Environmental Forces for Cathay Pacific

Topics: Airline, Malaysia Airlines, Flag carrier Pages: 4 (1184 words) Published: March 25, 2007
Environmental Forces:
Environmental forces are something that is intangible but somehow it still affects your firm¡¦s operation. Therefore, these environmental forces can be divided into groups such as internal and external forces. In the Cathay Pacific Airway case, the internal forces can be considered as its human resource management, since the labor cost is its main concern. In addition, government policies, competitors and customer satisfaction will be considered as its external forces.

Internal forces:
Cathay Pacific is currently paying extremely high salaries to its employees. This situation not only causing Cathay Pacific to lose profits but also become one of their disadvantage. According to the research, Cathay Pacific has been known as the highest salary paid Airline Company. In other words, there is no doubt why Cathay Pacific cannot raise their profit margin. Cathay Pacific really has to work on their human resource management in order to cut down their labor expenses to increase the profit. By comparing the numbers on wages, passenger carried and revenue from other two main competitors (Singapore and Malaysia Airline), we found out that Cathay Pacific has served almost double amount of passengers than Singapore Airline on year 2005 but only received half of what Singapore Airline made on its revenue. This result shows us that a high labor expense is damaging the company¡¦s operation. Therefore, Cathay Pacific really has to work on its human resource management in order to lower their expenses on labor.

External Forces:
Government policies are the most common external forces for international airline companies. Since the aircraft are not only traveling within nation, international airline companies now need permissions from other countries so they can land on their airport and somehow this can be very uncertain. Getting a permission from other countries are not as simple as come and go. There are so many things to be considered before...
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