Value Chain Analysis: Cathay Pacific Airways

The value chain analysis describes the activities the organization performs and links them
to the organizations competitive position Value chain analysis describes the activities within
and around an organization! and relates them on analysis of the competitive strength of the
organization Therefore! it evaluates which value each particular activity adds to the
organizations products or services "#ecklies $%%&' Value chain analysis can be used to describe
the activities within and around the organization! and relate them to the competitive strength of
the firm "its ability to provide value for money products and services' Thus! the approach rests
upon the need to identify separate organizational activities and assess their value added The
importance of organized activities and systems becomes clear The various resources "people!
machinery! information! etc' must be deployed into activities! routines and systems that produce
the necessary value The ability to perform particular activities and manage the linkages between
activities is the key source of competitive advantage "(owson $%%$' Activities that add value are
divided into two categories These are primary and support
Primary Activities
Primary activities are primarily concerned with the creation or delivery of a product or
service They can be grouped into five main areas:
)nbound logistics "receiving! storing and distributing the inputs to an organization'
*perations "transforming inputs into outputs'
*utbound logistics "storing and distribution and delivery of product and service combinations'
+arketing and sales "means by which consumers are made aware of an can purchase products
and services'
,ervice "activities that enhance the value of a product or service'
,upport Activities
-ach primary activity is linked to support activities! which help to improve their
effectiveness or efficiency
Procurement "the process of ac.uiring the resource inputs to all the primary activities across the
whole organization'
Technology development "all activities have a technology / including know0how and knowledge!
whether concerned directly with products and services or processes'
1uman resource management "those activities involved in recruitment! managing! training!
developing and rewarding people'
)nfrastructure "systems of planning! finance! .uality control! information management and
others'
Cathay Pacifics Value Chain
Cathay Pacific Airways is a 1ong02ong based airline that has a comprehensive network
of flights to over 3% destinations around the world )t is considered as one of Asias biggest and
most regarded airlines The company was founded in &345 in 1ong 2ong The company since
then has continued to develop 1ong 2ongs airline industry and supported 1ong 2ongs position
as a ma6or transportation center in the region The airline company was founded by "American'
and "Australian' Cathay Pacific was founded in 1ong 2ong on the $4th of ,eptember! &345
Cathay pacific is one of the most well known airline company in the world )t competes with
different airline companies for prestige and notoriety in the airline industry #ecently the
company underwent a change in image and strategies to counter the problems its industry has )t
shifted the focus of its strategy into making sure that there will be an increase of clients who
demanded their services! it also made sure that the services and technologies they use can be
competitive to other airlines company
*perations
Cathay Pacific believes that their business is selling e7perience to the passengers The
emotional bonding with the passengers is the key to building loyalty and one of the ma6or factors
that encourage the customers to repurchase the airline products The biggest difference of Cathay
Pacific to its competitors is its people The employees at Cathay Pacific are the ones who bridge
the gap between product development and customer e7pectation The passengers in Cathay
Pacific always feel welcomed! appreciated and reassured Passengers that travel with Cathay
Pacific know that they are in good hands ,ervice ,traight from the 1eart is a programme that
aims to develop cultural change within the airline focused on improving customer service
,ervice is the principal means of differentiating between airlines and is highly influential in
customer choice Cathay Pacific has e7pressed within its programme its understanding of the
importance of the people within the organization and its recognition of the contribution of those
people to its success Cathay Pacific provides e7cellent customer service by:
& Creating a climate for positive behaviour
Cathay Pacifics corporate culture instills in the employees the understanding of the
companys big picture The corporate culture that the company has encourages innovation!
constant improvement and personal responsibility The service philosophy of Cathay Pacific /
,ervice ,traight from the 1eart! encourages the employees to render .uality service with human
touch
$ #ecruiting the right people and offering proper Training
Cathay Pacific uses a holistic approach for managing its people 8etter understanding and
continuous learning are achieved by involving the staff in the 6ob rotation scheme -ach
employee in Cathay Pacific is a flag barer of the company -very member of the Cathay Pacific
family can represent the whole company
9 Continuous )mprovement
Cathay Pacific always bears a sense of urgency and crises Present successes are not
allowed to create complacency Cathay Pacific absorbs any good ideas from different companies!
governments or organizations
,ervice
+ore and more corporations throughout the world are adding value to their core
corporate offerings through services +odern corporations are increasingly offering fuller market
packages of consumer focused combinations of goods! services! support! self0service! and
knowledge
Cathay Pacifics goal is to deliver superior service and value to its customers and to
become the worlds most admired airline The organization recognizes that the .uality of service
sets it apart from its competitors The organization is committed to meeting on0time performance
goals! maintaining and growing international route network! and increasing flight fre.uencies to
meet market demand Cathay Pacific strives to deliver ,ervice ,traight from the 1eart and takes
pride in making its customers feel safe! welcome! comfortable and above all! reassured Cathay
Pacific anticipates the customers needs and aims not 6ust to meet! but surpass their e7pectations
Cathay Pacific go beyond ensuring satisfaction in order to strengthen customer loyalty and
enhance the profitability of the airline "Cathay Pacific Annual #eport $%%5'
Cathay Pacific uses :ifferentiation as its target market positiong strategy According to
Proctor "$%%%'! a differentiation strategy is one where wide product ranges and higher .uality
products are offered for the convenience of customers as well as added services A differentiation
strategy in which a product offering is different forms that of one or more competitors in a way
that is valued by the customers The emergence of cheap long0haul airlines does not bother
Cathay Pacific Airways The company maintains that they cater to a different market which
values service and product features more than price Cathay Pacific offers .uality service and
lu7urious features and amenities )nterior layout and configuration of the aircraft is one of the
considerations of Cathay Pacifics passengers ,pace is considered as the key comfort variable
Another important offering of Cathay Pacific that sets it apart from its competition is its high in0
flight service and catering standards )n flight service and catering standards according to
:oganis "$%%$'! cover the nature and .uality of food and beverages provided! the number of
cabin staff for each class of cabin! the availability and range of newspapers and magazines! in0
flight entertainment and communications! give0aways for passengers as well as for children and
so on Cathay Pacific e7erts a great deal of effort to the planning of airline meals and meeting
target catering standards Another competitive advantage of Cathay Pacific is the services offered
to passengers on the ground Cathay Pacifics super hub at 1ong 2ong )nternational Airport
offers a wide range of services and benefits aimed at making the passengers arrival! departure
and connections as smooth! convenient and pleasurable as possible
*ther intangible aspects of comfort and source of differentiation that Cathay Pacific is
offering are efficiency! helpfulness and friendliness of staff! both the cabin crew in the air and the
ground staff at check0in! in the airline lounges and at the boarding gates
Technology :evelopment
Cathay Pacific become Asias leading e0business airline by implementing ambiguous
strategy and fully harnessing state0of0the0art technology The company is determined to provide
their customers and business partners with greater ease and convenience! as well as to create new
business opportunities for business growth and to enhance efficiency and economic benefits
The company has unveiled a series of e0business initiatives in the areas of passengers!
cargo! procurement and internal procedures ;or e7ample! Cathay Pacific was the world<s first
airline to offer an online air ticket auction in late $%%%! allowing fre.uent flyer members of its
+arco Polo Club and Asia +iles program to bid for e7citing offers through the =eb site
Another innovative service was introduced by Cathay Pacific in >anuary of $%%&! this is the
comprehensive *nline Check0in ,ervice! which allows passenger to check in for flights and
reserve their favorite seat by using the )nternet Today! Cathay pacific is the leading Airline
Company in Asia! and respected around the world
Cathay Pacific Airways is known for its leadership in the adoption of new technologies
The airline was the first in the world to announce plans to install in0flight e0mail! the first to link
Airbus aircraft to its maintenance centers electronically! and the first in the world to auction air
tickets online Cathay Pacific also invested over ?$@% million in e0business as part of its plan to
become Asias leading e0business airline A key element in this strategy was the development of
a company0wide e0learning environment that Cathay Pacific calls (earners =orld Cathay
Pacific made rapid progress towards its aim of becoming Asias leading e08usiness airline The
passengers en6oy state of the art services throughout their 6ourney Among the technologies that
Cathay Pacific introduced in order to enhance passenger e7perience are:
& *nline Check0in
Passengers can check in and select their seats on Cathay Pacific flights from the comfort of their
home with the airlines comprehensive *nline Check0)n service from 4A hours up to 3% minutes
before departure
$ Boti;ly
8y registering for Cathay Pacific noti;(C Paging service! travelers can have the latest
flight information sent directly to them via mobile phone or email account They can also check
the latest flight status on Cathay Pacific website
9 Airport (ounges
Cathay Pacifics lu7urious airport lounges in 1ong 2ong offer free internet access and wireless
)nternet access for travelers with laptop computers :esktop computers at The =ing are installed
with broadband! high speed internet access These facilities have been introduced at Cathay
Pacific lounges around the world "Cathay Pacific Annual #eport $%%%'
4 )n0flight -0mail ,ystem
=ith Cathay Pacifics in0flight email system! passengers are able to send and receive
emails on board using their lap top computers Passengers are able to surf net )n0seat power
keeps laptop batteries charged throughout the flight
Technology refers to the employment of mechanical means especially scientific and computer
related! to perform tasks and manage information ":avenport &333' Cathay Pacific has decided
to )nternet0enable its entire global business operations This advancement in technology is
e7pected to provide a global internet platform for Cathay Pacifics e0business applications in the
future The new internetworking infrastructure that Cathay Pacific uses will provide a cost0
effective platform with global connectivity The infrastructure will also support the companys e0
business strategy and will make Cathay Pacific the ma6or e0business airline in Asia The new
technological advancement will initiate the companys development and deployment of e0
business initiatives that will improve the .uality of passenger services and increase its efficiency
and effectiveness Cathay Pacific uses the power of the internet to reduce communication costs
and increase the fle7ibility of its operations The delivery of supporting technology across
Cathay Pacific has been improved by a more ade.uate )T infrastructure
1uman #esource +anagement
1uman resources or human capital is the intangible resources of abilities! effort! and time
that workers bring to invest in their work ":avenport &333' The people at Cathay Pacific are the
ma6or contributors of strategic capability to the company *ne of the advantages of Cathay
Pacific over its competitors is the .uality of service that the staff provide to its customers
,ervice has a big impact on the customers perceptions about the companys product 8ecause of
the importance of its people! Cathay pacific formulated an employee development strategy
through proper and effective training This strategy is e7pected to strengthen Cathay Pacifics
position in the marketplace -mployee development can be an essential ingredient of an
organizations competitive advantage -mployee development includes all of the education and
training that organizations might invest in their employees such as training employees to perform
effectively in their current 6obs! orienting employees to the workplace! developing them for
advanced positions or programs! and building organizational capability for future success
Cathay Pacific promotes a working environment wherein the employees are free to act in both
the companys and passengers best interests
*ne of the keys to successful competition in the global market is the effective deployment of
human resources to achieve strategic capability and competitive advantage 1uman resources as
an internal resource of a firm are one of the sources of strategic capability 1uman resources are
among the top contributors to Cathay Pacifics strategic capability -ffective management of an
organizations human resources according to ,ims "$%%$' is a ma6or source of competitive
advantage and may even be the single most important determinant of an organizations
performance over the long term