Strategic and Environmental Analysis of Cathay Pacific
Muhammad Zeeshan Khan (Date: 10.06.2013)
This research report is aimed to critically examine the strategic processes, which organizations use to identify their goals and value and a develop strategic business plan in order to achieve those goals and objectives. This report mainly includes a case study, “Cathay Pacific: Doing More with Less” that has been published by Harvard Business School and Written by Mr. Warren McFarlan and Mr. Fred Young. The scope of report surrounds the environmental analysis, strategic planning, risk analysis, impact analysis and stakeholder analysis with the Cathay Pacific Airline. The ultimate outcomes of research are to develop understanding about how organizations develop their strategic plans and what are the factors, important to consider during strategic planning.
This report has been split into five parts. The first part of the report is about environmental analysis, in which the three areas so business plan has been captured including external environment with PESTEL analysis, Internal environment with SWOT and the competitive environment with Five Forces Analysis. The second part of the report is about evaluation business model and strategies, being used by companies to achieve competitive advantage and strategic objectives. The third part of the research is about risk analysis and assessing the importance of environmental factors during the planning process. The fourth part of the report is about examining the impact of globalization on business planning. The fifth part of the report is about assessing the impact of stakeholder on business planning. In the end, a summary has been added, based upon findings of critical research that briefly addresses the findings of research.
2. ENVIRONMENTAL ANALYSIS:
The environmental analysis consists of evaluation of possible or probable effects of influencing forces from environment on strategic decisions or even survival of business (BusinessDictionary.com, 2010). The environmental analysis mainly categorizes changes or forces, affecting business directly or indirectly (MaRS, 2012). However, there are three important areas to explore during the environmental analysis including external environment, internal environment and competitive environment. The environmental analysis of Cathay Pacific has been performed with the help of different models.
2.1 External Environment:
The focus of external environment is to examine the threats and opportunities from the external environment, affecting strategic decisions of the company (My Strategic Plan, 2012). In order to analyse the external environment, the framework of PESTEL have been used. See results of PESTEL Analysis through following link.
2.2 Internal Environment:
The internal environment of the company mainly consists of factors, events, entities, employees and conditions within the organization, which influences its strategic decisions and activities (BusinessDictionary.com, 2009). The analysis of internal environment mainly performed with the help of SWOT analysis. See results of SWOT Analysis through following link.
2.3 Competitive Environment:
The competitive environment, also known as market structure, consists of a dynamic system, in which a company competes (Mack, 2011). The competitive environment of Cathay Pacific consists of all competitive forces, which affects the competitiveness and strategic decision of the company. The five forces analysis has been used for analysing the competitive environment of Cathay Pacific. See results of Five Forces Analysis through following link.
3. STRATEGIC PLANNING OPTIONS:
The strategic planning is an organization’s process of defining strategy, making decisions or direction along with the allocation of resources in order to execute its strategy (Skills & Expertise, 2013). According to the case study findings, the company has used the following models and strategies as a part of its strategic plan. See the results of strategic planning options through following links.
4. GAINING COMPETITIVE ADVANTAGE:
The competitive strategy of Cathay Pacific has been analyzed in order to see the gaining competitive advantage at Cathay Pacific. See results of Five Forces Analysis through following link.
5. IMPACT OF STAKEHOLDERS:
The stakeholder analysis of Cathay Pacific has been performance in order to see the impact of stakeholders. See results of Five Forces Analysis through following link.
6. RISK ANALYSIS:
The purpose of risk analysis is to identify all the potential risks and their impact, which are likely to affect the strategic decisions of business. The major risks have been identified from analysis of external environment (PESTEL), the internal environment (SWOT) and competitive environment (the Five Forces). There have been found risk from strategic areas of Cathay Pacific. As per risk principle, more risk, more return. Similarly, as the company have outsourced its major areas, which have increased the profit by six folds, but the level of risk has been increased with same proportion. The implications for the company are to perform risk identification and risk assessment and then also do planning for managing uncertainty.
7. IMPACT OF GLOBALIZATION:
The globalization refers to “process of integration and interactions among people, governments and companies of different nations, triggered by international trade, investment and information technology (University of New York, 2013). In the 21st century, the world has become a global village and companies are now operating out of their boundaries (Held et al., 1999). In today’s world, the challenges of globalization are also affecting the strategic planning of companies, making it difficult for companies to operate smoothly. According to Weegy (2010) globalization have created environmental uncertainty, because when a company think about global businesses, then they have to face lots of issues and uncertainty, which increase complexity. The above results of PESTEL, SWOT and Five Forces analysis have highlighted many issues and challenges, which increases uncertainty for business, brought by globalization. Similarly, the increasing level of competition in domestic and international markets has been caused by Globalization, so the strategic planning of business has been affected due to globalization (Myatt, 2013). However, the increasing level of diversity, changing demographics, different market structures and rising economies has been caused by globalization. So when a business enters into new international or global market, then it has to face a high level of complexity in analysing the challenges and influencing factors, which are likely to affect the strategic decisions of the company. The implications for Cathay Pacific and other global companies are to consider all factors and challenges during strategic planning for the company.
This assignment is mainly focused to examine that how different companies use to develop their strategic plans. The case study of Cathay Pacific, a leading airline company based from Hong Kong that operating worldwide, has been chosen as case example and different concepts of strategic management have been applied, such as environmental analysis (PESTEL, SWOT, Five Forces), strategic planning (Ansoff Matrix, Porter’s Generic strategies), company’s strategies, risk analysis, impact of globalization and impact of stakeholders. The findings of strategic analysis have shown that the strategic planning process of companies have been greatly affected through environmental factors (external, internal and competitive), risks, globalization pressure and stakeholder’s interests. So, the companies have to consider all the factors, evaluate their impact and then modify their strategic planning process. The implications for strategic managers are to adopt and apply multiple strategic tools and concepts during strategic planning that will increase the chances of success for achieving company’s objectives.
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