logo

(PDF) The strategic impact of airline group diversification

   

Added on  2020-04-15

7 Pages1323 Words1834 Views
Running head: THE PORTFOLIO DIVERSITY OF TUNE GROUPThe Portfolio Diversity of Tune GroupName of the Student:Name of the University:Author Note:

1THE PORTFOLIO DIVERSITY OF TUNE GROUPAnswer 1:The following are the driving factors, which drive the diversification of Tune Group:Global competitiveness: The business objective of the Tune Group is to gain competitive advantage in severalprofitable markets. The group is present in diverse industry like hotel, airline andentertainment. It must also be noted that these industries are highly competitive and aredominated by multinational companies like American Airlines, the Hilton Worldwide andFox Star Studios. This analysis shows that the aim of Tune Group is to cater to a diverserange of customers to gain competitiveness in multiple industries.Diversification of risks:Tune Group is present internationally in multiple sectors like airlines, cab services,hospitality management and entertainment. These industries are highly competitive and thecompany has to invest huge amount of capital to operate in them. The economic changes inthe global markets like changes in the exchange rates of currencies and emergence ofpowerful rival companies often pose threats to profitability and return on investments ofcompanies1. These business risks necessitate the companies to diversify their product linesand markets of operations so that they can distribute the loss they incur in one market overprofits earned from other markets. Investments in several markets like airlines andentertainment guarantees more returns and cap their investments against market risks2. This1 Shin, H.S., 2014. The second phase of global liquidity and its impact on emerging economies. InVolatileCapital Flows in Korea(pp. 247-257). Palgrave Macmillan US.2 Corsi, F., Marmi, S. and Lillo, F., 2016. When micro prudence increases macro risk: The destabilizing effectsof financial innovation, leverage, and diversification.Operations Research,64(5), pp.1073-1088.

2THE PORTFOLIO DIVERSITY OF TUNE GROUPanalysis shows that the risks, which are present in the market, drive Tune Group to diversifyits products and markets.Answer 2:The product portfolio of Tune Group consists of nine products. Tune Talk Sdn Bhdis the mobile prepaid product of the Tune Group while Tune Hotels Group is thehospitality vertical of the company. Air Asia Berhad is the airlines product of Tune Groupand the leading low cost airline carrier in Asia. Tune Protect Group Berhad is the insurancevertical while Tune Studios Sdn Bhd is the music studio vertical of the businessconglomerate. Tune Group owns Queen’s Park Rangers FC, which is a football club inLondon. The business group owns Epsom College in Malaysia while Caterham Group isthe automobile manufacturing subsidiary of Tune Group with its headquarters in Britain.Tune Labs Sdn Bhd finances entrepreneurial ventures in travel, financing and retailindustries3. These strategic business units contribute towards diversification of the productportfolio of Tune Group. For example, Air Asia Berhad and Tune Talk Sdn Bhd allowTune Group to operate in low cost airfreight carrier and telecommunication marketsrespectively. As a result they enable the company to generate revenue from these diversemarkets and distribute its risks4. 3Tunegroup.com. 2017.About Us. [online] Available at: http://www.tunegroup.com/about.html [Accessed 20Nov. 2017].4 Clarke, R., Silva, H.D. and Thorley, S., 2013. Risk parity, maximum diversification, and minimum variance:An analytic perspective.The Journal of Portfolio Management,39(3), pp.39-53.

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
3112IBA-Workshop Case Analysis Preparation
|3
|915
|135

MKTG2002 International Marketing
|11
|3118
|36

AERO2307 - Airline Operations Management at RMIT
|8
|2515
|73

HI6006 - Competitive Strategy - Report
|6
|1287
|40

Business Strategy
|15
|3097
|82