One of the changes that the corporation will go through as it implements this strategy will be on finances. The financial policies within the corporation need to be changed to make sure that all funds available are channeled towards the mammoth project.AMR cannot solely finance the green construction strategy. This means that the company will have to outsource funds from different sources. One of the sources is public. The corporation will have to make an initial public offer to attract the public to buy its shares in a bid to raise adequate capital. The proceeds or profits realized by AMR will be ploughed back to the implementation of the green construction strategy.
The implementation of green constructions in airports calls for massive funding. The most appropriate financing for the project would be a long term loan. In this case, AMR borrows an exact amount of money to finance the entire project. Alternatively, AMR can seek for funding by issuing new stocks or corporate bonds. Though these are cheaper in the long run as compared to a long-term loan, the company lacks assurance that they can raise the exact amount of money to fund the expansion strategies. It would be appropriate to finance the project through sale of new stocks and corporate bonds and also a long term loan. The long term loan tops up the amount of money acquired from the sale of stocks while the sale of stocks raises public interest in the expansion ventures and therefore serves to market the company. The long term loan also has a flexible repayment plan with the interest spread over a long period of time which makes it comfortable to AMR.
The expansion strategy may call for long layoff periods for some of AMR’s staff. This is due to the restructurings involved that call for the hiring of specialist staff experienced in green real estate development. In the past AMR has relied on the transportation of passengers and parcels through its airplanes and therefore the expansion to a new line of business in green real estate will call for an executive management adept with that line of business. The lower levels of the company will also need restructuring of the workforce through long layoff periods to accommodate the implementation of the new strategies.
The acquisition of a new developer who is knowledgeable in construction and development of real estate in the civil sector is a delicate and expensive procedure. The research into market needs and the actual acquisition of a developer to implement those needs are pivotal aspects in the successful implementation of the expansion strategy. The cost of acquisition of the green real estate business segment could be effectively settled if AMR negotiates mutually beneficial deal with a developer where the developer comes in as a partner to the business for a stipulated period of time. This ensures that the developer invests their own amounts with a buyout clause in the deal which eventually revert the company fully to AMR.
Modifications in the business-level strategy to support the new corporate strategy
Some of the business level strategies will also have to be modified so as to support the corporate strategy. The financial constraint will have to be taken into consideration. This is because the funds distributed to the different business levels will go through significant alteration since some of the funds will have to be pumped into the new green construction company strategy. This might inadvertently lead to a situation where the wage bill of the business levels might have to be reduced.
In the long run the strategy to invest in green real estate has great potential and is highly viable. AMR’s executive management could make this an exemplary business venture if they conduct sufficient market research into the very first projects that they should embark on. It is no doubt that environmentally friendly buildings are in huge demand the world over. However, some places are in dire need of the buildings than others. China for instance has a massive environmental challenge due to rapid industrialization and a high population. For this reason modifications into this China and the Asian business segment of AMR should be in such a way that the staff and the funding befits of the implementation of the green real estate projects in such a market. After successful implementation of the projects in such a place modifications in all business levels should be carried out to roll out the projects in other viable markets.
In addition, the laying off of some employees who add no value to the company should be considered since they are part of the reason of the downward trend of the company. Restructuring the workforce could free-up extra funds that are later pumped into the new projects. Furthermore, the management of the different business levels might have to be changed. This is because they may not possess the skills needed to support the green company idea.
Modifying the business strategies will ensure that the green project implementation will face minimal impediments. The successful implementation of the green real estate projects by modernizing and making the airports environmentally friendly calls for the elimination of some of AMR’s routes of operation to facilitate airport reconstructions. The implementation should target to be complete in phases that prevent total closure of the airports. In case of total closure the airports’ authorities should redirect air traffic to nearby airports. AMR can also eliminate operations in routes that are not profitable and direct the funds that go with it (fuel, employees’ payments, security and baggage handling expenses) to the completion of the green real estate projects.
There are a variety of personnel to be incorporated into the new workforce of AMR. These include civil engineers, engineers in general, architects, landscapers, logistics and efficiency experts and interior designers. The engineers shall be tasked with designing and implementing the constructions. The landscapers design the layout of the airport. These include the lawns, the pavements the fountains among other decorative and aesthetic features of the airports. The interior designers remodel the interiors of the buildings such as the lounges, the waiting areas, the appeals of the restaurants among other features such as the carpeting, paintings of the interiors, furniture types and colors etc. The logistics team ensures the smooth flow of the project in terms of timeliness and deliveries of the project objectives.
Staffing in the corporation
AMR will also undergo some staffing changes to accommodate the new expertise that will be needed for the implementation of the strategy. Some of the new expertise needed will be majorly constructors Civil engineers, engineers in general , architects, landscapers, logistics and efficiency experts, interior designers and environmental experts. Construction experts will work closely with the environmental experts to achieve the basic goal of the strategy. The company will also employ project managers who will oversee the project. The company can borrow from the constructions of major international airports such as the Honk Kong International airport which was rapidly and effectively expanded to accommodate increased flights and increase the safety of planes landing and taking off. The new staff has complementary roles in the development of the new green real estate projects and so it should be highly cohesive in order for each of the professions to fulfill its roles be they designing of the runways and the buildings (civil engineers) or the designing of lawns and pavements (landscape architects) to the furnishing of the lounges and painting of interiors of the buildings (interior designers).
New core competencies and competitive capabilities
The proposed strategy requires a lot of competitive capabilities and new core competencies to be instituted. Since the green company project is a relatively new idea, it might be looked at with a lot of suspicion from the general public and other corporations. It is therefore up to the management to engage in intensive campaign to promote the new idea.
Reputation has a very important position in architecture and building development as it is a capital intensive process and has to be done right. In order to support the new business, AMR is going to start an intensive search for the best possible talent. If this is done correctly, the new business will be able to count on the expertise and reputation of architects, engineers, interior designers, and leaders which will help establish the brand name.
As it was mentioned before the core competency that is going to distinguish the company the best is going to be the integration that the new business would have by suing some of the expertise that can be retrieved from AMR’s aviation businesses. The new business will be a solution for airlines by a corporation that knows firsthand what they are going to look for. In order to use this competency some of the workers of AA are going to be transferred to the new business. Some examples of the type of employees that could be transferred would be, retiring pilots, counter attendants, operation and logistics management personnel, and mail logistics experts to name a few. The skills and experience that have been acquired by these employees is going to be brought in order to do this.
The company is also going to have to develop one of the most important competences, green engineering. This new business is going to create a new concept not heard before green airports. 3% of the total world pollution is created by aircraft alone(The Economist) (Economist. (2012, February 11). Trouble in the air, double on the ground; Planes and pollution.(planes and pollution in China). The Economist, Feb 11th 2012, 3.) which means that this could be a good way to give back to the environment. This will make the company stand out and show its care for the public.
The third and final competency that the company is going to have to acquire is design. The design of these new airports has to be AMR’s signature as an innovative, integrated, and intelligent solution. The size of the project can dictate many of the decisions taken in the project but design is obtained by the people that work in this new business and should be the best in the world. This is going to be obtained by recruiting young innovative interior designers knowledgeable of the industry and with understanding of different cultures in order to bring the local culture to the design of the airport.
Restructuring
At this time, the corporation will have two important activities running concurrently. The corporation will have all its basic activities going on and now, the new activities aimed at implementing the green construction strategy. This means that the company will have to differentiate both corporate and business structure on these lines. This will be instrumental in avoiding conflicts or collisions between the personnel working under both projects.
As it is shown in the corporate anatomy appendix the new green construction business will be a new independent branch of the corporation and will operate individual from all of the other businesses. The goal of this is that the new business has its own leadership which has a very different business purpose than American Airlines and American Eagle. It would be best to have the top leadership communicate with the top management of all three businesses so there is a working relationship between them. The goal of this project at its core is to create a new profit from a business that is independent and may be able to diversify the growing risk that the airline industry is currently facing.
The new business’ independence in its operations is paramount in order to achieve the goal of a business that in a worst case scenario can help AMR and its stakeholders to remain profitable. This is also important for the future growth of the business into the development of other real estate projects as it would have the competencies to see opportunities and sees them as they see fit.
