Analysis Of The Succes Of Flight Centre Limited

Introduction

Flight Centre Limited (FCL) provides a one-stop shop for all travel-related services, including visa, ticketing, accommodation, car hire, and any other possible service related to traveling. It has made a mark for itself in the travel and tour industry on the basis of its unique business model and strategies. It had presence on 11 countries with multiple businesses and brands. Its strong organizational culture and structure has led it to win many awards. This case study analyses Flight center’s success story on the basis of its values, strategy, corporate social responsibility etc. and how it faced ups and downs over the course of its business. Its leadership, teamwork, performance based reward system, inclusion of technology and information sharing are examples for others to follow.

FCL’s business model was based on “Lowest Price Guarantee”, which even meant selling airline tickets at a loss. As a response to online competition, its strategy was to provide the blended capacity of online and personal bookings. Customers get lowest price guarantee, personal responsiveness, follow up, etc. According to company website (2019), FCL has deals with airlines, hotels, car rental, insurances, railroad, cruise, and tour packages to a wide range of global destinations

Organizational Culture

Organizational culture is a set of values and norms that influence how work is done. The vision and mission of an organization have its long-term goals, communicates why it exists, and how it plans to conduct business. The vision statement helps in developing a course of action that is in line with where the organization is intended to head. It can also motivate managers and individuals to align their operational plans with the vision of the company. Flight Centre Travel Group’s vision statement focuses on employees, customers and partners, and it aims to be the world’s most exciting and profitable retailer for travels.

The work culture at FCL was based on sharing of information and teamwork. Through anthropological studies teams were made like families, those families combined to form villages, villages formed tribes. In other words, clusters were created, and the focus was on creating a community. During the recruitment process, personality traits are given more importance than experience and education.

In the book Skroo The Rules, it is written how Flight Center has a free wealth generation service for employees, and it was one of the most profitable workplaces in the world. Its corporate goals included making its employees rich. It gave employees liberty to grow and rewarded them adequately. The company has “Business Ownership Scheme” (BOS) through which employees get a share in the profits of the company as part of their reward for better performance. Through this, around 70% of staff own company shares.

Over the years, there has been cultural change in the organization due to a number of reasons. The dynamics of marketplace have changed from physical presence of providers to online presence in the form of booking and tour websites. As a result FCL needs to respond accordingly at expand its online presence and digitalize its processes.

Effectiveness of Leadership

Leaders influence how others interact and motivate others towards achieving the goals of the organization. Skroo Turner’s leadership is exemplary in not just one but many ways. Skroo was successful in creating a more meaningful work experience for employees. One could classify Skroo Turner as a transformational leader for bringing about optimistic change in a company. Be it pay cut in times of difficulty, he provides a role model for followers, is trusted, motivates, kindles creativeness and improvement, and is towards the positive direction.

Transformational leadership is practical, and targets to attain a company’s objectives through focusing virtuous conduct for the benefit of the company. He aimed to improve services by means of exemplary character and finest efforts. Research by Pierro, et al. (2012) confirms that transformational leaders influences employees’ positive organizational commitment.

During legal cases, Skroo did not give up and kept on competing. It later won the case on technical grounds of the term “market for distribution and booking services”. His approach to deal with online competition as a fact of life, and subsequently opening up more channels shows he wants to adapt to change. He wanted to make the company more agile, and upbeat with the current market trends.

The Major Challenges

Operating at a global level requires having an open mindset because they are bound to face challenges that have never existed earlier. Flight Center was facing a number of challenges. Details about them are provided below:

Customers to digital

Flight Center was losing its business to online websites that provide ticketing and accommodation facilities, this was much different that the brick-and-mortar presence of FCL’s outlets. In June of 2015 the company had a rare profit warning. The share price also went down by 17% as investors were unsure about FCL in the time of digitalization. In a few month the company did better and still reported profits that year.

Need for Diversification

Skroo Turner was concerned that the company could become a “one trick pony” (Smith, 2015), and that it needs to grow into expanding markets. It also seemed that diversifying into more modes of travel was the need of the hour, there include rail and cruise travel and tours.

Legal Problems

The company faced a few major legal charges. Firstly in 2012 it face charges of fixing prices with airlines, the airline lost the case but did not lose hope. It appealed against the decision and after five years it won the case that it did not compete with airlines in the market for booking distribution services. FCL got back the fine refunded and wit the legal costs and interest.

Need for change

The challenges that FCL faced were becoming more unpredictable now, and required thorough analyses before a strategy is developed. Some of the key areas where change was needed are

• Need to make itself more relevant in the digital space, and transition from being mere travel agents in a brick and mortar setup.
• Providing a wholesome experience to travelers, which was much beyond what online websites were providing.
• Understanding customer behavior and develop new products accordingly.
• There was also a need for FCL to train and develop its staff’s capabilities and attitudes from being salespeople and travel agents, to become well-rounded consultants in their operations and management of work.
• The pay scale needs improvement and an upgradation at the lower level because the basic pay was so low that it because uncompetitive to recruit the best talent.

Recommendations

Implement Digitalization get Customer Insights and Outreach

Flight center needs to invest in technological advancements such as in-depth data analysis to track where there customers are coming from, where they go, for the number of days, the routes they prefer, and other such questions. Currently sales are recorded by suppliers and amount only. The company needs to build better customer management systems that record data for future analysis. This would enable them to make relevant products and improve customer experience. Being customer centric will help them regain some of their lost market share.

Moreover digitalization also means adapting to technology that would increase their presence on mobile and tablet applications. Presence of digital and social media such as Facebook, Twitter, and Instagram, would help them reach customers easily, engage them in their own content, and monetize them in terms of more sales.

Improve Human Resources

Flight Centre help its employees grow to achieve its target, but there is a lot more that it could do.

• Improving staff capability and skills: The organization currently focuses on sales only. It needs to put in effort to keep a track of what skillset their employees have and what are the expected skillsets that the company would require in future. They need to match the demands of customers with the skillset of employees and improve productivity. It needs to bring the salaries of its employees in line with the competitors, in terms of cash payments.
• Developing Enterprise leadership: Enterprise leaders could be at any position, but they work across the enterprise irrespective of their particular business function. According to a study by Watkins (2012) enterprise leader is the one who takes responsibility of multiple corporate functions within an organization. In the case of light Centre, the staff in sales will not just look at his figures, but the benefit of the organization as a whole. This will create a culture that encourages understanding the business as a whole

These recommendations will enable FCL to manage the organizational and marketing issues in a much better way, and achieve the goal of better and faster service.

References

1. Baum, T. , 2006. Human Resource Management for Tourism, Hospitality and Leisure: An Inspirational Perspective. London: Thomson Learning.
2. Blake, D. , 2001. Skroo the Rules. s. l. :Information Australia.
3. Centre, F. , 2019. Flight Centre. [Online] Available at: https://www. flightcentre. com/
4. Group, F. C. T. , 2019. Who We Are. [Online] Available at: http://www. fctgl. com/about-us/who-we-are/
5. Pierro, A. , Raven, B. H. , Amato, C. & Bélanger, J. J. , 2012. Bases of social power, leadership styles, and organizational commitment. International Journal of Psychology, 48(6), p. 1122.
6. Smith, M. , 2015. Flight Centre flying despite structural challenges. [Online] Available at: https://www. afr. com/companies/tourism/flight-centre-flying-despite-structural-challenges-20150827-gj97p7
7. Watkins, M. D. , 2012. How managers become leaders: the seven seismic shifts of perspective and responsibility. Harvard Business Review, Issue https://hbr. org/2012/06/how-managers-become-leaders.