A Study on How Macro Environment Affect the Business

Topics: Low-cost carrier, Airline, Southwest Airlines Pages: 5 (1783 words) Published: July 22, 2011
1.1The marketing environment which made up of microenvironment and macroenvironment surrounds and impacts upon the organization. The microenvironment includes forces close to the company that affect its ability to serve consumers, such as other company departments, suppliers, competitors, and consumers. According to Armstrong et al (2006, pg. 61) the macroenvironment consists of larger societal forces that affect microenvironment which is the demographic, economic, natural, technological, political and cultural forces. 1.2Company must constantly watch and adapt to the marketing environment in order to seek opportunities and ward off threats. Report from International Monetary Fund (IMF, 2009) reported the global economy is in the midst of a deep downturn. Global growth is expected to fall when measured in terms of purchasing power parity and to turn negative. In this assignment, the author will be introducing one of the budget airlines in Singapore - Jetstar Asia. The author will also examine the macroenvironment forces that the chosen company and tourism industry will face in the current economy downturn.

The author had chosen the tourism industry in Singapore. The reason for choosing this low cost carrier is because the author sees a growth in this industry for the next 12 months. Singapore national carrier - Singapore Airline (SIA) had recently announced its reduction in flight frequency in most routes as there is about 11% reduction in capacity across their network. SIA will be withdrawing service to Amritsar, India and Vancouver, Canada. The Associated Press (Prahok, 2009) reports that Asia’s budget airlines should benefit from bargain hunting travellers amid a global economic slowdown. The fallen of fuel prices by about 75 percent enables budget airline to keep tickets cheap. The author believes this would be able to attract many travellers to switch from travelling on the usual full service carriers to budget airline.

3.0 Jetstar Asia
Jetstar Asia is a Singapore based airline with majority shares owned by Qantas and Temasek Holdings. It started operation on 13 December 2004 and acquired Valuair on 22 July 2005. Report stated (Jetstar Asia, 2008) both carriers now operate a total of seven aircrafts and 126 weekly flights to 16 Asian destinations in 10 countries within five hours radius of Singapore. The company, which includes its sister airline Valuair, has seen a 20 percent increase in revenue, a 4 percent rise in passenger load factor to more than 75 percent and about 20 percent jump in passenger carriage for the year ended 31 March 2008.

The macro forces that have been affecting the budget airline industry are Demography, Social/Cultural Economic, Political and Technological Environment. The author will be examining the impact of these forces on the chosen company within the tourism industry in the current economy crisis.

4.1Demography Environment
4.1.1According to Armstrong et al (2006, pg 65) this is the study of human populations in terms of size, composition and distribution of population in relation to social factors such as geographic boundaries. Factors affecting this environment include population trends, age trends, family trends and education trends. Armstrong et al (2006, pg. 66) had also stated Baby Boomers born between 1946 and 1964 have become one of the most powerful forces shaping the environment. This population are approaching life rethinking the way they live, eat, travel and spend. There could be intensive travel for this group as they are usually more flexible on their travel dates or even destination. Going on annual family trip is one of the relaxing lifestyle they enjoy. 4.1.2The next two generation known as Generation X and Y are grown up in times of recession and corporate downsizing. As a result, this group will have lesser spending power. The author notices there is a big group of youngsters onboard budget...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • the business environment Essay
  • How Technology Affects the Business Environment Essay
  • Business Environment Essay
  • Essay on business environment
  • Essay on Case study Business Environment
  • Macro Business Environment Essay
  • how do business in china Essay
  • business studies Essay

Become a StudyMode Member

Sign Up - It's Free