Sustainability in Global Business: The Aviation Industry - Term Paper Example

s s of Table of Contents: Contents Introduction 3 Socio-Cultural Determinants 4 2.Technological Determinants 5 3.Economic Determinants 6 4.Environmental Determinants 7 5.Political Determinants 7 Recommendations 8 Bibliography 10 Introduction The aviation industry is believed to be the reflector of the overall economy of a state. Since aviation industry can be dealt as a luxury service provider and also as one of the utility providers, it is often quite a lucrative yet appealing business for the capitalists. The future of the aviation industry, however, is a divisive topic yet quite a crucial one especially for the frequent air-travelers. The second class or the economy travelers are often the ones who hold a platinum status and also those loyalty credit card schemers, who mostly travel for purposes involving businesses or other similar matters. Similarly, the business class seats are reserved for the most privileged class. According to a few financial analysts, these business travelers are the ones who constitute the business reality for the company owners and thus the entire future of the industry lies in their hands. That being said, the aviation industry is one which drives the international commerce. However, the industry also involves several risks alongside a multitude of opportunities, since a lock-out owing to awful weather conditions may lead towards a loss of millions of dollars. Similarly, the global environment is being affected by technology where on-line video conferencing is expected to cut down physical air travel to a significant extent in the future. Thus, an interface might very well replace real human interactions in the future. Yet, the fact that airlines and aviation industry deals with the non-economic interests as well, physical presence is still crucial for human race, thus the industry still has a lot of potential. The paper will serve as critical guide in exploring the future of aviation industry where both risks as well as opportunities would be highlighted based on which recommendations for a business aiming at expanding its base in the industry would be projected. In other words, the future of the industry in terms of business environment would be explored based on a STEEP (Socio-cultural, technological, economic, environmental, political) analysis of the aviation industry. 1. Socio-Cultural Determinants To begin with, socio-cultural determinants affecting the industry need to be explained. It is a known fact that the emerging economics, namely the BRICS, are concentrating on the middle class buying behaviors to see what the most favorable business ventures may be. With the increase in trading opportunities and globalization of various industries, various intra-national routes need to be discovered, which improvement in the already over-loaded busy routes need to be made (DeVoogt & D`Oliviera 2012: 61). Furthermore, the newer generation is looking at airlines from a difference lens where they focus more on services, For this reason, the airlines have a space to earn more profits by charging the customers for the services they use i.e. charging on luggage or entertainment services. Furthermore, social media is adding to cultural connectedness amongst the people belonging from different corners of the world, thus, the social media generation is more interested in exploring travel destinations otherwise not considered very desirable. Furthermore, interesting aspects of social media and applications are further changing consumer behavior in favor of the industry. For instance, the internet users can now ‘check-in’ whenever they visit any location anywhere on the globe, an experience which is shaping the entire socio-cultural patterns (Hollnagel 2014: 44). Thus, those airlines brands which understand this future who may facilitate the customers in adding to these experiences may reap benefits out of the industry. Thus, these conditions have an added window of opportunity for the investors who can see an increase in revenue given the favorable business environment in terms of socio-cultural variables in context to the industry. 2. Technological Determinants Another significant aspect of aviation industry as a business venture is the technological aspect, since this industry directly deals with technology related challenges. The general trend nowadays in terms of technology is seeing a shift from product innovation to innovation in terms of services being offered. Given the technological progression due to products and cloud-based services, a business venture involving aviation industry must look forward into exploring how they can charge for facilitation in terms of technology. Furthermore, technology has redefined many aspects of clientele relationship with the airlines. For instance, Qantas is not using NFC and RFID based technology to allow their airline travelers to automatically check-in at the airports via swapping their card chips through the sensors (Mcmanners 2012: 55). Similarly, technology allows them to automatically check-in their luggage. Similarly, in the US, computerized monitors facilitate by offering IT support which can be used to check-in on reaching the airport. Similarly, social media allows exploration for the customers on potential vacation spots. Also, customers undergo most of the research over potential destinations online, thus, there is a challenge lying ahead for businesses to train their customer service staff to efficiently deal with online audience as well. For instance, it was reported that Qantas was ignorant enough to offer social technology for their travelers owing to which they had to undergo a huge loss in terms of branding. Aviation businesses are nowadays also seeking to invest in applications where business travelers may interact and explore business opportunities. Thus, research in terms of technology for Aviation industry may go a long way in reaping financial benefits by making the best use of the change in current trends, and also by predicting future trends as well. (McManners 2012: 44-45) 3. Economic Determinants Another significant aspect to determine the future of airline industry is the economy derivatives. There are various aspects to economic setup of the aviation industry, each of which may have distinct implications of the future of the business environment. Firstly, oil prices are subject to volatility depending on the oil market, political environment and various other factors, since these airlines are dependent on oil producing states for sustenance. Thus, the future may not very well be predicted and the investors in the industry must be wary of the fact, and may also look for alternatives to oil to run the businesses. Similarly, in the global pretext, the international airlines have to compete with Asian airlines which hire employees on a lower cost than that in the global north (Yeo 2012: 71). Furthermore, profit margin of the international airlines in context to the aviation industry related business model must undertake the factor of unions who can pressurize the employers via strikes and protests over fiscal matters. At the same time, the global financial depression which the world has been facing since 2008 hasn’t impacted the industry in the longer run, since the alternatives to air travel aren’t too practical, thus, the aviation business model doesn’t have to worry about the financial crisis in the future (Castro 2012: 81). Furthermore, the service providers must also focus on non-traditional ways to deal with the clients or the customers, since more and more accountability via technology and globalization is directly impacting profits of the airlines, thus, in the future, an airline would have to invest considerable higher in terms of customer handling training for the staff. Thus, volatility in terms of economy may be controlled yet a few factors like the oil prices continue to be a risk for the future of the aviation industry. 4. Environmental Determinants Moreover, environmental concerns are one of the most critical concerns of the international community, and they impact the aviation industry directly, thus the future of the airlines is dependent on the environmental legislations and norms. Aviation industry is responsible for the world`s carbon emission to a great extent. The green advocates are thus struggling hard to limit the environmental degradation resulting from the aviation industry. For instance, an environment related tax was imposed at Shiphoel airport which resulted in the re-routing of the airlines to other hubs. Furthermore, the recent initiative launched by the US Defence Department also rings alarm bells for the industry since it called for reliance on renewable energy sources of about 50% by 2020 (Dillingham 2007: 31-32). This implies that the aviation industry will also have to build an infrastructure ensuring environment friendly yet efficient industry. Another aspect to this issue is bio-mimicry which is aimed at reducing noise pollution. Thus, aviation industry should readily start employing necessary changes to avoid any implications due to environmental challenges in the future. 5. Political Determinants Furthermore, an analysis of the political environment is also crucial in this context since political issues are also of concern for the future of the industry. The Aviation industry has been vacillating between private as well as public enterprises, where national laws pertaining ownership, interests of the stakeholders and unionization in the industry determine political challenges revolving around the industry. Though, with time, it is becoming more and more difficult to nationalize the airlines owing to the immense competition also since subsidizing the fuel prices no more helps the governments. This implies that the investors can expect minimal role of government intervention in the industry in the future, yet certain events may trigger what may not be expected. Furthermore, politically speaking, branding alone doesn’t account for customer loyalty when it comes to airlines industry and instead, ecosystem of the services determines whether or not the customers would choose a particular airline. More importantly, international events like September 11 or the bird flu virus or in a few cases, even a breakout of war may disrupt airlines completely. Thus, generally, political trends not just at home but also globally will definitely impact the travel experience and expectations out of an airline. In any case, with greater accountability and collaboration, also ensuring loyalty rewards for customers, an airline may overcome any such barriers (Ellman 2009:22). Therefore, political issues which seem to be too problematic can be resolved with a brilliant business model in reality. Recommendations Therefore, given various challenges and opportunities certain recommendation may be made to those aiming at investing in the aviation industry. Given the future of the industry, certain generations can be made about the distant future of the industry, based on which following recommendations may be helpful; Innovation and creativity is the key to success in this business. Traditional technology and methods are depleting with the call for more openness, accountability and better services. Thus, the industry must invest in research and development aimed at introducing social media friendly policies and technology which deals affectively with dependency on oil or environmental issues attached. Thus alongside offering quality, innovative services may actually open up a window for these companies where they can charge the customers for extra services and yet maintain a strong brand image Customer service is one segment of the aviation industry which can`t be ignored given the future of the industry where the customers are too demanding in terms of information. Also, staff may be trained or even minimized by replacing it with technological interfaces, yet in any way, the industry needs to invest in this segment to compete with the market Yet, the industry still paves way for safe investment since the demand for the services remains unaffected by general trends globally, thus opportunities must be exploited given the irreplaceable status of these airlines Bibliography CASTRO, RAOUL. (2012). Corporate Aviation Management. Southern Illinois University Press. http://public.eblib.com/choice/publicfullrecord.aspx?p=1354427. DE VOOGT, A., & DOLIVEIRA, T. (2012). Mechanisms in the Chain of Safety Research and Operational Experiences in Aviation Psychology. Farnham, Ashgate Pub. http://public.eblib.com/choice/publicfullrecord.aspx?p=823569. DILLINGHAM, G. L. (2007). Aviation and the environment impact of aviation noise on communities presents challenges for airport operations and future growth of the National Airspace System : testimony before the Subcommittee on Aviation, Committee on Transportation and Infrastructure, House of Representatives. [Washington, D.C.], U.S. Govt. Accountability Office. http://www.gao.gov/docsearch/abstract.php?rptno=GAO-08-216T. GREAT BRITAIN, & ELLMAN, L. (2009). The future of aviation Vol. II, Vol. II. London, Stationery Office. http://www.publicinformationonline.com/secure/d13499.pdf. HOLLNAGEL, E. (2014). Safety-I and Safety-II the past and future of safety management. Farnham, Ashgate Publishing Ltd. http://public.eblib.com/choice/publicfullrecord.aspx?p=1661242.\ INTERNATIONAL CONFERENCE ON COMPUTER SCIENCE AND ITS APPLICATIONS, & YEO, S.-S. (2012). Computer science and its applications CSA 2012. Dordrecht, Springer. http://site.ebrary.com/id/10614874. MCMANNERS, P. (2012). Fly and Be Damned What now for aviation and climate change? London, Zed Books. http://public.eblib.com/choice/publicfullrecord.aspx?p=867039. Read More