1 Wk 6 - Final Strategic Plan [due Mon]   Assignment Content Create the Final Strategic Plan. The Final Strategic Plan contains the elements of all the previous weeks' components and incorporates inst

A FINAL STRATEGIC PLAN OF AIR TRANSPORT SERVICE GROUP

STRATEGIC PLANNING AND IMPLEMENTATION

JOSEPH VERGEL P. CALAJATE

UNIVERSITY OF PHOENIX

PROF. LORELIE KAID

MARCH 03, 2020

Executive Summary

Background

Air Transport Services Group (ATSG) leases aircraft and provides airline operations, ground services, aircrafts modification and maintenance services, and other support services to the air transportation, and logistics industries. The company was founded back in 1980 ABX was operating as airborne express, and in 2013 it became a public company. Then in 2007, it reorganized into ATSG

Mission

ATSG mission statement to provides unmatched services, achieve sustainable cash flow and sell high-quality services to its blue-chip customers

Vision and Values

ATSG's vision is to provide reliable services to customers through our people and a team of dedicated professionals. ATSG Values its customers, deliver on its promises and Contribute to sustainable development

Environmental Scan

ATSG faces external threats associated with the industry, global environment, and country-specific factors. The environment where this company operates is highly regulated, faces economic challenges related to currency fluctuation and flue prices that affect the revenue and increase the cost of operation. The suppliers operating in this market have higher power over the airlines because they are few, and only a few manufactures of airline inventory exist. The threat of new entrants is low because the industry is highly regulated and requires huge capital for a new venture to establish itself. The risk of substitutes is small, and the rivalry of operators in this market is intense.

Strategic Recommendation

The strategic issues faced by ATSG include the higher cost of debts, staff complaints, shrinking logistic market, and high operation cost. To address these vital issues, ATSG can enter into a contractual partnership with other e-commerce for leasing or for providing direct delivery of the cargo. There is a growth of brick and mortar businesses that may help ATSG leverage its revenue. Still, ATSG can integrate technology to lower the cost of marketing training of staff and conferences by utilizing video conferencing whiteboard software. To improve inventor management, ATSG can develop accurate forecasting to ensure the expected demand matches with the actual demand before procuring more aircraft. Strike aircrew may be addressed by negotiating with unions and staff to reach an agreement and increasing more staff to meet the demand.

Strategic implementation

The process of strategic implementation involves assigning duties to associated departments, activities that lead to the achievement of those strategies, and critical performance associated with the plan developed.

Organizational Change Management Strategies

The air transport services group can propose an incentive to staff. The incentive will encourage staff to accept and engage in the new direction of the company. The incentive may be through employee recognition plans and rewards matched with certain activities or values. The incentive will help to reinforce positive behavior. Still, the company can as well redefine cultural values. Initiating a culture of continuous improvement will help to change the hearts and minds of the employee. The culture of constant improvement will reinforce a new way of thinking about work. Recruitment of champion of change will help speed up the buy-in of staff, lower the degree of resistance, and serve as a mechanism for collecting feedback and disseminating information.

Risk Management Plan

ATSG faces strategic risk, operational risk, financial risk, and technological risk. To address this risk, ATSG can consult with stakeholder to ensure support and less resistance on the strategic goal implementation, and enough budgets are allocated for the same. ATSG can enhance its management capability by initiating mitigation strategies to prevent software privacy threats by protecting the system from hackers. The management should foster resource utilization and be ready for negotiation with a labor union, training staff, and motivate them.

Conclusion

ATSG is committed to providing unmatched services, achieve sustainable cash flow, and sell high-quality services to its blue-chip customers. To meet this mission focus, ATSG focus on entering a contractual partnership with other e-commerce for leasing or for providing direct delivery of the cargo for motor and brick industries. To increase financial suitability, the ATSG organization will negotiate interest rates, increase more revenue streams, and improve inventory management. ATSG plans to address staff complain about consulting with faculty and hiring staff.

Slide 1: Company Background

• Air Transport Services Group (ATSG) leases aircraft and provides airline operations, ground services, aircrafts modification and maintenance services, and other support services to the air transportation and logistics industries.

• The company provides unrelated services and customized solutions tailored to meet customer's needs.

• The company was founded back in 1980 ABX was operating as airborne express, and in 2013 it became a public company, and in 2007, it reorganized into ATSG

Notes

1. Airborne express was founded in1980

2. In 2003, ABX became publicly traded.

3. in 2007, it was recognized as ATSG

4. In 2007, it ATI was acquired

5. In 2010, ATSG leased 14 Boeing 767s to DHL

6. In 2015, it begins its relationship with the amazon ACM agreement for 5 Boeing 767 and other events since today.

Slide 2. Summary of its products

1. Aircraft leasing: CAM leases aircraft to ATSG airline and to external customers that include DHL and Amazon.

• • customer acquire the aircraft at schedule fixed monthly payments

  • maintain the aircraft in a serviceable condition at their cost

  • Examine its customer creditworthy before leasing the aircrafts

  • Return the aircraft in the same condition they were when they return.

1. ACM passenger services: Three airlines include ABX air Inc (ABX), Air transport International Inc, (ATI) and Air Transport International LLC(OAI)

• Provides airlift operation to DHL, Amazon, the DOD and the other transport to customers.

• Agreement with these customers include aircraft, maintenance, and insurance for the specified transport operation's

• DOD crafts program allows ATSG to bid for military charter operations for passengers and cargo operations.

1. Aircraft Maintenance and modification services: ATSG provides maintenance and modification services to other airline carriers through ABX, AMES and Pemco subsidiary

• AMES workstation is at Wilmington, Ohio, repair station certified by federal aviation administration

• PEMCO repair shop is in Tampa, Florida

• AMS customers include air cargo industries, passenger airlines, aircraft manufacture, and contract companies serving the commercial aviation industry.

1. Ground services: LGSTX provides labor and management for load transfer, sorting services at individual facilities in U.S

• LGSTX has an extensive inventory that includes ground support equipment such as power units, air starts, and pushback vehicles that it rents to the airport, ground handler, airlines, and other customers.

• Also, provide mail sorting services

1. Flight support: Provide support flight crew training to customers.

Slide 3: Mission statement

• ATSG's mission statement provides unmatched services, achieve sustainable cash flow, and sell high-quality services to its blue-chip customers.

• To achieve this mission, ATSG has

• Differentiated packages of value-added aviation services

• Build long-term customers partnership

Notes:

• ATSG provides unrelated services to ensure it meets its customer needs. for example, to meet leasing contract agreement; the company provide, insurance, aircraft maintenance, flights crews, and other services to ensure the operation runs smoothly

• ATSG has increased its contractual agreement with its key external customers, which include Amazon, DHL, and DOD. These agreements explain why the company has a reliable customer base because of its long relationship with customers by providing reliable, safe, and quality air and ground operations.

Slide 4: Vision and Value Statement

1. ATSG's vision is to provide reliable services to customers through our people and a team of dedicated professionals.

2. ATSG Values is to:

• To Deliver Value customers,

• Deliver on its promises and

• Contribute to sustainable development

Notes:

• ATG is committed to delivering undisrupted, safe, and quality services through its various operation services, which include air operation and ground operations to ensure customers see the value for their money.

• ATSG keeps on diversifying its portfolios, invest in more aircraft, and keep its fleet well maintained to ensure it continues to deliver on its promises to customers.

• The investment opportunities and employment of technology in its practices help to promote sustainability within the organization.

Slide 5: Environmental scan

1. National environment

• Government regulation on demand-side than on supply-side

• U.S environmental protection agency is authorized to regulate the air emission

• Noise regulation and more stringent aircraft operating regulation

• Data regulation on data protection

• Staffs strike due to few crews and long working hours

• Law on the consumer may prohibit mergers

• Regulation patent rights

Notes

• The U.S environmental protection agency is authorized to regulate air emission (ATSG. 2019). The agency has implemented the emission control standard adopted by the International Civil Organization. Due to the current finding on greenhouse gas, the agency has adopted a new certification standard for aircraft emission.

• Some airport has adopted local noise regulation and more stringent aircraft operating regulation which may require the company to spend more and make schedule changes or take other action to be able to comply with the local rules.

• This is because failure to comply with the regulations, the company may face a penalty, or their certification revoked affecting their operation.

• The company still faces international regulation because the airlines are subjected to aviation agreements between the U.S and the respective countries (ATSG. 2019).

• The relationship between the U.S and foreign governments may affect aviation agreement because such agreement is sometimes renegotiated. Therefore, poor international relations may alter or terminate the contract.

• Data regulation on data protection increase more requirements for personal data hence any violation of the GDPR result in significant fines.

• ATSG airline relies on flight crew that are unionized therefore in case the collective bargaining increases and the company operation and earning will be affected (ATSG. 2019). The company will be forced to terminate a customer contract.

Slide 6: General environment

• ATSG faces international regulation relating to aviation agreements between the U.S and the respective countries

• Relationship between the U.S and foreign government may affect aviation agreement

• An economic downturn may reduce the demand for delivery services

• Customer income level influences the demand air cargo

• Natural disasters such as earthquakes, pollution may halt operation in some regions.

• Law relating to minimum wages

Notes:

• An economic downturn may reduce the demand for delivery services offered by DHL and Amazon for shipping services. During an economic recession, customers prefer to use ground-based or marine transportation services instead of air services, which may affect air transport.

• The company still faces international regulation because the airlines are subjected to aviation agreements between the U.S and the respective countries (ATSG. 2019).

• The relationship between the U.S and foreign government may affect aviation agreement because such agreement is sometimes renegotiated. Therefore poor international relations may alter or terminate the agreement.

• Natural disasters such as earthquakes, pollution may force the ATSG to halt some operation for safety reasons in areas prone to earthquakes, bush fire, for example, California and Australia due to air pollution.

Slide 7: Industry environment

• High supplier power few to few manufactures, i.e., Boeing and Airbus

• Moderate substitute due to geographical limitation and skill required for ground operation support.

• Buyer powers moderate-high because they can shift to substitute or a competitor with minimal shifting cost.

• Threats of the entrance are low due to high cost of operation and inventory

• The threat of competitors is high due to regulation.

Notes

• High suppliers’ power due to a few manufactures of airlines, which include airbus and Boeing. Fuel and aircraft inventory are expensive

• Deregulation created a threat of new entrants and increased competitive rivalry to major players

• The high cost of fuel cost, investment on aircraft acquisition, inventory of maintenance, marketing costs, operating cost and aviation fees reduce the entry of new entrants

• Buyers power is moderately high because the DHL and Amazon can see services to competitors

• A threat of substitute is moderate-low because a customer may shift to marine, road and train transport even though some it is limited in geographical

Slide 8: Internal and External analysis: SWOT

Notes: Summary

1. strengths

• an unmatched mix of service for cargo and passenger markets

• Increased Revenue diversification with blue-chip customers

• Solid balance sheet and cash flows back value accretive capital allocation options

• Strong, sustainable cash flow from aircraft lease portfolio and DoD contracts.

• Established feedstock supply and diversity of aircraft to support operations

Weakness

• The cost of air acquiring new aircraft is high hence this eat some percentage of revenue

• High debts due to services route and buy aircrafts

• pilots’ trikes affect ATSG operation

• High maintenance is incurred through aircraft maintenance, acquiring spare parts for the aircraft and other ground equipment.

• ATSG manages a fleet of aircraft, incurs a lot of marketing costs, which leads to high operation costs.

Opportunities

• The airline can take advantage of a growing market for e-commerce to leverage its market.

• The economic uptick may promote a market for DHL and Amazon hence benefit ATSG indirectly through leasing.

• Comprehensive market coverage offers ATSG opportunity as compared to substitute brands such as train, air transport and marine transport which might be an option for DHL and Amazon

• Technological integration may be utilized to lower the cost of operation, for example, training because the organization may use video conferencing, whiteboard software and to reduce the cost of holding meetings and training. Technology may be employed to promote marketing and create awareness about airline services.

• Moe acquisition of aircraft helps ATSG meet capacity requirements.

Threats

• Rising fuel price is a significant increase cost of operation for the airline, especially when the cost of fuel keeps on fluctuating due to crude oil prices.

• Government regulation may create barriers that limit the airline in some routes, increase more cost due to more regulation.

• Threats of a trade union may affect the operation of workers go on strikes on-demand salary hike

• A new player in cargo transport may change the market share of the existing firm in the market.

• Technological advancement increases more regulation relating to a data breach

Slide 9: Strategic Recommendation

Notes

• The logistic market is thin; therefore, ATSG can improve the logistic market by entering a contractual partnership with other e-commerce for leasing or for providing direct delivery of the cargo.

• Integrating technological innovation to lower the cost of marketing, training, and conferences by utilizing video conferencing.

• ATSG can lower debts level by increasing more equity stake

• The company can improve inventory management by managing its relationship with partners better; have accurate forecasting to ensure the expected demand matches with the actual demand before procuring more aircraft.

• Pilots’ Strike can be addressed compensating staff better, negotiating with a labor union and increasing the number of a pilot to match the demand.

Slide 10: Implementation Plan

Slide 11: Organizational Change Management Strategies

• The following are strategies that can be employed by ATSG

• Staff Incentive

• redefine cultural values

• Recruitment of champion of change

• This change strategy is essential in ensuring the implementation of the strategic plan is achieved because there will be no resistance that might prevent the implementation of the strategic plan.

Notes:

• The air transport services group can propose an incentive to staff. The incentive will encourage staff to accept and engage in the new direction of the company. The incentive may be through employee recognition plans and rewards matched with certain activities or values. The incentive will help to reinforce positive behavior.

• Still, the company can as well redefine cultural values. Initiating a culture of continuous improvement will help to change the hearts and minds of the employee.

• The culture of continuous improvement will reinforce a new way of thinking about work. Recruitment of champion of change will help speed up the buy-in of staff, lower the degree of resistance and serve as a mechanism for collecting feedback and disseminating information.

Slide 12: Risk management Plan

Notes:

• ATSG may initiate appropriate consultation with stakeholders to ensure support and less resistance on the strategic goal implementation, and enough budgets are allocated for the same.

• The company should enhance its management capability by initiating mitigation strategies to prevent software privacy threats by protecting the system from hackers. The management should foster resource utilization and be ready for negotiation with a labor union, training staff, and motivate them.

Conclusion

Air Transport Services Group (ATSG) leases aircraft and provides airline operations, ground services, aircrafts modification and maintenance services, and other support services to the air transportation and logistics industries.

ATSG faces several strategic challenges associated with its thin market for logistics, high cost due to currency fluctuation and fuel, and staff overloads that result in strikes and dissatisfaction.

The strategies of addressing this strategic issue include entering contractual partnerships with other e-commerce for leasing or for providing direct delivery of the cargo for motor and brick industries.

To increase financial suitability, the organization can negotiate interest, increase more venue streams, and improve inventory management. The strategies of addressing staff complain and improve effectiveness include increasing the number of staff, pay them better, and negotiate with a labor union. ATSG may face risks related to strategic, financial, operation, and technological. Therefore, proper mechanism risk mitigation, such as involving stakeholders in the strategic implementation is essential.

References

Air Transport Services Group, Inc (ATSG) website. Retrieved from https://www.atsginc.com/sustainability/community

Choo, C. W. (2001). Environmental scanning as information seeking and organizational learning. Information Research, 7(1), 7-1.

Bloomberg, (2016, Nov 22). Cargo Carrier Pilots Strike Grounds DHL and Amazon. SupplyChain 24/7: Retrieved from https://www.supplychain247.com/article/cargo_carrier_pilots_strike_grounds_dhl_and_amazon/air_transport_services_group

Air Transport Services Group, Inc (ATSG). (2019). 2018 form 10-k Annual Report: Sec filling: Retrieved from https://otp.tools.investis.com/clients/us/atsg_inc/SEC/sec-show.aspx?FilingId=13270182&Cik=0000894081&Type=PDF&hasPdf=1

Hitt, M.A., Ireland, R.D., & Hoskisson, R.E. (2015). Strategic management: Competitiveness and globalization (11th ed). Stamford, CT

Air Transport Services Group, Inc (ATSG). Website: Retrieved from https://www.atsginc.com/investors/investment-case