group, 2017b). The company was then
floated on the Australian Stock Exchange in 1995; and according to Beirman (2016) has
continued to achieve significant growth following public listing through horizontal and vertical
integration. Whereby, acquiring smaller travel companies/hotels/resorts/tour operators and
their associated brands in developed and emerging countries that target specific local market
sectors.
3.3 Services
Flight Centre generates most of its revenue from the sale of travel and travel related services.
The services offered (see Table. 2 below) have been grouped into four key service areas:
leisure, corporate and wholesale travel along with other businesses that have been developed
to complement their core travel business.
Figure 2. Total
Transaction Value
(Flight Centre Travel
Group, 2017c)
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Table 1. Flight Centre products and services
SERVICE SERVICE DESCRIPTION

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