Cathy Pacific strategy recommandation
战略建议代写 This report analyzed three recent events happening recently that were related to Cathy Pacific. Recovering international traveling
Executive Summary 战略建议代写
This report analyzes the three trends currently happening that will impact Cathy Pacific, the airline based in Hong Kong. This report also summarized the impact of these three trends and suggested suitable strategic changes facing the new trends. Future recommendations were also made according to the proposed strategy.
Table of Contents
Introduction
With the pandemic starting in the 1st quarter of 2020, airlines around the world have been impacted with a loss in both domestic and international flight volumes due to a lack of travelers. Recently, with new policies in place lifting most of the traveling bans among countries (Stokel-Walker, C., 2022), airlines around the world have been given the opportunity to recover from the pandemic and start to resume some of their flights that were canceled during the pandemic. However, some countries, including China, still have strict traveling restrictions, especially for international flights (CNN, 2022), and airlines with China as a major target were still under the impact. 战略建议代写
Cathy Pacific, being the airline based in Hong Kong connecting mainland China with other international destinations, is one of the international airlines that relied heavily on Chinese consumers before the pandemic. Recent changes in both a reboot of international traveling outside China and a slightly lifted but still strict international flight policy in China would impact the company’s strategy choice after two years of reduced business.
On the other hand, politically, the tension between mainland China and Taiwan with the military operation around the area blocking naval and area space from civilian use might hurt the company’s flight schedule in the region (Brown, 2022). On top of these two trends, the new trend in rising fuel prices might also encourage the company to perform strategic changes in order to maximize benefits (Smith, K.A., 2022).
Aim
The aim of this report is to focus on analyzing the three environmental events related to Cathy Pacific’s operation and offer recommendations on strategic changes to maximize the benefits associated with these events.
Discussion 战略建议代写
The three strategic influences of the external environment on Cathy Pacific can be concluded as a recovering international tourism market with a strict international traveling policy in China, political tension around Taiwan, and a rising fuel price.
During the last couple of months, the international tourism market has been seeing a recovering trend from the impact of the pandemic (Airports Council International, 2022), and various countries are removing policies that were once restricting international traveling. These actions both reduced the effort of gaining access to international traveling through lifted or lowered requirements for testing and vaccine, and reduced efforts related to planning the trip with lifted mask requirement or quarantine period. These two factors added together would be beneficial for international traveling, for both leisure and business purposes.
Cathy Pacific, as an airline with operations centered in Asia but involved with multiple international routes.
With Hong Kong as one major air hub for traveling in Asia (Cathy Pacific, 2022). Can be hugely impacted by this new trend, with more opportunities to operate in international air space. This new trend reversed the long-lasting negative impact of international traveling which lowered the overall revenue generated from passengers taking international flights.
However, on the other hand, with Hong Kong being part of China and Cathy Pacific headquartered in Hong Kong. China’s policy regarding the pandemic can impact Cathy Pacific to a large extent, and there are two major impacts. First, Hong Kong is controlled by China and would have to follow a series of policies in accordance with the Chinese government, for example. A strict quarantine policy with 3 days in centralized quarantine and 4 days in self-quarantine. 战略建议代写
This strict policy increased the difficulty of traveling to Hong Kong as well as utilizing Hong Kong as a transferring spot. Lowering the overall demand for Cathy Pacific’s passenger flights. Another issue would be related to Cathy Pacific’s previous business focus on utilizing the large demand for international traveling in China and catering to Chinese customers on the mainland. With the strict international traveling policy still implemented in China, the number of Chinese international travelers will remain low and thus this portion of customers would see low recovery.
Thus, overall, a recovering international market but a market around China that is still under restriction might require Cathy Pacific to adjust its strategies based on the competitive scope.
With Cathy Pacific’s headquarter located in Hong Kong. 战略建议代写
Most of its flights would fly over the southeast region of China. Including the island of Taiwan. Recently, with the US official’s visit to Taiwan, the mainland and Taiwan’s relationship has been in tension with multiple military operations around the island blocking both air and naval space from civilian use. Which could negatively impact Cathy Pacific’s operation in that area (Plummer, R., 2022).
First of all, with the tension going on, even without an actual fight, the increasing military operation will disturb the normal operation of the airline as the plane must stay away from the air space to avoid being targeted during the operation. With the airline’s tight schedule on its employees, plane assets, and applicated flights, it would be hard to adjust its schedule without resulting in a loss in revenue. Preparing for such uncertainty requires extra effort and cost, and the risk would always exist until the tension is relieved.
Secondly, such military operations and exercises with real weapons can be dangerous for airplanes. MH17, the plane shot by a Buk missile in 2014 (Session, 2022), despite the debate on where the missile came from and who launched the missile. Would be an example of how military operation can create disaster for civilian airlines.
There were also sources, although not officially admitted by the Chinese military or Cathy Pacific, reporting a Cathy Pacific flight had to perform emergence true to avoid a missile in the south China sea (Brown, 2022). This footage of video, although with doubtful authenticity, combined with the MH17 case, indicated that operating in an area where there are military presence and ongoing operations can be dangerous. 战略建议代写
Last but not least, if the tension escalated into a conflict.
Then a reduced demand for traveling around the region could be happening. Together with a series of war-related actions such as the complete blocking of civil air traveling. This risk, although has a low possibility to happen, can bring a huge impact on Cathy Pacific is happened.
Thus, overall, the tension around south China between China and Taiwan would negatively impact the operation of Cathy Pacific. As well as generate other risks involved with military actions. Cathy Pacific might have to adjust its strategy on the scope to cope with the new situation.
Fuel price in 2022 has been a hot topic with its huge increase. Based on the report produced by IATA (2022), the jet fuel price on August 5 of 2022, when compared with what it was 1 year ago, has risen by 65%. 战略建议代写
Fuel expense can be a huge part of the airline’s daily expenses, accounting for 10% to 12% (Beers, 2021) of their operating expense, and for Cathy Pacific, the rising fuel price would put more burden on its operations on top of the reduced revenue brought by the pandemic. One side of the issue is that all airlines around the world are faced with this issue and a negative impact on every player on the market would not create a competitive disadvantage for Cathy Pathic alone. But on the other hand, whoever can gain access to lower fuel price or higher fuel efficiency would, on the other hand, gain competitive advantage.
Thus, Cathy Pacific, when faced with the rising fuel price, would have to adjust its strategy on cost-related aspects to utilize this event as an opportunity for it to gain competitive advantages.
Adapting the five business-level strategies (Porter, M.E., 1985, p. 12), there would be several strategic focuses on both the competitive scope and competitive advantage. Competitive scope refers to whether the strategic target is broad or narrow. While competitive advantage refers to if the corporation focuses on the cost or uniqueness offered to customers. 战略建议代写
For the three factors identified above, the first two trends, the recovery of international tourism and the tension between China and Taiwan. Can impact the scope of the strategy while the third trend, the increased fuel price, can impact the overall cost of the business.
Thus, the implication of strategy design theory here would be to determine the scope and advantage strategy of Cathy Pacific.
Based on the events currently occurring. The scope, to be specific, would impact Cathy Pacific’s customer base and operation areas, while the cost and uniqueness focus on if Cathy Pacific should offer differentiated or universal but cost-saving services to its customers. Based on the nature of the events, it can be seen that Cathy Pacific might be better to reduce its scope and avoid the Chinese market until the travel restrictions are lifted and the tension is relieved. As well as to reduce differentiated service to reduce the cost in order to lower impact from a reduced fuel price.
One strategic course of action would be to modify the current fleet so there will be less variance in airplane types and those airplanes would be chosen based on the efficiency of operation in international traveling to Europe, America, and Australia so as to avoid investing in the Chinese market. This would fit the increasing international traveling trend outside China, and Cathy Pacific has ready operating on serval of those air routes (Flight Connections, 2022), making it easy to increase capacity on these lines.
This strategy would also lower the impact of China’s ongoing strict COVID-19 policy as well as the troublesome area around Taiwan. 战略建议代写
Also, a fleet with planes in the same model would save on maintenance, parts as well as training costs, reducing the overall cost of the company to offset the rising fuel cost. This can be seen in the report created by Alexander Bruggen and Levin Klose (2010). Which concluded that fleet standardization is positively associated with operating performance. Overall, the strategy would fit the description of focused cost leadership in the five business-level strategies model proposed by Porter, M.E. (1985, p. 12).
Thus, the strategic goal for Cathy Pacific to set would be to adopt a focused cost leadership strategy and standardize its fleet to lower cost while focusing on operations outside the Chinese market to avoid the negative impact brought by China’s pandemic policy and its tension with Taiwan.
Conclusion
This report analyzed three recent events happening recently that were related to Cathy Pacific. Recovering international traveling with a restricted traveling policy in China indicated an opportunity for an international market outside China for Cathy Pacific. Tension around Taiwan indicates a risk of operating near China. Increased fuel price indicated increased costs for airlines and an opportunity for Cathy Pacific to lower fuel costs to gain a competitive advantage. 战略建议代写
A focused cost leadership strategy was proposed based on these events, with standardization of fleet and focus on the international market was proposed to Cathy Pacific to avoid the negative impact of these events and catch the opportunity that came with them, which achieved the aim of this report.
Recommendation
With the proposed change in strategy, it is recommended for Cathy Pacific to start analyzing its current fleet and create an optimal fleet design with a standardization focus. It would also be recommended that Cathy Pacific start assessing its current operating routes and the profitability of these routes, to determine which route would have room for additional capacity and which new route can be added to the plan, while routes in and out of China should be reevaluated to see if they are still necessary to be kept.
Reference: 战略建议代写
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