Cathay Pacific's Competitive Edge

China Eastern Airlines' increased labor costs have a negative impact on prices, while competition reduces prices. A effective strategy for Cathy Pacific Airways is to combine Strength and Threat strategies by addressing high fleet maintenance costs through technology, resulting in a strong brand against competition. This approach minimizes the negative effects of competition and strengthens the company's weaknesses. The key takeaway is that Cathy Pacific should focus on maintaining its high standards of customer service while ensuring transparency and balance in its business practices.

Running head: STRATEGIC MANAGEMENT
Auditing Strategic Management of Cathay Pacific
Name of the Student
Student ID
Name of University
Author Note

2STRATEGIC MANAGEMENT
Table of Contents
1. Executive Summary:................................................................................................................4
2. History of Cathay Pacific.............................................................................................................4
3. Situation at Cathay Pacific:.........................................................................................................5
4. Mission and Vision Statement Analysis:.....................................................................................6
Background................................................................................................................................15
Mission......................................................................................................................................15
Vision.........................................................................................................................................15
5. Corporate Governance:..............................................................................................................17
FACTORS.................................................................................................................................20
WEIGHT....................................................................................................................................20
RATING....................................................................................................................................20
WGTD SCORE.........................................................................................................................20
COMMENTS.............................................................................................................................20
SWOT........................................................................................................................................27
FACTORS.................................................................................................................................27
WEIGHT....................................................................................................................................27
RATING....................................................................................................................................27
Weighted....................................................................................................................................27
SCORE......................................................................................................................................27

3STRATEGIC MANAGEMENT
COMMENTS.............................................................................................................................27
TOWS........................................................................................................................................30
4. Mission and Vision Statement Analysis:...................................................................................33
Conclusion:....................................................................................................................................37
References......................................................................................................................................38

4STRATEGIC MANAGEMENT
1. Executive Summary:
The following report is going to audit the organizational and corporate strategy of Cathay
Pacific. There are different segments of the audit. These are the analysis of vision and mission
statement of the company, situation analysis of Cathay Pacific and external and internal analysis
of the organization. With the help of TOWS and different situational analytical tools, the audit
has been authenticated. The situation analysis comprises of both the organizational and product
quality and the provision of service that is considered within the market. Being a flagship wing
of the organization in Hong Kong, the company delves into the process of continuous service
development plan. This is how in most of the cases, the corporate governance, organizational
structure and external and internal characteristic traits of the company has been audited with
profound study.
2. History of Cathay Pacific
Cathay Pacific has been the flag carrier of Hong Kong for nearly seventy long years. The
operations of the airlines along with its subsidiaries have been transporting cargo and passengers
to around 180 destinations in 44 countries across the globe inclusive of the joint ventures and
codeshares. The airline was incorporated on 24th September, 1946 by American Roy C. Farrell
along with Australian Sydney H. de Kantzow, with each of them investing HK$1 for registration
of the airline. The airline was able to make the world’s first non-stop transpolar flight flying over
the region of North Pole in the month of July, 1998 that was stated to be the maiden flight
arriving at the then International airport of Hong Kong.

5STRATEGIC MANAGEMENT
In the year 2010, Cathay Pacific became the world’s largest airline of international cargo,
added with the main hub Hong Kong International Airport as the busiest cargo traffic airport of
the world. Cathay Pacific has been an award winning and globally apparent airline, being
rewarded with the “World’s Best Airline” award for four times along with constantly being
ranked as one of the best airlines existing in the world. On the month of September 28, 2006, the
airline endured shareholding repositioning under which Dragonair became a wholly owned
subordinate though it continued to operate under its own brand name. Cathay Pacific’s
acquisition of Dragonair meant gaining more admittance to the constrained, yet fast growing
market of Mainland China along with having more opportunities of the sharing of resources.
Cathay Pacific has always been recognized as a company that has set the standard of the
industry through the service it provides, playing a major role in strengthening the links of Hong
Kong to other global hubs through the regular services to Los Angeles, New York, London and
Sydney along with augmented frequencies to other destinations.
3. Situation at Cathay Pacific:
Cathay pacific has been playing a commanding role in strengthening the position of Hong
Kong as the global hub of aviation and the main gateway to the Chinese Mainland, leveraging its
vast network in enhancing the flow of traffic in business, cargo and tourists. Cathay pacific is
more dedicated towards the technological brilliance for its services and products. Under the
present circumstances, Cathay pacific has been trimming down costs in certain ways; like last
year they announced that they would clean-up their aircraft on less frequent basis. The airline is
also looking towards shifting some of its regional itineraries to Cathay Dragon, like it has been
doing with its flights of Kuala Lumpur.

6STRATEGIC MANAGEMENT
The main motive of Cathay Pacific is to frame a faster as well as leaner structure of the
organization with cutting down of some of the jobs that are not required anymore within the
organization. Certain new jobs would be created with some others need to be redefined.
Moreover it is planning on shortening its program of fuel-hedging along with revamping its
workforce as an integral part of the new strategy of business to arrest the earnings slide.
Cathay Pacific does possess number of strengths that has been facilitating the company in
enhancing its competitive situation and developing the performance of its market. The company
does boast of larger fleet of contemporary aircrafts across the globe. The modern fleet has been
contributing to the high dependability along with the protection of the flights that is being
offered by the company as the cases of repair needed by the aircrafts are a rare affair. Moreover,
the company requires renewal along with expansion. As the company look towards the
purchasing of new fleets it should be requiring extensive amount of funds which would be costly
for the company. However, if the company fails in purchasing new aircrafts it would reduce their
quality of service along with late delivery of the cargo and the passengers. Despite all these,
under the current circumstances, Cathay Pacific has bigger opportunities in developing of its
business in successful manner.
4. Mission and Vision Statement Analysis:
A vision or mission statement is stated to be the tools of motivation that has the ability to
encourage the employers along with the employees in attaining their goals. It has the ability in
facilitating their customers to understand the seriousness and reliability of their organization in
terms of attaining their mission. These statements are generally been used as the depiction of
their company illustrated in words, it displays the ways the company operates and things they

7STRATEGIC MANAGEMENT
prioritize as a business organization. The role of their well portrayed vision and mission
statements are cautiously written word for word as they strive hard in being the best, leaving
their customers with good impression and being an airlines that one feels contented with. They
excel in being the best. This is evident from the fact that they have been awarded the best airlines
four times. They believe in team effort and that is how things in an organization should be. “we”
brings in everyone to the same table signifying the fact that everybody plays an important role in
the operations of Cathay Pacific. Their support for Hong Kong has been immense and they have
always mentioned their commitment towards Hong Kong and its people. Cathay Pacific’s
mission and vision statements states directly the things they do and the things they believe in.
In their mission statement, it clearly depicts the fact that whatever they do, they perform
it as a group through proper emphasis on the word “we” and constantly repeating the same. Their
main motive is to work as a family, prioritize in working mutually in attaining a universal goal.
Adding to that is the fact that they did not cite “We wish, We will, or We strive to”, instead they
only went for “we”, meaning that is what they are and have been. The main role of this mission
statement is simply leaving its customers with a stronger impression, suggesting to them a
straight message of the ways Cathay Pacific have been and would operations
FACTORS WEIGHT RATIN
G
WGTD
SCORE
COMMENTS
STRENGTHS
SI FLEET SIZE 0.12 2.5 0.3 Cathay airways owns 147 aircrafts
in its fleet. The fleet which offers

8STRATEGIC MANAGEMENT
reliable schedules ensures that
customer demands are meet. This
indicates that Cathay provides a
wide range of customer services
including passenger travelling and
cargo movement. Customers are
also provided with many schedules
across the day hence elevating
convenience level of the company
to its customers. The fleet is used
as an economic tool in that while
other airlines employ many
aircrafts for a single schedule,
Cathay employs only one jet to
accomplish the task.
S2 NUMBER OF
DESTINATION
S
0.08 3.5 0.28 Cathay carries over a million
passengers every month. The
company has over 570 destinations
worldwide. This facts give Cathay
a competitive advantage across the
world. High number of destinations
creates a wider market reach which
is a major issue in increasing the

9STRATEGIC MANAGEMENT
sales income value of the company.
S3 HIGHLY
QUALIFIED
HUMAN
RESOURCE
0.2 4.0 0.8 Success of any company largely
depends on its human power ability
(Noe et al, 2013). Cathay airways
has attracted employees from
across the globe therefore drawing
diverse talent and cultures. The
blend of culture and talent ensures
that customers get best services,
considering the fact that Cathay has
wide destinations worldwide With
reliable staff, Cathay airways
customers get the best services.
The team is highly dynamic hence
can accommodate the diverse
cultures across the world.
S4 BRAND 0.28 5.0 1.4 Being the flag carrier of Hong
Kong, the company brand is
Cathay airways has been in
operation since 24 September 1946
when it was founded by American
Roy C Farrell and Australian
Sydney H. de Kantzow. The

10STRATEGIC MANAGEMENT
company is one of the founders of
one world alliance which is a
reputable affiliation of major
airlines across the world. The
alliance gives the member airlines
competitive advantage through the
effective, efficient and reliable
travel schedules across the world.
S5 AFFILIATION 0.12 3.5 0.42 The company is affiliated to the
“one world alliance” which gives it
competitive advantage. The global
alliance body gives Cathayairways
a chance to choose more flights on
a given day (Doz and Hamel,
2015). The company has entered
into a contract with Lufthansa
which is a major airline company.
The Lufthansa partnership will
provide its customers with direct
route to Europe and Australia.
Cathay airways has invested in
other related businesses such as
ground moving and restaurants

11STRATEGIC MANAGEMENT
which boost its annual income by
significant percentage.
WEAKNESS
W1 HIGH
OUTSOURCING
LEVEL
0.02 3.5 0.07 A significant percentage of
operations are being outsourced by
the company. Approximately 65%
of strategic and non-strategic
operations are outsourced. This
increases the risk of failure by the
company if the external companies
were to withdraw their services
with immediate effect. Outsourcing
also limits the company’s control
towards its activities. Companies
which rely too much on
outsourcing do not nature their own
talent hence hindering innovation
and professional growth of its
employees.
W2 UNDER VALUE
TICKET
0.09 3.0 0.27
Cathay airlines experiences high

12STRATEGIC MANAGEMENT
SELLING ticket booking level. The company
is ranked third worldwide after Air
France-KLM and Delta air in terms
of loading on percentage of seats.
This however does not translate
directly to its financial statements
of revenue and expenses since the
company despite having high
booking realizes losses as
compared to its competitors with
lower booking rate. This problem is
attributed to the fact that Cathay
airways have been selling their
tickets at a lower value to feel up
the empty seats.
W3 FINANCIAL
LIQUIDITY
RATIO
0.03 2.5 0.075 Liquidity ratio of a company
determines its ability to meet its
short term financial obligation
when they fall due. Compared to
other airline competitors in the
market, Cathay airlines recorded a
lower current ratio. This may be a
problem to the airlines when it’s

13STRATEGIC MANAGEMENT
conducting its future prospects.
However the company may use its
future major prospects to offset its
current obligation without
deviating from its planned budget.
W4 HIGH COST OF
FLEET
MAINTENACE
0.01 4.0 0.04 With a fleet of over 147 aircrafts,
the company cost on fuel and
engineering services has risen over
the years. High maintenance cost as
evidenced by the financial
statements is a major setback to the
company’s profit realization. The
company has tried to manage this
by acquiring fuel efficient aircraft
such as Airbus A350-900 and
retired several old and inefficient
Boeing 747-400 and three airbus
A340-300.
W5 FUEL
VOLATILITY
0.05 4.0 0.2 Fuel prices are not always
predictable hence to avoid
uncertainty (Berghofer and Lucey,
2014), Cathay airways has been
embarking on entering into future

14STRATEGIC MANAGEMENT
contracts through edging of fuel
prices. The contracts however have
worked to the disadvantage of the
company since a huge amount of
funds have been lost through
edging of fuel prices. The
management engages in wrong
decisions.in 2016, Cathay lost
HK$8.46bn on fuel edging. Again
in 2015, the company reported a
staggering HK%8.47bn courtesy of
poor edging decision. The company
is still implementing its edging
program in 2017 despite the losses.
TOTAL
SCORES
1 3.855

15STRATEGIC MANAGEMENT
Company's Vision and Mission
Background
Cathay Pacific is in operation in Hong Kong for over 71 years. Transforming to one of
the globes biggest international cargo airline and world wides busiest airport in terms of freight
traffic. Cathay Pacific was and still is one of the seven airlines to be graded as a 5-star airline by
Skytrax. With currently a fleet of 144 aircraft and a growing fleet they see the bright future
coming.
Mission
Cathay Pacific has two mission features. One importance is given to customer satisfaction for
passenger and cargo service by delighting passengers and clients with their needs and serving
from the heart. They want to provide safe flights and outstanding products. Environmental issues
are taken seriously by the airline.
Vision
Our vision is to be the world’s best airline. Being the best means that we always strive to excel in
everything we do. Our dynamic team provides the highest quality service so that our customers
are happy they chose Cathay Pacific. (Cathay Pacific, 2015)

16STRATEGIC MANAGEMENT
sites.cdnis.edu.hk
Business Objectives
In terms of vision and mission statement, they are motivating instruments that persuade and
encourage the workers and leaders to reach out for the set goals. Vision and mission also allows
clients to understand how significant and important it is, that the company is reliable and stands
in for strong and delightful service in all the fields. Those statements are utilized to represent the
firms written words and it reveals how a company works and how they rank their significance
and valueas a well-driven organization.
Main role of the chosen airlineare well described vision and mission statements. They are
thoroughly and meticulously written word by word as the firm aims high to the tops, to leave
passengers and clients a good experience, by making each flight memorable, interesting and safe
in all aspect. Making it the best experience for any customer. In the mission statement, it reveals
that whatever they do, they do it as a team and my making it a vital motto to think as a team, as a

17STRATEGIC MANAGEMENT
big family which holds together and pushes to strive ahead. Additionally, the reality that Cathay
Pacific did not mention we will or we strive to, alternatively they only noted we, defining that
they are, and they have. Main role of this mission statement is to give clients and customers a
powerful and compelling impression, sending them a message of how Cathay Pacific work and
what they believe in. Cathay Pacific lives as what they noted down, they really take things
serious, try always to be ahead of the rest and they will stay at the top ten. Most importantly they
work together as a family, cohesive and putting safety first.
5. Corporate Governance:
According to the company’s web profile, certain code has been set in order ensure the
involvement of the employees in the organization. There is a board that holds the responsibility
of the entire operational tasks of the organization. According to the code, the board is responsible
and accountable for the stakeholders to lead a group. As a matter of fact, this has been taken into
certain consideration pertaining to the effective understanding of the case with the effective
management policies. The directors are both individually and collectively accountable to set the
manner of the shareholders. The organizational strategies are determined by the board in various
levels. The strategies are figured in both collective and individual manner. The nature and extent
of organisational risk is evaluated and determined by the board. As a matter of fact, this has to be
taken into certain consideration pertaining to the effective nature of it that has to be taken into
certain consideration pertaining to the effective consideration of the process. The corporate
governance of the company is controlled by the directors. However, the directors and the
members of the board are equally directed to follow and adhere to the guidelines attributed and
scripted in the manual called- “Brief Guide for Directors”.

18STRATEGIC MANAGEMENT
It can thus be stated that in most of the cases there is a clear chance to cope up with the
basic understanding of the process that was highly effective in the understanding of the issues
that was based on the given segments. There is no scope for the Directors in the company to be
autocratic. Since the Directors are to follow and adhere to the rules and the code of conduct set
by the organizations core committee the determinants of the entire case in terms of creating an
effect in the entire organizational structure. The directors are guided to the conduct, business
activity and development of the organization. According to rule 3.08, the Listing of Rules, the
directors must abide by certain regulations and they ought to fulfil fiduciary duties and
responsibilities of skill, care and diligence. This is ascribed in order to find out the basic changes
in the form of service provision. It has been observed through the study of the rule book of the
directors that in most of the cases they are highly respectful towards the rules that are ascribed
within the organization. As a matter of fact, this has been taken into certain consideration
pertaining to the effective consideration of the case that this has been taken into certain
consideration pertaining to the effective understanding of the actual case for the basic structure
of the issues. The main motive of Cathay Pacific is to frame a faster as well as leaner structure
of the organization with cutting down of some of the jobs that are not required anymore within
the organization. Certain new jobs would be created with some others need to be redefined.
Moreover it is planning on shortening its program of fuel-hedging along with revamping its
workforce as an integral part of the new strategy of business to arrest the earnings slide. Cathay
Pacific does possess number of strengths that has been facilitating the company in enhancing its
competitive situation and developing the performance of its market. The company does boast of
larger fleet of contemporary aircrafts across the globe. The modern fleet has been contributing to
the high dependability along with the protection of the flights that is being offered by the

19STRATEGIC MANAGEMENT
company as the cases of repair needed by the aircrafts are a rare affair. Moreover, the company
requires renewal along with expansion. As the company look towards the purchasing of new
fleets it should be requiring extensive amount of funds which would be costly for the company.
However, if the company fails in purchasing new aircrafts it would reduce their quality of service
along with late delivery of the cargo and the passengers. Despite all these, under the current
circumstances, Cathay Pacific has bigger opportunities in developing of its business in successful
manner
The corporate governance of the organization leads to the employees’ engagement and
the settlement of organizational behaviour. In this regard, this can be stated within the factor
analysis through the basic understanding of the process for the case that has been taken into
certain understanding. Following duties have been assigned to the directors:
i) Honest and responsible act to maintain good faith within the organization
ii) Act for the proper purpose of the organization
iii) Answerability to the company for the implementation and cancellation of policy
iv) The chairman ought to ensure that the engagement of the directors would become
positive in the decision making process.
v) The chairman and the directors need to ensure that the steps taken for the provision of
the communication among the stakeholders and between the stakeholders and the
organizational core management body would result in effective productivity.
vi) Showing encouragement to the directors so as to find out how effective this would be
for the basic understanding of the process.
vii) Ensuring the job of the directors that their contribution would be regarded to excel the
best practice of the company

20STRATEGIC MANAGEMENT
viii) Promotion of culture and transparency within the company and among the employees
so as to validate and ensure constructive relation between the executive and non
executive directors.
FACTORS WEIGHT RATING WGTD
SCORE
COMMENTS
OPPORTUNITIES
01 Expansion into new
markets
0.15 4 0.60 In the past two years, the company has been
expanding its operations to new destinations. For
instance, In 2016, the company introduced
flights to Barcelona, which is a great tourist
destination thus complementing the company’s
operations in Madrid. Spain has become
Cathay’s second largest operator (Malsen, 2017).
The other destination that the company has
recently expanded into includes Christchurch.
Furthermore, there are many other emerging
markets that the company can take its operations
to. Therefore, Cathay Pacific has the opportunity
to expand its business into new markets.
02 Technological
advancement
0.08 3 0.24 Cathay Pacific has increasingly invested in
advanced technology. For instance, the company

21STRATEGIC MANAGEMENT
introduced self-service bag drop as well as kiosk
bag tagging. In addition, it introduced a new
cargo booking system. By investing in
technology, Cathay Pacific has the capacity to
improve its communication with partners,
customers as well as staff. Moreover, the use of
technology enables online check-in, flight-
schedule as well as ticketing. In other words, the
company’s use of advanced technology enhances
its efficiency. There are other areas that Cathay
Pacific has not utilized technology optimally to
enable it to provide its customers with reliable as
well as flexible services. In doing so, Cathay
Pacific is more likely to retain and attract more
customers.
03 Expansion in air
freight
0.12 3 0.36 Cargo traffic has been growing and Cathay
Pacific has been expanding its freighter services.
The company has recently expanded its freighter
services to Spain and India. As a result, the
company has seen an increase in cargo volumes.
As international trade increases, the company
has more opportunities to expand its freight
services to destinations such as Dubai.

22STRATEGIC MANAGEMENT
However, Cathay Pacific ought to continuously
study the market for cargo demand. In doing so,
the company should be in a position to identity
potential markets it can tap into.
04 Leverage of loyal
customers
0.05 3 0.15 Cathay Pacific is regarded as one of the leading
airlines in Hog Kong. This presents the company
with an opportunity to get more customers,
thereby generating more revenues. This
argument is based on the presumption that
people tend to place more confidence on
recognized airlines. Cathay Pacific has
established itself as a premium carrier. In
addition, the company has tried to differentiate
itself from the rest of the airlines. That is, in as
much as the company is a global brand, it has
managed to adapt to local market conditions.
Therefore, even as new players enter into the
market, Cathay Pacific can still leverage on
customer loyalty.
05 Growth of global
tourism
0.1 3 0.30 More and more countries in different parts of the
world are growing their tourism industry. As a
result, tourist destinations are ever-increasing
and, thereby, travel destinations. This presents

23STRATEGIC MANAGEMENT
an opportunity that the Cathay Pacific Airways
can capitalize on and expand its operations and,
consequently, increase revenues as well. That is,
it is anticipated that as the world economy
improves, international tourism will also grow.
Hence, there will be more air travelers and the
company can take advantage of the opportunity.
THREATS
T1 Competition 0.15 3 0.45 Cathay Pacific is facing stiff competition from
other airlines including Singapore Airlines, HK
Express, Hong Kong airlines as well as airlines
owned by the Chinese government. These
competitors have been expanding their fleets
aggressively.Moreover, state-owned air lines are
well funded and have higher capacities. Another
issue is that there is increased number of low –
cost airlines or budget airlines within the region.
Therefore, with a weakening global economy,
more and more people are opting to travel using
the budget airlines. To counter the competition,
Cathay Pacific airline could benefit from
introducing low cost options.

24STRATEGIC MANAGEMENT
T2 Oil prices volatility 0.15 2 0.30 Fuel is one of Cathay’s largest operating costs.
However, there are various factors that influence
the prices of jet fuel that are beyond the
company’s control. They include supply and
demand as well as geopolitical factors. Unlike
the majority of its competitors, Cathay Pacific
practices fuel hedging and, therefore, this
restricts them from lowering prices of their
tickets amidst oil price volatility. Cathay Pacific
invested in a four-year fuel hedge in 2015 which,
resulted into a loss of about $ 1.09 billion in the
following year (Sile, 2017 March 17). According
to Sun (2017 April 13), the fuel hedge was a
terrible gamble as the company was caught
unawares by the collapse in fuel prices. There is
nothing the company could do because the
contract tied the company to higher fuel prices
for a period of four years. Based on this
experience, the company intends to invest in
short-term rather than long-term fuel hedging.
T3 Regulatory
challenges
0.05 3 0.15 The airline industry-both domestic and
international-is largely affected by the changes
in the regulatory environment. Airlines are

25STRATEGIC MANAGEMENT
subject to a wide variety of regulations. What
makes it more complicated is that several
agencies, organizations as well as associations –
domestic and international- oversee or regulate
issues affecting the industry such as security,
economics, and safety and so on. These
regulations impact on the airline’s management
strategies, structure, and consequently,
efficiency and productivity. For instance,
recently, the Civil Aviation Department did
away with “passenger fuel surcharges” (Sun,
2017 April 13). This denied the company huge
amounts of revenue that would have shielded the
company a little bit from losses it experienced as
a result of fuel hedging.
T4 Increased cost of
labor
0.05 2 0.10 Labor accounts for more than 30% of the
Cathay’s operating expenses (Fareed & Goh,
2016 March 16). The company has more than
three thousand members of staff at the head
office. According to Fareed and Goh (2016
March 16), the Cathay Pacific suffers from
overcapacity. This has negatively impacted on
the company’s performance. For that reason, the

26STRATEGIC MANAGEMENT
company is planning to reorganize its structure
so as to have a simple, agile as well as smaller
structure. The company, as mentioned by Fareed
and Goh, is experiencing structural issues. This
is because for the past two decades, the company
has not undergone any meaningful restructuring.
T5 Environmental
threats
0.10 3 0.30 One of the challenges facing Cathay Pacific
airways ischange in climate. Changes in climatic
conditions have affected air travel negatively.
For instance, very high temperatures have forced
companies to reschedule flights. As changes
continue to occur, more disruptions are expected
to take place thus making air travel
unpredictable as well as costlier. For that reason,
Cathay Pacific airways has implemented
measures such as using bio-fuels, modernizing
fleet as well as improving fuel efficiency
(Cathay Pacific, 2017).
TOTAL 1.0 2.95
STRATEGIC FACTOR ANALYSIS SUMMARY (SFAS)
Cathy Pacific Airways

27STRATEGIC MANAGEMENT
SWOT
#
FACTORS WEIGHT RATING Weighted
SCORE
COMMENTS
S1 Strong Company
Product Brand
.12 5.0 .60 A strong brand ensures
the company uses less
resources in
advertisements that
woo customers easily.
This also contributes to
a high stock price.
S2 Large Efficient
Fleet Size
.17 3.5 .595 Ensures large number
of customers can be
handled at an instance
increasing profitability.
Necessary for
expansion to new
markets while
maintaining current
markets.
S3 Highly Qualified
Human Resource
Personnel
.15 2.5 .375 Build on customer
loyalty and increase
competitive advantage
of the company.
Ensures the labor force
is equally qualified and
delivering.
W1 High Cost of Fleet
Maintenance
.01 4.0 .04 This can be attributed
to the high frequency
of repairs and fleet
checks. Reduces

28STRATEGIC MANAGEMENT
revenues substantially
therefore reducing
profit margins.
W2 Market Fuel Price
Volatility
.05 2.5 .125 Makes expense
forecasts unreliable and
hence hard to forecast
profits. Make the
company a loser in the
options market.
O1 Technological
Advancements
.14 2 .28 Investing in a fuel
efficient fleet reduces
negative impacts on the
environment. The use
of a customer app to
reduce the effects of jet
lag increases customer
satisfaction and
experience.
O2 Expansion into new
markets
.08 2 .16 As much as this will
increase revenues it
will also increase
expenses. Given the
economies of scale
enjoyed by the
Airlines, this will be
profitable eventually.
E.g. the Asia-Latin
America market is a
prospect that increase
O3 Leverage of loyal
customers
.05 4.5 .225 Customers when
treated well have the

29STRATEGIC MANAGEMENT
tendency of becoming
loyal and even act as
marketers for the
company.
T1 Competition .14 2.5 .35 Stiff competition from
Singapore Airlines
Limited and China
Eastern Airlines
Corporation Limited
reduces prices and
hence revenues.
T2 Increased Cost of
Labor
.09 3.5 .315 Mainly attributable to
rising inflation, high
costs of labor reduce
revenues by increasing
the wages budget. This
hinders investments in
fleet purchases.
TOTAL SCORES 1.00 3.065
THREATS, OPPORTUNITIES, WEAKNESSES, STRENGHS MATRIX (TOWS)
Cathy Pacific Airways
Strengths (Internal)
1 Strong Company Product
Brand. We have built a strong
Weaknesses (Internal)
1 High cost of Fleet
Maintenance. Frequent repairs

30STRATEGIC MANAGEMENT
TOWS
brand and image in the stock
market.
2 Large Efficient Fleet Size.
We provide a wide variety of
airplanes and customer choices
to choose from.
and fleet services make it
costly to maintain our fleet.
2 Market fuel price volatility.
Fuel prices keep fluctuating
making it hard to budget for
future purchases
Opportunities (External)
1 Technological
advancements. Advancements
in fleet fuel efficiency and
customer application make
customer experience
memorable.
2 Expansion into new markets.
New market prospects like the
Asia-Latin America route
remain a possibility in the near
future.
An effective and equally
efficient Strengths
Opportunities (SO) strategy
would comprise of Strength
two (S2) and Opportunities
two (O2). Cathy Pacific
Airways already boasts of a
vast array of planes. This
coupled with the emerging and
lucrative prospect of plying the
Asia-Latin America market
could be a bankable strategy.
The company will spend only
a few pennies on marketing
and setting up the needed
infrastructure to accommodate
this venture. The vast majority
of the expenses that would
have gone to purchasing a new
set of fleet for this route would
be saved for other ventures in
the foreseeable future. This
would lead to an increase in
the customer base of Cathy
Airways and hence revenues.
The most effective Weakness
Opportunities (WO) strategy
would be using Opportunity
ONE (O1) to alleviate the
effects caused by Weakness
one (W1). The runaway
expenses of fleet maintenance
are highly attributable to
frequent repairs. Investing in
technological advancements is
likely to result in better
performing planes requiring
less checks and repairs. Cathay
pacific has been playing a
commanding role in
strengthening the position of
Hong Kong as the global hub of
aviation and the main gateway to
the Chinese Mainland,
leveraging its vast network in