Professional Documents
Culture Documents
Acknowledgement
Thanks to ALLAH almighty for giving us the skill as well as we also wants to tribute to our HOLY
PROPHET Peace Be upon Him who show us the reality of God.
The guidance and support received from all the group members who contributed to this report,
was vital for the success of the report. We were grateful for their constant support and help.
This report was arguably one of the most thrilling experiences in 4st semester. Making this
report has immensely helped us in understanding the skills of Strategic management. Thanks!
DEDICATED
To
Our Beloved parents
Table of Contents
1 Title
2 Acknowledgement
3 Dedication
4 Introduction
5 Brief history
6 Vision and mission statements
7 Internal and external assessment
8 SWOT analysis
9 Situational analysis
10 Strategies implementation
11 Matching Matrices
12 Quantitative strategic planning matrix
13 Recommendations
14 Conclusion
15 References
INTRODUCTION
Pakistan International Airlines is the national flag carrier, and as a symbol of National pride. PIA
head office is located in Karachi Airport. Principal activity of the PIAC is to provide air transport
services (passengers and freights). In addition, the corporation is engaged in providing
engineering, training, and other allied services. PIA play vital role in the growth of GDP as well
as earn sufficient foreign exchange for the country. It became member of IATA (International
Air Transport Associations) and commercial operation as a scheduled carrier for passenger and
cargo transportation.
Pakistan International Airlines Corporation (the Corporation) was incorporated on April 18,1956
under the Pakistan International Airlines Corporation Act, 1956(PIAC Act, 1956) and its shares
are quoted in all the stock exchanges of Pakistan.57 % shares held by Government of Pakistan,
and rest of 43 % shares held by Financial Institutions, Investment Companies, Individuals, Joint
Stock Companies, Foreign Companies etc. As the government is the principal owner of the
airline so the government selects the Board of Directors and the Chairman/CEO.
Brief History
In the days when Pakistan was still in the revolting position (June 1946) Mr. Mohammad Ali
Jinnah, the Founder of the upcoming Nation, instructed Mr. M.A. Ispahani, a foremost
industrialist, to set up a national airline, on precedence basis. With his stupendous vision and
forethought, Mr. Jinnah had anticipated that with the formation of the two wings of Pakistan,
alienated by 1100 miles, a swift and well-organized mode of transport was imperative.
The novel airline was primarily a pilot project, registered in Calcutta as Orient Airways Ltd, on
23rd October, 1946. With A.M. Ispahani as the Chairman and Air vice Marshal O.K. Carter as the
General Manager of the new air hauler, operating license for the airline was obtained in 1947
with Calcutta as the base.
Orient Airways was a privately owned company, with limited capital and resources. It could not
be expected to grow and expand on its own. It was then that the Government of Pakistan decided
to form a state-owned airline and invited Orient Airways to merge with it. The outcome of the
merger was the birth of a new airline, named Pakistan International Airlines (PIA) on 11 th
March, 1955.
Pakistan International Airlines established in 1954. PIA's first Super-Constellation (AP-AFQ)
registered on Apri'24, 1954. PIA started its regular service from May 10, 1954. Pakistan
International Airlines Corporation formed with merger of PIA and Orient Airways. PIA entered
the world of international aviation with a service from Karachi to London via Cairo and Rome.
Boeing 707-320 "International" introduced on the London route. First three of five Fokker F-27s
received and order placed for three Boeing 720B jet aircraft. PIA is the first Asian airline to
operate a pure jet aircraft.
At present, PIA operates to 75 destinations (38 international and 37 domestic) in countries spread
over 4 continents of the globe. One could say that since its inception in 1955, PIA has indeed,
come a long way.
“Employee teams will contribute towards making PIA a global airline of choice through
This mission statement addresses following core points of nine point mission statement analysis
fuel prices has risen in the international market and PIA has still old fleet, which causes
higher operating cost.
PESTLE ANALYSIS
This tool looks at macro environment of a firm. The macro environment affects the firms at
major level therefore it is necessary to analyze the affect of political, economic, social,
technological, legal and environmental factors on the firm.
Political
The politics of South Asia and Middle East in general and politics of Pakistan in particular are
very important for PIA as its major destinations are located in these regions.
The political situation in Pakistan is not normal. In the history of Pakistan hardly one or two
governments have completed their tenures. Political instability in the country is result of
interference by non political forces. The frequently changing political environment suffer firms
operations especially the government own organizations. The new governments change the top
level management soon after taking the charge of the government and appoint people with
political background on top level of organizations without testing the required educational
qualification and relevant experience. PIA is the most politically affected organization as every
new government appointed their own people who turned a profitable organization into a loss
bearing one which stopped its growth and started journey towards decline.
Economic
The economic condition of Pakistan is in a critical position. Economic growth is very low as
compare to other countries. The inflation rate is very high. Foreign investment is also
unsatisfactory. As PIA is operating from Pakistan, its international operations are affected by
exchange rates. Oil prices are an issue for all airlines. A huge amount is being paid as fuel cost.
Increase in oil prices affected the income of PIA as well. Fuel is the main component of airline
operations. The oil prices are increasing at a higher rate affecting the PIA’s profitability. These
all economic drawbacks seriously affect the performance of PIA.
Social
Pakistan is ranked among lower-middle income countries. The Pakistani model for economic
growth since independence was described above as restricted growth. Social development has
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PIA (Pakistan International Airline)
lagged behind economic growth, resulting in unequal social development and notable
deficiencies in education, health services, sanitation, and gender equality (Khan, Omar 2004).
The society of Pakistan is moderate in accepting changes. The social changes in Pakistan are
gradually taking place. Due to globalization and advancement in information technology, the
people accept social changes occurring throughout the globe. There are two standards in our
society, one is the upper class society and the other is lower level society which is in majority.
Technological
The internet has enabled PIA to keep costs low by allowing customers to book through its
website rather than through an agent. However, the web is less attractive for PIA expansion in
east domestic, as access to information technology is limited to certain areas and facility
providing activities lower the other developing countries in the region. This situation is likely to
change in the longer term.
PIA wholly depends on other agencies for exchange of their older crafts to new ones. It also
requires a huge financing system which is very difficult to it because of the economic condition
of the country as well as its own financial position. PIA is unable to buy new technology as it
costs too much. For this purpose the organization approaches to financial institution that provide
funds on their own conditions which reduces the profitability as the organization spends a huge
amount on paying interest.
Legal
The involvement of government in PIA is backed by legislation. The government uses these
powers delegated by legislation in their own interest which affects the performance of the airline.
Another drawback is its centralized system which is a time consuming practice and the important
actions cannot be taken immediately. Delays due to this centralized system create problems for
smooth operation of the airline and it causes huge losses and the organization also loses available
opportunities due to long decision making process.
Environmental
The main environmental issue facing PIA is that of policies formulated by legislation about
greenhouse emissions. The airline industry affects the environment negatively by increasing air
pollution and noise pollution. PIA uses regional airports to reduce the environmental effects on
busy airports situated in main cities of the country. Furthermore PIA has also introduced waste
disposal plan which helps in reducing pollution in the country.
PIA STRATEGY
PIA’s objective is to firmly establish itself as Pakistan’s leading scheduled passenger and cargo
airline through continued improvements and expanded offerings of its valuable service. Its
strategy to achieve this is:
Competitive fares.
Industry-leading customer service.
Frequent flights on national and International routes.
Low operating costs, addressing aircraft and equipment, personnel productivity, customer
service costs and airport access fees.
Taking advantage of the Information Technology.
Taking advantage of geographic importance and
Commitment to safety and quality maintenance (www.piac.com.pk)
The company operates a policy of offering the reasonable fares available from the industry. The
company has launched its electronic air ticketing system which makes passengers more
comfortable and save their time. The system also helps the airline to reduce expenses incur from
operation of booking offices in different locations and the cost of agents.
PIA has changed almost all of its old crafts with new Boeing aircrafts which reduced the huge
costs spend on maintenance of different types of old crafts.
Restructuring strategy adopted by PIA to overcome losses. Pakistan International Airlines (PIA)
has developed an aggressive strategy, the company has transformed into a cumulative loss of the
past eight RS200 hundred million Yuan airline president, said.
Secretary of Defense and Chairman PIA Lieutenant (retd) Asif Yasin Malik solve Multan
Chambers of Commerce.
“We were wrong aircraft flying in the wrong direction,” he said, adding that they will buy eight
new aircraft this year, in October or December. He said PIA without adding new aircraft to its
fleet since a decade.
PROPOSED STRATEGY
SPACE Matrix
Internal Strategic Position External Strategic Position
+6
+5
+4
Conservative Aggressive
+3
+2
+1
-6 -5 -4 -3 -2 -1 +1 +2 +3 +4 +5 +6
-1
(-0.62,-1.14) -2
3.00)
-3 Competitive
Defensive
-4
-5
-6
The graph indicates the PIAC to be in Third Quadrant which is defensive strategy quadrant
Defensive Strategies
In the defensive quadrant the company may use one of the following strategies rectifying internal
weaknesses and avoiding external threats. Defensive strategies include retrenchment, divestiture,
liquidation, and concentric diversification.
Domestic
SBU Revenue Revenue% Profit Profit% Relative MS Growth rate
M
a
r
k
e
t
G
r
o
w
t
PIA
h
M
ar
k
et
G
r
o
w PIA
t
h
Analysis Description
The company lies in both cases in cash cow but according to “Strategic management: concepts and
cases, / tenth edition By Fred R. David” if the company’s growth rate is too slow and productivity is
declining then the best way to solve the problem may be in retrenchment or divestiture. In some cases
when the portfolio is strong then we can opt for diversification.
Analysis Description
The above diagram indicates that PIAC lies in the middle order of “HOLD and MAINTAIN”.
Inthis type of situation the company may either use “market penetration” or “product
development”. In the case of PIAC we see the market penetration is not of much use hence
product development in the form a visible and distinctive brand identity may be taken in mind.
Here product may very well be in the form of PIAC as a pure Pakistani Brand Airline.
Cost Reduction
Add related products and services for existing customers
Add new products and services for new customer base
Underserved Niche (very small)
Market domination
Strategic partnership
Joint ventures
Common Strategies
The most common strategies from above analysis have been
Proposed Strategy
We propose the retrenchment strategy or turnaround strategy by the help of rightsizing.
Our main goal is to go through a temporary belt-tightening, which will allow the firm to pursue a growth
strategy at some future point
“Main problem of PIAC is the fact that it is not adaptable in nature when it comes to change. This is to
exclude image on logo or fleet. This is greater than this this is to consider that every strategy comes with
its own proposed structure”
Recommendations
There is a need to adopt a transparent method for privatization of these enterprises through
proper mechanism and plan which would boost the economy.
It will also help the government get rid of the circular debt piling up against these
institutions.
There is also a need to encourage both local and foreign investments in Pakistan and
give confidence to private sector to contribute its share for economic recovery of the country.
Without giving confidence to the private sector economic revival is impossible as the private
sector is engine of growth and can create employment and competition.
Conclusion
From the discussion above, it is clear that PIA is then only national airline of Pakistan. It has
developed a strategy different from those of its competitors, and that these differences directly
and indirectly contribute to its competitive advantage. PIA has reasonable opportunities along
with threats. But the frequent involvement of every government in top management of PIA
resulted in discontinuation of its strategic policies. An organization earning average profits five
years ago is now bearing huge loses.
There is a need to adopt a transparent method for privatization of these enterprises through
proper mechanism and plan which would boost the economy.
It will also help the government get rid of the circular debt piling up against these
institutions.
Without giving confidence to the private sector economic revival is impossible as the private
sector is engine of growth and can create employment and competition
References
1. www.piac.com
2. http://tribune.com.pk/story/269007/finance-ministry-tells-pia-to-adopt-austerity-measures/
3. http://www.bdoebrahim.com.pk/index.php?option=com_content&task=view&id=525&Itemid=0
4. www.Businessrecorder.com
5. http://www.paperpkads.com/news/index.php/restructuring-strategy-adopted-by-pia-to-
overcome-losses/
6. http://www.slideshare.net/biztekians123/strategicanalysisofpia