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UGANDA MARTYRS UNIVERSITY

FACULTY OF BUSINESS ADMINISTRATION & MANAGEMENT


MASTER OF BUSINESS ADMINISTRATION (MBA)
COURSE UNIT: STRATEGIC MANAGEMENT

A CASE STUDY OF UGANDA AIRLINES

“Fly the Crane to the Pearl of Africa”

19TH JANUARY, 2024


THE SCHOLARS

Byaruhanga Robert Luwambo Kayigwa Jonathan Barigye John Paul


Bumpenje John

Adengo Sheila Mary Mayanja Samuel


Wampande Doreen Erina Bizimana Paul
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PRESENTATION OUTLINE

UGANDA AIRLINES (INTRODUCTION)

THE EXTERNAL ANALYSIS (PESTEL) FACTORS THAT INFLUENCE THE OPERATIONS OF UGANDA AIRLINES

ANALYZING THE COMPETITIVE FORCES WITHIN THE AIRLINE INDUSTRY (USING PORTER'S FIVE FORCES MODEL)

THE APPLICABILITY OF THE PORTER'S FIVE FORCES TO UGANDA AIRLINES

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HOW TO GO ABOUT SOLVING THE CHALLENGES ARISING OUT OF THE FIVE FORCES
A CASE STUDY OF UGANDA AIRLINES
(INTRODUCTION)

 The original Uganda Airlines was founded on May 30,


1976, as a subsidiary of the Uganda Development
Corporation.

 Uganda Airlines is the national flag carrier of Uganda.  It started operations with a fleet of Boeing 707 and Fokker
F27 aircraft, serving domestic and regional routes. Over
 It was originally established in 1976 and operated
the years, the airline expanded its network to include
until 2001 when it ceased operations due to financial
destinations in Africa, Europe, and the Middle East.
difficulties.
 Unfortunately, Uganda Airlines faced several challenges
 However, in 2019, the airline was revived and
during its initial operation. Political instability,
relaunched with new aircraft and a renewed focus on
mismanagement, and economic difficulties in Uganda
providing air travel services.
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affected the airline's performance.
A CASE STUDY OF UGANDA AIRLINES
(INTRODUCTION-CONT’D)

 In April 2019, the Ugandan government announced the


revival of Uganda Airlines. The decision was made in an
effort to promote tourism, boost trade, and enhance
connectivity both domestically and internationally. The
 In addition, the airline's fleet aged, and it struggled to
government secured a fleet of new aircraft, including four
compete with other regional carriers.
Bombardier CRJ900 regional jets.
 As a result, Uganda Airlines encountered financial
 On August 27, 2019, Uganda Airlines resumed operations
problems, leading to its eventual liquidation in May
with its inaugural flight from Entebbe International
2001. The airline's assets were sold, and its operations
Airport to Jomo Kenyatta International Airport in Nairobi,
came to an end. For over a decade, Uganda did not
Kenya. Since then, the airline has gradually expanded its
have a national airline.
route network, adding destinations such as Dar es Salaam, 5

Mogadishu, Zanzibar, Kilimanjaro, and more.


A CASE STUDY OF UGANDA AIRLINES
(INTRODUCTION-CONT’D)

THE EXTERNAL ANALYSIS

 The revived Uganda Airlines aims to position itself as


a competitive and reliable carrier in the region. It
focuses on providing safe and efficient air travel
services while contributing to Uganda's economic
growth. The government has expressed its
commitment to supporting the airline's development
and helping it succeed in the aviation industry.
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THE EXTERNAL ANALYSIS (PESTEL)
OF UGANDA AIRLINES
The political stability and support from the Ugandan government play a crucial role in Uganda
Government
Airlines' operations. The government's commitment to the development and growth of the
Support
airline industry and its policies regarding aviation regulations, subsidies, and infrastructure
Political
P development can significantly impact the airline's operations.
Factors
The existence of bilateral agreements between Uganda and other countries affects Uganda
Bilateral
Airlines' operations. These agreements determine routes, landing rights, and capacity
Agreements
entitlements, enabling the airline to expand its network and serve international destinations.
The overall economic growth of Uganda and its trading partners directly impacts the demand
Economic Growth for air travel. A robust and growing economy can stimulate business and leisure travel,
Economic positively affecting Uganda Airlines' operations.
E
Factors Fluctuations in exchange rates can influence Uganda Airlines' operational costs. A strong
Exchange Rates Ugandan shilling may increase the cost of imported aircraft, spare parts, and fuel, while a
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weak currency can impact the purchasing power of customers and affect overall demand.
THE EXTERNAL ANALYSIS (PESTEL)
OF UGANDA AIRLINES
The demographics of Uganda, including population size, age distribution, income levels, and
Demographics travel preferences, influence the demand for air travel. Understanding the demographics helps
Social Uganda Airlines tailor its services and marketing strategies to target specific customer segments.
S
Factors Changing social trends, such as a rise in tourism, increased business travel, or changing
Travel Trends preferences for certain destinations, can impact the airline's operations. Uganda Airlines needs to
monitor and adapt to these trends to remain competitive and meet customer expectations.
Advancements in aircraft technology, such as fuel-efficient planes, improved safety features, and
Aircraft
in-flight entertainment systems, can influence Uganda Airlines' operational efficiency, customer
Technology
satisfaction, and overall competitiveness.
Technological
T The adoption of digital technologies, including online booking platforms, mobile applications,
Factors
and customer relationship management systems, has transformed the airline industry. Uganda
Digitalization
Airlines needs to embrace digitalization to enhance its operations, streamline processes, and
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improve the overall customer experience.
THE EXTERNAL ANALYSIS (PESTEL)
OF UGANDA AIRLINES
Environmental concerns, such as climate change and carbon emissions, have led to increased
Climate Change
Environmental scrutiny of the aviation industry's environmental impact. Uganda Airlines needs to consider
E and
Factors sustainable practices, fuel-efficient aircraft, and carbon offset initiatives to mitigate its
Sustainability
environmental footprint and adhere to international standards.
Compliance with international aviation regulations, safety standards, and licensing requirements
Aviation
is critical for Uganda Airlines' operations. Adhering to legal frameworks ensures operational
Regulations
Legal safety, maintains the airline's reputation, and enables access to international markets.
L
Factors Uganda Airlines must operate within the legal framework of competition laws, ensuring fair
Competition
competition and preventing anti-competitive practices. Compliance with these laws helps
Laws
maintain a level playing field in the aviation industry.

Analyzing these PESTEL factors, Uganda Airlines can better understand the external environment, anticipate changes,
identify opportunities, and mitigate potential risks to enhance its operational performance and strategic decision-
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making.
ANALYZING THE COMPETITIVE FORCES WITHIN THE
AIRLINE INDUSTRY

(USING PORTER'S FIVE FORCES MODEL)

Porter's Five Forces model is a


framework developed by Michael
Porter to analyze the competitive
forces within an industry.
Threat of New Entrants Bargaining Power of Suppliers Bargaining Power of Buyers Threat of Substitute Intensity of Competitive Rivalry
Products or Services
The airline industry typically Suppliers in the airline industry Buyers in the airline industry Substitutes for air travel Competition among existing
has high barriers to entry due include aircraft manufacturers, primarily consist of passengers include other modes of airlines is a crucial factor for
to factors such as high capital fuel suppliers, maintenance and and travel agencies. The transportation like road or rail. Uganda Airlines. The intensity of
requirements, regulatory repair providers, and technology bargaining power of buyers for However, air travel generally competitive rivalry depends on
hurdles, and the need for vendors. The bargaining power of Uganda Airlines depends on offers speed and convenience, factors such as the number and
significant investments in suppliers for Uganda Airlines factors such as the availability making it the preferred choice size of competitors, their market
aircraft, infrastructure, and depends on factors such as the of alternative airlines, price for long-distance and share, the level of product
operational capabilities. availability of alternative sensitivity of customers, and international travel. The threat differentiation, pricing strategies,
However, the threat of new suppliers, the uniqueness of their the level of service of substitutes for Uganda and the overall growth rate of the
entrants cannot be entirely products or services, and the differentiation. If customers Airlines might be relatively industry. If there are numerous
ruled out. If the barriers are airline's ability to switch have numerous options and are low, but it's essential to airlines competing for the same
lowered or new competitors suppliers. If there are limited price-sensitive, they can exert monitor evolving trends in market segments and engaging in
emerge with innovative suppliers or a lack of alternatives, more bargaining power, transportation and travel aggressive pricing or marketing
business models, it could suppliers could exert more power leading to increased preferences to identify tactics, it can increase competitive
increase competition for and potentially impact the competition and potential potential substitutes that could rivalry and put pressure on
Uganda Airlines. airline's profitability. pressure on fares and affect the airline's Uganda Airlines' market position
profitability. competitiveness. and profitability.
THE APPLICABILITY OF THE PORTER'S FIVE FORCES TO UGANDA AIRLINES
Porter's Five Forces model is applicable to Uganda Airlines, as it provides a structured framework to analyze the competitive dynamics within the airline
industry

The characteristics of
Uganda's market, including
As the national carrier of demographics, travel
Uganda, Uganda Airlines has preferences, and economic
a unique relationship with the factors, can influence the
government. The model may applicability and relevance of
need to incorporate the the model. Factors like
specific dynamics of Regional income levels, tourism trends,
government influence and and cultural preferences may Unique Selling
Industry support, including regulations, Competition require additional analysis to
policies, and potential
fully understand the Proposition
Structure subsidies or protectionism that
competitive dynamics faced
by Uganda Airlines. a
can impact the competitive professional hierarchy
landscape

Uganda Airlines operates within the Uganda Airlines competes Uganda Airlines can
broader airline industry, which is differentiate itself based on
characterized by high capital Government with both regional and
international carriers. While
Market its unique selling
requirements, significant regulatory Characteristics propositions, such as its
oversight, and intense competition. The
Influence the model can help analyze
national carrier status,
competitive rivalry, it's
model can help assess the competitive important to consider the network connectivity,
forces at play, such as the threat of new specific dynamics of the service quality, and
entrants, supplier power, buyer power, regional market, including customer loyalty. These
the threat of substitutes, and the factors such as route networks, factors may impact the
intensity of competitive rivalry. alliances, and regional relative strength of the five
aviation policies that can forces and require a
influence the intensity of customized analysis to
competition assess their influence on the
airline's competitiveness.
HOW TO GO ABOUT SOLVING THE CHALLENGES ARISING OUT OF
THE FIVE FORCES

Addressing Barriers to Entry Managing Supplier Power Enhancing Customer Value

If the threat of new entrants is high, Uganda To manage the bargaining power of To mitigate the bargaining power of
Airlines can focus on strengthening its suppliers, Uganda Airlines can adopt buyers, Uganda Airlines should focus on
competitive advantages and barriers to several strategies. This includes delivering superior customer value. This
entry. This could involve building strong diversifying the supplier base, negotiating can be achieved by offering exceptional
brand recognition, developing strategic long-term contracts to secure favorable service quality, personalized experiences,
alliances, improving operational efficiency, terms, exploring alternative sources of competitive pricing, and loyalty
and enhancing customer loyalty programs. supply, and developing strategic programs.
Additionally, maintaining good partnerships with key suppliers. By understanding customer needs and
relationships with regulatory authorities and Additionally, investing in supplier preferences, the airline can tailor its
leveraging government support can help relationship management practices can offerings and engage in targeted
create entry barriers for potential help build mutually beneficial and marketing efforts to create customer
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competitors. sustainable partnerships. loyalty and reduce price sensitivity.
HOW TO GO ABOUT SOLVING THE CHALLENGES ARISING OUT OF
THE FIVE FORCES

Monitoring Substitutes Competitive Positioning Collaboration and Partnerships

To address the threat of substitutes, Uganda To manage competitive rivalry, Uganda To overcome industry challenges,
Airlines should stay informed about Airlines needs to continuously assess the Uganda Airlines can consider
emerging trends and potential substitutes in competitive landscape and identify areas collaborations and partnerships
the transportation industry. It can where it can differentiate itself. This includes with other airlines, both
proactively adapt its services and offerings offering unique services, exploring new regionally and internationally.
to meet changing customer demands and routes, investing in technology to enhance Strategic alliances can enable
preferences. Furthermore, enhancing the operational efficiency, and continuously code-sharing agreements,
unique advantages of air travel, such as improving service quality. By focusing on its expanded route networks, and
convenience, speed, and connectivity, can core competencies and leveraging its national cost-sharing initiatives, enhancing
help mitigate the attractiveness of carrier status, It can maintain a competitive competitiveness and market
substitutes. edge. reach.
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