Business Strategy Management Report: Cathay Pacific Analysis

This report provides a comprehensive analysis of Cathay Pacific's business strategy, evaluating its effectiveness and future direction. It examines the airline's strategic choices, including market expansion, service modifications, and partnerships, and assesses their impact through SWOT, PESTLE, and Porter's Five Forces analyses. The report highlights both successful strategies and challenges, such as competition and employee satisfaction, while also exploring Cathay Pacific's engagement with global social responsibility, including carbon emission reduction and community initiatives. The analysis considers the airline's strategic moves to sustain its leading position and evaluates the impact of its choices on its future, emphasizing the importance of adaptation and customer satisfaction. The report concludes with insights into the airline's CSR policies and their influence on the airline's operations.

STUDENT NUMBER: A69486
BUSINESS
STRATEGY
MANAGEMENT

STUDENT NUMBER: A69486
TABLE OF CONTENTS
INTRODUCTION..............................................................................................................1
ANALYZE, EVALUATE AND CHALLENGE THE EFFECTIVENESS OF
ORGANISATION STRATEGY.........................................................................................1
IMPACT OF STRATEGIC CHOICES IN ITS FUTURE DIRECTION...............................5
EFFECTIVES OF THE ORGANISATION’S ENGAGEMENT WITH THE VALUES OF
GLOBAL SOCIAL RESPONSIBILITIES...........................................................................7
CONCLUSION................................................................................................................. 9
REFERENCES...............................................................................................................11

STUDENT NUMBER: A69486
INTRODUCTION
Cathay Pacific is the airline of Hong Kong and in the recent times it has emerged
as one of the leading competitors in the airline industry. It has been serving many
countries and it is providing it cargo services to around 200 destinations in 52 countries.
Besides this, the airlines have developed many new services as well as the products
which are made especially for competing with the competitors. They have made
partnership with different airlines which will help them in the future. This report talks
about the strategies which are not successful and because of this the operations of the
company got hindered. Besides this, it also stresses on the strategic moves which are
made by the Cathay Pacific to sustain their leading position in the future.
ANALYSE, EVALUATE AND CHALLENGE THE EFFECTIVENESS OF
ORGANISATION STRATEGY
Cathay Pacific is one of the leading airlines of Hong Kong. According to the case
study, it can be witnessed that the airlines has been mostly benefited from low fuel
prices which led to increase of customers (Chaffey and White, 2010). It also increased
the number of flights from 14 to 17 flights a week to the San Francisco. Besides this, for
meeting the needs of the customers they have reduced the Toronto flights. This has
assisted in serving the customers effectively but with the frequent modifications it has
lost the customers who were there regular travelers because of the unavailability of the
flights. This was done to attract new passengers but in that case Cathay Pacific was
unable to fulfill the demands of the existing one (Teece, 2010). This has given chance to
its competitors in taking the customers which uses the Cathay Pacific. The existing
passengers switched to Singapore airlines and Jet Airways as they were able to meet
the needs of the existing users (Morrison and Winston, 2010).
According to the case study, they have added two cargo flights per week to the
North America (Ciliberto and Schenone, 2012). This strategy is useful in expanding its
target market but not focusing on the customer satisfaction. It has been seen that with
the increase in business, Cathay Pacific has been delaying flights schedules which is
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resulting in loss of the customers. Besides this, they have made strategy regarding
developing of the business class; leaving a negative impact on the normal class people.
It has been reported that service quality has been degraded regarding poor
maintenance and several issues are identified by the customers. The strategy which
has been made for the business class employee is hampering the services of the
economy class people (Ciliberto and Williams, 2010).
According to the business environment, Cathay Pacific is facing challenges while
competing with the other airlines. The organisation has made strategy in increasing the
fleet and it even had expanded its hub. But by doing this also they are facing intense
competition in the Asian market (Berry and Jia, 2010). This is making difficult for the
organisation to compete with Singapore Airlines etc. For sustaining in this business
environment, it required by the company to make new strategy which can help them to
sustain in the European and the North American markets (Fu, Zhang and Lei, 2012).
On the other hand, making the strategies for the consumer and increasing the
satisfaction level of the users, Cathay Pacific was unable to the meet the demands of its
employees (BUSINESS 478-Section D400, 2016). As compare to other companies like
Qatar Airways they focus on the employee satisfaction which helps in carrying out the
operations smoothly (Han, Ham, Yang and Baek, 2012). This was the main reason
because of which the employees were not able to provide proper services to the
customers which resulted in dissatisfaction. This resulted in strike and also created a
negative image of Cathay Pacific. These were the strategies made by Cathay Pacific
which faced challenges in its effectiveness.
SWOT analysis
Strengths
 Strong base of satisfied customers
 Strong presence in global market
Weakness
 Very limited market in share in
some nations
 Cathay Pacific relies very heavily on
traffic which is moving onward
internationally
Opportunities Threats
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 Opportunities of start working in
growing markets and economies
of the world (Cathay Pacific SWOT
Analysis, USP & Competitors, 2016)
 Opportunity to leverage on some of
its dedicated customers
 Increasing competition among
airline industry
 Rising cost of fuel
Pestle analysis
Political Cathay Pacific is affected by any kind of changes in political
environment in the globe. For example increasing taxes results in
lowering down the profit margin of the brand
Economic Situations such as economic downturn directly results in creating
obstacles in growth and success of the selected business
Social In order to sustain in long run, it is required by Cathay Pacific to make
changes in its existing services according to changing customer
demand (Pest Analysis On Cathay Pacific Airway, 2016). This affects
the operations and business practices of the business.
Technological Cathay Pacific needs to adopt new and latest technology at regular
intervals in order to deliver fast and accurate services. This increase
the overall cost of operations.
Legal While carrying out operations in different countries, Cathay Pacific
needs to strictly follow their laws and regulations. This results in
making the activities and business practices more complex.
Environment Over the past few years, businesses in airline industry have been
asked to lower down the negative impact of their operations and
activities on environment (Pest Analysis On Cathay Pacific Airway,
2016). This has resulted in increasing the overall cost of operations.
Porter five force theory
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According to the porter five force theory, there are five major forces which affect
the activities of firms and are required to be taken into consideration (Chaffey and
White, 2010).
Buyer power Buyer power is very high as customers are available with wide
range of options available in front of them
Supplier power The supplier power is moderate
Threat of substitute Threat of substitute for Cathay Pacific is very low as there are very
less substitute present in the market (Porter Five Forces Model
Airline Industry Analysis, 2016)
Competition among
rivalries
The competition among existing business is very intense
Threat of new entry Low threat of new entry as large amount of investment and
resources are required to enter and operate in airline industry.
IMPACT OF STRATEGIC CHOICES IN ITS FUTURE DIRECTION
According to the case study, it has been seen that Cathay Pacific has developed
various strategies which will help in their future. According to the case study, they have
increased their market and are now planning to add serve to Madrid in the year 2016. If
this strategy is implemented effectively it will become the first flight which goes from
Hong Kong to Madrid directly (Lee and Wu, 2011). Besides this, they have been
providing various services and giving different schemes to the clients which will become
their loyal customers. These are the small investments which are made by the Cathay
Pacific. They have been doing partnership with different airlines as well as the
companies who will be able to give them profit in the future. Through the partnership
they have expanded its services in different areas. This will be significant for them in the
future as it will help to give them direction about the next strategy which they can make
in sustaining and retaining their position.
They have agreed codes with the Qatar Airways so that they can include the
flights which between Doha and Muscat. Through this they involved in these countries
which will be better in the future run because through this they can easily expand their
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market in these cities. Besides this, they have increased their passenger capacity which
will be helpful for the Cathay Pacific in earning profit in the long run (Dominic and Jati,
2011). In comparison to other companies like Singapore Airlines and Jet Airways they
are only focusing on developing their base but in case of Cathay Pacific they have
adopted the differentiated strategy to satisfy the employee of the organisation. In recent,
they have establish a “cloud based insight catering system” and also distributed the
tablets to the staff so that they can provide better services to their customers. This is
helpful in the future because, technology is continuously upgrading and they know that
after a span of time all the airlines companies will adopt this service to target the
customers.
Another strategy which has made positive impact on Cathay Pacific is its
diversification in different areas as well as the sectors. This theory has been applied by
the organization to expand its target market as well as cater different countries which
can provide them profit. By seeing the future condition, the organisation will not able to
sustain in the market if only provides flight services. Through the diversification they
have been building Cathay Pacific freighter, Cathay Pacific Catering Services Air Hong
Kong and Dragon Air (Du, Bhattacharya and Sen, 2010). With the help of this, they are
capturing the customers as well as in future these networks will help in generating the
revenue which will further result in growth. On the other hand, Cathay Pacific had
developed its huge network and they are serving more than 100 locations as this move
will help the organisation in making the distribution channel strong and in future the
organisation will be able to get profit from all the sectors. Another strategy which will be
helpful in the future is developing a new system for analyzing the feedback of the
customers and resolving their issues. So to grab the users, they have developed new
strategy for retaining the customers. Cathay Pacific has made new system which will
help in dealing with feedback in the future. As compare to other airlines like Qatar they
have been developing the same system which could satisfy the customers as well as
develop the positive image in the minds of the passengers.
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EFFECTIVES OF THE ORGANISATION’S ENGAGEMENT WITH THE VALUES OF
GLOBAL SOCIAL RESPONSIBILITIES
Cathay Pacific has been focusing on area of social responsibility effectively and
helping the environment in sustaining resources. The airlines are required to reduce the
carbon emission (Teece, 2010). For this, Cathay Pacific has made the commitment to
reduce the carbon emission and is focusing on the carbon global growth by 2020. From
this it can be evaluated that, they are emphasizing on safeguarding the environment
and assist in sustainable resources. Besides this, in compare to this, EasyJet has also
planned in reducing the carbon emission per passenger by 8% in 2020. This is effective
because it will help in reducing the environmental harmful effects which are increasing
the global warming of the nation. Besides this, according to the case study, Cathay
Pacific participated in the WWF and in that they switched off the lights of their building
as well as the billboards. This helped the nation to save the energy as well as these
steps gives positive impact on the consumers. From these initiatives it can be effectively
evaluated that, the organization is involving in the CSR policies. As through this it can
be seen that, they are contributing their share in sustainability of environment. Even,
besides earning profit they are focusing on saving the environment (Berry and Jia,
2010). For making it possible, the Cathay Pacific arranged a flight for the 50 beneficiary
of the Hong Kong in which they provided this facility to the labor and the child
development fund.
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Figure 1: carbon emission
(Source: carbon emission, 2016)
According to the case study, in October 2015, the Dragon AirYouth Aviation
Academy organised a workshop for 100 people providing the youngsters opportunity to
learn about the aviation industry. With the help of this, the individuals became educated
which set their career in this field. The effectiveness is that it will help in development of
the society as well as through this the firm standing in the society will be improved.
Besides this, through their noble work the government gives them special benefits
which are useful for the organisation. Besides this, by doing the corporate social
responsibility they establish themselves differentially from their competitors. Through
this also, the organisation can develop the competitor’s advantage in this field. By
fulfilling the CSR responsibility the organisation benefits a lot. Besides this, the
Singapore airlines launched a same program in which they gave the opportunity to the
underprivileged child to travel through flights. This helps in enhancing the relationship
with the customers and even a strong bond is built among the suppliers. This helps in
making the strategies and implementing it effectively (Scherer and Palazzo, 2011).
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Another effective for the Cathay Pacific in performing the CSR activity is that the
media are always attracted to the organization who are likely perform these types of
activities. This helps in making the organisation successful and even it has been
witnessed that positive advertisement has strong influence on the customers which
lastly results in increasing sales of the company (Teece, 2010). These are some of the
effectiveness which the Cathay Pacific has derived by giving benefit to the community.
CONCLUSION
From this report, it can be concluded that Cathay Pacific has become one of the
most talked airlines which has become famous through its services as well as the
products. There are many strategies which the organisation has made keeping in mind
the small sector of the customers. Because of this, the effectiveness of the strategy is
not seen much on the normal class customers. Further, by expanding the airlines and
diversification they did not focus on the existing operations which are performed by the
airlines. But despite of this, they have some effective strategic move through which they
can acquire a huge market share and compete with their competitors effectively.
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REFERENCES
Books and journals
Berry, S. and Jia, P., 2010. Tracing the woes: An empirical analysis of the airline
industry. American Economic Journal: Microeconomics, 2(3), pp.1-43.
Chaffey, D. and White, G., 2010. Business information management: improving
performance using information systems. Pearson Education.
Ciliberto, F. and Schenone, C., 2012. Bankruptcy and product-market competition:
Evidence from the airline industry. International Journal of Industrial
Organization, 30(6), pp.564-577.
Ciliberto, F. and Williams, J.W., 2010. Limited access to airport facilities and market
power in the airline industry. Journal of Law and Economics, 53(3), pp.467-495.
Dominic, P.D.D. and Jati, H., 2011. A comparison of Asian airlines websites quality:
using a non-parametric test. International Journal of Business Innovation and
Research, 5(5), pp.599-623.
Du, S., Bhattacharya, C.B. and Sen, S., 2010. Maximizing business returns to corporate
social responsibility (CSR): The role of CSR communication. International
Journal of Management Reviews, 12(1), pp.8-19.
Fu, X., Zhang, A. and Lei, Z., 2012. Will China’s airline industry survive the entry of
high-speed rail?. Research in Transportation Economics, 35(1), pp.13-25.
Han, S., Ham, S.S., Yang, I. and Baek, S., 2012. Passengers’ perceptions of airline
lounges: Importance of attributes that determine usage and service quality
measurement. Tourism Management, 33(5), pp.1103-1111.
Lee, F.H. and Wu, W.Y., 2011. Moderating effects of technology acceptance
perspectives on e-service quality formation: Evidence from airline websites in
Taiwan. Expert Systems with Applications, 38(6), pp.7766-7773.
Morrison, S. and Winston, C., 2010. The evolution of the airline industry. Brookings
Institution Press.
Scherer, A.G. and Palazzo, G., 2011. The new political role of business in a globalized
world: A review of a new perspective on CSR and its implications for the firm,
governance, and democracy. Journal of management studies, 48(4), pp.899-931.
Teece, D.J., 2010. Business models, business strategy and innovation. Long range
planning, 43(2), pp.172-194.
Online
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Cathay Pacific. 2016. [online]Available through:<https://www.oneworld.com/member-
airlines/cathay-pacific>. [Accessed on11 November , 2016].
Cathay Pacific SWOT Analysis, USP & Competitors. 2016. [online]Available through:<
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Pest Analysis On Cathay Pacific Airway. 2016. [online]Available through:<
http://www.managementparadise.com/forums/principles-management-p-o-m/208734-
pest-analysis-cathay-pacific-airway.html>. [Accessed on 13th December , 2016].
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https://docs.askiven.com/porter-s-five-forces-model-airline-industry-analysis.html>.
[Accessed on 13th December , 2016].
BUSINESS 478-Section D400. 2016. [online]Available through:<
http://www.sfu.ca/~sheppard/478/syn/1157/Group_C.pdf>. [Accessed on 13th
December , 2016].
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