Analysis of Global Business Environment and Airline Industry Dynamics

This report provides an analysis of the global business environment and its impact on the airline industry. It begins with an introduction to the global business environment and its influence on business operations, particularly within the airline sector. The main body of the report examines the changes in the global environment, such as technological advancements, and their effects on the airline industry, including the introduction of jet engines and wide-body aircraft. The report also identifies key drivers of change, including costs related to fuel and labor, and risk factors such as political instability. Furthermore, the report applies Kurt Lewin's force field analysis to assess the forces influencing the airline industry, both internal (e.g., profit objectives, reorganization needs) and external (e.g., input costs, competition). The conclusion summarizes the impact of these global environmental changes on airline operations, highlighting the importance of understanding and adapting to these dynamics. The report references several academic sources to support its analysis.

Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
Main body...................................................................................................................................1
Changes in the global environment and their impact on the airline industry..............................1
Drivers of the changes relating to airline industry......................................................................1
The Kurt Lewins force field analysis of Airline industry...........................................................1
CONCLUSION................................................................................................................................2
REFERENCES ...............................................................................................................................2

INTRODUCTION
Global business environment refers to the environment which includes environment of
the various countries that will affect the business operations of the firm. Global environment
consists of the international interactions which are out of the control of the company and
influence the decision-making process of the firm in terms of operating business activities
(Hamilton and Webster, 2018.). The assignment presents the changes in the global environment
which affect the organisation of the Airline industry. It will also define the drivers of changes
related to the airline industry.
Main body
In the year 2009, the commercial aviation industry entered into a golden age, between 2009
and 2017 revenue in the global aviation industry grew at a compound annual growth rate of
around 5.9 percent, reaching 754 billion U.S. dollar in 2017. The sector’s improved financial
performance is the outcome of a rising passenger figures and air cargo, which in turn are
influenced by a world which is becoming more and more affluent as well as highly
interconnected. Brazil, The United States, China and the European Union are ranked among the
most essential markets for air travel. A number of successful global airlines haven taken off on
their social flight and some are indulging in new manners for engaging with the customers to
develop long-lasting relationships. There are various trends and changes in the Airline industry
such as increasing use of Social media, Changing course in revenue generation, increased focus
on the standardization and regulatory route.
Changes in the global environment and their impact on the airline industry
Changes in the global environment has great impact on the operation of the airline
industry which involves technological development, it is the major innovation in the airline
industry such as Jet engines. These technological innovation considerably minimize the travel
time and introduced the wide body's aircraft which provides the opportunities to the airline
industry in terms of reducing the cost per seat which results in decreasing the generalized cost of
travel, so that it has positive impact on the demand(Taneja, 2017). Jet engines used for providing
must faster travel but it also increased the fuel consumption level of Airlines which affect the
productivity of the airline companies in terms of decreasing the profitability.
1

Drivers of the changes relating to airline industry
It includes various key drivers of changes in the airline industry such as costs, the airline
industry faces the great pressure from increasing fuel and labour cost for example Jet fuel prices
are expected to increasing at barrel(+25%) and the cash flow in terms of higher capital
expenditure for operating the airline companies and the cash from operations will be results in
decreasing the profit due to high capital spending. It also includes the risk factors which plays an
important role as the key drivers of changes in the airline industry which includes political forces
such as lack of clarity in the impact of Brexit and it also affects the business operation due to
instability of the political forces (Belobaba, Odoni and Barnhart, 2015).
The Kurt Lewins force field analysis of Airline industry
This model shoes the current level of business which is affected by driving forces in
terms of negative positive effect on the operations of the airline industry. It helps in evaluating
the decision of the change in terms of good or bad for the company. According to this model the
Airline industry provides a unique service with high level of convenience and efficiency to
customers that cannot be serve by other industries. The major problem in this in industry is high
cost fares which always affect the demand of customers which can be reduce by minimizing the
fuel cost and labour cost in the airline industry (Hassan, 2018). Lewin’s forced field analysis can
be applied on Airline industry as below –
Forces of change in Airline industry
Internal
1. Objective to enhance profit and performance measures
2. Need to reorganize for increasing competitiveness and efficiency
3. Conflicts between various departments.
External
1. Higher costs of inputs
2. Taxes and legislation
3. Social values and Ethics
4. Increased competition
Restraining forces
1. Parochial self interest
2. Habit
2

3. Disagreement over the requirement for change
CONCLUSION
The above study has been summarised with that the changes in global environment affect
the business operations of the organization which operates their business activities at the global
level. It includes the technological changes which affect the productivity of the firm due to the
technological advancement.
REFERENCES
Belobaba, P., Odoni, A. and Barnhart, C. eds., 2015. The global airline industry. John Wiley &
Sons.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Hassan, A.T., 2018. Organizational Change Management: A Literature Review.
Tallman, S., Luo, Y. and Buckley, P.J., 2018. Business models in global competition. Global
Strategy Journal. 8(4). pp.517-535.
Taneja, N.K., 2017. Driving airline business strategies through emerging technology. Routledge.
Wensveen, J., 2018. Air transportation: A management perspective. Routledge.
3