BTEC Assignment: Hong Kong Airlines Environmental Analysis

This report provides a comprehensive business analysis of Hong Kong Airlines, examining its external and internal environments. It begins with an introduction to the company and its operational context, followed by a detailed PESTLE analysis, which assesses the political, economic, social, technological, environmental, and legal factors impacting the airline's operations. The report then conducts a SWOT analysis to identify the company's strengths, weaknesses, opportunities, and threats. Furthermore, it explores the interrelationship between the company's internal capabilities and the external environmental factors, highlighting how these elements influence decision-making within Hong Kong Airlines. The report concludes by summarizing the key findings and emphasizing the importance of understanding the business environment for effective strategic planning and operational success. References are provided to support the analysis.

1Environmental Analysis of Hong Kong Airlines
Business and the Business Environment

2Environmental Analysis of Hong Kong Airlines
Table of Contents
1.0 Introduction..........................................................................................................................3
2.0 PESTLE Analysis of Hong Kong Airlines......................................................................3
3.0 SWOT Analysis of Hong Kong Airlines........................................................................5
4.0 Interrelation between Strength & Weakness and External Factors.................................7
5.0 Influence on Decision Making........................................................................................7
6.0 Conclusion.......................................................................................................................8
7.0 References............................................................................................................................9

3Environmental Analysis of Hong Kong Airlines
Introduction
The report is prepared to understand the concept of Business Analyst of Hong Kong Airlines.
Hong Kong Airlines Limited is an airline company operating its business from the
headquarters at Tung Chung in Hong Kong. It is required for an organisation to analyse the
business environment with the help of strategic tools such as SWOT Analysis, PESTLE
Analysis and the others. The file contains an analysis of macro-environmental factors which
may have an impact on the business of the company. The advantages and disadvantages of
these macro-environment factors are discussed with the help of PESTEL analysis technique.
Apart from that, SWOT analysis for the company is performed in this report. The relationship
of the organization's strengths and weaknesses with the external environment factors are
identified. Finally, the factors affecting and impacting the organization's decision-making
process are identified and their impact is analyzed with the company's performance. Hence,
the report shows the external factors impacting the business of Hong Kong Airlines along
with the company's internal strengths and weaknesses.
PESTLE Analysis of Hong Kong Airlines
PESTEL analysis is a technique which is used by a business analyst to identify the possible
impact of external environmental factor on the trade and economy of an enterprise (Ho,
2014). The various macro factors which might impact the operations of Hong Kong Airlines
are discussed as below:
 Political: The political factor has a sound impact on the process of an organization’s
business as every business operates in their country’s economy which is handled with
the political group of that country. In Hong Kong, the political environment is

4Environmental Analysis of Hong Kong Airlines
friendly to the company as the influence of China in the political territory of the
country has been limited from a long time (Peneda, et. al., 2011). The political parties
and decisions taken in favor of the airline's industry benefit the entity whereas the
adverse industrial decision also affects the working of the firms operating in the
industry.
 Economical: The economy of Hong Kong is growing continuously and it has been
identified that the country is earning a large portion of its income from external
markets. The country has a good foreign exchange reserve and possesses a good hold
for the exchange value of its currency (Baur, 2012). The better the economy of the
nation the better is the profits of the businesses operating within its territory. The
good economic status of Hong Kong helps the Hong Kong airlines to grab a better
amount of profits in the country. A depressed economy sinks the businesses into
losses. The growth of country and company as an economy is an interrelated matter
where one grows with the growth of other factors.
 Social: Society is formed with the people who are the customers to the organizations
working in the marketplace and people living and contributing to the economy of a
country. The social factor influences various decisions of the enterprises which are
why the companies are concerned with the corporate social responsibilities. These are
the duties which every organization operating in the marketplace performs to maintain
their social status in the market (Defourny, and Kim, 2011). Hong Kong’s society is
comprised of the people speaking their national language- Cantonese and the other
most used language is English. The social status determines the entity’s market share
and sustainability in the industry.
 Technological: The airline's industry or aviation industry is influenced by the
changes in technology as this sector is highly advanced in terms of technology. The

5Environmental Analysis of Hong Kong Airlines
new changes in the market industry influence the behavior of customers of the
industry as well as the companies operating in the market. The customers nowadays
are interest in the online service access and the companies which alter their process to
provide their customers the required services will be able to survive in the market
(Vu, et. al., 2015). Apart from this, the new technology involves capital costs but also
the increased incomes to the organizations. Therefore, the factor is quite effective to
determine the sustainability of the business in the industry.
 Environmental: For a business like that of Hong Kong Airlines, the environmental
factor is of great importance as the airlines have aircraft which need fuel to operate
and the fuel is available from the environment. Also, the aircraft when flying in air
release the smoke that affects the environment adversely. The environmentalist
sectors on the behalf of Mother Nature which increases the cost of their process and
indirectly the cost to their customers and thus has an impact on the revenue and
profits of the business (Pun, and So, 2012).
 Legal: Legal factor holds importance in the industry of aviation as this industry is
directly connected to the safety and security of human lives. The government releases
several laws regarding the safety and security of the passengers of the aircraft
(Guillet, et. al., 2011). The risk of the air crash and any such disaster is always there
in this industry that is the reason government issues various guidelines and form
different laws regarding safety and hospitality of the passengers. The laws are needed
to be obeyed by the industries to operate in the market industry.
SWOT Analysis of Hong Kong Airlines
SWOT analysis is an internal analysis tool for the organization’s which enables the
management to identify their entity’s strengths and weaknesses to increase the efficiency of

6Environmental Analysis of Hong Kong Airlines
their business (Ginieis, et. al., 2012). It also helps them to identify the possible opportunities
and threats in the market for the association so that the organization can take the full
advantage of the opportunities and can save its association from the damages which could
have to occur due to the unforeseen threats. The SWOT analysis for Hong Kong Airlines has
been discussed as follows:
 Strength: It includes those factors of the business enterprises which are supportive of
the company in increasing its growth and efficiency. The Hong Kong Airlines is the
subsidiary of Hainan Airlines because of which it enjoys the benefits of financial
support as the company Hainan Airlines is one of the largest private company of
China in the aviation industry (Pearson, et. al., 2015). The financial allows the
company to grow and response the market in a better manner. The company is
currently operating at the small scale which is helpful for the business as small scale
business is easy to manage and changes in the external environment of such
businesses are tackled by the organization in an effective manner.
 Weaknesses: It identifies those areas for the company where it needs to work on in
order to grow and develop as a successful enterprise. For Hong Kong Airlines, it has
been observed that the company is lacking in the management of its finances. It had
failed to pay its expenses for the aircrafts services due to which the association
providing it the services had stopped providing them the engineering services. It has
also faced rejection of expansion plan due to safety reasons from the aviation
department of Hong Kong which shows its weakness in the management of operations
(Sze, et. al., 2015). While the small scale has its associated benefits it also has some
drawbacks which restrict the business from bargaining for its expenses of fuel,
maintenance, and other activity expenses.

7Environmental Analysis of Hong Kong Airlines
 Opportunities: Hong Kong economy is driving the major portion of its economic
growth from the external businesses of exports and tourism sector. The growth of
tourism in the country will demand the means of transportation and thus the air travels
(Chan, 2013). This will increase the revenue of the organization and the management
should plan to grab this market opportunity to increase the profits of the association.
 Threats: The threats of Hong Kong airlines include the competitors in the market and
the cost of the aircraft's fuel is increasing which imposes a threat on small scale
businesses. Thus, the company should be aware of its on-going costs and should make
efforts to reduce other costs in order to manage the overall profit and survival in the
industry (Pearson, et. al., 2015).
Interrelation between Strength & Weakness and External Factors
The strengths of the Hong Kong airlines will help the company to drive the economic
advantages and fulfil the political and legal restrictions applicable to the association. It is also
helpful for the organization in developing social status by fulfilling the corporate social
responsibility towards the society. Due to same scale operation, the contribution to the
damages in the environment is relatively lower than the large enterprises operating in the
industry (Ahlan, and Sukmana, 2014). The weakness of the company multiplies the negative
impact of the adverse external factors and thus should be taken care of. Hence, it is clear that
strength and weakness has a combined impact on the organization with the organization's
external environmental factors.
Influence on Decision Making
From the above study of Hong Kong airlines external and internal factors affecting the
working of the organization the following points are concluded that might affect the decision
–making of the company (Tsui, et. al., 2014).

8Environmental Analysis of Hong Kong Airlines
 The company should have a cost control system as this is a threat to the survival of
the business and it is impacting the operational management of the company which in
turn disturbs the efficiency of decision-making ability of management.
 The company should plan its flexible future strategies in order to response the
dynamic factors of the macro-environment and make a sensible decision that will take
full advantages of the opportunities in the market by utilizing the strengths and
improving the weaknesses(Tsui, et. al., 2014).
Conclusion
This report has explained the effect of macro-environment factors on the operations and
decision-making process of Hong Kong Airlines. It has explained the meaning and has
developed an understanding of PESTLE analysis to its users. This report also defines the
SWOT analysis for the business. It has shown the interrelation of both the analysis of the
association and identification of the key factors affecting the operating efficiency of the
company. Thus, the report provides an understanding of environmental factors to a business
and their responsiveness by the association along with the benefits and drawbacks associated
with them.

9Environmental Analysis of Hong Kong Airlines
References
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Baur, D.G., 2012. Financial contagion and the real economy. Journal of Banking &
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Chan, E.S., 2013. Managing green marketing: Hong Kong hotel managers’
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10Environmental Analysis of Hong Kong Airlines
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