University Assignment: Strategic Management Audit of Cathay Pacific

This report presents a comprehensive strategic management audit of Cathay Pacific, Hong Kong's flag carrier. It begins with an executive summary and a historical overview of Cathay Pacific's operations, including its growth and evolution. The report then delves into a situation analysis, examining the airline's current market position, technological advancements, and cost-cutting measures. It includes an in-depth analysis of Cathay Pacific's mission and vision statements, evaluating their effectiveness and alignment with the company's goals. Furthermore, the report assesses corporate governance and conducts both internal and external analyses, utilizing SWOT and TOWS matrices to identify strengths, weaknesses, opportunities, and threats. The audit also explores factors influencing the airline's performance, providing a well-rounded evaluation of Cathay Pacific's strategic management 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