Assignment

On
Strategy Formulation of Biman Bangladesh Airlines Ltd.
SIM: 501 (Fundamentals of Strategic Management)

Submitted to:
Dr. M A Mannan
Professor

Submitted by:
Md. Shahidul Islam
ID: 210
MBA, 13th Batch
Stream: SIM

Department of Management Studies

University of Dhaka

April 12, 2012

 Table of Contents

Particulars Page No.

SWOT Analysis: An Introduction 3
SWOT Analysis Workshop 4
Work Plan 4
Industry & Organizational Profile 4-8
International Airlines Industry 8
Bangladesh Airlines Industry 8
Elements of Internal and External Environment 9
List of Internal Strengths & Weaknesses 9
List of Opportunities & Threats 10
SWOT Format 11
Strategy Formulation 12
References 14

SWOT Analysis
SWOT analysis is a strategic planning method used to evaluate the Strengths, Weakness,
Opportunities, and Threats involved in a business. It involves specifying the objective of the
business venture or project and identifying the internal and external factors that are favorable
and unfavorable to achieve that objective. Identification of SWOTs is essential because
subsequent steps in the process of planning for achievement of the selected objective may be
derived from the SWOTs.

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  Strengths: characteristics of the business, or project team that give it an
advantage over others
 Weaknesses: are characteristics that place the team at a disadvantage relative to
others
 Opportunities: external chances to improve performance (e.g. make greater
profits) in the environment
 Threats: external elements in the environment that could cause trouble for the
business or project

Conducting a SWOT analysis involves a seven steps process, which are illustrated in the
following chart:

SWOT Analysis Workshop

SWOT analysis of the Biman Bangladesh Airline Limited will be conducted following the
mentioned seven steps. The report is based on secondary data and it also contains
hypothetical information regarding the organization.

Work Plan

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Corporate Profile of Biman Bangladesh Airlines limited
Biman Bangladesh Airlines is the flag carrier airline of Bangladesh. Its main hub is at
Shahjalal International Airport in Dhaka, and also operates flights from Shah
AmanatInternational Airport in Chittagong, earning revenue from the connecting service to
Osmani International Airport in Sylhet. Biman's operations are assigned the IATA airline
code BG and the ICAO airline code BBC, while its call sings is BANGLADESH. The carrier
provides international passenger and cargo service to Asia and Europe, as well as major
domestic routes. It has air service agreements with 42 countries, but flies to only 18.
The airline was wholly owned and managed by the government of Bangladesh until 23 July
2007, when it was transformed into the country's largest public limited company by the
Caretaker Government of Bangladesh. The airline's headquarters, BalakaBhaban, is located
in Kurmitola, Dhaka.
Created in February 1972, Biman enjoyed an internal monopoly in the Bangladesh aviation
industry until 1996. Presently Biman has two 737-800, four DC10-30, three A310-300 and
three F28-4000 aircraft in its fleet. Biman is in the process of procuring more new generation
aircraft such as Boeing 777-300ER, 787-8 and 737-800 for its fleet.
Biman operated flights to 29 international destinations as far away as New York City to the
west and Tokyo to the east. The airline has suffered heavy financial losses, and has a
reputation for poor service because of regular flight cancellations and delays caused by its
ageing fleet. Annual Hajj flights, transporting non-resident Bangladeshi workers and
migrants, and the activities of its subsidiaries, form an important part of the carrier's business.
Under Skytrax's five-star rating systems, Biman merits two stars. The carrier is currently
facing competition from local private airlines & some international carriers, which offer
greater reliability and service standards, which is experiencing an 8% annual growth rate,
owing to a large number of non-resident Bangladeshis.
Since becoming a public limited company, the airline has reduced staff and begun to
modernize its fleet. Biman has made a deal with Boeing for 10 new aircraft, along with
options for 10 more.

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 VISION
To establish Biman Bangladesh Airlines Limited in the aviation market as a
world-class airline.
MISSION
To provide safe, reliable, efficient and economical air transport services and to
satisfy customers’ expectations while earning sustainable profit and continuing to
be a caring employer.

The airline’s Reservation and Departure Control System and other communication systems
are fully computerized. Biman is now striving to make the airline more attractive to its valued
passengers by fixing priority on providing more comfort and maintaining schedule regularity.
Biman does entire maintenance work on its F-28 aircraft. Biman is also doing C-check, D-
check on DC10-30 and A310-300 in its hangar complex at Dhaka.
Checks, repair and maintenance of one DC10-30, one wide bodied Boeing and two F-28
aircraft can be done simultaneously there.Biman is in the process of procuring more new
generation aircraft such as Boeing 777-300ER, 787-8 and 737-800 for its fleet.
In addition to its own aircraft, Biman’s ground-handling unit also provides support to
Singapore Airlines, Thai Airways, Malaysia Airlines, Qatar Airways, Emirates, Kuwait
Airways, Oman Air, Saudia, Gulf Air, PIA, Indian Airlines, Dragon Air, Druk Air, etc.at
HazratShahjalal International Airport,Dhaka.

HUMAN RESOURCES AND ORGANIZATIONAL STRUCTURE

The human resource is of consists of the country’s most experienced and expert people
although the appointment in the top level management is highly politically influenced.
Therefore, the person who does not have proper experienced and expertise in the airline
business are appointed in the top. This is one of the major of the employee dissatisfaction and
airlines poor performance.
The Manpower status of Biman Bangladesh Airlines Ltd as of June 2010 is given below-
Employee Level Permanent Contractual Casual Total
MD & CEO -- 01 -- 01
Executive Director 03 03 -- 06
Cockpit Crew 132 14 -- 146
General manager & Equivalent 13 01 -- 14
Dy. General Manager & 30 01 -- 31
Equivalent

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 Manager/Asst. manager/officer & 701 25 -- 726
Equivalent
Staff 1945 336 -- 2281
Total 2824 381 -- 3205

ORGANOGRAM
The organization is extremely red taped and bureaucratic causing delayed and costly decision
making and inefficiency in operation.

Chairman

Board of Directors

MD & CEO

Directorates

Directors

Planning Administra Engineerin Customer Finance Flight

tion g Service Operation
Planning Planning

GM
Store & Marketing
DGM Purchase & Sales
Planning
Manager

Asst. Manager
6
Officer

Jun. Officer
 Supervisor

Assistant

M.L.S.S
FIXED ASSET LESS DEORECIATION
The asset of the airline is adequate in relevance of other local airlines. Moreover the
government always remains as the helping hand of the organization in crisis period as it the
sole national flag carrier. But proper transparency is not maintained in their regular operation
like maintenance and procurement of aircraft, which costs extra money of the airline.
Amounts in Tk.
2009-10 2008-09
Biman Bangladesh Airlines (BBA) 15,803,855,303 16,154,051,948
Biman Poultry Complex (BPC) 1,215,958,206 1,214,724,483
Biman Flight Catering Center (FCC) 192,239,779 195,892,076

Total 17,212,053,288 17,564,668,507

FLIGHT
Biman Bangladesh Airlines basically provides two categories of services:
Domestic flights: Currently Biman has the following domestic flights:
 Sylhet
 Chittagong
 Cox’s bazaar
International Flights: Bangladesh Biman provides 51 departure and 51 arrival fights per
week. It has the following
International flights from Dhaka to:
Abu Dhabi Bahrain Hongkong Singapore Mumbai
Delhi Bangkok Dubai New York Frankfurt
Jeddah Calcutta Karachi Doha Kuwait
London Katmandu Kualalumpur Paris Tokyo
Riyadh Rome Brussels Muscat Yangoon

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Element of Internal and External Environment
The elements of internal and external environment that most probably impact the
organizations’ performance and profitability are given in the following table:
Internal Environmental Elements External Environmental Elements
Human Resources General environmental elements
Management Economic Environment
Physical & financial Resources Political Environment
Technological Resources Demographic Environment
Organizational culture Socio-cultural Environment
Industry environmental elements
Competitors
Substitute product
New entrants

List of internal Strength and Weakness

Based on the internal factors selected above, a list of internal Strengths and Weakness is
prepared below:

Strengths and Weakness Related Internal

environmental elements
Strengths
A. Biman is in the process of procuring more new
generation aircraft such as Boeing 777-300ER, 787-8 Technological resources
and 737-800 for its fleet.
B. Experienced technical personnel Human Resources
Physical & financial
C. Adequate physical and financial resources resources

Weakness
A. Politically influenced appointment of top level
Management
management and top level personnel with improper
experience and expertise in airline business. Human Resources
Management
B. Lack of motivation among personnel
C. Lack of transparency in operation like maintenance
Organizational culture
and procurement of aircraft.
D. Political influence and bureaucratic organization

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List of External Opportunities and Threats
Based on the external general and industry factors selected earlier, a list of external
Opportunities and Threats is prepared below:

OPPORTUNITY AND THREAT Related External

environmental
elements
Opportunities
A. Unexplored market in Middle East, East
Asia, Asia pacific, Europe, America; where Demographic
General Biman does not have direct flight and environment
Environment potential domestic market.
Opportunities B. Preference over airline than other means of
transportation because of rise domestic Socio-cultural
economic activity and poor condition of other environment
transportation system.

Industry A. Exit of British airways from Dhaka to

Environment London direct route operation provide Competitors
Opportunities chance to gain the market share and less
competition
B. Postponement of GMG Airlines has opened a Substitute product
way to capture more market share
C. Poor infrastructure and service of road and
water transportation between city and major
towns
Threats
General A. Volatile energy market frequently increasing Political
Environment the cost of fuel environment
Threats B. Global economic recession affecting the
frequency of travel Economic
environment
Industry A. Emergence of new domestic airlines, i.e.
Environment Regent, Bestway, and their expansion in Competitors
Threats international routes.
B. Worldwide industry slow growth. During
2001 to 2006 the rate of air travel globally
increased at 3.7 percent per year. Economic features
Profitability is generally low, in the range of
2-3% net profit after interest and tax1.
C. Procurement of third generation energy
efficient aircrafts by competitors. Competitors

1
http://en.wikipedia.org/wiki/Airline

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SWOT Format
The following table will illustrate the summary of the total SWOT analysis:
Serial Statements Symbols
no
Internal environment Strengths Weaknesses
1 Biman is in the process of procuring more new
generation aircraft such as Boeing 777-300ER, 787-
8 and 737-800 for its fleet.
2 Experienced technical personnel
3 Adequate physical and financial resources
4 Politically influenced appointment of top level
management and top level personnel with improper
experience and expertise in airline business.
5 Lack of transparency in operation like maintenance
and procurement of aircraft.
6 Lack of motivation among personnel
7 Political influence and bureaucratic organization
External environment
Industry environment Opportunities Threats
8 Exit of British airways from Bangladesh operation
provide chance to gain the market share and less
competition
9 Poor infrastructure and service of road and water
transportation between city and major towns
10 Emergence of new domestic airlines, i.e. Regent,
Bestway. And their expansion in international
routes.
11 Worldwide industry slow growth. During 2001 to
2006 the rate of air travel globally increased at 3.7
percent per year. Profitability is generally low, in the
range of 2-3% net profit after interest and tax2.
12 Procurement of third generation energy efficient
aircrafts by competitors.
General environment Opportunities Threats
13 Unexplored market in middle east, east Asia, Asia
pacific, Europe, America; where Biman does not
have direct flight and potential domestic market.
14 Preference over airline than other means of
transportation because of rise domestic economic
activity and poor condition of other transportation
system.
15 Volatile energy market frequently increasing the
cost of fuel
16 Global economic recession affecting the frequency
of travel

2
http://en.wikipedia.org/wiki/Airline

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Strategy Formulation:

Objective Setting:
 To increase 10% Middle East and South Asian market share within 2014.

Adopted Strategy:
Biman shall use niche marketing strategy. To achieve the objective it has to ensure the
following actions plan. These are-
Its main target customer shall be blue collar migrant Bangladeshi workers and middle
class economical businessmen
Ensuring on time take off service to the passengers
Recruitment of new innovative business graduates in vital positions in place of back
dated employers
It shall add some middle class fuel-efficient third generation aircrafts that can carry
200-250 passengers at a time.
Using of latest airlines MIS system to facilitate the service and reduce the number of
unnecessary employees.
Providing best service from competitors with reasonable fare.
Offering attractive incentives to the local and international travel & tour agencies
Rebuilding a positive brand image to the passenger through offensive advertising
Re launching international flight services from Chittagong and Sylhet.
Improve flight schedule services; if any problem occurs it will inform the passengers
as soon as possible before the flight

Conclusion

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Bangladesh Biman Airlines Limited as one of the oldest and the sole nationalized airliner in
Bangladesh is rewarded with both some strengths and weaknesses. As a nationalized
company it is highly bureaucratic and politically influenced which causes lack of
transparency in operations. On the other hand airlines long business period and government
support helps it to accumulate plenty of assets and the experience also helps it to build a pool
of expertise personnel. Poor national communication channel, exit of key market player,
potential unexplored market and business people’s preference over airline travel provide its
opportunities for future growth. Although emergences of local competitions, industry slow
growth, changing technology, volatile fuel market and world economic recession can become
threats for the airlines future growth. The airline must have to minimize its lacking in internal
weak factors and also properly maintain its strength to make them its competitive advantage.
Only then it will able to tackle the future challenges properly and grab the opportunities of
growth.

References

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 Md. Ashraf Hossain Khan, Accounts Officer (Head Office), Biman Bangladesh
Airlines Ltd.
 Biman Bangladesh Airlines Limited, Annual Report, 2010.
 http://www.biman-airlines.com
 en.wikipedia.org/wiki/Biman_Bangladesh_Airlines

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