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Journal of the Faculty of Tourism and Hotels-University of Sadat City, Vol. 3, Issue 1, June, 2019
- 1 -
Strategic Agility as a Competitive Advantage in Airlines - Case Study:
Egypt Air
Bassam Samir Al-Romeedy 1
1 Faculty of Tourism and Hotels, University of Sadat City
Abstract
Strategic agility has become one of the important tools that help airlines
survival, increasing competitiveness, and achieving excellence in a changing
and volatile labor market, that achieve a competitive advantage. The prime
objective of this research is to illustrate the importance of strategic agility in
achieving competitive advantage through studying its impact on innovation,
service quality, delivery reliability, process flexibility, and cost leadership. 300
questionnaires were distributed on a random sample of employees in Egypt air,
while 256 questionnaires were found usable for analysis. The results showed
that Egypt air is characterized as an agile company. Results also indicated that
strategic agility affects greatly the competitive advantage in Egypt air, where it
affects greatly delivery reliability, followed by innovation, then process
flexibility, service quality and finally cost leadership.
Keywords: Agility, Agile Organization, Agile Workforce, Strategic Agility,
Competitive Advantage.
Introduction
Organizations face a lot of challenges, because of rapid and fluctuating changes
in the work environment (Sherehiy et al., 2007; Kettunen and Laanti, 2008;
Idris and Al-Rubaie, 2013; Sohrabi et al., 2014; Qin and Nembhard, 2015).
These changes are due to technological development, globalization, innovation,
creativity, and changing customers' preferences (Swafford et al., 2006 and
Tseng and Lin, 2011; Sherehiy and Karwowski, 2014). Companies have to
cope with these changes and increase their competitiveness to survive within
the market (Alavi and Abd-Wahab, 2013 Young, 2013; Sherehiy and
Karwowski, 2014; Lee et al., 2015).
The term agility appeared when the work environment was influenced by rapid
changes (Alavi and Abd-Wahab, 2013). consequently, companies should
review their objectives, policies, and respond rapidly and with the flexibility to
work environment requirements. This helps with the emergence of the so-
called "strategic agility" (Ganguly et al., 2009; Hosein and Yousefi, 2012).
Strategic agility becomes a vital factor for success and sustainability in the
work environment (Trinh-Phuong et al., 2012), as well as the pursuit of
excellence, work processes development, and then achieving competitive
advantage (Idris and Al-Rubaie, 2013). Today, Companies seek to provide the
best value for its customers more quickly than its competitors (Sukati et al.,
2012).
Journal of the Faculty of Tourism and Hotels-University of Sadat City, Vol. 3, Issue 1, June, 2019
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Agile organizations are innovating new and fast ways to respond to changes
through the development of the company's strategies, using technology,
exploitation of human resources and improving their skills (Zain et al., 2005;
Hosein and Yousefi, 2012), quick meeting of customers' needs, quick entry and
exit in alliances (Oyedijo, 2012), offering new services in a timely manner
(Shah and Ward, 2003), take advantage of opportunities and minimize the risks
in a changing work environment (Qin and Nembhard, 2015).
The research aims to discuss the importance of strategic agility in achieving a
competitive advantage in airlines (Case study: Egypt Air) by examining its
impact on innovation, service quality, delivery reliability, process flexibility,
and cost leadership.
Literature Review
The concept of strategic agility
There are a number of strategic agility concepts, but these concepts are all
involved in reflection the quick response to changes in the labor market (Zain
et al., 2005 and Abu-Radi, 2013). The term agile was first used in 1991 by
researchers at the Iaccoca institute at Lehigh university (Latham, 2014). The
concept of agile organizations has been associated with fast decision-making,
flexibility and quick responding to market (Kharabe, 2012). According to
Sherehiy and Karwowski (2014: 467-468), Agility is "organization's capability
to flexible and rapid response to changes in the internal and external business
environment for exploiting all available opportunities". Strategic agility refers
to "The ability to continuously adjust and adapt strategic direction in core
business, as a function of strategic ambitions and changing circumstances, and
create new product, services, new business models and innovative ways to add
value for a company" (Audran, 2011, 47; Vecchiato, 2015, 29). Whilst Shin et
al. (2015) depicted that strategic agility means, the ability to produce new and
right products at the required time and price.
The importance of strategic agility as a competitive advantage
The work environment is characterized by quick changes and intensive
competition (lawler and Worley, 2006; Young, 2013). As a result,
organizations need to be developed in order to ensure survival against its
competitors by having a workforce that has the skills and capabilities to cope
with these changes (Idris and Al-Rubaie, 2013). As Young (2013) mentioned,
strategic agility is the best way to compete and survive in the market. For the
organization to be agile, it must adapt to unforeseen changes in the work
environment (Charbonnier-Voirin, 2011; Young, 2013; Tikkanen, 2014),
global competitive in market, providing a variety of quick service (Abu-Radi,
2013), processes development, change management and innovation (Economist
Intelligence Unit, 2009). Additionally, acquiring and sharing knowledge
(Cegarra-Navarro et al., 2016), teamwork and building a strong relationship
with customers (Tikkanen, 2014). Besides, financial support, human resources
planning (Hosein and Yousefi, 2012), training on advanced technology (Alavi
and Abd-Wahab, 2013), creating new ways to perform tasks, new ideas (Zain
et al., 2005), possession of qualified workers (Qin and Nembhard, 2015),
flexibility and effectiveness (Audran, 2011).
Journal of the Faculty of Tourism and Hotels-University of Sadat City, Vol. 3, Issue 1, June, 2019
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Agile organization means not only continuing responding to the changes, but it
also means the ability to exploit the available opportunities offered by changes
(Gallagher and Worrell, 2008; Izza et al., 2008; Trinh-Phuong et al., 2012;
Ashori et al., 2015; Lee, 2015), so as to keep its existence in the market and
increase its competitiveness (Young, 2013).
In the light of the continuing changes in the labor market, organizations should
have employees with high knowledge and skills (Qin and Nembhard, 2015), A
so-called agile workforce who is characterized by the ability to deal
appropriately with changes in a timely manner, as well as their ability to benefit
from the advantages of the change (Alavi and Abd-Wahab, 2013). Latham
(2014) has pointed out that, the agile workforce must be characterized by
intelligence, quick responding to changing customers' needs and market
conditions, acquiring new knowledge, cooperation between employees and
management, quick decisions making, and using advanced technology. Sohrabi
et al. (2014) Clarified that the agile workers are expressing agile performance
at work, which can be identified in six key dimensions, are dealing with
unexpected situations, solving problems collectively, flexibility, learning tasks
and work procedures, adapting to others, and dealing with the pressures of
work.
According to Morgan and Page (2008), factors of organizations' success in
changing labor market are represented in applying strategic agility successfully
(Santala, 2009), which becomes the hallmark in contemporary organizations
(Narasimhan et al., 2006; Trinh-Phuong et al., 2012; Nejatian and Zarei, 2013).
As Sukati et al. (2012); Tikkanen (2014); Ashori et al. (2015) and Luthria and
Rabhi (2015) mentioned, strategic agility is an important tool to achieve
competitive advantage in changing labor market. Strategic agility helps
organizations dealing with the changes quickly and efficiently (Naylor et al.,
1999; Izza et al., 2008; Zhang, 2010; Tallon and Pinsonneault, 2011; Sukati et
al., 2012; Winby and Worley, 2014), quality improvement (Sohrabi et al.,
2014), effective using of advanced technology, achieving excellence in the
labor market (Hosein and Yousefi, 2012), reducing costs, effective using of
organization resources, increasing productivity, providing a variety services in
a timely manner (Kováč et al., 2012). It helps also meeting the customers'
needs quickly, increasing customers satisfaction, reducing unimportant tasks
(Tseng and Lin, 2011), increasing competitiveness (Erande and Verma, 2008),
taking advantage of available opportunities in the market (Santala, 2009;
Kettunen, 2010; Chen, 2012; Kharabe, 2012; Ashori et al., 2015).
Besides, flexible dealing with internal and external changes (Agarwal et al.,
2006; Bosco, 2007; Lim et al., 2007; Young, 2013; Sohrabi et al., 2014), and
making quick and correct decisions (Doz and Kosonen, 2008; Minin et al.,
2014). Economist Intelligence Unit (2009) and Brusset (2016) also added that
Strategic agility concerns with the way in which organizations survive in the
times of turbulence and crises facing the labor market. Denning (2013) and
Latham (2014) also confirmed that strategic agility will not be achieved under
routine and bureaucracy.
Journal of the Faculty of Tourism and Hotels-University of Sadat City, Vol. 3, Issue 1, June, 2019
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Moreover, Tikkanen (2014) indicated that there are four factors to identify if
the organization implements strategic agility or not. These factors are
responding, efficiency, flexibility, and speed. According to the Economist
Intelligence Unit (2009), Agile business is characterized by fast decision-
making, outstanding performance, continuous improvement accountability and
credibility, empowerment, effective and strategic management of human
resources, decentralization, accessing to the right information at the right time.
Economist Intelligence Unit (2009) Also noted that there was a study
conducted at the Massachusetts institute of technology (MIT) showed that the
agile organizations increased revenue by 37%, and achieved 30% profits higher
than non-agile organizations.
Methodology
Research design
The researcher depended on the questionnaire for statistical data collection
about the sample characteristics, to what extent Egypt Air is characterized as
agile organization, and the impact of strategic agility as the independent
variable on achieving competitive advantage through (innovation, service
quality, delivery reliability, process flexibility, cost leadership) as dependent
variables. To achieve the study objective, the researcher proposed a model that
shows the impact of applying the strategic agility on achieving competitive
advantage.
Research model and hypotheses
Study model illustrates the impact of strategic agility on achieving competitive
advantage. This model has been developed after reviewing previous studies
related to this subject by Chen (2012); Oyedijo (2012); Abo-Radi (2013); Idris
and Al-Rubaie (2013) and Young (2013). The model includes six variables,
one of them is independent (strategic agility), and five are dependent
(innovation – service quality – delivery reliability – process flexibility – cost
leadership) as depicted in figure (1).
Figure (1) Study Model
Innovation
Service
Quality
Competitive
Advantage
Strategic
Agility
Delivery
Reliability
Process
Flexibility
Cost
Leadership
Journal of the Faculty of Tourism and Hotels-University of Sadat City, Vol. 3, Issue 1, June, 2019
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Study hypotheses
The study aims to test the following hypotheses:
H1: Applying of strategic agility has a significant effect on achieving
competitive advantage in Egypt air.
H1a: Applying of strategic agility has a significant effect on innovation in
Egypt air.
H1b: Applying of strategic agility has a significant effect on service quality in
Egypt air.
H1c: Applying of strategic agility has a significant effect on delivery reliability
in Egypt air.
H1d: Applying of strategic agility has a significant effect on process flexibility
in Egypt air.
H1e: Applying of strategic agility has a significant effect on cost leadership in
Egypt air.
Research instrument
The study employed a questionnaire as an instrument for data collection. The
questionnaire was divided into three sections: 1)Demographic information, 2)
Strategic agility, and 3) Elements of achieving competitive advantage. Section
one includes the demographic and work information of the respondents
(Gender, Age, Level of Educational, Job Tenure). Section two (Strategic
Agility) Includes 19 items of a five-point likert-type rating scale (1=strongly
disagree, 5=strongly agree) modified from the scale developed by Worley et al.
(2014) and Lee (2015). This section assesses the organization based on four
agility routines as follow:
A) Strategizing (S): Means stable identity and flexible intent that seeks to build
a series of short-term strategic advantages (was measured by 4 items),
B) Perceiving (P): Means sensing, interpreting, and preparing responses to
signals from the competitive environment (was measured by 5 items),
C)Testing (T): Means designing, resourcing, and executing effective tests of
potential responses to environmental threats and opportunities (was measured
by 5 items), and
D) Implementing (I): Means effectively and efficiently institutionalizing the
organizational response in operations of the firm (was measured by 5 items).
Section three (Competitive Advantage's Elements) includes 18 items of a five-
point likert-type rating scale (1=strongly disagree, 5=strongly agree) modified
from the scale developed by Chen and Paulraj (2004) and Abu-Radi (2013) as
follow:
A) Innovation: Refers to the capability of an organization in developing new
Services, processes and working Methods (was measured by 4 items),
B) Service Quality: Refers to the capability of an organization in providing
services that conform to established specifications, are reliable and provide
overall satisfaction to the customers (was measured by 5 items),
C) Delivery Reliability: Refers to the capability of an organization to deliver on
time service consistently (was measured by 2 items),
Journal of the Faculty of Tourism and Hotels-University of Sadat City, Vol. 3, Issue 1, June, 2019
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D) Process Flexibility: Refers to the capability of an organization to provide a
large variety of services within its existing facility (was measured by 4 items),
and
E) Cost Leadership: Refers to the capability of an organization to provide
services at competitive prices (was measured by 3 items).
Sample and data collection
300 questionnaires were distributed to a random sample of employees in Egypt
air, while 256 questionnaires were retrieved with a percentage 86.4% and were
found usable for analysis.
Data analysis
To achieve the objective of the research, the statistical techniques used in data
analysis include Cronbach alpha to assess the reliability, frequencies,
percentages, means, standard deviation, Spearman’s correlation, and simple
linear regression
Reliability
According to Nunnally (1978), the reliability coefficient of 0.70 or higher is
considered "acceptable" in most social science research. The Cronbach Alpha
reliability for variables and the tests indicated that the reliability coefficients
for variables were above 0.86, which shows that the instrument is reliable for
being used.
Results and discussion
Demographic information
Table (1) indicates that the majority of the respondents were males by 83.2%;
50% of respondents reported being from 36 to 45 years old. As for the level of
education, there were 95.3% of respondents who had a Bachelor degree. Years'
number of Job Tenure varied among the respondents. There were 32.4% of
respondents who had 6-10 years of experience, also 27% had 11-15 years of
experience, and along with 25% had 3-5 years’ experience.
Table (1) Demographic Characteristics of Respondents
Freq.
%
Freq.
%
1- Gender
2- Age
Male
213
83.2
less Than 25
11
4.3
Female
43
16.8
25-35
83
32.4
Total
256
100
36-45
128
50
More Than 45
34
13.3
Total
256
100
3- Level of Education
4- Job Tenure
Bachelor
244
95.3
Less Than 3
Years
23
9
Master
6
2.3
3-5
64
25
Doctoral
1
0.4
6-10
83
32.4
Diploma
2
0.8
11-15
69
27
Others
3
1.2
More Than 15
17
6.6
Total
256
100
Total
256
100
Journal of the Faculty of Tourism and Hotels-University of Sadat City, Vol. 3, Issue 1, June, 2019
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Descriptive results
Table (2) shows the mean and standard deviation for all items of strategic
agility in Egypt air. The mean score of strategic agility is 4.13, with standard
deviation of 0.95. This result means that Egypt Air is an agile company,
adapting to the changing business environment, responding rapidly, and
flexible to this environment.
Table (2) Mean Rating of Strategic Agility
Items
Mean
SD
1-organization has a unifying purpose / mission, other than profitability and
growth.
4.11
1.13
2-organization develops strategies with flexibility in mind.
4.10
1.21
3-organization has a culture that embraces change as normal
4.21
1.09
4-organization has core values that reflect a change ready organization
4.24
.95
5-organization spends a lot of time thinking about the future
4.23
.92
6-organization puts as many employees as possible in contact with the external
environment , especially with customers
4.45
.75
7-organization allows information to flow freely from the outside to
departments and groups where it is most valuable
4.16
.93
8-organization shares financial and business strategy information with all
employees
3.88
1.25
9-organization has formal mechanisms to connect senior management with
employees at all levels of the organization
4.42
1.03
10-organization encourages innovation
4.25
1.05
11-organization has enough budget so that employees can develop new
products or better ways of working together
3.93
1.32
12-organization is capable of shifting its structure quickly to address new
opportunities
4.25
1.10
13-organization has flexible budgets that respond to marketplace changes
3.95
1.17
14-organization regularly reviews learning from change efforts
4.43
.91
15-organization considers the ability to change a strength of the organization
4.57
.50
16-organization rewards seniority more than performance
3.70
1.46
17-organization pays for the skills and knowledge that contribute to
performance
3.50
1.43
18-organization has a well-developed change capability
4.12
1.17
19-organization encourages managers and employees to develop the leadership
skills of their direct reports
4.06
1.27
Total mean/standard deviation of strategic agility
4.13
.95
Table (3) indicates the mean and standard deviation for all items of competitive
advantage in Egypt air. The mean score of competitive advantage is 4.17, with
standard deviation of 0.84. The mean score of innovation element achieved
4.19, with a standard deviation of 0.96, service quality element achieved 4.26
with standard deviation of 0.90, delivery reliability element achieved 4.09, with
standard deviation of 1.26, process flexibility element achieved 4.15, with
standard deviation of 0.97, and finally cost leadership achieved 4.16, with
standard deviation of 0.80.
Journal of the Faculty of Tourism and Hotels-University of Sadat City, Vol. 3, Issue 1, June, 2019
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Table (3) Mean Rating of Competitive Advantage
Items
Mean
SD
1-organization has the ability to develop new methods at a high rate
compare with our competitors
4.21
1.14
2-organization has the ability to develop new features in existing
services at a high rate compared with our competitors
4.17
1.12
3-organization has the ability to develop new service technology at a
high rate compared with our competitors
4.02
1.21
4-organization has the ability to develop new working methods at a high
rate compared with our competitors
4.36
.87
Total mean/standard deviation of innovation
4.19
.96
1-organization has the ability to provide services of high level of quality
compared with our competitors
4.27
.99
2-organization has the ability to provide services with high level of
performance compared with our competitors
4.29
.96
3-organization has the high level of service quality as perceived by the
client compared with our competitors
4.20
1.13
4-organization has the ability to provide a high level of conformance
quality compared with our competitors
4.28
1.02
5-organization has the ability to provide a high level of service reliability
compared with our competitors
4.26
.99
Total mean/standard deviation of service quality
4.26
.90
1-organization has the ability to reliably deliver services on time
compared with our competitors
4.11
1.21
2-organization has to promptly handle client complaints compared with
our competitors
4.08
1.31
Total mean/standard deviation of delivery reliability
4.09
1.26
1-organization has the ability to rapidly change service mix compared
with our competitors
4.16
1.10
2-organization has the ability to rapidly change services volume
compared with our competitors
4.06
1.28
3-organization has the ability to provide broad service mix within same
facilities compared with our competitors
4.21
1.11
4-organization has the ability to rapidly handle clients’ needs compared
with our competitors
4.19
1.09
Total mean/standard deviation process flexibility
4.15
.97
1-organization has the ability to offer lower priced services compared
with our competitors
4.24
1.08
2-organization has the ability to provide services at lower internal costs
compared with our competitors
4.21
.98
3-organization has the ability to reduce overhead costs compared with
our competitors
4.02
1.14
Total mean/standard deviation of cost leadership
4.16
.80
Total mean/standard deviation of competitive advantage
4.17
.84
Journal of the Faculty of Tourism and Hotels-University of Sadat City, Vol. 3, Issue 1, June, 2019
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Spearman correlation analysis
According to the results of the Spearman correlation between strategic agility
and competitive advantage's elements in the table (4), The value of Spearman
correlation coefficient between strategic agility and competitive advantage's
elements was 0.771. This shows that there is a strong positive correlation
between the two variables. The table also shows that most closely element
related to strategic agility is the delivery reliability as it achieved 0.821 as a
value of Spearman correlation, then innovation that has achieved 0.812,
followed by process flexibility that has achieved 0.795, then service quality
that has achieved 0.613, and finally cost leadership that has achieved 0.576.
Table (4) Spearman Correlation between Strategic Agility and
Competitive Advantage's Elements
competitive advantage's elements
Correlation Coefficient
Sig
Innovation
0.812**
000
Service Quality
0.613**
000
Delivery Reliability
0.821**
000
Process Flexibility
0.795**
000
Cost Leadership
0.576**
000
Competitive Advantages
0.771**
000
Simple linear regression analysis
Table (5) depicts the Simple linear Regression analysis between strategic
agility and competitive advantage elements. Results show that strategic agility
clearly affects competitive advantage elements by 46.3% (F Value= 88.654;
Sig=.000). Strategic agilitygreatly affects innovation with 42.6 (F Value=
145.113; Sig=.000), furthermore strategic agility affect service quality with
36.7% (F Value=31.397; Sig=.000), delivery reliability with 56.9% (F Value=
14.756; Sig=.000 ), likewise on process flexibility with 39.2% (F Value=
102.975; Sig=.000) and finally, strategic agility affect cost leadership with
30.4% (F Value= 189.436; Sig=.000).
Table (5) Statistical Characteristics of the Simple Linear Regression
Adjusted
R Square
F value
Sig.
The impact of strategic agility on innovation
0.426
145.113
.000
The impact of strategic agility on service quality
0.367
31.397
.000
The impact of strategic agility on delivery reliability
0.569
14.756
.000
The impact of strategic agility on process flexibility
0.392
102.975
.000
The impact of strategic agility on cost leadership
0.304
189.436
.000
The impact of strategic agility on Competitive
Advantages
0.463
88.654
.000
Journal of the Faculty of Tourism and Hotels-University of Sadat City, Vol. 3, Issue 1, June, 2019
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Conclusion and recommendations
The application of strategic agility is one of the significant tools to achieve the
competitive advantage within the volatile and rapid changing business
environment. It also helps the organization to overcome the crises during the
recent period and regain its balance and position in the global labor market.
This makes it imperative for Egypt Air to expand in the application of strategic
agility to be the more agile company, and able to compete and survive in the
work environment through speed, efficient and highly flexible responding to
changes.
According to the study results, Egypt air considers an agile company by putting
future strategies to deal with the change, flexible thinking, and the ability to
cope quickly with change. Moreover, the interest in encouraging employees to
communicate and research in the external business environment, as well as
effective communication between workers and management encouraging them
to express their opinion, creativity, and innovation. It is worth mentioning that
Egypt air can achieve competitive advantage in the global market through
innovation, service quality, delivery reliability, process flexibility, and cost
leadership.
The study also showed that, there is a relationship between the application of
strategic agility and achieving competitive advantage through the five elements
(innovation, service quality, delivery reliability, process flexibility, and cost
leadership), so the strategic agility affect achieving competitive advantage
through its effect on innovation, delivery reliability, process flexibility, service
quality and cost leadership in Egypt air. Based on these results, Egypt air
should focus on training and continuous learning to develop employees' skills
and experience. Egypt air should also focus on the continuous improvement of
the services provided, as well as the level of quality. In addition to, using
advanced technology in all departments. Furthermore, Continuously carrying
out research markets to identify the desires and needs of customers. Moreover,
Egypt air should provide a variety of services with fit different prices that
different categories of customers.
Since this study discussed the impact of strategic agility on achieving the
competitive advantage in Egypt Air through the five elements, Future studies
should address other airline companies operating in Egypt, and comparing its
results with the results of Egypt Air to determine the amount of competition
among them. Future studies can also examine the impact of the training
programs provided by Egypt Air on the success of strategic agility application
and its impact on the company's reputation in the business environment. This
study also focused on the viewpoint of employees of Egypt Air. On the other
hand, it is possible to study the viewpoint of their customers because they are
important.
Journal of the Faculty of Tourism and Hotels-University of Sadat City, Vol. 3, Issue 1, June, 2019
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