ANALYZING TOP TIER PERFORMANCE OF GARUDA INDONESIA
ANALYZING TOP TIER PERFORMANCE OF GARUDA INDONESIA:
Faculty of Business and Social Sciences
International University Liaison Indonesia (IULI)
BSD City, Serpong, Tangerang Selatan, Indonesia
Email: [email protected]
Humans are by nature driven to keep on developing and grow themselves. The idea of growing and developing usually validate when they are able to finish another level task, or accomplish something. In either, the process would push someone to be able to gain or achieve their expected result. This process of planning and executing the desired outcome would be called as strategy (“Strategy,” 2018).
By keeping in mind the end goal/point to accomplish any objectives, each individual or association needs to have values or basic principle and clear reasoning, in that sense one would be able to plan a strategy. Strategy itself has an exacting definition as a high level plan to accomplish at least one objectives under states of vulnerability. Strategy is required in everything in corporate issues, as well as, in actuality, and fundamentally all that we do throughout everyday life. Numerous thinkers have their sort of view of what strategy is really implies. One of them, Kenneth Andrews he defined corporate strategy as the example of choices in an organization that decides and uncovers its targets, purposes, or objectives, creates the important approaches and plans for accomplishing those objectives, and characterizes the scope of business the organization is to seek after, the sort of financial and human association it is or expects to be, and the idea of the monetary and non-monetary commitment it means to make to its investors, representatives, clients, and groups (Nickols, 2016).
Without strategic management, a business will never be continuing in any case. It is basic to comprehend and locate the best strategy to recognize what organization/individual/association ought to do to accomplish the most advantage. It likewise encourages the organization to recognize future open doors in the market and foresee how the future market will be, so the organization can influence the strategy to contend in future to advertise. By understanding strategic management, the organization can consummately comprehend what the means to do in each basic leadership. To make a business runs well, organization should know precisely how to advertise their item and how to design a showcasing strategy that can achieve the organization’s target which is picking up benefit.
A state-owned company, Garuda Indonesia is a noteworthy universal and household aircraft that has been the lead of Indonesia’s aviation routes for over forty years. It is the biggest aircraft in Southeast Asia and one of the biggest in the Southern Hemisphere, conveying more than 16,000 travelers day by day to a growing rundown of 16 residential and 28 universal goals. Through backups, for example, Merpati Nusantara Airlines, PT Aero Catering, PT Satriavi Tours and Travel, and Aerowisata Hotels, Garuda has broadened its venture into carrier nourishment administrations, facilities, and tourism (“GARUDA INDONESIA – Company Profile, Information, Business Description, History, Background Information on GARUDA INDONESIA,” 2018).
In spite of the fact that Indonesia announced itself a free republic in 1945, the country kept on battling with the Dutch until 1949. In October 1948, without further ado before world acknowledgment of Indonesia’s autonomy, Garuda started modestly when a group of Indonesian Air Force officers bought a solitary DC-3 Dakota from Singapore. The aircraft propelled its lady flight from Calcutta to Rangoon in January 1949. Named for a legendary Indonesian feathered creature who spares a lady from death, Garuda was accused by the administration of cultivating the country’s monetary development (“Garuda Indonesia SuccessStory,” n.d.).
Development of an efficient air travel industry in Indonesia was crucial because of the country’s unique geographic situation. Indonesia is the world’s largest archipelago, stretching for more than 3,100 miles and comprising a series of more than 17,508 Southeast Asian islands, including Bali and Java. Nearly 6,000 of the islands are inhabited by a diverse ethnic population totaling over 170 million, and Garuda has acted as a domestic air link for the nation. In addition, Garuda’s establishment of international flight routes has been partly responsible for the developing the national tourism industry since the 1980s, when Indonesia began turning its focus away from the petroleum trade after the oil glut of that decade and sought to cultivate tourism as an alternative means of income.
II. Company Profile
PT Garuda Indonesia is a leading airline in Indonesia, offering scheduled passenger and cargo services to various domestic and international destinations across the Asia-Pacific and the Middle East region. The airline’s vision is to give each customer the best possible travel experience, from the time they choose to fly with Garuda to when they arrive at their ultimate destination. Garuda Indonesia is continually refining its products and services in the air and on the ground not only to fulfill its customers’ expectations but anticipate how their expectations will change in the future.
Garuda Indonesia vision is to be a sustainable airline company through customer-oriented services and growth in profit. Which is pursued through Garuda Indonesia’s mission that aim to be as maximize shareholder return through strong revenue growth, cost leadership in full service operations, and group synergy while providing the highest value to customers through excellent Indonesian hospitality
Right now, Garuda Indonesia is resenting a new level of service excellence in air travel, Garuda Indonesia, the national airline of Indonesia, seamlessly connects 83 destinations worldwide, including exotic locations in the beautiful archipelago of Indonesia all at once.
Since October 30, 2007, Garuda Indonesia has formulated a set of corporate values known as FLY-HI, which is the acronym of eFficient & effective; Loyalty; customer centricitY; Honesty & openness and Integrity(“PT Garuda Indonesia (Persero) Tbk. Business and Work Ethics,” 2015). This has for years become one of the most effective work ethics and culture for Garuda Indonesia’s employees. And now, with more than 600 daily flights and a fleet of 196 aircrafts by January 2017, Garuda Indonesia proudly serves its passengers with the award-winning distinct service “Garuda Indonesia Experience”, which highlights Indonesia’s warm hospitality and rich diverse culture (“About Garuda Indonesia,” 2017).
To provide better and more convenient services, Garuda Indonesia continuously strives through its ongoing transformation program. The progress of the transformation can be seen from the achievement of a Skytrax’s 5-star Airline rating as well as the winning of the prestigious “The World’s Best Cabin Crew” for four consecutive years in 2014 to 2017, “The World’s Most Loved Airline 2016” and “Best Economy Class” award in 2013, also from Skytrax (Garuda Indonesia, 2017).
III. Theoretical Background
(masukin ttg strategic management lagi)
(masukin 5 step strategic management)
Figure 1: Stages of Strategic Management
In order to form a beautifully crafted strategy, one should have gone through several step before finally executing it. Strategic management process, however is according to David, sorted into three stages; strategy formulation, strategy implementation, and strategy evaluation. Strategy formulation illustrations are included choosing what organizations to enter, which organizations to abandon, how to designate assets, regardless of whether to expand tasks or enhance, whether to enter global markets, whether to unionize or shape a joint wander and how to evade an antagonistic takeover. As the following stage, strategy implementation cases are setting up yearly targets, devise approaches, propel representatives, and assign assets with the
A. Brand Theories
According to Park, et al., the construction and maintenance of the brand image is prerequisite to the brand management. Theoretically, all products and services could be demonstrated by functional, symbolic or experimental elements, through which brand image is established. Up to now, scholars haven’t come to an agreement on the definition of brand image. Throughout prior literature, researchers define brand image mainly from four perspectives: blanket definitions, meanings and messages, personification, cognitive or psychological elements (Park, Jaworski, & Maclnnis, 1986). To accommodate a proper brand image, a company should’ve have a proper branding strategy for themselves, and then it will be use to explore its brand image.
The brand strategy itself has a definition as a long-term marketing support for a brand, based on the definition of the characteristics of the target consumers. It includes understanding of the preferences, and expectations from the brand. (Glen, 2017). A brand is a concept that happens in a consumer’s mind. It’s a perception. A company does not create brand, it merely creates the tools, actions, and processes that enable the formulation of a brand.
(masukin tentang brand equity)
Figure 2: Brand Equity
Brand equity is an intangible asset in which there are psychological and financial value for the company (Kotler ; Keller, 2008). According to Aaker, brand equity has important roles that can be seen both from the customer and the company sides. In general, when seen from the side of the customer, brand equity can increase or decrease the value perceived by the customer. Therefore, brand equity is strongly related to customer’s purchase intention (Aaker, 1991).
Brand equity can also provide additional value that leads to increasing customers’ confidence in making purchasing decisions. That value is derived from customer’s experience in using the product/service and their knowledge in the characteristics of products/services. Keller’s brand equity as seen on figure 1 then being broken down to several important points, which are (Majid, Alias, Samsudin, ; Chik, 2016):
1. Brand Awareness (customer’s level of awareness towards certain brand)
2. Brand Association (impression/image that comes to customer’s mind about certain brand)
3. Perceived Quality (overall quality of a brand that is perceived by customers)
4. Brand Loyalty (level of customer’s loyalty towards certain brand)
(masukin diamond of national competitive advantage pg 178)
Figure 1: World’s Top 10 Airlines
The airline business in Indonesia is experiencing a very tight competition domestically, as well as internationally. Along with the increasing level of mobilization, we can see from figure 1, that currently there are various international-flight airlines offering high quality services in order to compete in World’s Top Airlines. This makes the competition among airline services become increasingly tight, considering that Skytrax World Airline Awards has been global benchmark for airline excellence (Passengers Choice Awards). In addition, consumers as decision makers are also becoming more selective in deciding airline service for their international flights. Airline companies compete not only in terms of products or services offered, but also in accentuating their brand. Companies are now competing with each other to attract customers through their respective airline brand in order to inform and suggest consumers to keep buying and using their services. Therefore, a strong brand equity becomes important in the airline industry. Brand equity is an intangible asset in which there are psychological and financial value for the company (Kotler & Keller, 2008).
A strong brand equity is proved by the achievement in the future where consumers will know the product and feel closer naturally. To achieve this, companies need to understand the meaning of the brand through the customer’s viewpoint, called Customer-Based Brand Equity (CBBE). With a strong brand equity, the attractiveness of the product or service will be stronger in the eyes of consumers, so that it can lead them to the purchase of product or service offered (Taskin ; Akat, 2010). PT. Garuda Indonesia Tbk. has been a pioneer of airline in Indonesia since 1949. Garuda Indonesia is also the only airline which has strong financial support from the Indonesian government. In addition, Garuda Indonesia has became the first Indonesian airline to join SkyTeam since 2004.
SkyTeam is an alliance consisting of various major airlines in the world. Together with the SkyTeam alliance, Garuda Indonesia is connected to more than 1,000 city destinations across the world. Beside gaining greater access, Garuda Indonesia is also benefited by flight frequency and route connectivity increases, making it easier for people to travel internationally with them. With their increased routes, especially on international routes, Garuda Indonesia has high potential to strengthen its existence in international flights.
Arif Wibowo, the CEO of Garuda Indonesia explained three main pillar that become the company’s main focus. The pillars are: Return Maximization, Excellent Indonesian Hospitality, and Group Synergy, which also supported by applying the efficient cash-flow policy within the company that is on-going proportionally. He hoped that with this kind of arrangement, the company would still be growing positively up to 2020 (Butarbutar, 2016).
(The influence of airline brand on purchase intention)
V. S.W.O.T Analysis
Strategic management is the art and science of formulating, implementing, and evaluating cross-functional decisions to achieve organization’s objectives. Various models are created to apply strategic management theory in line with organization’s goals, culture, and other internal and external influence