Strategic Plan: Delta Airlines (Phase 2)

Current Strategies
Data airlines in the last couple of years has an announced a strong financial result. Being one of the biggest airline company in the world it makes one curious to find what the underlying strategy of the company is. The last quarter of 2018 it announced a prediction of a final annual operating margin of between 16.5% to 17.5% (Allan et al, 2018) and an expected fuel price changes of up to 3 billion dollars. Delta Airlines last announcement to its investors it outlined some key strategy that it had put in place in order to forge ahead in being the biggest airline company in both North America and the world as a whole.
It outlined its vision to keep forging durable partnership with other firms and airlines, its investment in innovation and technology and its aim to partake in fleet restructuring and reduction of airline rent and depreciation. The strategies have seen the company make historical quarterly revenue especially in the third quarter of 2018.
One of the main strategy of Delta airline is its focus on people and culture. Employees have been at the core of the companies’ success. Over financial year of 2017/2018 Delta Airlines has been able to pay its 80,000 employees over 25 million dollars in rewards (Allan et al, 2018). The rewards to employees has seen the workers more motivated and productive, this in turn has seen the reduction of pension expenses by over 43 million dollars (Allan et al, 2018) leading to a drop in adjusted non-operating expenses.
Focus on Delta Airlines’ social responsibility has seen the company gain customers. Being in a industry that relies on perception it is easy to see why the company has invested in social responsibility. Delta Airlines was the number one blood donor to  American Red Cross when it donated 11,085 units in its 214 blood drives over the financial year of 2017/2018. The company is also a National Signature Partner of Junior Achievement 3DE programme, where it has donated 2 million dollars. Delta airlines was also at the fore front to help victims of both hurricane Florence and Michael.
The other strategy that Delta airlines is putting in place is expanding its network and partnership around the world. The company is trying to reach even greater heights by growing their global network. Recent activities have seen the company launch a joint venture with the Korean Air, this will see an expanded reciprocal codeshare of over 50 markets (Park et al, 2018). Delta airlines is also launching new routes in an aim to continue with its strategy to expand its global market share. Los Angeles to Paris and Amsterdam and Atlanta to Lisbon are some of the routes that have been launched.
Customer service and loyalty is one of the most important component for in the airline industry (Park et al, 2018). Delta airlines has put in place several strategy to enhance customer service and loyalty. The first strategy put in place is improving the customer experience in their flights. The company recently launched the refreshed 777-200ER aircraft, fitted with 9 abreast seats in the main cabin, new interior features and additional entertainment features (Park et al, 2018). Second,Delta Airline also revamped itself by redesigning the cabin crew outfit to fit the new modern style. Finally, the airline has opened its renovated Skyclub at the Ronald Reagan International airport. It added an additional 1800 square feet to hold more customers.
The final strategy of Delta airlines is to improve its Financials to what it calls ‘Investment grade balance sheet’. Delta airlines’ first strategy is to reduce its current long term debt. The company has acquired a 1.6 billion dollar unsecured debt so as to refinance its secured debt. Securing the debt through an offering of a maximum of between 3 to 10 years noted blended yield, it has lowered its interest rate by over 20 million annually at a run – rate basis (McKenna, 2018). The company had also increased its revolver fund that has an undrawn 3.1 billion credit facility by 635 million(McKenna,2018). The strategy on their financials has seen the company’s balance sheet grow over the 2017/2018 period.
The current strategies that Delta Airline is employing are working. The company currently has over 180 million customers in that are served in 324 destination, distributed over 57 countries in 6 continents, who are served by over 80,000 employees. The success of their strategy has been seen by the recent feature in the Fortune 50 Most Admired Companies (McKenna,2018). Delta Airline has also been recognised as the most admired company in 7 out 8 times in the recent 8 years.
In conclusion, Delta airlines strategy to focus on its culture of people, customer service, partnership and network and its financials is surely paying off. With its high on time performance and maintenance cancellation reduction, the company will get even stronger over the coming financial year of 2018/2019.
However, a key analysis of its strategy is needed to evaluate what lays ahead for Delta airlines in the coming years. What are the weaknesses and strengths of the current strategy employed and also to find the threats and the opportunities that lay ahead.
SWOT Matrix With Strategic Implication
The SWOT matrix is used to managers to try and identify and exploit opportunities, build on strengths, counter threats while eradicating weaknesses. The SWOT matrix is divided into two categories, Strength and Weaknesses are the internal environment, while the Opportunities and Threats are the External environment. Delta airlines like any most companies has several strengths that have helped it grow to be one of the largest airline in the world operating under a single certificate.
Strengths
Strengths are the factors in the internal  environment that the companies possesses that could help it achieve its vision (Leiber, et al, 2018). The strength Delta Airlines has helps it in protecting its market around the world, while assisting venture into new markets and gaining more customers.
The strong brand portfolio that Delta Airlines has created over the years stands as its biggest strength. The company has over 327 destinations in 57 countries, leading as one of the biggest airlines. Secondly, the company has invested in the automation of its services, giving it a leverage above its competitors. Thirdly, the company has had for the recent past, good returns on its capital investments. Fourth, it its strong distribution network in over 6 continents, being the only countries to reach the 4 corners of the earth. Delta airlines has high product innovation, which is helped by the strong relationship with its dealers and suppliers. The ownership of the biggest hub (Atlanta) and several others like New York and Seattle with improved customer service and focus on business travellers has added to its strength. Finally, the great operating strategy of Delta Airlines and good revenue premium have it much stronger compared to its competitors.
Weaknesses
Weaknesses of a company are the factors in the internal environment that limit it from achieving full potential or meeting its set target (Leiber et al,2018).
Some of the weaknesses of Delta Airlines include; poor at demand forecasting, higher worker attrition rate compared to competitors, poor marketing strategy, inefficiency in asset utilisation, low investment in technology compared to competitors, low profitability ratio and Net contribution and low product diversification.
Opportunities
Opportunities are external environmental factors that when utilised can increase the growth of a business or help it in achieving its vision (Humprey,2005). Over the coming financial year, Delta airlines has several opportunities that it can take advantage of. Some of these opportunities include; Chance to invest in emerging market created by recent government agreement, investment into the green drive created by governments around the world, decrease in cost of shipping, increased online customers, reduction in taxes, changes in customer trends, increase in middle class especially in Asia, global economic growth and decrease in global oil prices.
Threats
Threats are the factors in the external environment that may hinder a company from achieving its set objectives if not properly countered (Humprey,2005). Some of the threats that Delta Airlines face include; rising cost of oil and raw material, liability laws, law suits, increase in American isolationism, impact of New Environment Regulation Under Paris Agreement (2016), negative impact of online channel on physical infrastructure, United Kingdom exit from European Union, increase in terrorism activities, trade wars between United States of America and China and possible negativity from social media.
SWOT Strategic Implications
Having looked at the strengths, weaknesses, threats and opportunities of Delta airlines from a simplistic SWOT analysis, it is important to evaluate the strategic implication of it from a weighted SWOT matrix.
A Weighted SWOT matrix is useful in creating a strategic plan for the company. It helps the company create strategic plans for Attacking, Building for Attack, Defence and Building for defence.

Attack (Strength- Opportunity)
In order for Delta Airline to build its attack, it needs to leverage its strength so that it can take advantage of the opportunities available.
Delta airlines can use its strong brand to try and reach the emerging markets that have come after recent government activities. The airline can also use its strong culture of investing in green energy and its commitment to a sustainable environment to leverage on the recent green drive by the government. Another opportunity that Delta airline can take advantage of is the decrease in shipping cost. By leveraging on their increased capacity of cargo services they can increase cargo capacity and market share.
Investment in technology is another strength that Delta airline can use to gain new customers in the online channel while using their strong global network and partnership to take advantage of the growing middle class especially in Asia.
Defence (Strength – Threats)
Delta Airlines need to use its strength in order counter their threats, in doing things they will build a strong defence against their competitors.
The strategy that Delta airline management can use is using the strong brand to market themselves in social media by creating a social public relation in order to counter the threat of a possible social media negative campaign. The company can also create a risk assessment strategy to counter the possibility of either a liability suit or changes in regulation. Improving the global network and a rigorous public relation campaign will help the company against increased isolationism.
Building on Attack (weaknesses- Opportunity)
The management of Delta airlines need to use their strength in order to counter weaknesses while still exploiting opportunities.
A good strategy is for the company to use technology to improve its product demand forecasting so as to take advantage of the increase in the middle class. Another strategy would be to use the strong global network they already possesses, to improve its marketing strategy so as to reach the emerging markets. The strong revenue premium by Delta airlines can be used to improve on the use of technology so as to be aware and act on customer trend. The use of the good returns that the company has had over the recent period can be used to decrease the workers attrition rate and take advantage of the growing customer number from the online platforms.
Building on defence ( Weakness- Threats)
Delta airlines need to use their strengths to counter their weaknesses and strengths.
A strategy that the management out to use is leveraging on their strength of product innovation in order to counter the rising cost of raw materials while still filling the gap in their product range. Another strategy that Delta Airlines can use, is using their culture of investing in green energy to counter the possible threats of the New Environment Regulation Under Paris Agreement (2016) while still improving their efficiency in utilisation of assets which will improve their financial ratios and improve their market range.
BCG Matrix With Strategic Implications
BCG Matrix which stands for Boston Consulting Group’s Product Portfolio is a matrix that helps management in choosing a long-term strategy in the aiming of achieving it long-term objectives in gaining long term growth opportunities (Harding,2017).
The BCG matrix helps the company decide on projects it needs to invest, discontinue or develop. That is why it is sometimes known as the growth share matrix.
To get the strategy that Delta Airlines to meet its long term objectives, we need to analyse the different products provided by the company and help allocate resources accordingly.
The products are placed according to 4 categories namely;
•    Cow
•    Dog
•    Stars
•    Question marks/ unknowns/ problematic children
The matrix is based on the assumption that cash generation is relative market share (Harding, 2017). While the cash usage is market growth.
The relative market share is based on the relationship with experience curve, in such that when a company produces more product or in this cases serves more customers, it takes advantages of economies of scale. The parameters is measured relative to largest competitor. The market growth rate is based on the assumption that more earning will produce higher investments in order to stimulate future growth.
Delta Airlines offers 4 products to its customers, namely; Domestic flights, regional flights (international flights), cargo and other services ( linking airports). The products vary in their market share and growth rates over the past financial year.
Domestic flights. Delta Airlines has the third biggest market share of 16.8% (Moir et al, 2018) with its competitors Southwest Airlines and America Airlines controlling 17.9% and 18.1% respectively (Moir et al, 2018). The domestic market share for Delta Airlines increased 9.2% compared to its competitors 0.42% over the same period.
Regional flights. In spite of the revenue fall in this product, the market share increased by 47.8% over the financial year of 2017/ 2018.
Cargo. The cargo product fell in market share by 41.26% with a revenue decline of 19.67%.
Other services. The revenue fell by 51.21% with a decrease in market share of 25.24% (Moir et al, 2018).
The products of delta Airlines can be categorised according to the same categories of BCG based on the parameters provided.
Cash cow
A cash cow is a product that enjoys a large share of the market in a slow growing industry. The product is able to generate revenue relatively larger than what is invested. From this explanation we can conclude that Delta Airlines Cash Cow is the Domestic flight. It has a relative high market share with a higher growth rate.
Star
A star is a product that has a considerable large market share in fast growing industry (Harding,2017). The star has a clear outlined market and need large investments to be turned into cash cows. From this definition we can conclude the star for Delta Airline is the regional flight. The company holds a 22.8% share but it increased it with 47.38% over the past year.
Dog
Is a product that has a small market share in a strong growing industry (Harding,2017). They relatively worthless in terms of business but afford other advantages to the firm. From this, we can conclude that other services is our dog. It has a small market share and it keeps shrinking in size.
Question marks
Question mark is a product with a small market share in a slow growing industry (cite). From this definition we can conclude the cargo segment of Delta Airlines is the question mark. It has lost market over the past financial year of up to 41.17% and continues shrinking. With smaller airlines and cargo freight company companies coming on board it raises the question if Delta Airlines should keep this segment of their business
In summary, for Delta Airlines strategic plan, they need to invest more and capitalise on the domestic front as that is their biggest earner and use those funds to build on their regional segment. The other services should be stopped or restructured over the course of the year for long time sustainability. On the cargo segment, a solution needs to be found and partnering with smaller firms or buying them all together would be a wise move to try and revamp that market segment.

SPACE Matrix With Strategic Implications
Space which stands for strategic position and Action Evaluation is a matrix that looks mainly focused on strategy trajectory and formulation as it related to the competitive position (Wheelan et al, 2017) . This matrix looks at the internal and external elements of a given company to determine which strategy ought to be adopted. The internal dimensions are made up of the financial strengths and the competitive advantage of the company while the external dimensions are made up of the environment stability and industrial strengths of the company. These two elements when analysed determine the strategic position of the given company. The strategy that can a company can take are divided into four quadrants namely;
•    Aggressive
•    Conservative
•    Defensive
•    Competitive
a combination of the elements in the dimensions determine which quadrant the company will fall and hence the strategy to adopt.
Quadrant 1- Financial strengths and Industrial stability (Aggressive)
Quadrant 2- Financial strengths and competitive advantage ( Conservative)
Quadrant 3- Competitive advantage and Environmental stability (Defensive)
Quadrant 4 – Industrial Stability and Environmental stability.
To determine which quadrant and strategy Delta Airlines will take, we will calculate the points of each dimension and plot it on a Cartesian plane.
The result are that Delta Airline needs to adopt a more defensive strategy. By employing technology and aggressive marketing. The defensive strategy will help the company protect its share of the market over the long run.
Possible Alternative Strategies
1.    Leverage on technology – Delta Airlines need to increase their use of technology in its operation and marketing. Some of the weaknesses examined at Delta Airlines are the poor financials and inadequate utilization of assets. The weaknesses can be countered by use of technology in better examination of financials and utilization of resources. Technology can also help in the prediction of customer trends and demand which can give the company a higher competitive advantage.
2.    Aggressive marketing- for a company to give a competitive advantage, aggressive marketing is one component the company needs. The company is low on its marketing compared to its competitors. Its visibility especially on the social media is quite limited. Delta Airlines need to leverage their big brand by having a control of the narrative in social media. It has become one of the big threats that the industry faces and a control of it, will minimize risk and also give it a competitive advantage.
3.    Increase of Salary and other Incentives- Workers attrition rate in Delta Airlines has been the highest in the industry. It has been due to the low incentive offered to the workers, though the official statistics say that 88% of the workers say that Delta Airlines is the best Company to work in, the number of people living the airline is quite high. The company need to find the department with the highest attrition rate and offer better salary and more incentives in order to reduce the cost of training new employees.
4.    Investment in research of alternative fuel- Fuel is one of the biggest operating cost for the firm and the recent fluctuation in cost of fuel has cost an unpredictability in the operating cost. Despite the company having its own refinery, the cost saved of 0.1 dollar per barrel is not adequate enough as it still dependent on the global cost of fuel that are not stable. Research on alternative fuel is already underway with partnership with different firms, however, the company needs to invest more. Alternative fuel will not only save the company a large amount of the money spent on operating cost, but also support their environment sustainability drive.
5.    Increase community intervention in the regional market- Delta Airlines has been heavily involved in community intervention in their domestic market. However, little is being felt by the international market. With the rising market share in the international market, Delta airline needs to increase their competitive advantage by doing more community intervention programme in some of the markets especially in the Asian markets.
Evaluation of Organisational Structure
Organisational structure is defined as the lines of command to which a company is organised in which it encompasses various factors which include; industrial size, environmental degree which may include technology and culture (Preuss, 2017).  The organisational structure has grown over the years, beginning from the agricultural sectors and handicraft that had more centralized systems to the new more decentralized system that have division of labour and responsibilities.
There are two sets of command; horizontal structure and vertical structure. The former is one where there is more hierarchical reporting from one stage to the next and the latter has emphasise on more direct connection and sharing of tasks. The 20th century companies mainly encompass both type of structures. There are also different types of structure models, namely; elementary structure, functional structure, divisional structure and matrix structure.
The elementary structure is one where the firm is organized by technique and similar operations are placed together. In elementary structure there isn’t any formal arrangement, transparent and the profit depends on specilization of labour.
The functional structure is one where there is a single head and the organization has separate department where different tasks are performed. The departments have clearly _stipulated mandates and goals. There is also the modified functional structure where there are directors managing different phases and projects that help in horizontal communication. The need to solve internal disputes of roles is done by placing vertical communication channels like a Chief Executive to help coordinate the different phases and projects.
The divisional structure is where there are different divisions in production of products or offering of services. The different divisions have different specilization in their fields. The matrix structure is one way the focus is mainly on function and the product or service provided.
Delta Airline has a Chief Executive Officer that runs the company and supported by a Board of Directors. Under him are department heads that lead different segments of the business. This department heads see over the functioning of various divisions. As evidenced by this, Delta Airlines uses a modified functional structure. This is a structure that is unique to Delta Airlines as most companies in the same industry use the functional structure. The reason for the use of this type of structure is due to the high investment and need for high coordination and specialized roles played by each member of the staff.
The advantages of using this type of structure is the competitive advantage it gives Delta Airline over the execution of its projects and relationship with consumers. Modified functional structure also reduces the time it takes to complete projects and hence saves the company money. The company also gets the advantage of better coordination of their projects and company. However, this type of structure also comes with its downside.
First, the complexity of communication and activities undertaken by the staff is increased. Secondly, there is less utilisation of the labour force as some might be under- employed to fit the structure and high displacement among staff.
Recommendation
Structure
Delta airline line needs to change its organizational structure from a modified functional structure to a functional structure. The change will bring advantages like taking more advantage of the economies to scale and it will also improve the standard of institutional knowledge to its employees
Technology
The company needs to change its use of technology. The technology is mainly used to offer services to the consumers, but the consumers have little interaction with the technology. The company needs to look more like a 21st century company. The use of small animated robots to cheer up the customers is one way of doing it. Increase of tech-rich entertainment is another way the company can go. Use of technology can also be utilised in the way Delta marketing does it marketing. Use of recommendation systems and Search Engine Optimization tools can increase its share in the market.
Reward
The rewarding system of customers and employee needs to increase. The number of customer using Delta Airline will increase with the knowledge they are recognized and appreciated. For example, through a lottery ticket, the company can offer a first class ticket to any place the customer may desire as a way of appreciating them. This will increase loyalty and boost income.
Culture
The culture of social responsibility that Delta Airlines has created needs to be extended to the regional market. The company does little to nothing for its other market and their impact is little felt in other countries, denying them the much required market share.

References
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Park, Y., & O’Kelly, M. E. (2018). Examination of cost-efficient aircraft fleets using empirical operation data in US aviation markets. Journal of Air Transport Management, 69, 224-234.

McKenna, E. (2018). Delta Airlines: A Strategic Analysis.
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Moir, L., & Lohmann, G. (2018). A quantitative means of comparing competitive advantage among airlines with heterogeneous business models: Analysis of US airlines. Journal of Air Transport Management, 69, 72-82.

Preuss, L. (2017). Barriers to innovative CSR: the impacts of organisational learning, organisational structure and the social embeddedness of the firm. In Innovative CSR  (pp. 331-351
Leiber, T., Stensaker, B., & Harvey, L. C. (2018). Bridging theory and practice of impact evaluation of quality management in higher education institutions: a SWOT analysis. European Journal of Higher Education, 1-15.
Humphrey, A. (2005). SWOT analysis for management consulting. SRI alumni Newsletter, 1, 7-8