Garuda Indonesia Proposal Plan

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1.0. Problems and Alternative Strategies Despite good performance made for the last few years, Garuda Indonesia has incurred losses of US$211million in the first half 2014, despite a 0.7% increase in revenues. This is due to the depreciation of Indonesian Rupiah and the rising fuel price. It leads to an increase in operating costs which climbed 15% to $1.96 billion (Natahadibrata, 2014). Therefore, three alternative strategies are proposed to solve this problem. They include low-cost-differentiation strategy, flanking attack, and guerrilla attack. 2.1. Low-Cost-Differentiation Strategy This strategy is about developing service differentiation while trying to reduce the operating cost as shown by Table 1.1. It focuses on international routes expansion especially Malaysia since tickets for international route are paid in US$. Garuda can reduce the risk of holding Rupiah that depreciates in value recently (Bloomberg, 2014) due to the political instability and huge trade deficit as shown in Appendix 1 Figure 1.1 (Indonesia-Investment, 2014). Table 1.1 Low-Cost-Differentiation Strategy Differentiation | Garuda will do a frontal attack towards Malaysia Airlines regarding its trust issues due to the accidents. Garuda may concern of providing international routes that are similar to Malaysia Airlines and prove the public that Garuda is better and safer by developing a new promotional campaign that emphasizes on its service differentiation that can be categorized into five dimensions: * Tangibility – Provide comfortable lounge, provide clean and comfortable airlines by maintaining its key differentiation, “Garuda Indonesia Experience”, which is based on the five senses (sight, sound, scent, taste, and touch) (Garuda Indonesia, 2014j). * Reliability – Improve punctuality, show the professionalism of the cabin crews in handling various situations, and ensure

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