Macro-Environment Analysis Essay
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Macro-Environment Analysis (United Airlines)
Overview of United Airlines
United Airlines was formed in 1927 from the merger of three key airlines namely: Boeing Aero plane company, Pacific Air Transport, Varney and National Air Transport (“Company Overview | United Airlines Holdings, Inc.”, 2020). Boeing was the predominant airline in the United States but it progressively expanded into international routes and became the second largest air carrier in the world. Today, United Airline flies to 120 destinations across twenty-six countries (“Company Overview | United Airlines Holdings, Inc.”, 2020). The airline continues to persist as the industry’s top innovator by utilizing marketing strategies that provide customer-focused products and services.
Assessing United Airlines’ macro environment
United Airlines does not exist independently business environment, but instead, it operates in a larger context, which is referred to its Macro environment. According to Matovic (2020), a company’s macro environment is the broader, comprehensive economy and the forces that impact it. Ideally, it is the external environment in which a company operates and the factors that affect how it runs its operations. In this case, United Airlines’ macro environment consists of six different forces that shape its opportunities, but also present diverse threats to the company. These forces include Political, Economic, Socio-Cultural, and Technological forces (Matovic, 2020). PEST analysis model is used to understand United Airlines’ environmental pervasiveness by considering various Macro Environment factors.
Analysis of political factors
The political environment plays a significant role in influencing factors that may impact any business enterprise. Political factors include government laws and directives regarding certain business engagements, pressure groups and government agencies. Therefore, a company should know everything about the legal and political environment of a country before entering into a new market or country. United Airlines operates in major airlines in twenty-six countries across the world, hence, it exposes its business operations to different political environments that present political system opportunities and risks. Therefore, United Airlines must observe the rules and regulations established by every country of operation including the United States’ Federal Aviation Authority and the UK’s Civil Aviation Agency (“Company Overview | United Airlines Holdings, Inc.”, 2020). Some laws may lead to increased operation costs and more administration. For instance, the current air career agreements between the UK and the US state that only four key airlines should land at Heathrow International Airport for direct flights between these countries. United Airlines is among the four airlines allowed to land at Heathrow, therefore, this law presents an opportunity for the airline to invest in the UK (“Company Overview | United Airlines Holdings, Inc.”, 2020). Furthermore, United Airlines should analyze factors such as political stability, corruption level, anti-trust laws, industrial safety regulations, trade regulations and tariffs and favored trade partners before investing in any market or country.
Analysis of economic factors
Macro- environment factors such as economic cycle, foreign exchange rate, inflation level, interest rate and saving rate determine an economy’s aggregate demand and investment. In this view, United Airlines can utilize the economic factors of the countries it wishes to operate in including inflation rate, and economic indexes in the industry such as the rate of consumer spending to predict the company and industry’s growth trajectory (Matovic, 2020). The economic factors that United Airlines should consider before entering any market include but are not limited to: Inflation rate, interest rate, economic growth rate, discretionary income, an economy’s labor cost and productivity, the type of economic systems in the countries of operation and the exchange rate and stability of their currency. For instance, recent world events such as SARS, Iraq and Syria wars and the COVID 19 pandemic have direct significant impacts on airline activities, thus, United Airlines must consider the opportunities and risks they present before operating in different markets across the world (News, 2020).
Analysis of social factors
Every society has a unique culture, distinct basic values, preferences and behavior. This means that people’s cultural groups shape their values and beliefs and any business must understand these cultures to operate effectively in different markets. In this case, shared values, attitudes and beliefs in different societies play a major role in how United Airlines markets understand their customers in different countries (Pupo Kairuz et al 2020). The social environments in which United Airlines operate shape how the company strategizes its marketing message for key consumers in the Airline industry. Hofstede’s cultural dimensions’ model, which evaluates systematic variations in national cultures may be used to understand key social factors that influence United Airlines’ operations in different markets. The key dimensions highlighted in this model include individualism versus collectivism, power distance, femininity versus masculinity and uncertainty avoidance among other cultural factors (Stamolampros, Dousios & Korfiatis, 2020). Some of the fundamental social factors that United Airlines may consider before entering any market include but are not limited to: Hierarchy, class and power structures in a society, education level in the Airline industry in the countries of operation, and cultural factors such as gender roles and social conventions in the countries of operation.
Analysis of technological factors
Technological advancement has disrupted various industries including the Airline industry, which has transformed swiftly, particularly over the past five years (Pupo Kairuz et al 2020). The safety of the crew and the customers is the primary focus of all airlines. Therefore, United Airlines must invest in aircraft technology such as flight training, aircraft security, aircraft maintenance to ensure that it provides effective customer service, update its fleet and guarantee their safety.
Opportunities and threats
A SWOT analysis assesses a firm’s strengths, weaknesses, opportunities and threats (CAPA – Centre for Aviation.2020). In this case, United Airlines stands a chance to gain a competitive advantage over its rivals through its training initiatives to improve employee-customer experience, which is essential in boosting customer loyalty. Besides, the company pledged to increase its capacity in the US by at least 6% this year, which creates an opportunity for the company to compete for as many potential customers as its rivals (CAPA – Centre for Aviation.2020). However, the company faces the threat of losing market share due to low cost carries. COVID 19 also presented a substantial threat to United Airlines along with other airlines due to the travel legislations passed by different countries (News, 2020).
References
Company Overview | United Airlines Holdings, Inc.. United Airlines Holdings, Inc. (2020). Retrieved 19 November 2020, from https://ir.united.com/company-information/company-overview.
Matovic, I. M. (2020). PESTEL Analysis of External Environment as a Success Factor of Startup Business. ConScienS, 96.
News, A. (2020). Risk of COVID-19 exposure on planes ‘virtually nonexistent’ when masked, study shows. ABC News. Retrieved from https://abcnews.go.com/Politics/risk-covid-19-exposure-planes-virtually-nonexistent-masked/story?id=73616599.
Pupo Kairuz, A. R., Ponce Ruiz, D. V., Viteri Pita, G. F., & Bustillo Mena, F. S. (2020). PESTEL analysis of environment state responsibility in Ecuador. Neutrosophic Sets & Systems, 34.
Stamolampros, P., Dousios, D., & Korfiatis, N. (2020). Evaluating domestic bias on airline passengers’ ratings: The moderating effect of cultural value orientation. International Journal of Hospitality Management, 87, 102466.
United Airlines SWOT: positive direction after years of upheaval. CAPA – Centre for Aviation. (2020). Retrieved 19 November 2020, from https://centreforaviation.com/analysis/reports/united-airlines-swot-positive-direction-after-years-of-upheaval-430133.
| Sources: 6 | Order type: Essay Subject: Business and Management Academic level: Master Style: APA Language: English (U.S.) |
Order Description
Analysis of the Macro-Environment of united airlines.(Includes identification & analysis of global factors & application of analysis to business situation) A. What political/legal forces affect the industry? B. What economic forces affect the industry? C. What social forces affect the industry? D. What technological forces affect the industry? E. What are the threats and opportunities facing the organization?
