External Analysis for Cathay Pacific Airways essay

At the moment, the political environment is favorable for the business development of Cathay Pacific Airways. As the company operates internationally, it can enter new markets and develop its business abroad, while many governments are tolerant in relation to foreign direct investors because they need investments badly to overcome negative effects of the economic crisis of 2008.

On the other hand, the company is based in Hong Kong and owns a share of China Airlines as well as China Airlines reciprocally owns a share of Cathay Pacific Airways. At this point, it is worth mentioning the fact that China is undemocratic country with the Communist rule. Even though the government attempts to introduce some principles of the open market economy, there is still the problem of the corruption and the overwhelming impact of the state on the domestic economy and business. In such a situation, Cathay Pacific Airways can never be certain in its future in China, although China is one of the fastest growing markets in the world and Cathay Pacific Airways have great prospects in this market. Therefore, the undemocratic regime in China may have a controversial impact on Cathay Pacific Airways because, on the one hand, the company can benefit, if the government and local authorities support it, while, on the other hand, the company may not be absolutely certain in the ongoing tolerance and loyalty of the government because of the persisting corruption and tightening competition.

The current economic environment, where Cathay Pacific Airways has to operate is far from perfect, because the company has to operate in the highly competitive business environment, while the global economy is still recovering from the global financial crisis of 2008. The negative impact of the global financial crisis of 2008 can hardly be underestimated, taking into consideration that the airline industry has suffered from a steep decline since the financial crisis has struck. In fact, the global financial crisis caused the crisis in the airline industry because customers had grown concerned with their saving and flights had become unaffordable for them. At the same time, the cargo flow worldwide had dropped too. As a result, today, the company has to struggle for regaining its position in the market and attracting customers to increase the cargo and passenger turnover. The company was traditionally concerned with both segments of the transportation market and, at the moment, the company attempts to regain its position and to increase its market share.

The social environment, where Cathay Pacific Airways operate, is also quite controversial (Boonstra & Gravenhorst, 1998). On the one hand, the company has a positive brand image and solid reputation. On the other hand, environment concerns of the public and security concerns affect consistently the passenger flow and, therefore, the overall performance of the company. In fact, the company has a positive brand image and reputation among customers. As a result, the company can rely on the customer loyalty. However, the growing environment concerns of the public put under the question, whether the company can count on the customer loyalty in the future or probably the environmental criticism may deter some of its loyal customers form the company. On the other hand, at the moment airlines offer the fastest way of transportation passengers and cargos that means that customers, who need to travel fast or for a long distance, will hardly refuse from services of such companies as Cathay Pacific Airways.  As for the safety and security concerns, the problem of international terrorism is not as burning in China and East Asia as it is in the US or the Middle East, for instance. This is why the company is relatively secure compared to its overseas rivals and less vulnerable to the risk of terror attacks and other security-related issues.

The technological environment is basically favorable for the successful business development of Cathay Pacific Airways. In actuality, the progress of technologies allows the company to introduce new technologies that help the company to save costs and to increase the customer satisfaction through offering them new services or services of the higher quality. In such a way, the company can benefit from new technologies. On the other hand, the development of new technologies raises the problem of the security of flights. For instance the use of mobile phones and other mobile devices may be potentially dangerous and affect the security of flights increasing the risk of aircraft crashes. In this regard, Cathay Pacific Airways, attempt to introduce new technologies that can protect aircrafts’ equipment from the potentially dangerous impact of mobile devices used by passengers of aircrafts. Anyway, the development of the contemporary technological environment can enhance the competitive position of Cathay Pacific Airways, if the company manages to introduce technological innovations faster than its rivals do. Therefore, new technologies have a considerable potential, which, being realized properly, can bring Cathay Pacific Airways a stronger competitive position in the market.