BAMG 3116: Global Strategic Management Report on Hong Kong Airlines

This report provides a comprehensive analysis of Hong Kong Airlines' global strategic management. It begins by assessing the company's current performance, highlighting its position in the hospitality industry of Hong Kong and its challenges due to the COVID-19 pandemic. The report then delves into the competitive environment, examining political, economic, social, and technological factors, along with industry analysis including the power of buyers and suppliers and the threat of new entrants and substitutes. The analysis explores the reasons behind the current performance, including strengths like expansion strategies and weaknesses such as competition. It also considers opportunities for market expansion and threats like high capital requirements and license suspensions. The report utilizes VRIO analysis to assess the value, rarity, imitability, and organization of HKA's resources. Finally, it offers recommendations for improvement, focusing on resource differentiation and enhancing the customer experience to gain a competitive edge. The report concludes by referencing relevant sources.

Running Head: Global Strategic Management
[Company name]
Global Strategic Management
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Contents
The current performance of the company..................................................................................1
The competitive environment of the company...........................................................................2
The reasons for the current performance...................................................................................2
Recommendation on how to improve the current performance.................................................4
References..................................................................................................................................5

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The current performance of the company
The organization selected for the analysis is Hong Kong Airlines Company. The organization
is present in hospitality industry of Hong Kong and is performing well in the overall
environment. The headquarter of the company is in Tung Chung district and the main hub of
the organization is Hong Kong Airport. The organization was established in the year 2006 as
a member of the HNA group and it flies to more than 30 regional international destinations in
Asia and North America using both passenger and cargo aircraft. The fleet size of the
organization is 44 and the subsidiary company of Hong Kong Airlines is Hong Kong Air
Cargo. The company is the third largest airlines present in the environment of Hong Kong
that is at enough profitable state (Hong Kong Airlines 2020). However, the position at which
the organization is currently present is not that great due to the emergence of pandemic
COVID- 19. The company had fallen below the target of profitability by 6% (Tsui, Yuen, and
Fung 2018).
The competitive environment of the company
Political factors of the nation Hong Kong in which the company prevails shows stability in
the actions of the government. Political parties work with harmony to maintain peace in the
nation.
There is presence of economic growth and profitability that helps other companies to grow by
earning better and using high technology as well.
Social factors of Hong Kong there is presence of educated community in Hong Kong and
people prefer living life at ease. Also, there is presence of adequate gender diversity in the
nation.

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Technology plays a crucial role in the country as the companies make use of technology on a
greater level so as to satisfy the needs of customers.
Lastly, it should be noted that that laws and strict and crucial for companies to manage
otherwise strict penalties are imposed and the environment of the nation is stable for the
people to spend their livelihood.
Considering industry analysis, there is low power in the hands of buyers and high power with
suppliers in the environment as less number of suppliers are present in the industry. High
competition reduces competence of the business, however, market entry of new organizations
is less because of high investment. Thereat of substation is also low of the organization in
aviation industry (Donohue 2018).
The reasons for the current performance
The biggest strength of Hong Kong Airlines could be seen as its expansion strategies in Hong
Kong market. The company started providing services to the customers present in low cost
market as well. Resulting in which, profitability of the business increased due to increasing
number of customers in the target market. The company was also rated four start by Skytrax
because of its efficient service quality. Alongside, biggest weakness of HNA is its growing
competition in the environment. With the halt in the functions of HNA, Cathy Airlines gained
advantage in the market. Thus, high degree of competition with strong opponent in Hong
Kong environment is the biggest weakness of HNA. Hong Kong Airlines secured four billion
Yuan (3 year loan) from 8 Chinese banks, thus, burden of loan could also affect the position
of the company (Zhang, et., al., 2017). Further, the opportunities present with the
organization is scope of market expansion using available resources. The company should
diversify the scope of business for better growth. High capital requirement act as a threat for
the business in implementation of business strategies while combining the opportunities

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available. Also, the company also faced the difficulty in managing the license suspension
because it raised enough cash to satisfy the city’s Air Transport Licensing Authority (ATLA)
(Freed 2017).
Threshold competencies of HNA is involves its extensive resources and strategies that are
used to target the customers present in the environment. Innovation management strategies
helped the organization in aligning its resources and capabilities in such a way that the
company was able to compete in the airlines environment. Distinctive capabilities of HNA
involves targeting a larger segment in the Hong Kong environment. Strategic alliance of
HNA helped them to attain funds due to which the business was able to target larger segment
involving low cost customers as well. Thus, brand image of HNA is distinctive capability that
helps the company in attaining competitive advantage in the business environment (Wong,
and Ho 2019).
VRIO analysis is a business analysis framework that helps the organization in identifying the
resources of the business and evaluating its effectiveness towards the functions of the
company. Below mentioned is the explanation of VRIO analysis for the company Hong Kong
Airlines:

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Valuable: It is should be noted that the resources of HNA are definitely valuable and it is
because of the resources only due to which the company attains competitive advantage in the
market. The resources of HNA are valuable because it helped the business to save itself from
the upcoming threat of license cancellation in the aviation market.
Rare: It is definite the resources are valuable but not rare enough to maintain that competitive
advantage in the Hong Kong environment. There is possibility of imitation of the resources
because of lack of rarity of the resources (Kei 2019).
Imitable: yes the products of HNA are imitable to some extent, it should be noted that all
competitors use similar products that reduces the competence of the organization in the
national environment.
Organization: lastly, it should be noted that yes the resources of HNA are organized in the
environment. The company faced difficulty in managing the business, however, organization
of resources and services helped the organization to maintain its level in the competitive
environment and regain the upper hand in the industry as well (Wan, and Zhang 2018).
Recommendation on how to improve the current
performance
It is recommended to the company HNA that need to make changes in the resources of the
organization. The company need to find the resources that help the organization to fight
against high competition in the environment. It should be noted that rarity of the resources
would help the business to implement strategies that differentiated in the environment.
Currently, Cathy Airlines is at better position in the aviation environment, thus, HNA need to
introduce resources and competencies in the business that provide differential facilities to the
customers as well. In this way, the customers would be able to identify differences between

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the services of this airlines and others while choosing HNA in the market as well (Minwoo,
Larry, and Wenbin 2019). The company is committed in offering the best experience to the
customers and delightful experience in Hong Kong, therefore, the company promises brand
message of ‘Truly Hong Kong’. Based on this brand message, the organization should let the
customers seek experience of the cultural practices of Hong Kong through their flight
journey. Every activity should be designed in such a way so as to provide differential
experience to the customers.

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References
Donohue, K., 2018. Hong Kong Airlines blossoms into global carrier. Airways (Sandpoint,
Idaho).
Freed., J. (2017) Hong Kong Airlines targets Cathy Pacific’s Core Business Market [online].
Available from < https://www.reuters.com/article/us-hk-airlines-strategy/hong-kong-airlines-
targets-cathay-pacifics-core-business-market-idUSKCN1BH1M4 > [accessed on 2 April
2020].
Hong Kong Airlines., (2020) About Us [online]. Available from <
https://www.hongkongairlines.com/en_HK/aboutus/overview > [accessed on 2 April 2020].
Kei, C.M., 2019. A Study of Customer Satisfaction in Airlines. International Journal of
Trade, Economics and Finance, 10(6).
Minwoo, L.E.E., Larry, K.B. and Wenbin, S.O.N.G., 2019. Analysis of direct operating cost
of wide-body passenger aircraft: A parametric study based on Hong Kong. Chinese Journal
of Aeronautics, 32(5), pp.1222-1243.
Tsui, K.W.H., Yuen, A.C.L. and Fung, M.K.Y., 2018. Maintaining competitiveness of
aviation hub: Empirical evidence of visitors to China via Hong Kong by air
transport. Current Issues in Tourism, 21(11), pp.1260-1284.
Wan, Y. and Zhang, A., 2018. Airport charges, infrastructure life cycle, and economic
impact: a case study of Hong Kong. In Transportation, Knowledge and Space in Urban and
Regional Economics. Edward Elgar Publishing.

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Wang, K., Tsui, K.W.H., Liang, L. and Fu, X., 2017. Entry patterns of low-cost carriers in
Hong Kong and implications to the regional market. Journal of Air Transport
Management, 64, pp.101-112.
Wong, A.T.T. and Ho, M.W.M., 2019. Service Quality and Customer Satisfaction on Budget
Airlines: Kano Model Approach. Journal of Economics, Management and Trade, pp.1-16.
Zhang, A., Hui, G.W., Leung, L.C. and Cheung, W., 2017. Air cargo in mainland China and
Hong Kong. Routledge.