Impact of COVID 19 on businesses | Report

RUNNING HEAD: BUSINESS ENVIRONMENT
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Business Environment

Business Environment
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Introduction
This report is based in the impact of COVID 19 on the businesses. In order to know the
impact of this issue an organization has been selected that is “American airlines”. According to
WHO, Coronavirus is a disease spread through interaction between people and close contact
(WHO,2020). This disease is spreading at the global level and affecting each and every aspect of
human life. This disease has infected more than 110,000 people in 110 countries. Coronavirus
become the biggest threats to businesses and for the growth of the economy at global level. With
this context this report consists of challenges and forces that American airlines face and
strategies that the company can use in order to overcome this situation.
Organization
American Airlines is one of the oldest airlines that were founded in 1926 in the US. The
company operates in aviation industry and offers services related to logistics and passenger
carrying. The company has presence at the global and domestic platform with 6,800 flights in
350 destinations (Koonin,2020).
Problem: Decrease in number of passengers in flights leads to flight cuts and affecting airline
operations
Challenges and Forces
Due to Coronavirus, the aviation industry get affected to the greater extent as travelling is not
safe for people and is the option to stop the spread of this virus. Many countries decided for lock
down and restricted the travelling of people between two countries. Travelling restricted to
China, Australia, Canada, European countries, Asian countries and in the US.
Political: The political factors arises because of Corona Virus for American airlines are;
government imposed restriction on cross border, passed laws for quarantining large portions of
their population, and travel restriction at the domestic level also. Trump also announced travel
restrictions and closed boarder that the country shares with Canada. All these political
interference impacted the growth of aviation industry but on the other side the government of
different countries is providing aid to airline industry that collectively accounted for $200bn

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(Chinazzi, Davis & Marco,2020). This might help in to stable the aviation industry at the global
level. With the government order, the company reduced its international flights capacity by 75%
that includes reduction in number of flights for Asia, Europe, Australia, and South America.
Economic: The growth of aviation industry gets hampered to the greater extent because of
Corona virus. Due to this stock market prices of American airlines have declined. Revenues of
American airlines are falling because of slow growth of the aviation industry at the global level.
Further, because of this unemployment rate at the global level is increasing. American Airlines
facing issues related to providing paid leaves to employees and shortage of flight attendants.
Hence, due to Corona virus growth of American Airlines gets hampered. As the revenue for the
company in March is lowered by $1.5 billion.
Technological: The technological forces that airline industry is facing include use of testing
equipment, high checks by flight attendants for passengers and use of tracking and tracing
devices and focusing on storing of proper data of passengers. All these precautions are taken by
American airlines for continuing its operations. Hence, technological forces also impact on
operation of American airlines and the company need to invest on these equipment and
technological tools in order to ensure safety of passengers.
Global: Due to COVID 19, aviation industry till now experienced loss of 19% of revenues or
total of $63 billion at the global level. American Airlines share prices reduced by 25%, all these
factors already made airline companies into shock. On the other side, government of different
countries providing help to the industry by relaxing companies from tax and other charges. This
might improve the condition of Airlines at the global platform in upcoming months.
Societal: COVID19 presented a global epidemic threat and the social forces are the main that
impacted the business. The mindset of people shifted and they start quarantining, and reduce the
travel related work. Due to that number of passengers in airlines reduced. On the other side,
people who are travelling expecting high level of precautions and care from the side of airlines.
Due to that American airline at present is focusing on providing best quality services to
customers who are travelling at this stage (McKibbin & Fernando,2020). Hence, social factors
are major force and challenge for airline industry to overcome. Any problem at this stage from
the side of American airlines might impact the brand image of the company for longer run.