UNIVERSIDAD CATLICA DE SANTIAGO DE GUAYAQUIL INGENIERIA EN COMERCIO Y FINANZAS INTERNACIONALES SUBJECT: STRATEGIC PLANNING I B TOPIC: Planning Tutorial Work

(2 ND Term) NAMES: Karen Martnez Karen Salmon Sara Rojas Jorge Cuenca

COURSE: 7 B

DATE: September, 2013

TAME
1

1.OVERVIEW

Tame EP was founded in 1962 in Quito. The goal that motivates its establishment is linked to the need to integrate Ecuador and encourage the commercial, social, and cultural tourism. In 2009, TAME decided to renew their image, so they worked on an extensive program of branding with Facultad de Agencia y Alma. Also they are in engaged of transportation of people and cargo by air to various cities in Ecuador and abroad. It also provides transport services charter for example flights to: Cartagena, San Andres, Panama, Punta Cana, Jamaica, Havana, Varadero, Curacao, Manaus and Buenos Aires. In certain cases with the following operators: Decameron, Viamerica, Feritur, PGV and Maxitravel. Industry Companys Name Sector Regional Airlines TAME EP- Transportes Areos Militares Ecuatorianos. Services

FLEET AIR:
Enrollment HC-CEX HC-CEY HC-CGF brand Embraer Embraer Embraer Type ERJ 170 ERJ 170 ERJ 190

HC-CGG HC-COH HC-CGW HC-CGJ HC-CID HC-COC HC-COE HC-CGT HC-CMO HC-CMP HC-COF HC-CLT HC-CMB HC-CMH

Embraer Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus ATR ATR ATR

ERJ 190 A330 A320 A320 A320 A320 A320 A319 A319 A319 A319 42-500 42-500 42-500

Organizational chart

a) Competitors Aerogal - Quito - Guayaquil - Cuenca - Galpagos Avianca - Quito - Guayaquil - Cuenca Copa Airlines - Quito - Guayaquil Icaro - Quito - Guayaquil - Cuenca - Galpagos Lan - Quito Guayaquil-Manta Quiport - Quito Saereo - Quito - Guayaquil Taca - Quito - Guayaquil

Market share of airlines in local- domestics flights

LAN (31 ,70% ) Aereog al(16,09% ) Tam e( 45,06)

Fuente: Diario HOY, 23/04/2013

ROUTE MAP:

Local Flights from :

Quito Guayaquil Coca Cuenca Esmeraldas Galpagos Lago agrio Latacunga Loja Macas Manta San Cristbal (Galpagos) Santa Rosa Tena Tulcn

International flights to: Caracas Bogota 5 Buenos aires Lima

Panam Sao Paulo La habana

Cali New York (soon)

2.

DEFINE THE STRATEGIC PROCESS

a) Companys Mission and Vision:

MISSION: Proporcionar transporte aerocomercial nacional e internacional con aviones modernos, garantizando a sus clientes altos estndares de calidad, a fin de obtener rentabilidad social y financiera. To provide national and international commercial air transport with modern aircraft, to ensure its customers high quality standards in order to obtain social and financial returns. VISION Mantener el liderazgo nacional, ser preferida por la calidad de su servicio y proyectarse internacionalmente Maintain national leadership, and to be preferred by its quality of service and project abroad.

b) Mission and Vision Alternative:

We developed a new Mission and Vision, based in what they established, but following the correct process of creating a corporate mission and vision. Mission Structure: What are you? In what business are you in? : We are an Ecuadorian airline company that provides air transportation services. What services do you offer? : We offer local and international transportation for people and cargo with high standards of services What activities distinguish you from the competitors? : We improve the tourism with competitive and fair flight prices for our clients and care about security in flight routes. 6

Target: Our service is for Ecuadorians and foreign tourist who need to travel around the country of Ecuador and then for international routes such as Panama, Colombia, Peru, Argentina, etc. Mission

We are an Ecuadorian airline company that provides air transportation services offering local and international flights for people and cargo with high standards of services and constantly improving the tourism with competitive and fair flight prices for our clients always caring about security in flight routes.

Vision Structure: Time: Become a leader company in Ecuador and Latin America in the next five years of air transportation. Future: making expansion and covering routes than other competitors doesn`t have being more efficiency and effective in our operational and logistics management. Technology: Through diversification and use of new and updated technologies in our air operations. Customer Services: Giving always a safe travel on the time required for our customers.

Vision Become a leader company in Ecuador and Latin America in the next five years of air transportation making expansion and covering routes than others competitors don`t have being more efficiency and effective in our operational and logistics management through diversification and use of new and updated technologies in our air operations and always giving a safe travel on the time required for our customers.

c) Objectives:
The principal pillars of this company are based in the following objectives: MAIN OBJECTIVE: 7

Overcome competition Meet the expectations of our customers Provide new products and services Competent staff Ensure the participation of people to achieve the objectives Improve the integrated quality management Preventing incidents and accidents and avoid negative impact on the environment.

Alternative Objectives: 1) FINANCIAL OBJECTIVES: Control the budget of the Managers, specifically commercial management. Improve control and budget analysis.

2) SALES OBJECTIVES: Establish Measurability: is that sales agents will be able to end a day of work and assess their own level of achievement according to the standards that were assigned. Implement Relevance: sales agents must be relevant and appropriate for their work.

3) HUMAN RESOURCES OBJECTIVES: Select employees who demonstrate motivation to work and good performance. Train frequently to our employees. Implement an evaluation system and employees performance (all areas). Provide professional guidance to the entire working group, forming motivation, companionship and avoiding internal conflicts.

4) MANAGING OBJECTIVES: 8

 Continuous monitoring of activities in the Operational departments, finance, logistic, human resources and marketing strategies. Prepare plans internal meetings, in order to provide internal and external solutions. To strengthen the organization by developing strategies and motivation.

d) Values
Service

It reflects love, vocation and self-satisfaction by assisting others. Is affection, cordiality, respect and kindness in dealing with our customers, travelers, business partners and colleagues. Integrity

Be honest and loyal to our customers and our organization, and with high sense of responsibility, in all our actions. Commitment

Requirement assumed voluntarily, using our best abilities for mandated compliance and achievement of the objectives of our organization. Be punctual Give the best treatment to the passenger Discipline Teamwork

e) SWOT Analysis:
TAME has as every single business its own Strengths, Opportunities, Weaknesses, and threats which are well-known as SWOT Analysis by their initials, the SWOT will be analyzed as follows: I. STRENGHTS Market Positioning with local direct routes- National market leader 9

Extensive network of routes and frequencies- Route expansion to Brazil (Sao Paulo) and Argentina (Buenos Aires). legal Resources Points of sale across the country. Ability to provide services to other companies Acquisition of an Airbus A-320 to expand toward New York route. TAME has the certification IOSA International Operational Safety Audit to comply with control systems and operational systems. It is certified with the certification ISO 9001 (Quality Management), ISO 14001 (Environmental Management), and OHSAS certification 18001 (Work Security and Health Management) Over 50 years of experience in aeronautical industry.

II.

OPPORTUNITIES High demand of flights due to FIFA World Cup 2014 Government improvement in airport infrastructure and capacity promoting tourist flux Possible increment in clientele due to fixed prices Possible new route to New York Increased domestic tourism New profitable routes Link with government agencies Support from government by implementing politics that help in fair competition

III.

WEAKNESSES Lack of direct international market positioning Airplanes with low passenger capacity Limited operational capacity Tame is subject to political actions that can affect business liquidity due to being government bound It is not possible to reserve a flight ticket via the only method, the only way to do it is to approach the offices The lack of training to the airline staff on land to affront the delays giving the correct information to the clients. 10

IV.

THREATS: Excessive expenses due to state politics taken to eliminate subsidies in airplane fuel Budget loss due to fixed prices in seasons of high demand seasons Avianca competition recently acquired another airline called TACA making itself stronger strategically The lack of information for passengers when the flights present delays.

f) SWOT Matrix
S O Potential air commercial market Increase of the national tourism. A company with experience in the local market. The Ability to provide services to other companies o Other airlines are expanding new local routes. o Government measures. W Weak commercial plan. Poor Internal legislation. High administrative and operating costs.

The subsidy of the airplane fuel. The new internal taxes in airports

I.

SO: Strength Opportunity Potential air commercial, Tame has the opportunity to expand its national and international routes even with foreign airlines.

11

 II.

Another strength for tame is that this company counts with a variety of equipment and can rent to other local airlines. Tame has many years of experience in comparison with other companies in the air industry. SW: Strength Weaknesses o In despite of tame has a commercial plan is not enough strong for the company. o Poor internal legislation is not well defined for some employees at the moment to put in practice.

III.

ST: Strength Threats o Other airlines are expanding new routes causing more competitive for us but the advantage of tame is can cover the same route many times at day. o The governmental measures can affect Tame but in other hand its principal client is the Presidency so in that way there is a benefit.

IV.

WT: Weaknesses Threats The subsidy to the airplane fuel its a high cost that every local airline should define in its budget and this measure can affect in the final consumer. The internal taxes involve all the operations will increase in the next days and it is another cost for the local airline.

g) Porters 5 Forces
1. Threat of new entrants: Potential competitors:
Competition DIRECT COMPETITOR Notes 15 shared routes ( 38% ), 8 shared destination ( 20% ) 12 shared routes ( 30% ), 8 shared destination( 20% )

Airline AEROGAL

LAN Airlines STRONG COMPETITOR Copa Airlines AVIANCA LOW LOW

12

Airline American Airlines

Competition LOW

Notes 6 shared destination ( 15% )

Service differentiation Excellent customer service Low prices New Plane -capacity

It is not easy to enter in this market because of the cost of resources that you need to enter. The barriers are high, getting the licenses and patents to use the airports and airplanes are costly.

2. Threat of substitute Services:

The threat for substitute of this kind of service is low, given by the fact that there arent many ways of traveling, but on the ground, air and sea. So the lack of time saving is what attracts customers to airways transportation.

3. Bargaining Power of Suppliers Fuel is the most principal resource we need in order to perform its mechanical activities, and the acquiring of this is becoming more expensive every time. the government is

cutting off the subsidy for the fuel, the government is also raising the tariffs of international arrival and departures, the parking, and lightning on the tracks. 13

4. Bargaining Power of Buyers: There is a high bargaining power of buyers, although there are few competitors, we all offer a similar service. so what we are backed up is the loyalty of our customers

5. Intensity of rivalry among competitors To analyze the intensity of the competitors we have taken the following characteristics. Competitors are numerous: in the case of TAME , there are competitors have similar services The services are no different: All services offered by the competition fulfill the needs of customers, but what sets a Tame is the quality they possess due to the use and implementation of new technologies. Competitors have the same market target: All competitors have the same market but each has specific customers whom are loyal to the company, due to the service they have received, the expertise of the company and the years in the market.

h) Assets
Tangible: Infrastructure 17 Planes Technology Labor force Intangible: Brand Know How Knowledge (skills and experiences).

14

i) Capabilities
Unique within the internal market. The loyalty of our customer represents the power of our brand Customer service, showing respect integrity, and commitment, which is part of our culture Logistic: 86% of punctuality without the influence of meteorological facts. Alliance: Copa Airlines. Tame should also get an alliance with AWAS the leasing company of planes, which would lead to a backward integration, Tame also has to make alliance with the government to ask for the subsidy of the fuel.

Unique within the internal market. Loyalty to its customer represents the power of our brand. Tame has a large trajectory in the Ecuadorian aviation market. It started to provide commercial, social, tourist and cultural development. Tame had increased the level of commitment with its customers and one alternative for this is implementing new services online to ensure the previous checking. To show the right information for the surprising delays, the staff of tame is always caring for the passengers and bringing them the occasional assistance. Customer service, showing respect integrity, and commitment, which is part of our culture. All these years Tame has had the characteristics of being in contact with the principal needs of its clients. 15

Tame provides an excellent national and international air transportation service under the highest safety and environmental standards in care counting on competent and committed staff. Tame strives to totally satisfy the needs and expectations of our customers and establish good relationships with our suppliers in order to get mutual benefits. Tame is committed to continuous improvement, damage prevention and fulfillment of requirements and national and international applicable legislation for the benefit of all parties. Logistic: 86% of punctuality without the influence of meteorological facts. Tame is one of the local airlines that tries to deal with the delays in a positive ways, they bought new aircrafts to solve the demand in the market and to cover new routes. But in the aviation industry the meteorological facts are unmanageable.

Industry and Market Analysis

Management Processes

Client Evaluation and Follow Up Clien t

Clien t

Operations Processes

Commercial Passengers

Commercial Cargo

Costumer Service

OPS

MNT

Human Resources
Supporting Skills Processes

Logistics

Value Chain

Finance Informatics Planning and Business Development

Counseling Skills Processes

Internal Audit Legal Counseling Aviation Policy Social Communication 16

Process for ISO- IOSA Support

Integrated Quality Management, Security, and Environment

Support Activities
Research and Development: Tame has been improved it equipment acquiring new aircrafts and investigating what is the best option to enter in the national market. Each month tames teamwork selected an idea to put in consideration and then analyze with the principal managements.

Human Resources: The part of the recruitment in Tame is one of the most important parts, the selection of one person could take 1 17

month. The select person should approve 2 interviews one in English and other in Spanish then a logical test and of course the reference are important. Our staff is prepared to supply every problem on board or land. General Administration: The General Administration in Tame is managed on the headquarter located in Tame, in this office the main decisions are taken and addressed to the rest of the country where tame is as Guayaquil, Manta, Loja, Cuenca, and other small airports.

Support processes:
Its activities are aimed at providing human resource support, financial, material and technological processes required for their vital actions and they are comprised of: Human Resource Management: for managing the most important resource: People. Financial Management: provides economic resources required at all levels. Logistics Management: provides infrastructure support and system-level materials. The Technology and information Management: that manages the database and technological platforms and communications with its own hardware and software.

Customer Value:
The customers opinions are important for that reason TAME make surveys about it services and ask to the customers how can the company improve in that way the company can clarify what are the benefits on board for them and what are the failures. Tame has a select group of clients; they are executives who travel every day or people who can pay the prices of this company. The clients in Tame are seeking an excellent service with an appropriate cost. Tames clients are looking for comfort, security, and a good service, before and after a flight. Clients pay a little more in this airline in comparison with others, and they expect more than their commercial rivals and it is important to remember this information at the time of a technical problem and the solution that the company gives to your customers.

Customer value preposition:

18

In all of those years Tame has been reaching an important position in local the market, to buy new elements for its aircraft fleet. Tame offers its clients good prices with a very nice atmosphere, specialized trained staff with the latest security standards, new national and international routes. In the last years tame has signed agreements with international airlines in Peru and Colombia. The incorporation of modern planes with a higher capacity increases the number of passengers and consolidates Tame's prestige in the commercial aviation market. -Quality service -Competitive Tariffs -High technology equipment -Routes not operated by other airlines (domestic routes to the east, highlands and coastal)

Quality objectives:
Meet the expectations of our customers. Provide new products and services. Having more competent staff. Achieve the participation of employees to achieve goals. Permanently improve the organizational climate. Increase net profits of the company. Establish a system of evaluation of suppliers. Implement and certify the quality system based on ISO 9001-2000, 14000 and OHSAS 18001 IOSA. No incidents or accidents have and avoid negative impact on the environment.

Tames Goals and Objectives 2013

N Area or Goal departmen t 19 Objective Dead line Person in charge

Operationa l Manageme nt Maintenan ce Manageme nt

Comply with 95% of planned itineraries keep 100% of the aircraft in optimal conditions of operation Commerci Operate to al internationa Manageme l nt destinations Sao Paulo, Buenos Aires and New York.

Meet planned itinerary.

the 31/12/20 13

Provide 31/12/20 scheduled and 13 unscheduled maintenance of aircraft. Expand 31/12/20 international 13 air operations. Integrate and connect to Ecuador and the region, stimulating tourism, business and trade, always committed to sustainability and social and financial returns. -Being the airline emblem of Ecuador, recognized internationally, integrating the region, serving worldwide destinations and offering a travel experience Ecuador Love Life. Open new routes is to continue the development of international markets, focusing on three types of

Leonardo Guzman Operationa l Manager Rommel RubioMaintenan ce Manager Commercia l Manager

20

clients: businessmen of the two countries, tourists and students. 4 Finance Cover 100% Manageme of nt commitmen ts for the purchase and leasing of aircraft. Human Apply 100% Resources of the Manageme regulatory nt training. Meet financial 31/12/20 commitments 13 character for the purchase and leasing of aircraft. Having trained 31/12/20 and qualified 13 staff through the regulatory compliance training required by the aeronautical authority. Eco. David ChedrauiFinance Manager

Dr. Jaime NuquesHuman Resources Manager

Tame s Balanced Scorecard

FINANCIAL Strengthening the financial management

21

system Increase returns 6% Decrease costs 4% Improve the asset utilization CUSTOMERS Risks reduction 2% Increase the market participation Current customer loyalty Incorporate new customers Develop the customer service culture Improve the level of customer satisfaction 4% Increase the profitability for the customers Make evident the leadership in the aero commercial industry in Ecuador Implement the product design system Improve the productivity New businesses line development Implement the post sales service Permanently fleet renovation New airplanes fleet standardization Old airplanes fleet modernization Reform domestic legislation Reform and amend the statutes of the company Update the internal regulation Implement the system of human talent management Development and capacitation of the personal in operational security and customer service Improve the organizational climate Strategic information system development Exploit the useful information for the decision making Implement a procedures organization Transform the functional organization into a procedures organization Establish the competitions and evaluate the performance processes

INTERNAL

LEARNING AND GROWTH

TAME STRATEGIC MAP

22

23

Bibliography:
Tames Office in Jose Joaquin de Olmedo Airport http://vuelos.idealo.es/linea-aerea/TAME-EQ/VenezuelaVE/ http://www.tamevirtual.org/index.php

24