Strategic Management - Air NZ external analysis

1546 words 7 pages
External Analysis
An external analysis will be done for Air New Zealand using the strategic tools such as PEST analysis and Porter’s Five Forces aiming to identify key strategic issues which will affect the profitability of the company. The analysis will be based on these two categories: the General environment which centralise on the company’s future among other competitors and the Industry environment which centralise on situations and circumstances which will affect the operation of Air New Zealand in the industry.
PEST Analysis
Government support plays a significant role in the success of Air New Zealand as a leading airline company representing New Zealand. This support can be seen in 2001, major losses created by
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However, improved technology enables the customer to search for the cheapest fares. Therefore, companies such as Air New Zealand have to compete with Jet Star (competitor) as they provide daily cheap deals for customers.
Customer service
Some customers are willing to pay more for good customer service such as Air New Zealand but most of them only care about the price.

Threats of Substitutes: Medium
Short distance
Trains and road trips can be a quick fix for short distance travel (domestic), however, can be time consuming.
Video conference
Using Skype for video conference can be an alternative for long hour business trips, however, for some important meetings; businessman has to be physically there.

Rivalry among Competitors: High
Product differentiation
Limited routes provided for travel purposes and limited availability in airport slot.
Fixed costs
High storage costs to store the aircraft, landing fees and maintenance fees
Exit barrier
High exit barrier as it is expensive to enter the industry (large amount of capital has been invested)
Slow growth
As high barrier of entry, the growth of the industry is fairly slow
Diverse competitions
Airline industry competes domestically and internationally. For Air New Zealand, its main competitors are Jet Star for domestic flights. For international flights, depending on


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