Strategic Management: PEST Analysis of Oman Air

This paper provides a PEST analysis of Oman Air, analyzing the external environment and identifying opportunities and threats for the company. It also includes a reflection on the research process.

STRATEGIC MANAGEMENT

Table of Contents
1.0 Task 1: PEST Analysis................................................................................................3
1.1 Introduction...............................................................................................................3
1.2 Company Overview..................................................................................................3
1.3 Industry Analysis......................................................................................................4
1.4 External Environment Analysis: PESTLE Framework.............................................5
1.5 Opportunities and Threats........................................................................................7
1.6 Conclusion................................................................................................................8
2.0 Task 2: Reflection......................................................................................................10
References.......................................................................................................................14
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1.0 Task 1: PEST Analysis
1.1 Introduction
The analysis of the external environment of a b8sines has been considered to be one of
the most success-critical aspects of the studies of strategic management as the process
of such analysis and evaluation takes into consideration number of factors that are not
only external but also internal to the business as well (Krarti, Ali, Alaidroos and
Houchati, 2017). The instant paper deals with such analysis from the context of Oman
Air, an airline company based in Oman, against the backdrop of an established
theoretical framework.
At the very outset of the study, the researcher provides a brief overview of the theme of
the paper followed by the concise introduction to the chosen company. In the
subsequent sections of the report, the researcher analyses the industry trends which
the chosen company belongs to and also the company’s respective position in the given
industry segment. In addition, the paper also focuses on the analysis of the external
environment of the company based on PESTLE framework which identifies the
opportunities and threats for the company from the market forces. Finally, the
researcher closes the discussion by way of providing a concluding note.
1.2 Company Overview
Oman Air (hereinafter may be referred to as “OA” or the company or the firm, as the
case may be) is a national airline company based in Muscat, Oman. The company is
the flagship carrier of the Sultanate of Oman and has made a significant contribution
towards the making of Oman a major air traffic hub in the entire Middle East for the past
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several years. The airline company operates both in the domestic as well as
international market through its codeshare agreements with the number of flyer
companies like Lufthansa, Qatar Airways, Gulf Air, Etihad etc. Presently the company’s
total fleet size is around 70. The company has received the number of awards including
the "Seven Stars Luxury Lifestyle and Hospitality Awards 2018”, “Airline of the year
Middle East 2018”, “Official Four Star Airlines Rating at the APEX Regional Passenger
Choice Awards” etc in the year 2018 (Omanair.com, 2019).
The vision statement of the company is “To Become the Best” which is short and
simple and yet highly deep in terms of its strategic positioning and brand objective
(Omanair.com, 2019).
Some of the strategic objectives of the company are briefly listed below:
 becoming a safe airline and airline of the first choice
 increasing the revenue and reducing the cost
 undertaking initiatives towards the growth as per the pre-decided 10-year plan
 contributing to the development of the Sultanate of Oman (Omanair.com, 2019)
1.3 Industry Analysis
The airline industry in the Middle East has been growing at a steady rate for the past
several years. World's topmost airline companies are based in the given region. As per
the data released by OAG, the seating capacity has increased by almost 3.8% in the
year 2018 (Krarti, Ali, Alaidroos and Houchati, 2017). Though the industry is highly
competitive with the number of major market players are competing with each other with
their aggressive pricing strategy and innovative service offering, the overall outlook may
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seem to be vibrant for the long-term. At the beginning of the year 2019, it has been
observed that Middle East has total 1509 aircraft on order completed as compared to
1650 in service that makes the Middle East the country with the highest ratio of orders
to fleet in service of any region in the world (CAPA - Centre for Aviation, 2019).
1.4 External Environment Analysis: PESTLE Framework
1.4.1 Political
 The industry generally receives support from the Sultanate of Oman. OA is one
of the members of Arab Air Carriers Organization and hence gets significant hold
up from the government and regulators in this regard.
 Terrorism and civil unrest within the country generally lead to the political
uncertainty which, in turn, adversely affects the visitors’ footfall and eventually
the airline services, for quite obvious reasons.
 However, generally the Middle East has been able to maintain a healthy and
stable relationship with other countries across the world and therefore the foreign
service especially the tourism and hospitality may seem to be profitable if
executed well.
1.4.2 Economical
 UAE has a strong growth rate in GDP (Gross Domestic Product) and
simultaneously a very low unemployment rate which may accelerate the growth
and expansion of the corporate houses.
 As per the report of the World Bank, Oman's GDP is expected to increase by
2.3% in the year 2018 and around 2.5% in the year 2019 (World Bank, 2019).
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 However, the low oil price economy may affect the business environment to a
certain extent.
Social
 The disposable income in the hands of most of the people is sufficiently higher
and hence, the hospitality industry expects a steady growth potential throughout.
 The religiously strict society may affect the organizational culture in terms of
cultural diversity and inclusion through equal rights and access to corporate
benefits and services (Becherer and Helms, 2016).
Technological
 The young population in the country is extremely tech-savvy which allows the
corporate housed to leverage technology in their service offering and value
proposition to a great extent.
 The recent trend shows that there is a growing tendency among the customers to
manage their booking, travelling and even personalize their itinerates through
mobile applications.
Legal
 Most of the countries in the Middle East has a strict legal framework and Oman is
also no exception to the same, which, at times, affect the business operations.
 The breach of law attracts severe penalties, fines and even the prosecution that
may result in reluctance for the new investors to consider Oman as a probable
market for penetration and expansion.
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 On the contrary, the ban and restrictions imposed by the US and other few
countries on the airlines from the Middle East, in the advent of terrorism, has
adversely affected the domestic airlines’ operations.
Environmental
 Since the economy is largely dependent on petroleum oil-based products and
services, the environmental regulations are also very strict and stringent.
 The recent trends show the development of biofuels in order to reduce
environmental impact.
 research shows that the airline industry is responsible for approximately 12% of
the total carbon fuel emission and GHG emission in the entire transport industry
across the globe (Ltd, 2019).
1.5 Opportunities and Threats
Opportunities
Based on the analysis of the macro-economic environment of OA, it may be construed
that the business has the opportunities to leverage the technology and changing tastes
and preferences of the consumers to meet their luxury flying demands and desires.
Through disruptive innovation in the service offering and exclusive value proposition
and excellent quality may help the firm to tap more market share in the segment. The
membership with Arab Air Carriers Organization may also provide additional benefit for
the firm in the long-run in terms of a strategic tie-up with other airlines through
codeshare agreement (Becherer and Helms, 2016).
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Threats
The risk of a terrorist attack and resultant political turbulence may adversely affect the
company's operations. Moreover, the strict legal framework and regulatory environment
may pose certain challenges on the company. In addition, the stiff competition also
creates a threat to the company for sustainable growth in the long-run (Al M.K., Kathiri,
and Said, 2019).
1.6 Conclusion
On the basis of discussion and analysis as performed in the previous sections of the
entire paper, the researcher has been able to reach out to a concluding statement that
may underscore the fact that the process of devising an organizational strategy based
on the analysis of the external and macro-economic environment is crucial for the
success of the business. It has been well observed that OA has been performing
extremely well in the given industry segment for the past several years. Though there
have been number o challenges in the airline industry from the country’s context, the
management of OA has been able to mitigate those challenges by framing effective
corporate policy sets for the same. However, it is advisable to the management that the
leadership should always be vigilant on the latest market trends as the choices, testes
and preference horizon of the customers in the given industry has been highly volatile
and dynamic with the passage of time. Therefore finally, it may be concluded that a
well-designed corporate strategy followed by the strong leadership and efficient
corporate governance by way of implementing the strategy sets, controlling and
monitoring the same will considerably contribute towards the achievement of corporate
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goals of sustainability in the industry in the long-run in most time and cost efficient
manner (Belwal, 2017).
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2.0 Task 2: Reflection
While undertaking the previous task (i.e. Task 1), I, as a researcher of the project, have
gained immense experience both in terms of technical skill as well as a soft skill. I would
like to briefly narrate the same in the subsequent sections of the paper herein.
In terms of technical skill, I would like to convey that I have learnt how to research on a
specific topic based on primary and secondary data. In order to perform the given
research work, I had to undertake both primary and secondary research. While
preparing the report, I searched for the economy of Oman, the political structure of
Oman, social background and technological growth at Oman. I visited various websites
that could provide me with relevant information on these areas. But I realized that
practical experience was needed. Then I got the contact of Oman airlines and different
corporate houses of Oman through internet surfing, especially from their respective
websites. I created concise sets of questions which I sent to them through the mail. I
asked for their feedback in my mail. From the responses received, I came to know that
some major competitors of Oman Air like Etihad, Gulf Air etc consider OA as well as
their major competitors. I have also been able to gather on the fact that the strict rules,
religious bans, low oil prices are the threats for the company, though the management
has been efficiently running the show. Most of all, OA has knowledgeable well-
mannered staffs too. I referred few journals as well which have been available online.
Apart from the same, I put reliance mostly on primary data as well as website sources.
However, interestingly, I could not find an annual report of OA on their website.
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After analyzing political economic social and legal conditions of Oman and also
considering technological conditions, opportunities and threats for Oman Air, it can be
stated that the company's performance is excellent in the airline's industry. Company’s
management is well established to overcome several challenges. Terrorism is a big
challenge for the company. In Oman, there are farm legal restrictions and the society is
also religiously strict. They have their own religious faith and culture. They are not ready
to break those rules and customs for any reasons, whatsoever. In such an environment,
foreign investors may not be interested to penetrate. But Oman is not behind when we
are talking about technology. Especially young generations always like online
availability of new offers, booking confirmations, cancellations etc. They also have
disposable income in their hands. There is an opportunity for Oman Air to act
attractively for more prospect. Though Oman economy is petroleum based and low oil
price is a threat to the company. Moreover, the petroleum-based products are not
environment-friendly and there is a certain growth of using bio-fuel products to save
energy and the environment as well.
In terms of teaching skill, I would humbly like to state that I have been fortunate enough
to get my supervisor. My supervisor has always been very helpful and whenever I
needed support for any help on any information, the teacher has always provided me
with the required support. In addition, I would also like to say that the course curriculum
has been devised in such a manner that I feel that such course materials have helped to
me to gain an insight into the business world. In other words, the course structure and
programs are a healthy combination of theoretical aspects of business and also the
practical essence of the same. In this context, it may be wise to establish that
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theoretical knowledge is of no value if the same cannot be practically implemented in a
real-world scenario. But, here I feel that study of all theories and models have helped to
me to apply those theories on the real-world context as well which has sharpened my
skill and knowledge.
Lastly, I would like to reiterate the fact that by doing this assignment, I have been able
to sharpen my soft skill as well. Since the task had a deadline and quality parameter
associated with the same, I had to complete it within the given deadline and that too
with quality, as expected. After starting the work, I realized that the task is not tough, but
requires extensive research and time devotion. I, therefore, had to plan my schedule
accordingly so that I can plan my study, my college, my living and my research work as
well. I managed to extract 2 to 3 hours on a daily basis from my busy schedule. Every
day, I used to research and whatever I used to find, I used to jot them down on a piece
of paper. After 3 days, I got enough material for my task. Thereafter, I started
incorporating the same in my report and to my utter astonishment, I managed to
complete the task within the given deadline!
Apart from time management skills, I learnt how to remain calm even in tough
situations. I remember, once I was not getting information on the threats OA may
perceive for them. I was struggling for them. I wanted some direct information,
preferably some web sources that will give me a listing of threat perceived by OA. Then
I realized that even I find such web sources, that will not add any value to me, as that
will tantamount to spoon feeding. I need to write something based on my knowledge
and insight acquired on the firm. I revisited the PESTLE analysis conducted on the
company previously and therefrom, I managed to extract the relevant threats.
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Therefore, I would say that the task has inculcated a sense of honesty and integrity
within me as well.
Therefore, I would like to conclude stating that undertaking such assignment has truly
been an enriching and enlightening experience for me as the same has helped me not
only to develop my writing and research skills but also my soft skills to a certain extent.
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References
Al Ani, M.K., Kathiri, A. and Said, M., (2019). The Impact of Turbulent Environment on
Firm Performance: A Study on Omani Industrial Companies. IUP Journal of Applied
Finance, 25(1).
Becherer, R.C. and Helms, M.M., (2016). The role of entrepreneurial marketing in
improving market share for small businesses facing external environmental or resource
challenges. Journal of Business and Entrepreneurship, 27(2), pp.119-147.
Belwal, R., (2017). Public transportation in Oman: a strategic analysis. Advances in
Transportation Studies, 42.
CAPA - Centre for Aviation. (2019). Middle East Aviation Outlook 2019: Saudia shifts
the balance. [online] Available at:
https://centreforaviation.com/analysis/airline-leader/middle-east-aviation-outlook-2019-
saudia-shifts-the-balance-457937 [Accessed 30 Apr. 2019].
Krarti, M., Ali, F., Alaidroos, A. and Houchati, M., (2017). Macro-economic benefit
analysis of large scale building energy efficiency programs in Qatar. International
Journal of Sustainable Built Environment, 6(2), pp.597-609.
Ltd, A. (2019). PESTEL Analysis of Emirates | Business Teacher. [online]
Businessteacher.org.uk. Available at:
https://businessteacher.org.uk/pestel/emirates.php [Accessed 30 Apr. 2019].
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Omanair.com. (2019). [online] Available at:
https://www.omanair.com/en/about-us/corporate-information/oman-air-profile [Accessed
30 Apr. 2019].
Omanair.com. (2019). [online] Available at: https://www.omanair.com/en/vision-
statement [Accessed 30 Apr. 2019]
Omanair.com. (2019). [online] Available at: https://www.omanair.com/en/strategic-
objectives [Accessed 30 Apr. 2019]
World Bank. (2019). Oman's Economic Outlook - April 2018. [online] Available at:
https://www.worldbank.org/en/country/gcc/publication/economic-outlook-april-2018-
oman [Accessed 30 Apr. 2019].
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