A Corporate Strategy for AIROD Sendirian Berhad (1988 - 1994)

AIROD Sendirian Berhad (ASB) was incorporated in early 1985 as a business firm, being the first Government project to be privatized. Its principal activities range from providing overhaul and repair services of military and commercial aircrafts and its related equipment and components. ASB clearly set its short-term and long-term goals and are made known to all its employees. Its organization structure is based on seven formal departments under the overall direction of the Managing Director, an expatriate from Lockheed Aircraft Services International (LASI). The main problems faced by this company are: its inability to penetrate open market; high overhead costs; and inadequate skill and expertise to keep in pace with the rapidly changing environment of aircraft maintenance services. The case is analyzed using the framework suggested by Leslie Rue and Phyllls Holland. Thus, the following are analyzed: mission, strategies and objectives, strategic capabilities, the broad environment, the competitive environment, and the SWOT analysis. The alternative options/ solutions to overcome the stated problems are presented in two-fold: the improvement of current capabilities, and the search for new capabilities. In the former, the options available are to: redefine mission statement, restructure the organization, set functional area standard refine corporate goals, adopt strategic management, of excellence, improve marketing and financial management, develop human resource, and acquire civil work certification. In the latter alternative, the options available are to: upgrade A-4 aircraft, and add new lines of business which include manufacturing aircraft parts and flight data recorders, developing capability in ground communication systems, servicing of cathodic protection device, undertaking subcontract work, negotiating with aircraft manufacturers to become the licensed assembler and/ or manufacturer of aircraft and aircraft parts, and establishing the Aeronautical Training School. In recommendation, the summary of strategies to be adopted are presented according to short-term and long-term implementation. Then the impact of these strategies are summarized by proposing the two management key goals: to expand sales at a growth rate of 10% per year, and to achieve an annual net profit margin of 10%. Then the projected sales and profit f or the period 1988 to 1994 is proposed based on the actual results of the past three years of operations. The implementation plan and review and control method are then presented to allow the company to translate the strategies into plan and action; and to review the plan when environmental changes affect the attainment of goals. The three types of control techniques proposed are: strategic control, management control, and operational control. The newly formulated corporate goals for the next seven years (1988 - 1994) will hopefully bring ASB towards another phase of organizational development.

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