Corporate Culture and Company Effectiveness Biman Bangladesh Airlines

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MINISTRY OF EDUCATION OF THE RUSSIAN FEDERATION

PEOPLES FRIENDSHIP UNIVERSITY OF RUSSIA

FACULTY OF ENGINEERING

Engineering Business and Industrial Management Department

Stream: Management

Specialization: Innovation in Business Creation and Management

MASTER'S DISSERTATION

CORPORATE CULTURE AND COMPANY EFFECTIVENESS: BIMAN

BANGLADESH AIRLINES

Student: Murshed Helal

Email: [email protected]

Country: Bangladesh

Scientific supervisor: Ivanova T.B.

Chairman, Professor:

Alekseenko V.B.

Moscow 2015

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To Alekseenko V.B.,

Head of Engineering Business and

Industrial Management Department

From: Murshed Helal

Group: IBM-204

APPLICATION

I kindly request you to approve as my Master's Dissertation scientific supervisor

Ivanova Tatiana Barisovna

The Topic of the Master Dissertation: CORPORATE CULTURE AND COMPANY

EFFECTIVENESS: BIMAN BANGLADESH AIRLINES

Date:

_______________________

Signature

3

Calculation and Explicatory Report for the Master's Dissertation


Faculty: Engineering


Specialty: 080200

Topic of the Master Dissertation


BANGLADESH AIRLINES

Student: Murshed Helal ( Email : [email protected])

Scientific supervisor:

PhD, Professor: Ivanova. T. B

Allow the Master dissertation

to be defended at the State Examination Commission

Chairman of Engineering Business and Industrial Management Department

Professor: Alekseenko V.B.

Date____________________

4




Specialty: 080200 Management

Group: IBM -204

Master's Dissertation

ASSIGNMENT


1. Topic of the dissertation: CORPORATE CULTURE AND COMPANY


2. Delivery date of the finished dissertation: __May 2015

3. Bench-mark data: Statistical data

4. Table of Contents CORPORATE CULTURE AND COMPANY


1) Introduction

2) Chapter 1. Theoretical approaches to corporate culture

3) Chapter 2. Corporate culture of Biman Bangladesh Airlines

4) Chapter 3. Technologies of creating an effective corporate culture

5) Conclusions

6) Appendix

7) Bibliography

Date and signature

_______________________

5

9) Scientific supervisor

Parts Scientific

supervisor (SS)

SS signature Students

signature

Introduction Ivanova T.B.

Chapter 1. Ivanova T.B.



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Calendar Plan

NN

Stages of the Master Dissertation Presentation Deadline

for every stage

1. Literature search, literature review,

bibliography compiling

05.01.2015

2. Compiling Master Dissertation Plan and its

confirmation by the scientific supervisor

08.02.2015

3. Presentation of the Introduction

15.02.2015

4. Part 1 presentation of the whole material

12.03.2015

5. Systematization and analysis of the empirical data

30.03.2015

6. Collection of additional data 12.04.2015

7. Analysis of the information obtained

03.04.2015

8. Scientific supervisors approval of the conclusions 07.04.2015

9. Provision of corrections, alterations and

recommendations

08.04.2015

10. Speech writing 10.05.2015

11. Acknowledgments (external and internal) 14.05.2015

12. Thesis and pre-defense reviews presentation to the

Department

Student: __________________

Scientific supervisor__________________________________

Head of the Engineering Business and

Management Department ___________________________________

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ENGINEERING BUSINESS AND INDUSTRIAL MANAGEMENT

DEPARTMENT


BANGLADESH AIRLINES

MASTER'S THESIS

BY

MURSHED HELAL ( Email: [email protected])

080200-MANAGEMENT

Moscow 2015

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BANGLADESH AIRLINES

Table of Contents

Introduction ..................................................... 10

CHAPTER 1: Theoretical approaches to corporate culture

1.1 Definition of Corporate Culture ................................ 13

1.2 Hofstedes cultural dimensions of Bangladesh ...................... 15

1.3 The Denison Organizational Culture Survey (DOCS) .......... 18

1.4 Importance of effective corporate culture ........................... 23

CHAPTER 2: Corporate culture of Biman Bangladesh Airlines

2.1.1 Biman Bangladesh Airlines General information ............ 26

2.1.2 Biman Bangladesh Airlines Corporate structure ................ 35

2.2.1 SWOT analysis of Biman Bangladesh Airlines ................ 36

2.2.2 PESTLE analysis ............................................... 38

2.3.1 Online Marketing Strategies ........................................... 41

2.3.2 Customers Relationship Management ( CRM) ...................... 46

2.3.3 Corporate Social Responsibility (CSR) ................................ 48

2.3.4 Innovation in Biman Bangladesh Airlines .............................. 51

2.2.4 The importance of Market Research ................................ 53

2.3.5 Human Resource Management (HRM) ............................... 55

2.4 Analysis of passenger evaluation ............................. 57

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CHAPTER 3: Technologies of creating an effective corporate culture

3.1 How to create an Innovative Corporate Culture ....................... 63

3.2 How to reach company effectiveness .................................... 66

Conclusions ...................................................... 69

Appendix ....................................................... 70

Bibliography ............................................... 76

DECLARATION ................................................... 79

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Introduction

Corporate culture refers to the beliefs and values that have existed in an organization

for a long time, and to the beliefs of the staff and the foreseen value of their work that

will influence their attitudes and behavior. Corporate culture is rooted in an

organization's goals, strategies, structure, and approaches to labor, customers,

investors, and the greater community. Administrators usually adjust their leadership

behavior to accomplish the mission of the organization, and this could influence the

employees' job satisfaction. The knowledge of corporate culture has increasingly

received attention in many field of study. Traditionally, implications of corporate

culture can be understood through a qualitative approach since it believed that

characteristics of corporate culture are complex and difficult to measure as a concept.

As an executive, identifying, understanding and the influencing the organizational

culture can ensure corporate agility and success. As a potential employee, catching a

glimpse of the true culture of an organization will help one decide if the company is a

place where one can contribute and flourish. In, both cases misunderstanding culture

can lead to disaster.

The purpose of this paper is to analyze the corporate culture of Biman Bangladesh

Airlines and to suggest the technologies of making it effective. In this study, it is to

understand organization's vision, values, norms, symbols, assumptions, passengers

feedback etc. We also pay special attention to peculiarities of cross-cultural

communication between different ethnic groups gathered in multinational companies.

The analysis will play a significant role to understand the drawbacks of company and

apply effective strategies to minimize the bottleneck and modernize the company to

maximize the market volume and profit.

Methods and methodology applied in this paper can be used by top managers and HR-

departments of multinational companies in their aspiration to bring fresh air to the

companys environment making it effective and attractive for the personnel and new-

comers. The material suggested can be also used in academic sphere.

Relevance of the topic

Due to globalization and global economic affaire the world has been turned into a

global village. People around the world today are moving throughout the world either

for commerce and industrial, tourism and employment or for education and research

purposes. Due to the aforementioned factors, airline industry around the globe is

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growing and developing rapidly. For survival and forward movement in this ever

competitive global business arena, customers satisfaction through quality of products

and service is very significant factor for impressive market share and profitability. To

pave the way for very many effective and efficient strategies and methods are applied

within the business. Effective corporate culture is one of the most effective and

influential business strategies whose proper implementation accelerates organizational

effectiveness and staff's capabilities to turn the company modern, dynamic and

profitable.

Practical importance of the research

Application of the effective corporate culture on Biman Bangladesh Airlines will

modernize and profitable the sector and promote & diversify the economic activities:

Dynamic, diversify & modernize the Biman Bangladesh Airlines;

Promote organizational effectiveness & standard of service

Save, comfortable and reliable service

Achieve customers' confidence & increase market share

Increased public & private investment;

Increase competitive advantage and staffs capability

The aim of the research

To create and propose an effective & utmost corporate culture for Biman Bangladesh

Airlines

Tasks

- To assay theoretical and methodological approaches of airlines;

To anatomize the key issues affecting the effectiveness of Biman Bangladesh Airlines

To analyze the economic, organizational & service oriented approaches of Biman

Bangladesh Airlines

To identify and advocate key policy instruments (organizational changes, regulatory

measures and economic incentive).

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To analyze the experience of other modern airlines.

To propose an effective & innovative approach to Biman Bangladesh Airlines.

Object of the research

Economic activity of Biman Bangladesh Airlines: implementation and exercise of

innovative corporate culture may serve as a tool of effectiveness, modernization and

dynamism o

Subject of the research

Corporate culture of the company

Research hypothesis

Proper implementation of effective & innovative corporate culture would turn the

Biman Bangladesh Airlines into modern, dynamic and profitable sectors from

ineffective, obsolete and lose sector

Methodology of Accumulating Data for the Research

Three types of procedures were persuaded to accumulate the data;

Primary data collection

Secondary data collection &

Final data collection

Methods of research: Competitive analysis, SWAT analysis, PEST Analysis & 5C

analysis, questionnaires.

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Chapter 1: Theoretical approaches to corporate culture

1.1 Definition of Corporate Culture

For Bangladeshi business environment the term corporate culture is relative new in

spite of the fact that in Western countries proper research and application of this

concept began in 80-th. The notion corporate culture came to substitute the well-

known notion of organizational culture or organizational behavior. Organizational

culture and organizational behavior are factors which have strong impact on

companys effectiveness as they create motivational environment for productive

activity with minimum expenses. The question about how to increase productivity has

been occupying constantly minds of researchers in different countries.

The appearance of term corporate culture was also connected with a new approach

to the main means of production. Human resources sprung to the first place as the

main productive power. New methods were required for management and

development of human resources, especially in the spheres based on knowledge and

intellectual capacity. Why? Our brains are able to create miracles: discoveries,

innovation, and novelty. Very often the creator is not even conscious of the

importance of his invention. He doesnt even know the real value of his results so it is

easy to take advantage of his ignorance to make profit of it. It is imposable to give

him the equal remuneration. Creating an innovative environment which is reached by

corporate culture as an inner sphere of any company the owner can get unlimited

profit through uniting all employees for fulfilling the mission and strategies of the

organization. In other words, innovative corporate culture was found to be the most

effective instrument among the management tools that help to create a favorable

atmosphere for increasing companys effectiveness and improving its market

positions.

The first attempts of corporate culture and national mentality research were made by

Western scientists in 1930th. It was a group of American archeologists headed by

Margareta Mid who offered new and effective instruments to manage people through

the knowledge of their national culture which was generated under the influence of

numerous factors:

- Geographic position of the nation or ethnic group;

- Climate;

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- Mode of life:

- Land fertility and water;

- Longitude of socio-economic formations;

- Religion, etc.

The research into the above mentioned and other factors even let this group help the

American government to cope with Japan at the end of the 2nd World War turning

this country into the American friend and alien. Unfortunately the scientific activity of

this group is not much open as its members worked for secret American institutions

but their contribution to the research of national mentality of different ethnics is

priceless.

In the 3d quarter of the XX century there appeared numerous definitions of corporate

culture, formulated by different scientists. Then it was G. Hofstadter in the middle of

70th that made a serious analytical work for IBM and its branches in different

countries of the world where the company came across the lack of understating in

cross-cultural communication.

Hofstadter offered his own methodology of research which became well-spread over

the world, paying attention to national features of business behavior.

All of them have their share in the definition of corporate culture: - Organizational or

corporate culture is the pattern of values, norms, beliefs, attitudes and assumptions

that may not have been articulated but shape the ways in which people in

organizations behave and things get done. Though this definition uses corporate

culture as a synonym to organizational culture as the way the personnel and

management are to work together, there is a certain difference between these two

notions. The notion corporate culture is wider as it adds the necessity for every

member of the company to feel protected by the management.

Culture is an abstract concept applied across multiple academic and social fields with

changing contextual meanings. The rapid increase in attention paid to the subject

garnered fundamental disagreements about what culture is and how it should be

studied. Not only is culture difficult to definitively describe, but organizations and

their leaders are in constant pursuit of a good or right or functionally effective

culture. Most can agree that it exists and that its effects are important. Edgar Schein

(2004) concurs that attempts to define culture are not only numerous but vary

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dramatically, leaving different ideas about what exactly it is. For example, the

Merriam Webster (2011) dictionary presents ten different interpretations of culture

ranging from developing the intellectual and moral faculties to an acquaintance with

and taste in fine arts to the act or process of cultivating living material in a prepared

nutrient. Despite these differences, most authors concur that the concept of

organizational culture refers to the shared values, underlying assumptions, and

behavioral expectations that govern decision making (Schein, 1985; Barney, 1986;

Alvesson, 1990; Hofstede, 1998; Christensen, 2006; Senge, 2006; Kissack &

Callahan, 2009; Rainey, 2009; Cameron & Quinn, 2011). In other words, culture

creates social order, continuity, and a collective identity that generates commitment to

rules about how we do things and how to get the job done within organizations

(Cameron & Quinn, 2011).

The culture of an organization refers to the unique conguration of norms, values,

beliefs and ways of behaving that characterize the manner in which groups and

individuals combine to get things done. This definition is particularly important to a

foreign company activity in a unusual national reality when national personal could

try to insert their own vision of labor activity.

Though these definitions reflect the most important features of organizational culture,

they are not full. More extended definitions were given by American scientist E.

Schein: A pattern of basic assumptions invented, discovered or developed by a

given group as it learns to cope with the problems of external adaptation and internal

integration that has worked well enough to be considered valid and, therefore, to be

taught to new members as the correct way to perceive, think and feel in relation to

these problems.

Russian scientist V. Kozlov considers that corporate culture is: a complex of

suggestions accepted by all members of organization without any evidence; setting

common frameworks of behavior, accepted by the most part of staff. Organizational

culture shows itself in philosophy and ideology of management, value orientations,

beliefs, expectations and norms of behavior. Organizational culture presents the

cumulative characteristic of organization, ways of activity evaluation, and presence of

specific terms that are understood by all employees within a company The most

important aspect of this definition consists in recognition of the cumulative effect of

the corporate culture.

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1.2 Hofstedes cultural dimensions of Bangladesh

The Hofstede Model distinguished cultures according to five and this model provided

scales from 0 to 100 each dimension, and each country has a position on each scale or

index, relative to other countries. These five dimensions were empirically verifiable,

and each country could be positioned somewhere between the poles.

Hofstede empirically found four dimensions of culture in research across more than

50 countries. The dimensions are: power distance, collectivism versus individualism,

masculinity versus femininity and uncertainty avoidance. Bangladesh was not within

his first survey IBM studies. Hofstede later adds a new dimension, long- versus short

term orientation, based on the student sample of 23 countries around 1985 (2).

Bangladesh was included in this new survey. In Hofstede's first survey many other

Asian countries like India and Pakistan were included. Since Pakistan and India are

the countries nearer to Bangladesh and Bangladesh was a part of Pakistan until 1971

and as these countries have the same nature of history since the British rule and

having the same socio-economic, political and cultural features.

The Hofstede Model distinguished cultures according to five and this model provided

scales from 0 to 100 each dimension, and each country has a position on each scale or

index, relative to other countries. These five dimensions were empirically verifiable,

and each country could be positioned somewhere between the poles.

Table 1: Scores of 5D Hofstedes Cultural Dimensions

Country IDV PDI MAS UAI LTO

Bangladesh 20 80 55 60 40

IDV-Individualism

PDI- Power Distance Index

MAS- Masculinity

UAI-Uncertainty Avoidance Index

LTO- Long-Term Orientation

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Chart 1: 5D Hofstedes Cultural Dimensions of Bangladesh

From the chart above we can compare five cultural factors of Russia, Bangladesh.

Individualism versus collectivism is one of the important aspects of culture's

unstated assumptions'. The assumption that we bound together into tight groups of

interdependent individuals is fundamental to collectivism. Hofstede describe

Collectivist as the vast majority of people in our world live in societies in which the

interest of the group prevails over the interest of the individual and Individualist as a

minority of people in our world live in societies in which the interests of the

individual prevail over the interest of group (4). His Individualism Index (IDV) score

measures the level of individualism and collectivism in a particular culture. Countries

scored low in the IDV are characterized as collectivist.

Scoring 20 of 100 we can say Bangladesh is a less individualistic country.

Bangladeshi people have very close ties their extended family person, within which is

unquestioning loyalty. Major decisions of life for example education and marriage are

dictated from within this group, and family protection will continue in exchange for

absolute allegiance.

Power distance is defined as the extent to which the less powerful members of

institutions and organizations within a country expect and accept that power is

distributed unequally'. Most of the Asian countries under the survey of Hofstede are

found having large power distance. Bangladesh scores high on this dimension (score

of 80) which means that people accept a hierarchical order in which everybody has a

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place and which needs no further justification. As a Bangladeshi, I can say that it is

not very difficult to notice inequality between people in government, in organization

even within the families.

Hofstede define masculinity as pertains to societies in which social gender roles are

clearly distinct i.e., men are supposed to be assertive, tough, and focus on material

success whereas women are supposed to be more modest, tender, and concerned with

the quality of life, femininity pertains to societies in which social gender roles overlap

i.e., both men and women are supposed to be modest, tender and concerned with the

quality of life.

Bangladesh scores 55 on this dimension and can be considered a a masculine society.

In masculine countries people live in order to work, managers are expected to be

decisive and assertive, the emphasis is on equity, competition and performance and

conflicts are resolved by fighting them out.

The Uncertainty avoidance scores are much higher for Bangladesh.

A standard score in Long term orientation shows that Bangladesh is one the way of its

development.

1.3 The Denison Organizational Culture Survey (DOCS)

Professor Denison for 15 years was researching the impact of corporate culture on

companys economic effectiveness. On data, gathered from 1000 companies he

created a survey, consisting of 4 key elements: Adaptability, Mission, Involvement

and Consistency.

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Figure 1: The Denison Organizational Culture Survey

Adaptability

Are we listening to the marketplace?

High-performing organizations perceive and respond to the environment,

customers; they are apt to restructure and re-institutionalize behaviors and processes

to adapt to the outer environment.

Creating Change

High-performing organizations welcome new ideas and willing to try new

approaches to doing things, see the necessity of creating constant change as way of

doing business.

Customer Focus

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Employees recognize the need to serve both internal & external customers and

continually seek new and improved ways to meet customer expectations.

Organizational Learning

Thoughtful risk taking is encouraged. Organizational learning means we gain

knowledge from successes and failures. Our first reaction to reasonable mistakes is

not Who is to blame?, but rather What can we learn?

Mission

Do we know where we are going?

High performing organizations have a mission that tells employees why they

are doing the work they do, and how the work they do each day contributes to the

why.

Strategic Direction & Intent

Strategic direction & intent typically refers to the multiyear strategies high

priorities established to operationalize the vision.

Goals & Objectives

Goals & objectives are the shortterm, specific goals established that help every

employee see how his/her daily activities connect to the vision & the strategy.

Vision

Vision is the ultimate reason you are in business your purpose what you are

ultimately trying to achieve.

Involvement

Are our people aligned and engaged?

Highly involved organizations create a sense of ownership and responsibility.

Out of this sense of ownership grows a greater commitment to the organization and an

increased capacity for autonomy.

Empowerment

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They clarify those areas where employees can make decisions, have input, or

those areas that are beyond an employees scope of responsibility. This promotes

informed empowerment.

Team Orientation

Teamwork is encouraged so that creative ideas are captured and employees

support one another in accomplishing work goals.

Capability Development

Capability development is practiced in a variety of ways, including training,

coaching, and giving employees exposure to new roles and responsibilities.

Consistency

Does our system create leverage?

Consistency provides a central source of integration, coordination and control,

and helps organizations develop a set of systems that create an internal system of

governance based on consensual support.

Core Values

High-performing organizations have a clear set of core values that help

employees and leaders make consistent decisions and behave in a consistent manner.

Agreement

By engaging in dialogue and getting multiple perspectives on the table people

can reach agreement when difficult issues and problems arise.

Coordination & Integration

Employees understand how the work that they do impacts others and how

other's work impacts them. They make sure that work is coordinated and integrated to

serve the organization as a whole.

Involvement and adaptability reflects flexibility and inclination to changes.

Consistency and mission defines the opportunity to stability and controllability.

Consistency and mission mostly influence the financial indexes as ROA (return

on assets), ROI (total return on investment) and ROS (return on sales). If the rates of

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consistency and mission are between 3 and 4, it means that ROA, ROI and ROS are

high and operating force of company is big.

Involvement and consistency which altogether constitute internal focus, have

its impact on quality, personnels satisfaction and ROI. Rates from 3 to 4 also reflect

the high level of quality, small percent of defects, right distribution of resources and

higher level of personnel satisfaction.

Involvement and adaptability reflect product and innovations development. If

the rates of these indexes are from 3 to 4, the level of innovativeness and creativity in

production and services is rather high, reaction to changing conditions is fast.

Adaptability and mission (external focus) influence on incomes increase in

sales and market share.

The Denison Organizational Culture Survey completely reflects the connection

between corporate culture and economic effectiveness of the company. It covers the

main aspects of companys business activity: Return on Sales, Return on Investment,

quality of goods, employees satisfaction, level of creativity and innovations,

flexibility, strategies and missions, team-orientation, delegation, corporate education

etc. This model we may use in our diagnostics.

In conclusion, we should say that corporate culture is a serious tool for improving the

effectiveness of any organization. We should not forget that effective corporate

culture absorbs peculiarities of national mentality and national culture. To have

positive business results, corporate culture is to be designed properly, because in case

it develops spontaneously it will never bring any profit, on the contrary it would slow

down the development of the company.

As it was suggested by E. Schein, corporate culture is developed at three levels:

Surface rituals and ceremonies, psychological climate, dress-code, myths and

legends, etc.;

Undersurface values, trusts, strategies and philosophy;

Deep national culture, mentality, peculiarities of perception.

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According to the theories and methodologies suggested by different scientists,

effective corporate culture is to have the following features: high level of employees

background, strong motivation, fair compensation, innovative environment, staff

professional promotion, social protection, flexibility, friendly atmosphere, etc.

The effectiveness of any organization is defined by its economic (profit, productivity,

environmental compatibility) and social effectiveness (satisfaction of staff, stability,

good team-work, etc.). The influence of corporate culture on the company

effectiveness is analyzed by different methods and strategies.

1.4 Importance of effective corporate culture

Corporate culture unites owners, management and personnel to reach the unique aims

for corporate wellbeing. This unification is the strongest motivation factor. Corporate

culture helps to strengthen the labor discipline as it sets up precise, concrete and exact

labor and ethic frameworks, and forms behavior stereotypes, which are passed to the

company new-comers.

Corporate culture of the transnational company absorbs national cultures and submits

national mentality, creating a new vision of personal and labor relations. Corporations

are interested in constant employees vocational professional training and education

and HR rotation from region to another. It makes personnel stop identifying

themselves with their own country and its national interests, considering them to be

part and parcel of the multinational corporation.

To study the potential effect of culture, we need to be clear on why this culture might

matter. Both in OReilly (1989) and Kreps (1990), culture is considered relevant

because employees will face choices that cannot be properly regulated ex ante. Think

about a firm with a reputation for impeccable customer-care. Both managers and

employees are tempted to save on the effort necessary to provide the best care.

Offering the best effort is costly and the probability of being detected is minimal,

especially if the shirking is only partial: it is hard to prove that the care was only

slightly subpar. Furthermore, the negative consequences of a reduced reputation will

not be felt right away. One bad episode can hardly destroy a long-standing reputation

of excellence. Hence, without the proper motivation, managers and employees are

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likely to skimp on the quality of their services. Even if the board anticipates this

problem, it is hard to design the proper incentive contracts. How can a firm sustain a

reputation of impeccable service? A solution is to raise impeccable service to the level

of a value that needs to be respected at all times, not a goal that is traded off against

other goals. The advantage of elevating this principle to the level of value is threefold.

First, by advertising it as a companys value a firm is more likely to attract 6 and

retain people who share this value or -- at the very minimum have a lower cost to

live and operate by this value. Second, by promoting top customer service as a value

it makes it clear to the employees that the company accepts no compromises on this

front: it is a commitment not to engage in economic calculations. In this way, for

example, an employee will not trade off the customer satisfaction with a larger profit.

Finally, promoting top customer service as a value facilitates its establishment as a

norm inside the firm. The enforcement of social norms differs in several ways with

respect to the enforcement of legal norms. To be enforceable, legal contingencies

need to be verifiable in court. By contrast, it is sufficient that a contingency be

observable for a social norm to be enforceable. An employee with a negative attitude

towards customers can hardly be sanctioned in court, but he can easily be shunned by

colleagues. Precisely because the judgment and the punishment are administered by

the community, not by a court of law, social norms should be very coarse, so that the

detection of a violation is relatively easy. Last but not least, for a social norm to be

enforced it must be shared by most people in a community. In particular, in a firm it

must be shared and followed by who is at the top. This is really a case of lead by

example. Social norms have typically less enforcement power than legal norms. A

violation of a legal norm can lead to harsh punishments, such as incarceration and (in

some countries) even to death. The violation of a social norm leads to lesser

consequences, such as ostracism from the community. In spite of this limited

punishment, social norms can help ameliorate moral hazard problems inside

organizations. Moral hazard in organizations is twofold. There is a moral hazard at the

top: top managers are tempted to renege their commitment to reward firm specific

investments made by the employees (Shleifer and Summers, 1991). There is also a

moral hazard inside the organization: employees want to save on effort because they

do not fully internalize the benefits this effort brings to the organization. This lack of

internalization is partly due to the inability to measure the employees marginal

productivity and, thus, to reward them appropriately through contracts.

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In a wider sense of the word corporate culture is a culture of transnational or

multinational companies having their head offices in US or some of the Western

countries. Its branches exist in regions with completely different corporate culture. To

make these companies be effective there is a necessity to set up solid foundation on

which the relations between owners, management staff and personnel, with different

national mentality and culture are to develop in correspondence with the general

mission of the organization and its aims.

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CHAPTER 2: Corporate Culture of Biman Bangladesh Airlines

2.1.1 Biman Bangladesh Airlines General information

Biman Bangladesh Airlines Ltd. The national flag carrier of Bangladesh has started its

journey from scratch virtually with no aircraft, no ancillaries. It came into operation

immediately after the war of independence. Despite many odds on its journey towards

a long and challenging way to progress, Biman has been able to establish its

reputation as an airline of welcome smile and an ocean of hospitality.

Created in February 1972, Biman enjoyed an internal monopoly in the aviation

industry of Bangladesh until 1996. In the decades following its founding, the airline

expanded its fleet and destinations but it was adversely affected by corruption and

mismanagement. Biman operated flights to 18 international destinations. The airline

was wholly owned and managed by the government of Bangladesh until 23 July 2007,

when it was transformed into the country's largest public limited company by the

Caretaker Government of Bangladesh. Since becoming a public limited company in

2007, the airline has reduced staff and begun to modernize its fleet. The airline has

made a deal with Boeing for ten new aircraft along with options for ten more. Biman

Bangladesh Airlines is certified as safe to fly in Europe by the European Aviation

Safety Agency and it also successfully passed the IATA Operational Safety Audit and

since then, the airline has resumed flights to some of its previous destinations in Asia

and Europe.

In order to modernize Biman fleet with new generation aircraft, Biman signed two

agreements with Boeing in April and May 2008 for purchasing new generation 4 X

777-300ER, 4 X 787-8 and 2 X 737-800 aircraft. Three 777-300ER aircraft joined

Biman fleet in October/November 2011 and February 2014. The 4th 777-300ER is

being delivered on 21 March 2014. Besides, two 737-800s and four new 787-8s are

scheduled to be delivered by Boeing in November/December 2015 and 2019-2020.

Currently Biman is operating 02 domestic and 18 international destinations.

Biman signed an agreement with Egypt Air Holding Company for dry lease of two

777-200ER aircraft, which were added to the fleet as of March 2014. Biman is in a

bid to operate more domestic destinations, as such procuring two Turbo-Prop aircraft.

Biman has already phased out vintage F28 and DC10-30 aircraft from its fleet as a

part of fleet modernization. The airline operates its own ancillary and maintenance

facilities at Hazrat Shahjalal International Airport.

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Biman Bangladesh Airlines has significantly improved its position as it nears the

finishing line in its long overdue fleet renewal programme. But the carrier continues

to face several challenges and will need network and strategic adjustments if it is to

complete a turnaround. Biman is one of Asias smallest flag carriers, operating only

12 aircrafts on a network of 22 destinations, including 18 international and three

within Bangladesh. Its fleet currently consists of four 777-300ERs, two 777-200ERs,

two 737-800s, two A310s and two newly added Bombardier Dash 8 Q400.

Table 1: Aircrafts in Biman Bangladesh Airlines fleet

Aircraft In Serviece In Storage

Total 12 2

Airbus A310-300 2 0

Airbus A310-300ET 0 1

Boeing 737-800 2 0

Boeing 747-200B 0 1

Boeing 777-200ER 2 0

Boeing 777-300ER 4 0

Boeing 787-8 0 0

Bombardier Dash 8 2 0

Source: CAPA Fleet Database

28

Figure 1: Biman fleet Configurations

The journey began with a DC-3 aircraft-an air force plane gifted to the new airline by

the government. But the joy was short-lived. Before any service could begin, the

aircraft crashed while on a training, flight. Biman was finally air borne on March 7,

1972 with flights to Chittagong and Sylhet and on March 9 to Jessore. Thus the

domestic operation of Biman began. Since then there has been no looking back.

Indeed, it was the international operation of the airline which started first. On 4th

March, three days before start of domestic operation, the first flight of Biman's

international operation landed in Dhaka from London with 179 passengers on board.

The aircraft used in the flight was a chartered one from British Caledonian.

It was not an auspicious beginning for a new airline of a war devastated country like

Bangladesh. In the list of priorities for the resource hungry country, the position of an

airline had to be far down the line. The highlights of Bimans 42 years will actually

not depict the agonies that the airline had to undergo, but will give an idea how the

airline is surviving by charting a not so glamorous course like many of the

competition.

1972

Biman began its international operations with flights to London and Calcutta and its

domestic operations with flights to Chittagong, Sylhet, Jessore and Ishwardi. Four F-

29

27s joined the fleet, enabling Biman to operate domestic services and an international

service to Calcutta. Two of the F-27s were acquired from India and two from the

Netherlands. One DC-6 was also leased for two months.The service to London

continued with the chartered aircraft.

1973

Bangkok became Biman's third international destination and in the domestic sector

Thakurgaon was included in the network. Four more F-27s joined the fleet of Biman.

Two of these gifts from Australia and the other two were purchased from the Fokker

Company. A leased Boeing 707-320C joined Biman's fleet to operate its Dhaka-

London services. The airline also purchased another Boeing 707-320C.

1974

Dubai and Kathmandu became Biman's fourth and fifth international destinations. In

the domestic sector services were extended to Cox's Bazar. In the international sector,

services were extended to Yangon, Abu Dhabi, Karachi and Mumbai in 1976. The

second Boeing 707-320C, joined the fleet.

1977

Singapore became another part of Biman's international network. Biman acquired its

third Boeing 707-320C from Trans Air of Canada. Biman was made a corporation

under the title- Bangladesh Biman Corporation. Jeddah, Doha and Amsterdam

became part of Biman's expanding network in the international sector in 1978. Two

more Boeing 707-320C aircraft were acquired, one of them from Japan.

1979

The year turned out to be the year of route expansion. In the international sector,

services were extended to Kuala Lumpur, Athens, Muscat and Tripoli. Syedpur

became a part of the domestic network in the following year. Tokyo and Dahran were

brought within the fold of Biman's network in the following year. An off-line office in

Jakarta was also opened. Another Boeing 707-320C joined Biman's fleet in 1980.

1981

The airline started operations to Rome and Kuwait, but suspended its Tokyo

operation. Biman received one Being 707-320C as a gift from Kuwait and purchased

two F-28s from the Fokker Company.

30

1983

The airline entered a new era with the acquisition of three used wide-bodied DC-10-

30s from Singapore Airlines. Baghdad was made on-line. Biman extended its

international services to Paris and to Rajshahi in the domestic sector in 1984.

1986

Bahrain was brought within Biman's network. One of the Boeing 707-320Cs was

phased out. Services to Frankfurt were extended in the following year.

1988

Riyadh was brought within the network in place of Dahran. Services to Baghdad were

suspended. One more Boeing 707-320C was phased out.

1989

The airline entered the select club of one million passengers. Services to Sharjah were

opened and the suspended service to Baghdad resumed. A new DC-10-30, purchased

from McDonnell Douglas, joined the fleet and the remaining Boeing 707-320C was

phased out. The airline also encompassed modern technology with the commissioning

of a Computerized Reservation System. The Flight Catering Centre at Hazrat

Shahjalal Interantional Airport was commissioned which enabled Biman not only to

upgrade its own in-flight services with high quality food, but also to earn additional

revenues by other airlines. The Ground Training School was merged with the

Apprentice Training School and moved to modern complex at Hazrat Shahjalal

International Airport.

1990

Two ATP aircraft joined the fleet for domestic routes and the F-27s were phased out

in the same year.

1992

New Delhi and Nagoya were included in Biman's international network and

operations to Sharjah were suspended. The $ 30m Hangar Complex at Hazrat

Shahjalal International Airport was commissioned.

31

1993

For the first time Biman crossed the Atlantic with services to New York. Hong Kong

was also included in the network but operations to Nagoya were suspended. Two DC-

10-30s were taken on lease.

1994

A Computerized Departure Control was commissioned. Biman commenced services

to Brussels and suspended its operation to Amsterdam in 1995.

1996

The two new Airbus A-310 were purchased from Airbus Industries. One DC-10-30

and one A 310-300 aircraft were taken on lease for three years in 1999.

2000

Another DC 10-30 and one A 310-300 aircraft were taken on lease for three years.

Two B 737-300s aircraft were taken on lease for one year in 2003. The leased B 737-

300 was released in April 2004. Further two F28 aircraft were purchased in May

2004.

2006

Biman commenced services to Manchester on 08 April 2006. Biman suspended its

operation to New York, Brussels, Paris, Frankfurt, Mumbai, Narita and Yangon for

operational reasons.

2007

Bangladesh Biman Corporation turned into a Public Limited Company. E-ticket and

BSP were introduced.

2008

The airline went into an agreement with Boeing Aircraft Company for acquisition of

10 new generation aircraft of 4 Boeing 777-300ER, 2 Boeing 737-800 and 4 Boeing

787 the biggest ever deal in the history of Biman as well as the country. One Boeing

747-300 was taken on lease on ACMI basis for 12 months. Two more 737-800s

joined the fleet in November.

32

2010

One lease-hold Boeing 777-200ER joined the fleet. Two Boeing 737-800s were taken

on lease for 5 years. The aircraft will remain in the fleet till January 2015. The airline

took delivery of one Airbus 310-300 on lease for 3 years.

2011

The first 02 of 04 Boeing 777-300ERs joined the fleet in October and November,

2011 and thus replacing the ageing DC10-30s, the long time backbone of Biman fleet.

2014

The 3rd Boeing 777-300ER joined the fleet on 5th February and the 4th is joining in

the second week of February. Now the airline has a new backbone comprising of

Boeing 777-300ERs, the new work horses of Biman, named as the Palki, the Arun

Aalo, the Aakash Pradeep and the Raanga Pravat.

During the four decades of Bimans existence, many types of commercial airliners

have adorned the fleet- ranging from the early leader, the venerable DC 3 to the

modern Peoples Preference, the Boeing 777. As stated earlier, the airline had

placed a firm order for the fifth generation Dreamliner to complement its fleet. Fuel

efficient Dreamliner is a new wonder of the skies.

Biman can look back with pride to many occasions where it made memorable

contributions to the nation and the travelling public. When the floods of 1988

engulfed the whole country Biman operated an air bridge providing the country's only

link with the outside world. As the flood waters moved up, even on to the run way at

HSIA, the skill and dedication of Biman's pilots kept the air bridge operational.

Biman Becomes Part of History:

On February 20, 2014, Biman operated the historical final-flight of worlds last

passenger DC10-30 on Dhaka Birmingham route and thus recording its name in the

annals of world aviation history.

33

The air transport is required high professional in work to ensure safety, exactly and

fast which are outstanding advantages of traveling passenger by air. Service quality

then becomes significantly important factor to achieve genuine and sustainable

passengers.

All the airports in Bangladesh are operated under the Civil Aviation Authority of

Bangladesh (CAAB), an autonomous body. CAAB is responsible for airports,

runways and air traffic control, taxiways, terminal buildings, warehouse, control

tower, operation and administrative buildings, air navigation and radio

communication system. There are three international and six domestic airports in

Bangladesh. Table 1 & 2 provides the list of Domestic airports & International in

Bangladesh with their locations.

Table 2: Domestic Airports

Location ICAO IATA Airport

Rajshahi VGRJ RJH Shah Makdhum

Airport

Barisal VGBR BZL Barisal Airport

Cox's Bazar VGCB CXB Cox's Bazar Airport

Jessore VGJR JSR Jessore Airport

Saidpur VGSD SPD Saidpur Airport

Source: Biman Bangladesh Airlines

There is another domestic airport under construction in Bagerhat

Table 3: International Airports

Location ICAO IATA Airport

Dhaka VGZR DAC Hazrat Shah Jalal

International

Airport

Chittagong VGEG CGP Shah Amanat

International

Airport

Sylhet VGSY ZYL Osmani

International

Airport

Source: Biman Bangladesh Airlines

34

Excellent and reliable customer service is one of the greatest aspects for an airport and

airlines in todays competitive environment. There are many factors that can help an

airport to build its customer base and customer service can be a determining factor in

the success of an entire operation.

Vision and Mission of Biman Bangladesh Airlines

Vision:

To protect Biman Bangladesh Airlines ltd. in the aviation market as a world-class

airlines

Mission:

To provide safe, Reliable, Efficient and Economical air transport services and to

satisfy customers exceptions while earning sustainable profit and continuing to be a

caring employer.

Goal:

To provide and develop Safe, Efficient, Adequate, Economical and properly

coordinated air transport services, internal as well as international.

Name and logo:

Biman Bangladesh Airlines

White stork flying across the red sun

35

2.1.2 Biman Bangladesh Airlines Corporate Structure

From the structure, We can say that Biman Bangladesh Airlines has a very strong

corporative structure. There are several multifunctional teams who are responsible in

CE0

Director

market &

sales

Director

Custom

Service

Director

Admin

Director

Finace

Director

e store &

eng.

Director

project &

planning

Director

flight

operator

Gm Dist. Sales Gm sales Gm marketing Gm cargo

Gm sales promotion

Manager counter

Country Dist.

Manager

Dy GM Sales

Manager Pax &

Cargo Sales

Manager Agency

Interline

Dy GM Marketing

Manager Reservation

Manager Market

Research

Manager Tariff &

IATA Affair

Manager

Communication

Manager Export

Manager Import

36

different sectors. It is an effective corporate structure in modern competitive business

to achieve expected goals. The modern business strategies are changing because of

new technologies and competitors' polices. To keep the customers closer the Airline

can also change its strategy like recruit more employees in the customers' managing

sector. In modern business online marketing is playing a vital role. Biman Bangladesh

Air should put more attention in online marketing. The airline can recruit personnel in

this sector like Online marketing manager, Social media moderator.

2.2.1 SWOT analysis of Biman Bangladesh Airlines

A SWOT analysis leads the company to identify the positives and negatives inside the

companys organization (Strengths and Weakness) and outside of it, in the external

environment (opportunities and Threats). Developing a full alertness of the

companys situation can help with both strategic planning and decision-making. The

role of SWOT analysis is to take the information from the environmental analysis and

separate it into internal issues (strengths and weaknesses) and external issues

(opportunities and threats).SWOT analysis is done for a company, to find out its

overall Strengths, Weaknesses, Threats and opportunities leading to gauging the

competitive potential of the company.

Internal

factors

Strengths Weaknesses

Government backing

fourth generation aircraft in

Biman's fleet

Biggest limited company in

Bangladesh

Strong Brand Recognition

Corruption

Poor salary range

Careless management

More than 20 percent of the

operational capacity of the planes

remain unutilized

Delays(flight

schedules/administrative procedure)

Adding routes without proper

market study

37

limited destinations

Less innovation

Inattentive Cabin crews

Unreliable service

doesnt have enough source of

entertainment inflight

Less advertisements ( in TVs/Social

links/ Public places)

Absence of competitive spirits

Shortage of information in Biman

database

External

factors

Opportunities Threats

1.Can influence the

outstanding hub which it has

created in Bangladesh

2.Brand-new fleet to improve

customer confidence

3.More international

destinations to leverage on its

high charge brand image

4.To making people feel

curious, company can plan

and develop marketing

strategies in its growth areas

where it can attract new

customers. They have a

enormous opportunity to

A lot of competitors

Should go for low cost flights.

Price of ticket increased because of the

price increasing in oil

Fuel cost raised

Aviation regulation and government

policy

Accidents, luggage robberies affect

customers confident

Political instability in Bangladesh

One of the worlds worst airlines by

38

increase its market base by

expanding across Middle

East, India and China.

5. Offer the most inclusive

and scrupulous training

program to staffs to ensure

brand experience and

suitability

businessinsider

Low rating in SKYTRAX

World's 2-Star Airline

flawed handling of airports

From the SWOT analysis, we can see that the Airline is struggling with many

problems, which are possible to solve easily. One of the main weaknesses is

corruption, many of the high official of the organization are involved with it. The

government and the authority of the Airline should take steps to remove corruption

from the organization because many other weaknesses are there which are happening

because of corruptions.

2.2.2 PESTLE analysis

PESTLE analysis is in effect an audit of an organizations environmental influences

with the purpose of using this information to guide strategic decision-making. The

assumption is that if the organization is able to audit its current environment and

assess potential changes, it will be better placed than its competitors to respond to

changes.

To help make decisions and to plan for future events, organizations need to

understand the wider meso-economic and macro-economic environments in which

they operate. (The meso-economic environment is the one in which we operate and

have limited influence or impact, the macro-environment includes all factors that

influence an organization but are out of its direct control). An organization on its own

cannot affect these factors, nor can these factors directly affect the profitability of an

organization. But by understanding these environments, it is possible to take the

advantage to maximize the opportunities and minimize the threats to the organization.

Conducting a strategic analysis entails scanning these economic environments to

detect and understand the broad, long term trends.

39

A PESTLE analysis is a useful tool for understanding the big picture of the

environment in which an organization is operating. Specifically a PESTLE analysis is

a useful tool for understanding risks associated with market (the need for a product or

service) growth or decline, and as such the position, potential and direction for an

individual business or organization.

A PESTLE analysis is often used as a generic 'orientation' tool, finding out where an

organization or product is in the context of what is happening outside that will at

some point affect what is happening inside an organization. The six elements form a

framework for reviewing a situation, and can also be used to review a strategy or

position, direction of a company, a marketing proposition, or idea.

PESTLE

factors

Remarks

Political

Political unrest in Bangladesh

There is not enough political goodwill to increase the airport

capacity or modernize it

Economic Biman signed a contract with US aircraft manufacturer, the Boeing

Company, to purchase eight aircraft at a cost of Tk 8,728 crore in

2008. Of them, four aircrafts are Boeing-777-300ER model and

remaining four Boeing-787-8 model.( dhakaherald, 9 November

,2013)

Apart from procuring the eight Boeings, Biman later ordered for

another two Boeing-737-800 aircraft. Biman took a syndicated loan

at 4.57 per cent interest from nine local banks. ( dhakaherald, 9

November ,2013)

3. The new CFM56-7 engine for the Next-Generation Boeing 737

and Boeing Business Jet offers customers dramatically lower

operating costs while maintaining industry-leading performance,

reliability, and operability. A reduction of 1 percent in fuel burn can

40

mean an annual savings of up to $15,000 per aircraft (GE Aviation,

june 1997)

Biman lost Tk210 crore in FY 2013-14. During FY 2012-13,

Bimans losses stood at Tk191.6 crore. It was Tk594.2 crore in FY

2011-12 (dhakatribune, 1 november 2014)

Social Achieved 65% timely flights by adding Boeing 777-300ER to its

fleet (Dhaka tribune, 14 February 2014)

Many Passengers require high quality services on board flights

Asias 9th worst airport ( Prothom Alo, 31 October 2014)

Technological

Boeing 777-300ER is 19% lighter than its closest competitor,

greatly reducing fuel requirement: (Dhaka tribune, 14 February

2014)

Biman Bangladesh Airlines Training Center (BATC) has been

training its ground, flight service and technical personnel ( Biman

Bangladesh Airlines website)

The technologically advanced will use 20% percent less fuel,

provide Biman Bangladesh airlines up to 45 more cargo revenue

capacity (prnewswire, 22 April 2013)

The CFM56-7's advanced technology, which includes three-

dimensional aero design, a high efficiency wide chord fan,

advanced electronic engine control and active clearance control

systems, will provide significant cost benefits.

Legal

1.Approving of flight routings

41

Environmental

rolls-royce trent 892 engine design for environment

Reductions in airport noise

Reduce CO2 emissions

Reduce NOx emissions

( HAW Hamburg, 24 June 2010)

2.3.1 Online Marketing Strategies

Online marketing is the fastest growing and most exciting branch of marketing today.

As the world becomes ever more connected, keeping up with developments and

trends is vital for marketers trying to reach new audiences who are more discerning,

fragmented and cynical than ever. Technology and software are changing at such a

high rate that it seems almost impossible to keep up with trends. Products and services

are evolving and adapting to the online sphere. Online marketing has boomed in

recent years, most companies have used it mainly for advertising or promoting

corporate images. Online marketing can be many types, such as:

a. Advertisement in online b. Search engine optimization c. Social media marketing d. Web Marketing e. E-mail marketing

a. Advertisement in online

Online advertising plays a vital role achieve the expected goals in modern business.

Nowadays online advertisement has become popular to the companies because its cheaper and effective than the traditional methods of advertisement.

42

Figure:1 Online advertisement of Biman Bangladesh Airlines

Biman Bangladesh Airlines was not very active in online earlier. The airline has

started its online marketing. Recently a online banner advertisement (Figure: 1) of the

airline has seen in many leading online news portals of Bangladesh. Probably this was

the first advertisement of the national carrier. It proves the top management of the

airline has understood the importance of online marketing. The online advertisement

of Biman Bangladesh Airlines should be increased to promote its brand and to get

prospective customers.

b. Search Engine Optimization

Search engine optimization is a methodology of strategies, techniques and tactics used

to increase the amount of visitors to a website by obtaining a high-ranking placement

in the search results page of a search engine (SERP) -- including Google, Bing,

Yahoo, Yandex and other search engines.

Building a solid SEO strategy consists primarily of selecting relevant keywords and

providing valuable content related to those keywords. In the past, SEO was driven by

factors like keyword placement, keywords density, and even how many times a

keyword was used to link to that page.

But the search engines quickly discovered that keywords could be easily manipulated.

A page that had nothing to do with a keyword could be ranked in top three, just by

optimizing the page. Today, this means that sites who rely solely on keywords are

often ignored by the search engines.

43

In Bangladesh Google and Yahoo are the most popular search engines. Strong search

engine marketing strategies will take the national carrier of Bangladesh more closer to

its customers which will bring a fruitful result for the airline.

c. Social Media Marketing

In the current modern societies, Social Media channels are commonly used in order to

connect people together throughout the world using the Internet. Whether it is through

social networks, forums, blogs or media sharing websites, people can now have a

conversation online, also called interactive dialogue, with anybody and on any

subject, permitting them to share their experiences and valuable information. The use

of social media sites as part of a companys marketing strategy has increased

significantly in the past couple of years. Looking on a business perspective, it goes

without saying that Social Media Marketing has offered a large variety of new

opportunities for companies to promote their brand, products and services.

One of the biggest advantages that advertising through Social Media can offer

marketers is the ability to specifically target customers based on a variety of different

factors. Social Media sites are storing all kinds of data on their users, such as age,

gender, geographical location, interests, and many other pieces of information.

Consequently, these data can be used to reach the companys target audience.

Therefore, marketers can deliver marketing messages directly to the people who are

the most likely to notice them and click on them.

Biman Bangladesh Airlines, the national flag carrier of Bangladesh loses crores of

taka every year, by reducing corruption, improving its services and getting active in

social web sites can reduce the loss, even can turn into a profitable sector by gaining

customers faiths. Besides, it will also help the airline to plan the routes properly by

getting direct feedback from the passengers. If we compare the social media activities

of Biman Bangladesh Airlines with the other productive airlines like Emirates Airline,

Finnair, Aeroflot Airlines we will easily find the differences. For example in

Facebook,

44

Table 1: Comparisons of activities between some airlines in Facebook

Name of Airlines Activities

Emirates Airline Having at least 1 post in a day( huge

responses from the passengers) ,

Available in on-line every day from

8am to 8pm (GST) to answer questions

Finnair Having a very productive post in every

2 days, advertising through Facebook

page, answering the customers

questions

Aeroflot Airlines Having an effective post in every 3

hours. Answering passengers questions

as quickly as possible

Biman Bangladesh Airlines Only a post in 3 or 4 months. Not really

productive posts.

Biman Bangladesh Airlines should emphasis on its social media marketing strategies

to get closer to passengers, provide more information and answer the customers

questions as early as possible. By doing this; the national flag carrier can get more

customers satisfaction and can set up a strong bond with them. If we look at the

productive airlines, we will see, they are sharing very effective posts every day. Even,

they are not hesitating to apologize for any kind of technical problems on their pages.

Sam Walton, founder of Walmart said If you have questions, go to the store. Your

customers have the answers. And I think by having social media marketing strategy,

company can receive customers feedback and take the decision how meet customers

needs.

A journalist of Russia Segodniya and lecturer of New Media and E-journalism said

The use of social media in the airline industry has become a rapidly increasing trend.

Airlines are using the social media as a platform for brand development and product

marketing, improving customer service and improving passenger experience e.g.

through updating and responding to customers feedback. But unfortunately

45

Bangladesh Biman still don't have a Social Media strategy which is very much needed

for not only to improve company's positive image but also for advertising and

promotion sales attention.

With millions of users, Social Media Sites makes a convenient target base for people

who are trying to market products or services to people online. Actually, Social Media

Marketing has become a very effective way to drive targeted traffic to companies

website or blogs. The authority of Biman Bangladesh Airlines should set social media

marketing Strategies to promote the company, to get direct feedback of passengers

and to take the company into a profitable sector as well.

d. Web marketing

To accelerate online marketing the airline must create an ecommerce website which

will be full of necessary information and 24/7 format services. An instant chat box

should be created in the website to ensure 24/7 online customers service. Better online

services to the customers will ensure more satisfied old customers and will help to

prospective new customer.

e. Email marketing

Email marketing is directly marketing a commercial message to a group of people

using email. In its broadest sense, every email sent to a potential or current customer

could be considered email marketing. It usually involves using email to send ads,

request business, or solicit sales or donations, and is meant to build loyalty, trust, or

brand awareness. Email marketing can be done to either sold lists or a current

customer database. Broadly, the term is usually used to refer to sending email

messages with the purpose of enhancing the relationship of a merchant with its

current or previous customers, to encourage customer loyalty and repeat business,

acquiring new customers or convincing current customers to purchase something

immediately, and adding advertisements to email messages sent by other companies

to their customers.

46

Figure 2: Email marketing of airBaltic

Email marketing is helping small and big companies to gain more customers in this

globalized world. Many reputed airline companies (Figure: 2) using Email marketing

to reach their goals. Email marketing can bring a positive result for Biman

Bangladesh Airlines also. The top management of the airline should be more concern

about it.

2.3.2 Customers Relationship Management ( CRM)

Customer relationship management (CRM) is a combination of people, processes and

technology that seeks to understand a companys customers. It is an integrated

approach to managing relationships by focusing on customer retention and

relationship development. Customer relationship management is a comprehensive

approach that promises to maximize relationships with all customers, including

Internet or CRM e-customers, distribution channel members, and suppliers.

Customer relationship management (CRM) can help organizations manage customer

interactions more effectively to maintain competitiveness in the present economy.

Managing a successful CRM implementation requires an integrated and balanced

approach to technology, process, and people. CRM involves using technology to

gather the intelligence organizations need to provide improved support and services to

the customers. In other words, CRM is also about what the organizations do with that

information to better meet the needs of their existing customers and identify new

customers, resulting in higher profits for organizations.

47

Figure: Customer Relationship Management

There are only three ways to increase the profitability of a customer base; acquire

more customers, optimize the value of existing customers, or retain the right

customers longer. As the economic climate continues to become more competitive,

the fight over customers intensifies. Of the three choices above, acquiring new

customers is the most expensive. Research shows that acquiring a new customer costs

5 to 10 times more than retaining an existing one. Studies also show that loyal

customers will buy more over their lifetime and are willing to pay a premium for

doing business with someone they like and trust. Therefore, while organizations will

clearly continue looking for new customers, once acquired, they now know that it is

worth a significant investment to keep them. CRM is a way to do that.

In the airline industry, data analysis and data mining are a prerequisite to push

customer relationship management (CRM) ahead. Knowledge about data mining

methods, marketing strategies and airline business processes has to be combined to

successfully implement CRM. Data mining is very useful to support CRM in the

airline industry. In an initial phase of CRM, customer segments based on individual

patterns are found that it describes groups of customers with distinct needs and value.

The segmentation results are very useful for marketing concerns and for improving

customer services. For instance, the derived strategic segments can be used to derive

some high-level business strategies and to perform tactical marketing actions,

respectively.

Customer

Relationship

Management Customer Service

Strategy

Sales Social Media

Technical support

Marketing

48

For Biman Bangladesh Airlines, It is very important to develop its Customers

Relationship Management strategies to acquire more new prospective customers and

to obtain existing customers. Th CRM strategies will help the airline to get more

customers faith.

2.3.3 Corporate Social Responsibility (CSR)

Corporations around the world are struggling with a new role, which is to meet the

needs of the present generation without compromising the ability of the next

generations to meet their own needs. Organizations are being called upon to take

responsibility for the ways their operations impact societies and the natural

environment. They are also being asked to apply sustainability principles to the ways

in which they conduct their business. Sustainability refers to an organizations

activities, typically considered voluntary, that demonstrate the inclusion of social and

environmental concerns in business operations and in interactions with stakeholders

(van Marrewijk & Verre, 2003).

Corporate Social Responsibility is a concept which has become dominant in business

reporting. Every corporation has a policy concerning CSR and produces a report

detailing its activity. The broadest definition between of corporate social responsility

is concerned with what is or should be- relationship between global corporations,

governments of countries and individual citizens. More locally the definition is

concerned with the relationship between a corporate and the local society in which

itresides operates.

49

Figure: The Social Contract

Most people intially think that they know what is CSR and how to behave

reponsiblyand everyone claims to be able recognise socially or irresponsible

behaviour without necessarily being able to define it. So there is general agrrement

that CSR is about a company's concern for such things as community involment,

socially responsible products and processes, concern for the environment and socially

responsible employee relations. According to the European commission CSR is about

undertaking volutary activity which demonstrates a concern of stakeholders.

Corporate Behaviour is very important for company success both financially and

concerning the relationship between corporate and business interest. In other words

corparate behaviour is based on all these components and involvse laws, ethics and

coporate social responsibilites. Corporate behaviour has effects not only on

stakeholders but also on the entire economy.When a corporation acts ethically and

socially responsibly in its bussiness decision and strategic planning then that

corporation will be more sutainable.

50

Figure: Components of Corporate behaviour

Organizations have developed a variety of strategies for dealing with this intersection

of societal needs, the natural environment, and corresponding business imperatives.

Ryanair is Europe's largest law fare airline. Ryanair's steady growth is being achieved

inthe most enviromentally friendsly and sustainable way by investing in the largest

aircraft and technologies (which have reduced fuel burn and CO2 emissions by 45%

over 9 years). Ryanair is currently the industry leader in terms of environment

efficiency and it is constatly working further improving performance.

Biman Bangladesh Airlines should set a progressive CSR strategies to come more

closer customers or promote its brand .

CSR is becoming a leading principle of top management and of entrepreneurs. The

quality of relationships that a company has with its employees and other key

stakeholderssuch as customers, investors, suppliers, public and governmental

officials, activists, and communitiesis crucial to its success, as is its ability to

respond to competitive conditions and corporate social responsibility (CSR). These

major transformations require national and global companies to approach their

business in terms of sustainable development, and both individual and organizational

leadership plays a major role in this change.

coporate

behaviour

ethics law

CSR

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3.3.4 Innovation in Biman Bangladesh Airlines

What is Innovation? Innovation is crucial to the continuing success of any

organization. Innovation may be defined as exploiting new ideas leading to the

creation of a new product, process or service. It is not just the invention of a new idea

that is important, but it is actually bringing it to market, putting into practice and

exploiting it in a manner that leads to new products, services or systems that add value

or improve quality. It possibly involves technological transformation and management

restructuring. Innovation also means exploiting new technology and employing out-

of-the-box thinking to generate new value and to bring about significant changes in

society.

Studies have confirmed that all businesses want to be more innovative. One survey

identified that almost 90 per cent of businesses believe that innovation is a priority for

them. The conclusion is that the importance of innovation is increasing, and

increasing significantly. In the current day economic scenario, innovativeness has

become a major factor in influencing strategic planning. It has been acknowledged

that innovation leads to wealth creation. Even though efficiency is essential for

business success, in the long run, it cannot sustain business growth.

Figure 1: The need for Innovation

Although the need for more innovation is widely recognized, there is no commonly

accepted view of what innovation means in a business context. Many employees think

of it primarily as radically new products delivered by R and D departments;

Changing business

environment

Changing customers

and needs

Technological

Advances

Intensified competition

The need for

Innovation

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Figure 2 : Innovation Process from Paul Trott, 2006

Business must look ahead, not behind. It's not just the big companies that need to do

this. Every business must innovate to compete. They must create new products and

services for new markets. They must be creative, and come up with new ideas that

never would have been thought of before.

Innovation Management is about more than just planning new products, services,

brand extensions, or technology inventions. Its about imagining, mobilizing, and

competing in new ways.

A Study of European Business School, DLR and PricewaterhouseCoopers shows the

most important success factors for innovation are customer orientation, creative staff

and corporate culture.

Being innovative does not mean inventing; innovation can mean changing your

business model and adapting to changes in your environment to deliver better

products or services. Successful innovation should be an in-built part of your business

strategy and the strategic vision, where you create an environment and lead in

innovative thinking and creative problem solving.

In my opinion, innovation is also required to be competitive today and tomorrow. In a

broader sense, innovation is important to the advancement of the society around the

world. New and innovative products can increase the standard of living and provide

people with the opportunities to improve their lives.

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2.2.4 The importance of Market Research

Market research is any organized effort to gather information about target markets or

customers. It is a very important component of business strategy which is a key factor

to maintain competitiveness over competitors and provides important information to

identify and analyze the market need, market size and competition.

Market research, which includes social and opinion research, is the systematic

gathering and interpretation of information about individuals or organizations using

statistical and analytical methods and techniques of the applied social sciences to gain

insight or support decision making.

Biman Bangladesh Airlines is a national flag carrier, the biggest public limited

company in the country, which is fully owned and operated by the Government of

Bangladesh. The corporate body of Biman namely 'Biman Bangladesh Corporation, is

doing business as Biman Bangladesh Airlines under the Ministry of Civil Aviation

and Tourism. The airline provides international passenger and cargo services to its

destinations. It has air service agreements with 42 countries. Annual Hajj flights;

transporting tourists and non-resident Bangladeshi workers and migrants; and the

activities of its subsidiaries form an integral part of the airline's business.

Table 1: PASSANGER, FREQUENCY & REVENUE (JUL02 JUN13) [1]

PERIOD FRQ PAX REV

(BDT IN CRORE)

JUL02 JUN03 13562 1424802 1839.00

JUL03 JUN04 14276 1543491 2057.41

JUL04 JUN05 15388 1537421 2230.06

JUL05 JUN06 14263 1398556 2349.56

JUL06 JUN07 11319 1200895 2194.93

JUL07 JUN08 8460 1375615 2639.91

JUL08 JUN09 8494 1397664 2341.49

JUL09 JUN10 8012 1425205 2453.55

JUL10 JUN11 9037 1602001 2771.42

JUL11 JUN12 9126 1765922 3243.89

JUL12 JUN13 6762 1578188 3384.32

TOTAL 118699 16249760 27505.54

Source: Mohammad Shah Newaz ,Director, Marketing & Sales, Biman Bangladesh Airlines

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In FY 201011 it made losses of BDT 2 billion, despite the government exempting it

a debt of about BDT 11.94 billion and BDT 5.73 billion owed to the BPC and the

CAAB, respectively In FY 201112 it made a loss of BDT 6.06 billion

(US$75 million, the airlines highest loss ever), in FY 201213 unaudited figures

show a loss of BDT 2 billion. The airline plans to be fully profitable by FY 2014

15. As of December 2013, The Airline owed BDT 15.60 billion to different sources of

which BDT 3676.2 million to CAAB and BDT 8.50 billion to Padma Oil Company,

its fuel supplier [2]. Aside from incurring losses, the national flag carrier is reputedly

plagued with many problems, including poor customer service, delayed flights and

schedule disruptions. Bangladesh Economic Review 2013 reported that since the

Dhaka government converted the airline into a public limited company in 2007,

Biman posted losses every year except fiscal 2007-08 and 2008-09.

Figure 1: Bangladesh Airlines Profit or Loss fugure from 2007 to 2013

Biman Bangladesh Airlines is counting huge amount of loss every year because of its

poor corporative culture and starting routes without proper market research. The

Airline is going suspend the Dhaka-Frankfurt service from 27th November 2014

because each flight incurs losses of Tk70 lakh due to very low passenger numbers. On

the first flight to Frankfurt this year, only seven travellers were on board the Boeing

777 aircraft that has a capacity of 419 passengers. The Dhaka-Frankfurt route, which

has been offered and discontinued before, was not subject to a rigorous market study

before it was relaunched. Biman Bangladesh Airlines started its service to Frankfurt

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and the government cancelled flights to Frankfurt in 2006 due to an insufficient

number of passengers.

Biman Bangladesh Airlines suspended it's Yangon and New Delhi operations two

months ago. The airline also has reduced its flights to Kolkata, Hong Kong,

Kathmandu, Bangkok and Kuala Lumpur and planning to add five international

destinations to Tokyo, Japan; Kunming and Guanxu, China; Colombo, Sri Lanka; and

Male, Maldives.

Market research is a way of getting an overview of consumers' wants, needs and

beliefs. Market research is the process of researching to customers and the market.

Market research enables a compa

Corporate Culture and Company Effectiveness Biman Bangladesh Airlines

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