Strategic Management - Air NZ external analysis
External Analysis
An external analysis will be done for Air New Zealand using the strategic tools such as PEST analysis and Porter’s Five Forces aiming to identify key strategic issues which will affect the profitability of the company. The analysis will be based on these two categories: the General environment which centralise on the company’s future among other competitors and the Industry environment which centralise on situations and circumstances which will affect the operation of Air New Zealand in the industry.
PEST Analysis
Political/Legal
Government support plays a significant role in the success of Air New Zealand as a leading airline company representing New Zealand. This support can be seen in 2001, major losses created by Ansett Australia (Air NZ owns 50%); massive amount of capital was injected to Air New Zealand by the New Zealand Government. Also, the New Zealand Government is currently the largest shareholder of Air New Zealand (73.13% - see figure 1 in appendices). However, the Government proposed to drop current shareholding to 51% until end of 2013 or early of 2014. According to analysis, because of this proposal, Air New Zealand’s shares prices have not fully reflected its current company value (Matthew Goodson from Salt Funds Management). Less shareholding means less support in difficult times.
Economical
All airline companies are directly influenced by the economy of the country. The numbers of passages are quite tightly connected with economic performance. Also the fuel cost is the other essential element to impact on company’s profit (need to find some reference). The reduction of flight prices between Gisborne and Auckland is a good example. An average of 11% price cut was able to be introduced because of direct increase (12%) in the demand for the services since October 2012 (Media Releases 2013 - Air New Zealand cuts fares between Gisborne and Auckland, 2013). Even there was 100% increase in the landing fees since December 2012 at
An external analysis will be done for Air New Zealand using the strategic tools such as PEST analysis and Porter’s Five Forces aiming to identify key strategic issues which will affect the profitability of the company. The analysis will be based on these two categories: the General environment which centralise on the company’s future among other competitors and the Industry environment which centralise on situations and circumstances which will affect the operation of Air New Zealand in the industry.
PEST Analysis
Political/Legal
Government support plays a significant role in the success of Air New Zealand as a leading airline company representing New Zealand. This support can be seen in 2001, major losses created by Ansett Australia (Air NZ owns 50%); massive amount of capital was injected to Air New Zealand by the New Zealand Government. Also, the New Zealand Government is currently the largest shareholder of Air New Zealand (73.13% - see figure 1 in appendices). However, the Government proposed to drop current shareholding to 51% until end of 2013 or early of 2014. According to analysis, because of this proposal, Air New Zealand’s shares prices have not fully reflected its current company value (Matthew Goodson from Salt Funds Management). Less shareholding means less support in difficult times.
Economical
All airline companies are directly influenced by the economy of the country. The numbers of passages are quite tightly connected with economic performance. Also the fuel cost is the other essential element to impact on company’s profit (need to find some reference). The reduction of flight prices between Gisborne and Auckland is a good example. An average of 11% price cut was able to be introduced because of direct increase (12%) in the demand for the services since October 2012 (Media Releases 2013 - Air New Zealand cuts fares between Gisborne and Auckland, 2013). Even there was 100% increase in the landing fees since December 2012 at