The Success Of Flight Centre

Flight Centre is a travel agent situated in Australia that has enjoyed a lot of success over the years making it one of the leading travel agents in Australia and the rest of the world (Roth, 2010).

The main objective of compiling this special report about Flight Centre as an organization is to find out the secrete behind the success of the company and the various management approaches and principles applied by the company’s management to ensure the company maintains its level of success (Johnson, 2005). This paper will explore the management strategies of Flight Centre and the importance of social co-operate responsibility in the development of the company image and brand.

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Flight Centre Limited as a company became fully operational in 1981 and since then has emerged as the leading travel agent in Australia and the rest of the world. The company had a market capitalization of $1.145 billion on the Australian by the year 2006 indicating a steady growth since its establishment (Johnson, 2005).

The company has expanded beyond the boundaries having opened up branches in ten other countries in Europe, America and Africa. Flight centre is one of the leading employers offering jobs to over 8000 workers in its 1500 stores spread across different countries (Roth, 2010).

Some of the major countries in which the company has experiences rapid growth include Canada, United States, United Kingdom, New Zealand and South Africa. Since its establishment, the company has revolutionalized international travelling and diversified its services to fully meet customer demands (Roth, 2010). Apart from being a travel agent, the company offers other services such as accommodation, car rentals and holiday packages to comprehensively meet business and holiday needs for its clients.

Flight Centre has been able to increase its sales because of its effective market segmentation strategies that cater for online, wholesale, corporate and retail clients (Joyce, 2001). Some of the major outstanding factors that make Flight Centre remain very competitive in the market is its extensively network of stores that makes distribution faster and effective and the fact that it is an internationally recognized brand compared to other brands (Thompson, 2005).

Flight Centre is the leading travel agent in terms of online transactions making it have a competitive edge over its competitors. Flight Center has been acquiring other companies around the world with the recent one being the Liberty Travel company as a strategy for penetrating the North American market (Dobson et al., 2004).

One of the weaknesses of Flight Center is its inability to sell tickets directly to its clients a fact makes it face a lot of competition from other travel agencies like Qantas, Trailfinders, Webjet and S8 which are able to sell their tickets directly.

The company also is threatened by the preference of many travelers to make their travel arrangements online instead of engaging the services of travel agents (Soloner, et al., 2006). However, the company has an opportunity to exploit the market due to the ever increasing number of leisure travelers and students who are in need of more affordable flights that can only be organized by travel agents.

Flight Centre has a current share price of $21.590 regardless of the fact that there were many natural disasters experienced in the just concluded financial year. The company is expected to record a pre-tax profit of around $ 250 million which will be a 20% increase compared to the previous profit record (Roth, 2010).

All the Flight Centre branches in ten countries recorded an increase in sales with the United States Branch being the highest with a $2 million profit. The high profits recorded in the last financial year are attributed to the increase in the number of leisure of travelers (Copley, 2004).

The success of any organization depends on the strategic plans of the company and the management principles applied by the company’s leadership. Flight Centre has remained competitive and stable over the years because of the board’s resolve to safeguard the value of its shareholders all the time (Clegg et al., 1999).

Some of the strategies put in place by the board to ensure the shareholder’s value is safeguarded include effective communication and charting of the company’s objectives, constant performance monitoring, establishment of risk identification and control mechanisms and strict monitoring and control of capital expenditure and investment.

The board delegates power to managers and employees to ensure all the company’s financial and strategic objectives are met (Kotler, 2005). All the employees are expected to uphold ethical standards in all their dealings. All the decisions made are based on the company’s constitution and core philosophies. Integrity is highly emphasized with all the managers and employees expected to comply with ethical and legal requirements of their area of duty.

Flight Centre has a well established audit committee that ensures that there is integrity in all financial reports of the company (Baherjee, 2007). The audit committee has the responsibility of reviewing the company’s financial reports to ensure all financial policies of the company are not altered in any way. Flight Center has transparent mechanisms that ensure a continuous disclosure of information to its shareholders especially on issues concerning share values (Werther, 2010).

The company’s management respects the rights of its shareholders with the shareholders being given an opportunity to raise their concerns and opinions during annual general meetings. Flight Centre has well established risk management and control mechanisms with a strict compliance to Australian laws.

The Remuneration structure of Flight Centre is fair to all the employees with the board ensuring that it is done responsibly and all the records included in the annual financial report (Mallin, 2009). Flight Centre has a fare wage structure compared to other players in the industry which has contributed immensely to the high level of motivation among its staff.

Corporate Social Responsibility is an integral part of a company’s business activities and involves processes that ensure that the organization brings a positive effect to its immediate environment and the society in general (Kotler, 2005).

Most companies are always under scrutiny by external stakeholders who always want to know what the company does to promote the immediate communities and how it treats its staff and other stakeholders. Companies have the responsibility of improving the quality of life of its employees and the local communities.

Companies pay taxes from their profits and also allocate a certain percentage of its profits to charity works that improve the general welfare of the society (Kotler, 2005). Social responsibility ensures that the company is well managed to make business remain competitive and sustain the value of wealth creation. Corporate Social Responsibility helps the company address environmental and social concerns voluntarily.

Corporate Social responsibility offers the company a good opportunity to interact with its stakeholders and in the process impacting the society positively (Baherjee, 2007). By contributing to societal growth and development, the company is in other words promoting public interest.

A good company should not only focus on making profits but should also be concerned about the environment and the people inside and outside the company. Corporate social responsibility clearly shows the consumers what the company stands for and its actual mission (Kotler, 2005).

There is no formal legislation to govern corporate social responsibility but companies have to adhere to principles for responsible investment (Kotler, 2005). Apart from benefiting the society, companies receive a fair share of benefits through its Corporate Responsibility activities. The benefits might include financial benefits through gaining business, staff retention and recruitment, risk management, brand differentiation and goodwill from the government.

In conclusion, Flight Centre Limited is one of the leading travel agent organizations because of its effective management strategies. Despite stiff competition from its competitors, the company has remained stable through diversification of its services and its efficient distribution centers established in more than ten countries around the world.

Strategic planning combined with effective management approaches and principles have made Flight Centre to continue enjoying high profits over the years despite the many challenges the industry has been facing.

Corporate social responsibility forms an integral part of the company’s involvement in the betterment of the environment and the society in general. How the company treats its employees together with their families and its role in improving the environment and the general society are key aspects of an effective Corporate Social Responsibility strategy. Apart improving the welfare of the society, the company gets some business and goodwill benefits in return.

References

Baherjee, S. B., 2007. Corporate social responsibility: The good, the bad and the ugly. New York, NY: Edward Algar Publishing.

Clegg, S. et al., 1999. Global management: Universal theories and local realities. New York, NY: SAGE.

Copley, P., 2004. Marketing communication management: Concepts and theories, cases and practices. New York, NY: Butterworth-Heinemann.

Dobson, P. et al., 2004. Strategic management: Issues and cases. New York, NY: Wiley-Blackwell.

Johnson, M., 2005. Family village tribe: The story of Flight Centre Limited. New York, NY: John Wiley and Sons.

Joyce, P., 2001. Strategic management: A fresh approach to developing skills, knowledge and creativity. New York, NY: Kogan Page Publishers.

Kotler, P., 2005. Corporate social responsibility: Doing the most good for your company and cause. New York, NY: John Wiley and Sons.

Mallin, C. A., 2009. Corporate social responsibility: A case study approach. New York, NY: Edward Algar Publishing.

Roth, M., 2010. Top stocks 2011: A share buyer’s guide to leading Australian companies. New York, NY: John Wiley and Sons.

Saloner, G. et al., 2006. Strategic management. New York, NY: John Wiley and Sons.

Thompson, J. L., 2005. Strategic management: Awareness and change. New York, NY: Cengage Learning EMEA.

Werther, W. B., 2010. Strategic corporate responsibility: Stakeholders in a global environment. New York, NY: SAGE

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