E - Commerce at Yunnan Lucky Air:
Backed by the Hainan Airlines of the China, Yunnan Airlines was founded in 2004 as one of the most cost-effective domestic airline operating from its hub in Kunming, in the province of Yunnan. The limited route license added to the airline’s competitive advantage and maintained its monopoly within the region. Its major competitors include Air China and China Southern Airlines among others. As Yunnan is one of the most attractive tourist destinations of Southern China, the airline attracted a lot of customers and started producing profits within just three years of its inception. This huge success was the result of a viable strategy of the company that included just one type of airplane to reduce maintenance and costs, short haul and point to point routes and just one seating arrangement. There was no in-flight entertainment as well but as the airline was dealing in just short trips, these factors did not adversely affect its revenues. Presently, the company is facing a niche competition after the introduction of many new low-cost airline companies in the already saturated market and to keep itself ahead of the competition, Lucky Air needs to revisit its business strategy and come up with a plan of action that would help in its progress. This task is unduly challenging as it faces many competitors and any error or lapse of judgement may adversely affect the future of the company.
E-commerce in China:
According to (Kotler et al, 2012) ‘The digital revolution has created an Information Age that promises to lead to more accurate levels of production, more targeted communications and more relevant pricing’. In western countries e-commerce is not only a great asset in the business world, it is becoming the most dominant factor of gaining advantage and expanding their range within the sector. The internet usage in the China, however, is fairly limited and there is still a lot of potential for penetration inside the different remote regions of the country. This factor endorses the fact that the use of internet to have a competitive business advantage is currently minimal. The internet service at this time, especially in the airline sector, is unsophisticated and slow. The advancements in this sector are however enormous. Although only 1% of the population in China use the internet for their convenience, this situation is going to change soon considering the speed at which this commodity is gaining influence in the country. Luckyair.net:
Kotler at al. (2012) state that ‘companies can improve their cost efficiency by skillful use of the internet’. This forum can improve logistics and operations to not only improve the accuracy and service quality but gain enormous cost savings as well. The biggest advantage that Lucky Air has is its association with Hainan Air that ensures that it is linked to one of the best IT support in the country. Lucky Air uses just .15% of its own net income on its IT investment. Having this aid at their disposal has made them get an edge over their competitors and the company is the first of its kind to enable online credit verification, buy and refund tickets online and has no call-centre back end operations that delay and frustrate the customers. In addition, the company also provides information on destinations, flights and news updates. The on-line communities also help increase brand loyalty through blogs and forums. Options Open to Lucky Air:
There are many different options available to Lucky Air to improve its standing in the airline sector. Some of these options include A. Revitalization of e-commerce to establish itself as the online travel leader. B. Expansion of the airline’s operations to include long haul routes C. Merger with other smaller companies to have a wider range of resources and capital available and improve its position in the highly competitive market Factors to be considered:
Kotler at al. (2012) see management...
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