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Analysis of China Airlines - Essay Example

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International Business Final Exam BY YOU YOUR SCHOOL INFO HERE DATE HERE International Business Final Exam 1.0 Industry Analysis The global airline industry operates is a mature market, categorised under an oligopolistic model of competition. An oligopoly is a market structure in which there are only a handful of very large competitors that dominate market share in which competitive rivalry is the main function of competition and gaining competitive advantage (Boyes and Melvin 2005)…
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Download file to see previous pages The extent of political multiplicity is not necessarily relevant for understanding the global airline industry, nor is the technological environment as this is relatively homogenous for airlines utilising similar support IT such as e-commerce, on-board entertainment, social media, and software for enterprise resource planning. 1.1 Social Factors The social factors associated with the different target customer segments in the regions serviced by the global airline industry and its competitors is critical to understanding how the business maintains competitive advantages. Each regional culture maintains differing societal views that impact dimensions of service quality, marketing and promotion, and customer relationship management. Customers in Japan maintain distinctly unique cultural values from other Asian nations, scoring high in areas of masculinity as identified by Geert Hofstede. Japanese customers with high masculinity characteristics have significantly high expectations for top quality service and in product presentation (Hofstede Center 2012). Service failures or product quality occurring on-board will be the most predictable elements of service development with this important revenue-generating market segment. Japanese customers are also recognised as being one of the most risk averse cultures on the planet (Hofstede Center 2012), therefore once a business has managed to establish brand loyalty there is little risk of brand defection (Boone and Kurtz 2007). Customers in China, however, are very hedonistic which was established on the foundation of Confucian-era values (Farh and Cheng 2000). Hedonism involves characteristics of self-indulgence and maximisation of self-utility (Lemos 2004; Overskeid 2002), borne of a collectivist culture where saving face is one of the most top valued social characteristics to achieve group affiliation (Hofstede et al. 2010). This highly collectivist culture demands more attention to achieving excellence in service which translates into a hedonistic measure of self-expansion. Influence from Chinese consumers exert new service quality pressures on labour systems charged with service delivery, thus distinguishing Chinese consumers from that of Japanese high-resource buyers. Social factors continue to impose risks on companies operating in this industry sector, forcing transparency in operations and demanding new emphasis on competency in service delivery. There are global consequences in international markets that have reached market maturity and where airline companies must utilise culturally-sensitive promotions and advertising in order to gain market attention that stresses places more emphasis on culturally-based market research to gain market prominence. 1.2 Economic Factors The fiscal situation in China is relevant for analysis since many airlines in this industry service customers from or to this destination. In 2012, China’s fiscal leadership injected 57.92 billion USD into a struggling economy to stabilise interest rates and influence new corporate borrowing (Safe Trading 2013). This has opened new avenues for foreign direct investment and has served to create more favourable exchange rates between Taiwanese currency values and ...Download file to see next pagesRead More
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