Low cost Airline

Overview of Indian Airline Industry – 2007

The passenger airlines industry comprises passenger air transportation, both scheduled and Chartered. The major carriers include Indian Airlines, Jet Airways, Jet-Lite, Air Deccan, Spice Jet, Paramount, Go Air, Indigo and Kingfisher Airlines.

The passenger airline service can be divided into two broad types:

Full Service carriers: These airlines offer all the in-flight and out-flight services like food, beverages, newspaper, and magazine on board. The ticketing is through both agents and internet and classes offered are business class, first class, executive and economy. Jet Airways, Kingfisher, Indian Airlines, Paramount etc

Low Cost Carrier, LCC: These are also called “no-frills carrier” as in-flight services like food, newspaper, specified seat are not a feature in these as a measure to keep down the cost. Air Deccan, Jet-Lite, Spice Jet and Go Air are LCCs.

The value of Indian airline industry as of 2006 was $6 billion with a compound annual growth rate (CAGR) of 27.6% for the 5-year period spanning 2002-2006. The domestic segment totaled about 90% of these revenues with passenger volumes of approximately 36.4 million (refer exhibit 2 & 3).

The Indian airline industry has seen a robust growth post-deregulation and subsequent liberalization initiatives of the government.


History and Evolution of Indian Airline Industry

The Regulation era
At independence, there were nine Air Transport Companies operational in the Indian Territory - Tata Airlines, Indian National Airways, Air service of India, Deccan Airways, Ambica Airways, Bharat Airways and Mistry Airways. Indian Aviation Industry was plagued by inappropriate regulatory and operational procedures resulting in either excessive or no competition.

In 1948 government of India together with Air India (earlier Tata Airline) set up a joint sector company, Air India International. In 1958, under Air Corporations Act, 1953 the government nationalized the airlines, merged them and created Indian Airlines with JRD Tata as the chairman of Air-India and a director on the board of Indian Airlines.

The Directorate General of Civil Aviation, DGCA, controlled flying licenses, pilots, certifying aircrafts for flight and issuing all rules and procedures governing Indian airports and airspace. The licensed airlines were known as “Air Taxis”.

Deregulation
In the early nineties, with the opening up of the Indian economy, the Air Corporation Act 1953 was repealed and Air Corporations Act, 1994 was enacted. This ended the monopoly of the public sector and private operators were allowed to operate both scheduled and non-scheduled services in the domestic sector and there were no major restrictions on aircraft size and type.

Post- Deregulation
The civil aviation authority, CAA was commissioned to maintain a competitive civil aviation environment which ensures safety and security in accordance with international standards, promotes efficient, cost-effective and orderly growth of air transport and contributes to social and economic development of the country.

To support the growth of the airline industry the Government in 1994-95 permitted direct import of aviation turbine fuel (ATF) under the special import license scheme. In 1997-98, the privatization policy was further liberalized and foreign equity participation of up to 40 per cent (100 percent in case of non-resident Indians) was allowed in the domestic airline sector.

In addition to the public carrier Indian airlines, a host of private carriers like Jet Airways, Sahara airlines, Jagson, East West, Modi-luft started operations. Out of these only Jet Airways, Sahara and Jagson carried on and others closed down. Year 2003 saw the entry of Air Deccan, the first low cost carrier. The growing air line industry attracted launch of other carrier like Spice Jet, Go Air, Indi Go, Paramount and Kingfisher

Air-Port Infrastructure
The Airport Authority of India (AAI) manages total 122 airports in the country, which include 11 international airports, 94 domestic airports and 28 civil enclaves. Top 5 airports in the country handle 70% of the passenger traffic of which Delhi and Mumbai together account for more than 50%.(refer to air route map)


Airline Industry Structure and competitive landscape

I. Suppliers and their bargaining power

The major input suppliers for the industry are aircraft, jet fuel and labor.

There are only a few major aircraft suppliers like Boeing, Air bus, ATR etc. Thus, they control the cost, delivery time or other terms. Aircraft are either leased or purchased from manufacturers by negotiating separate contract for each order. The negotiating power is generally low. A disincentive for airlines to switch suppliers is the fact that they often sign contracts for a number of aircraft to be produced over a period of time, and that breaking this contract would incur financial penalties.

The jet fuel, ATF, has no substitutes and OPEC controls their prices. Owing to a series of treaties between countries, airline fuel is not taxed. However, airlines have little control over rising fuel prices, and must often use techniques such as hedging to mitigate the impact of price fluctuations. Unlike other modes of transport like road and railways, airlines have no alternative source of energy.

Airlines employ a relatively large number of flight and ground staff, including mechanics, reservation and ticketing staff. Although the ticketing for LCCs is done mainly through the internet the labor cost may contribute 30 ~ 40 % of the total cost. With growing industry domestically and globally there is a dearth of experienced pilots. Thus, it is getting increasingly expensive to acquire pilots.

However, a number of airlines have formed partnerships or alliances with other airlines in order to buy fuel or purchase aircraft as a bloc, to reduce the supplier power and achieve a higher bargain power. It is difficult to find substitutes for the inputs as – an airline must have aircraft, a supply of jet fuel and a sufficient workforce before it can offer flights. Overall, supplier bargaining power is strong.

II. Buyers and bargaining power

The individual customers, leisure and business customers are the major buyers. The large number of individual consumers in this market diminishes buyer power, as the impact of losing one customer may be marginal for an airline. Switching from one player to another is rare due to high sunk cost of tax and surcharge.

However, as this industry is highly price sensitive, customers therefore shop around on Internet where it is easy to compare the ticket price, flight time and number of stops en route. Airlines also offer loyalty schemes and frequent flyer programs to ensure that customers do not switch over.

Therefore, the bargaining power of buyers is moderate overall

III. Threat of New entrants

The air industry in India has been deregulated to a certain extent, and airlines are now free to negotiate their own operating arrangements with different airports, enter and exit routes easily, and to set fares and flight volumes according to market conditions it is easy and attractive for new entrants.

However, although the bureaucracy and large financial investment required in setting up an airline serve as a deterrent to new companies. Air carrier companies must comply with a large number of rules, and there is a large amount of bureaucracy involved in setting up a new airline.

A new entrant in market as a new company requires considerable capital , for example, to acquire a fleet of planes. Even for an existing company to begin operating in India, the market may impose significant costs in terms of overheads, wages, and so on.

Access to good distribution channels may be difficult. Infrastructure in some parts of India is lagging behind the growth in air traffic. Increasing congestion at busy airports creates difficultly for a new airline to get primetime slots and can result in it being restricted to offering flights only at off-peak times thereby affecting the load factor

Although the revenues have grown strongly in recent years, rising fuel, labor cost have resulted in losses for all major airlines Overall, there is a moderate threat of new entrants.

IV. Substitutes

The main substitutes for airlines are other forms of transport: road, rail and marine. India is a large country and many urban centers, including some smaller cities, are served by airports. Domestic flights can be long in duration due to the time taken to reach the airport and check in but overall journey times are considerably shorter than bus or rail travel.

With increasing disposable income and time becoming a valuable for many business and leisure customers the trend towards the air travel is increasing. LCC travel is attractive.

Railway network is extensive and provides a fairly comfortable service between regional centers. Fares are substantially lower than those for the plane, although journey times are often long when compared flying. Thus, people prefer to travel by train if the airport is far from their destination or when airfare is substantially higher.

Also, as rising ATF price increase wedge between low cost airfare and train fare due to subsidized fuel for train and bus the attractiveness of LCC travel is loosing its sheen. Overall, the threat of substitutes for travel is moderate.






V. Industry rivalry

The Indian airline industry has many players in low cost segment. Even the full service carriers are offering competitive fares. Consumers can switch between different airlines quite easily depending on who is offering the most competitive airfare.

As many players own the majority of their aircraft, although they lease a few facilities and services, the exit barriers are high. Leaving the airline industry would require divestment of substantial and often quite specialized assets.

As the fixed cost are high, the ticket pricing is getting more and more competitive to get a larger share of the customer pie. With rising fuel cost a major portion goes into the fuel surcharge and taxes. Therefore, the contribution is low. Thus, there is intense industry rivalry.

Expanding an airline’s flight network may involve providing more frequent flights to a destination or adding new destinations to its service. It is possible to do either of these in a cost effective manner by signing a code share agreement with another airline.

Many airlines are also going in for acquisition and mergers. Air Deccan and Kingfisher have merged. Jet airways took over Sahara and rechristened it Jet-Lite, a low cost service.

VI. Government- Initiatives for Promotion of Aviation Industry

The airline industry growth is one of the core areas for domestic/international economic and tourism growth. Further the government has taken significant steps in this regard to keep up the growth in the aviation industry. The various steps taken by the government are :

(i) The FDI limit in Air Transport Services (Domestic Airlines) has been increased from 40% to 49% (NRI`s and PIO allowed 100% FDI).

(ii) Private scheduled carriers with 5 years experience in domestic sector and having fleet size of 20 aircraft permitted to operate on international routes

(iii) Liberal policy in the exchange of capacity entitlement / traffic rights paved the way for more foreign airlines to operate to / from India

(iii) Fleet expansion plans of Air India/Indian Airlines approved

(iv) Delhi and Mumbai airport being restructured and greenfield airports developed at Bangalore and Hyderabad.



Low Cost Airline Industry in India

The low cost carrier services started in India with the launch of Air Deccan in 2003.The low cost service has been modeled to a great extent on the model of Southwest Airlines in US.

The major features of the Low cost carrier model are low and simple fare structure .They point-to-point links between primary and secondary airports with high frequency.Seats are sold on first-come first-serve basis, so passengers get cheaper fares by booking earlier. The airline can also adjust the price bands if demand is greater or less than expected. All fares are one way and there is no difference in fare conditions.

Low Cost Strategies

1. High seating density and load factors: Higher seating density and no business class reduces per seat costs by 16%. The low cost airlines operate with higher load factors (fewer empty seats) so their costs per revenue passenger kilometer are even lower.




2. Direct booking: Direct ticket booking on internet, through call center and other innovative means prevents the agent commission cost.

3. No frills (No “free” food, drinks, lounges or loyalty programs): This reduces the cost per passenger. Cost is also reduced on other activities like caterers, airhostess and crewmembers. Also in-flight snacks on payment basis generate added revenue. No newspaper is distributed during the flight. It reduces administrative costs by having bare essentials at the airports and no fancy airport lounges or city offices. Time saved on account of loading and unloading of food and accessories reduces the turnaround time so that the aircraft can fly for a longer duration

4. Simple systems of yield management (pricing): The number of in-flight personnel is reduced to four per airbus and one on an ATR. The in-flight crew clears up the trash left over by the passengers, does away with the cleaning staff and local maintenance. This not only reduces the cost but also reduces the turnaround time thereby improving the fleet utilization.

5. Generate revenues from alternate sources: Airlines generates additional income by advertising for other brands. The airline sells every inch of external and internal space to interested advertisers.

6. Uniform aircraft types (usually the ATR, Airbus 320): Single type of aircraft will help in lower maintenance cost as spares can be used interchangeably. Further the training costs will reduce due experience curve effects. Having a single type of aircraft will also reduce the landing fees.

7. High Utilization: Usually the low cost carriers have a high utilization of their aircraft which is achieved by quicker turnaround times. The more the amount of time the aircraft is in the air increases revenue. These carriers generally keep the aircraft in air for about 11-12 hours per day thus increasing their revenue.

8. Focus on secondary airports: The LCC’s focus on secondary airports since here the turnaround time is very low and there is no congestion on and off the ground thereby saving on fuel and time and achieving high turnaround times. Further going to secondary airports also reduces the various fees which are levied in busy terminals and help in having priority service as there are only a few airlines operating from such airports.

9. Short Sector length: The low cost carriers generally focus on a shorter sector length i.e. average of around 400 nautical miles. This enables them to fly a greater no. of flights in a day as well as to help them to increase their efficiency as they will carry only the required fuel load thereby increasing the fuel economy. A single long haul flight may turn out to less profitable than a two / three short haul flights.

Low Cost Airline players-
The major LCC players are:
1. Air Deccan
2. Spice Jet
3. Go Air
4. Jet Lite

The low cost carrier constitute roughly 38% of market share (refer exhibit 4).

Air Deccan is the biggest player in the low cost carrier segment (refer exhibit 5).


Air Deccan

Air Deccan was founded by Captain G.R.Gopinath and launched as the first no frills airline in India in August 2003, with one ATR-42 and 4 daily flights.It was to provide air service to secondary cities in South India with six turbo prop airplanes having a capacity of 48 passengers.

Deccan's vision: “To empower every Indian to fly & to demystify air travel in India, by providing reliable, low cost and safe air travel to the common man by constantly driving down the air fares as an ongoing mission”. The discount model was based on Southwest Airlines with a point to point service. The “lean and mean” approach to staffing level and aims at maintaining a low aircraft to employee ratio to help cut down on cost and have low ticket pricing.

Until very recently airlines in India have operated on cartelized high-fare structures, ostensibly because of the high cost of fuel, high taxes, and high infrastructure and operating costs. Consequently, only the wealthy and price-insensitive business travelers could afford to fly. Little wonder that passenger traffic actually declined by 7% year-on-year in 2001-02.

Air Deccan’s success has been based on offering rock-bottom prices in order to target ordinary middle- class Indian who would otherwise ordinarily travel by train. The airline attracted an estimated 1.8m passengers in August 2005

The low cost business model follows the basic attributes as briefed earlier and detailed below:

1. Low Cost Structure: Fleet utilisation has been optimized.While most airlines plan for 55 minutes between flights for a single aircraft, Air Deccan takes 40 minutes for an Airbus and 20 minutes for an ATR. This allows longer flying hours for each of its planes.

Smaller aircraft are another way tokeep costs down since landing fees are higher for bigger aircraft. Air Deccan uses smaller aircraft for shorter flights and bigger planes for long hauls. Air Deccan has a single class system so that there are more seats per aircraft: 180 seats as compared to the 150 on full-service airlines such as Jet Airways and Indian Airlines. More passengers per plane translates into lower costs per passenger.

However, there are certain elements of cost that even Air Deccan cannot reduce. These include the cost of aviation fuel, the taxes levied by the government and other airport charges—all of which make up over 50% of the fare.

2. Get rid of frills. The inflight costs has been reduced by reducing the number of cabin crew to four per Airbus and one for every ATR and by not serving free inflight meals (passengers can buy food, snacks, water and coffee onboard). It does not even distribute newspapers during the flight. It has reduced administrative costs by having bare essentials at the airports and no fancy airport lounges or city offices.

3. Simple ticketing procedures. Air Deccan’s tag line is “Simplifly”. It has gone beyond the traditional distribution network and embraced the internet, call centers and other innovative media for reservations and bookings. Air Deccan offers e-tickets, where a customer books a ticket online and prints it and offers a facility to book air tickets through Reliance WebWorld’s nationwide retail chain of 241 Real broadband centres and through select Hindustan Petroleum petrol pumps. All of this means fewer offices, fewer salaries and fewer bills

4. Connect both large and small towns. Air Deccan uses the larger A-320 to connect the major cities and the ATRs to connect small towns. It is the only airline to fly to cities such as Kanpur, Jabalpur, Gwalior, Dehradun, Hubli, Belgaum, Vijaywada, Nasik, Kolhapur and Surat.

5. Generate revenues from alternate sources. Air Deccan generates income by advertising for other brands. The airline sells every inch of external and internal space to interested advertisers. Air Deccan has the logos of NDTV and Sun Microsystems painted on the exteriors of planes. Cabin interiors are plastered with ads, and even baggage tags and boarding passes—printed on thin pieces of paper—carry advertising.

Go Air

GoAir was conceived by Jeh Wadia of India's Wadia Group, a major long-established diversified industrial conglomerate, with the objective of "making domestic travel in India an affordable commodity". The carrier was launched in November 2005, initially with one A320 operating six flights a day. Currently operates 59 flights a day, across 11 destinations in the country covering Ahmedabad, Bengalooru, Chennai, Cochin, Delhi, Goa, Hyderabad, Jaipur, Jammu, Mumbai, Srinagar.

The present market share of 5% and it operates CAT III compliant A320 aircrafts. They have plans to expand the current fleet to 18 numbers by March 2009 and to 34 numbers by March 2011.

GoAir's distribution strategy has, like many of its competitors, used innovative avenues for distribution such as online bookings, travel agents, retail and self-help outlets. They have introduced GoTravel Agents, GoTata Indicom Outlets, GoInlott outlets, GoCyber café and GoPCOs, and the airline's call centre.

GoAir is publicly leading the push for regulatory reform to permit the outsourcing of ground handling and maintenance in order to lower operating costs. In January 2007, GoAir has begun using Radixx Air Enterprise to power some of its airline management programmes, including consumer web, travel agent and airline call centre reservations, revenue management and accounting and check-in programmes.

GoAir, has registered roaring business at the end of its first financial year; 2006-07. GoAir has sold over 1.5 million seats flying 396 weekly flights to 11 airports across the country. Since beginning operations in November 2005, GoAir has captured a 5% market share posting the highest load factor for Jan’07 (78%), Feb’07 (80%) and March’07 (77%) and cumulative till date April’07 (79%). GoAir has seen an average growth over the last four quarters in terms of revenue of 60%, in terms of passenger growth 50% and load factor growth is 17%. GoAir’s is planning new schedules with added frequencies on certain sectors and the introduction of new connections, offers its passengers an option to choose a flight at a time most convenient to them. GoAir became India’s first low fare carrier to win the prestigious international award for “Excellent Services” awarded by the Pacific Area Travel Writers Association (PATWA).

SpiceJet

SpiceJet has a fleet of 11 aircraft. SpiceJet will add 8 brand new aircraft to its fleet of 11 by 2008. These will include five B737-900ER aircraft with a seat capacity of 212. This aircraft will be the largest capacity aircraft in the Indian domestic skies. The next rounds of confirmed aircraft acquisitions will happen during April 2008 through March 2011, by when the total fleet strength will stand at 35 aircraft.

The airline carried over 2.61 million passengers during June 2006 to March 2007, and enjoys a market share of over 10% as of May 2008. The motto of the Company is to offer lowest air fares to its guests and provide safe, reliable and quality service of flying them between two points.

SpiceJet currently operates 83 flights daily to 17 destinations, offering connectivity between metros and nonmetros. Their main non metro destinations are Ahmedabad, Bagdogra, Coimbatore, Jammu, Varanasi, Vizag.

SpiceJet has the lowest cost per unit amongst Indian LCCs. This has been achieved by maintaining a standard aircraft type (B737 – 800) with identical seat configuration in a single cabin, engines and other maintenance equipment. Hence commonality of aircraft spares and training for crew and engineers also substantially contributes to reduced costs. It is this cost advantage that they pass on to the customers for them to avail of our consistent and year round low fares.

SpiceJet’s aircraft utilization is amongst the highest in India, while the turn-around time at airports is the lowest. This delivers efficiencies resulting in excellent asset management. Spicejet, having a fundamentally sound business model, is heading towards a break-even during Quarter 1 of 2007-08 financial year – the 1st by any new entrant in India.

Jet Lite

JetLite, formerly Air Sahara, is an airline based in New Delhi. Controlled by Jet Airways, the airline operates scheduled services connecting metropolitan centres in India. The airline also provides helicopters which are available for charter services and aerial photography. Its main base is Indira Gandhi International Airport, New Delhi, with hubs at Hyderabad, Mumbai. The airline was established in 1991 and began operations in 1993 as Sahara Airlines. Initially services were primarily concentrated in the northern sectors of India, keeping Delhi as its base, and then operations were extended to cover all the country.

Jet Airways bought Air Sahara in 2007 and rebranded the same as Jet Lite This takeover has given Jet Airways a combined domestic market share of about 32%. Jet Lite operates a fleet of 25 aircraft comprised of Boeings 737s and commands a market share of 7.1% as of May 2008.

As a move to cut down costs the airline is beginning the drive by charging passengers for food and beverages served on-board. JetLite, which has until now been positioned between full-service airlines and no-frills carriers that sell refreshments on-board, currently provides a free food tray with a cup cake, bun and a small bottle of water. Jet Airways is also considering taking over profitable routes from JetLite, the erstwhile Air Sahara that was bought by Jet Airways in early 2007, and sharing the ticket distribution software. These moves come amid a surge in aviation fuel prices that are squeezing airlines’ earnings. Jet Airways is planning to deploy JetLite in price-sensitive segments and induct Jet Airways wherever there exists a mix of business and leisure traffic. This will maximize revenue and profitability on account of synergies between both the brands.

Current Scenario and challenges

The low cost carriers in India have seen a good growth in the last five years. The growth pace gave a hope of churning out profits in near future from the current negative bottom line situation. Though low-cost airlines have encouraged a dramatic increase in the number of Indians who fly, there is still vast untapped potential.

Nearly as many Indians (16m) travel by train every day in India compared to the number who fly in a year. The low cost airlines are targeting the 800,000 rail passengers who travel every day in first class or air conditioned second class.

However, the scenario in 2008 presents many challenges as detailed below:

Rising fuel prices: The rising ATF cost is forcing an increase in ticket price (refer exhibit 5). It is seen that over a period of three years ATF prices have risen around 200%.

The fuel surcharge is going up very fast (exhibit 6).The fuel cost on an average contributes around 40 % of the total cost. This has a potential to reduce the attractiveness of low air-fare, for low budget domestic passenger, vis-à-vis the A/c rail fares. This threatens to not only impede the growth in passenger volume and value but also may prolong the time for the LCCs to convert to a profitable position.

Service inconsistencies, mediocre customer care and rapid growth.

Growing Competition: The full-cost airlines have started their low cost services like Alliance Air and Jet Lite offering the tiered fares that compare with other budget carriers like Spice Jet, Go Air and others

Pilot Shortage:Shortage of experienced pilots to operate has become a great challenge to these LCC. The shortage of quality manpower has them looking for experienced people in the erstwhile USSR.

Rising labor cost and inflation: Labour costs are also going up from day to day due to rising inflation and containing these costs at appropriate levels is going to be tough.

Weak Air Port infrastructure: Less no. of airports add to the congestion where the aircraft has queue up for take off and landing is a major challenge. Further the shifting of airports to the outskirts of the cities generally increase the commuting time between the airports and also increase the cost. This generally affects the LCCs the most since they fly on short haul trips and the total time including commuting from the city to airport increases the cost and time for the passenger who may turn to alternative means of transport.

Strategies to overcome the challenges

Reduce the cost further: As the fuel cost attributes to over 40 % of the cost, the airlines should focus on steps to improve the fuel efficiency. This can be achieved by reducing the weight of the carrier - carrying less water, having disposable glasses, flying at a reduced speed to reduce headwinds, polishing the aircraft frequently to lessen the drag, etc.

Increase the fleet utilization and load factor: LCC should keep away from the un profitable routes, increase service to non-metro stations and reduce metro station flights. As metro traffic is congested there is a lot of waiting time to take-off or land. This not only increases the idling fuel cost but also reduces the fleet utilization.

Fuel Hedging: The increase in fuel prices can to some extent be nullified by adopting hedging strategies. For example Southwest Airlines has locked in fuel at $51 per barrel for their operational requirements of the rest of this year.


Merger and Acquisition: The merger of Kingfisher and Deccan, acquisition of Air Sahara by Jet Airways is taking place due to shakeout in the space of the airline industry. The airlines are aligning themselves to derive the maximum economies of scale which would not be possible with a large no. of operators.

Better Fleet utilization- Fly abroad: The government is considering policies where the start up airlines can be allowed to fly abroad by relaxing the norms. These airlines can better utilize their aircraft by flying to nearby foreign destinations and returning with a full fuel load (at cheaper prices) to utilize on their domestic routes.

References

BOOK
Datamonitor report 2006
Rediff News May 15, 2006 – What the future holds for Air Deccan?
http://www.foolonahill.com/mbaaviation.html#_Toc83227607
SpiceJet Annual Report
Various articles appearing in the Economic Times during the period May/June 2008
Deccan Aviation Annual Report
Times of India News articles appearing during the period May/June 2008
http://www.business.headlinesindia.com/industries/aviation.html
Vishwapti presentation ATP Cost.ppt from web
low cost strategy 040405 worldwide.ppt from web
GoAir presentation from the web
PDF File from web: “Impact of the Adherence to the Original Low-cost Model on the Profitability of Low-cost Airlines” by FARIBA ALAMDARI and SIMON FAGAN
Air Transport Group, Cranfield University, Bedford, UK
Taylor and Francis Ltd TTRV103857.sgm
(Received 2004; revised 2004; accepted 2004)

Decision making Styles

What is the job of a Manager? They get things done, make plans, take decisions and allocate resources for a common goal that can be called the Company’s objective. But the most important job of a manager is to make decision. Decision making capability is one that distinguishes an Effective Manager from manager.
Some aspects of Decision Making are:
Reviewing Data: The manager is to seek value information from different sources and review them in Team or group to take out the valuable information from that data. The data can be analytical , graphical or conceptual and requires in depth study of the situation prevalent at the site of information.
Exchanging Information: Then the exchange of information followed by brain storming session takes place.
Coming-up with Ideas: The individual ideas are taken and analyzed.
Evaluating Alternatives: The various alternatives got from the analysis of the ideas are then evaluated to get meaningful foresight of the implementation of the decisions.
Implementing Directives: Finally the implementation of the decision takes place and theory changes to practical.
Following Up: The follow up of the implemented decision is a must for growth on a regular basis ie maintaining the positive outcome and acting in case of the negative output if any.

Decision Requirement at Different Level

In Higher Level Management the main area of interest is making Decision about which services to offer and how to develop them. In the case of Lower Level Management action is at premium ie solving the problem on the spot as and when detected or ordered by the Higher Level Management.

Decision Style
Definition: Decision Styles depends on two components:
-How information is used and
-How options are created
User of Information: The information required by the user can be categorized in two categories:
Maximizers:
i. Depend on Huge Data: These require huge amount of data to analyse before they end up making a decision.
ii. Come up with well informed Decision: These people give more realistic and upto date information and decision based on the facts they utilize in making decisions.
iii. But at the price of TIME and Efficiency: These people consume a lot of time and efficiency in collection of data and result in more cost required for a decision to be taken.
Satisficers: ( Coined by Economist Herbert Simon)
i. Want only Key Facts: These people are mainly intuitive and require only key facts that can help formulate decision and analyse these in connection to their expertise and past experience.
ii. Apt to leap to Hypothesis and test them on the go
iii. Ready to act as soon as they have enough information to satisfy their requirement

Creator of Options:
Single Focus
i. Believe in single course of Action
ii. Put all energy in what they believe they should do



Multi Focus
i. Generate multiple options
ii. May take multiple course action
iii. Put energy into adapting to circumstances

Style of Decision Making

Decisive: These people individually value action, speed, efficiency and consistency to take a decision. Their decisions depend on their past experiences. Once a plan is in place, they stick to it and move on to the next decision. In dealing with the other people they prefer honesty, clarity, loyalty and especially brevity. Time is precious to them.


Flexible: Individually they value action, speed but the main emphasis is on Adaptability. They search for just enough data and decide line of action. They quickly change course of action if there is a need.

Hierarchic: Individually they do not rush for judgment, analyze a great deal of information and expect others to contribute. They readily challenge other’s view and analyses and decisions. From their perspective the decisions should stand the test of time.

Integrative: Individually they do not look for a single best solution. They usually frame situations very broadly taking into multiple elements related to situations and make decisions that are broadly defined. These make decisions with multiple course of action and like a lot of Inputs. These explore a wide range of view points including those that conflict with their own. This approach is not an event, but a Process.
Broader perspective

People do not fall neatly into four little boxes and circumstance influence the decision style. A manager needs to have the ability to call on all the four styles and exhibit expertise in all the four styles. For example in stable environment single focus style would prevail while in a uncertain environment multi focus will prevail.

Managers make decisions differently in public setting (Where they are being observed) and in private setting (where there is no need to justify the process). The public mode is called as ‘Leadership Style’ and the private mode is called as ‘Thinking Style’.

Charting Decision Styles
Leadership Styles
In public decision making senior executives are complete opposite of lower level Managers. The Decisive style (minimal information and single option) is dominant among First level Supervisors, but nearly non-existent among Sr. Executives.
The fast moving, multi focused flexible style is embraced by Sr. executives while low in supervisors. The Hierarchic style (lots of data, one option) is frequently used by first line supervisors. Its use reduces through a managers career and bounces back at the most senior level. Integrative style is used heavily by senior executives, but it is hardly applied by junior managers.

Thinking Styles
Here the private decision making style at each level is very different from those in Leadership style. The Integrative and hierarchic style (Analytic and maximizing style) increase progressively and then merge at the senior level. The Integrative and hierarchic style (Analytic and maximizing style) increase progressively and then merge at the senior level. The fast moving, multi focused flexible style is embraced by Sr. executives while low in supervisors.

Decision Style approach to Development

Most companies rely on management development and succession planning schemes on the assumption that
-Leaders are Leaders
-Good people can handle anything

Conclusion
Career development map makes it clear for up-and-coming managers that what lies ahead is
- a new terrain
- Quite different Challenges
- In some cases challenges are opposite what they have encountered in the past.
It also shows that
- relying on past successes and habits is no guarantee of success
- May be the road to failure

Early high performance is a useful indicator of future success, but it is by no means the only one

My Thoughts - Life

Life, as the letters are rearranged, becomes Lie, If and File.
It's like a file which is created as the person or a creature is born not physically but in the embryo stage. Every moment adds up a little or more on the subsequent pages filed in it. Experiences, relations, moods, Personality changes, thoughts, Aims and the Profile of the person changes time to time and papers are added in quick successions making the file a bulky one. When a creature leaves the world the file is closed and packed for further references and kept in a Bookshelf of the world. it depends on the quality of the work written off in the file that determines the access to the file once it is placed on shelf.
It contains If at every stage that can't be resolved, as the view is blind. The hope never dies and the path is never seen clearly. Only If remains!! If this happen, I will be happy. If this donot happen, I will be happy. I can do this......... Not specified but if lies in it too, If I want to be successful. There are many conditions. " If I have all the world, i am happy". But still I am not happy. So a big Question mark remains as future is blind. Thoughts and imagination gives a glimpse but still the future is illutionary.
It contains Lie at every stage. Nothing is clear. There are a lot of assumptions, that satisfy the need for data or hope, but everything is a lie.
Still what remains to be told is "File such experiences, that make others refer you again and again, after the file is kept on bookshelf. The time of reference should be more than the time of idling of the file". Take the Life as it comes. Don't try to alter the If or give up to see the If, but work on your thoughts and imagination to perceive a better if ahead and work on it hard so that, it can increase the will to add another pleasant page in the file. Don't be stressed by a failure as it is in itself a lie. Seek the case of Abraham Lincon. Lie about failures, file the pleasant, file the achievements for self and others made by you and See a better future ahead till the file closes............ Have a nice life ahead!!!!