Yunnan Lucky Air

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weaknesses identified is that it is dependent on a single type of aircraft Boeing 737 yet only one class of seating being offered. There was no in-flight entertainments made available as well as no flights available to international destination. Apart from that, it could only carry a small amount of cargo and freight due to its single type of aircraft.

When reviewing the opportunities and threats, external factors are taken into considerations in Yunnan Lucky Air’s environment which both opportunities and threats are independent from each another. Upon differentiating strengths and weaknesses against opportunities and threats, it is essential to question if Yunnan Lucky Air does not exist due to if the answer is yes, it means that is an external factor to Yunnan Lucky Air. Opportunities are favourable conditions in the environment that could produce rewards if leveraged properly and it has to be acted on if Yunnan Lucky Air wants to benefit from them. On the other hand, threats are barriers that prevents Yunnan Lucky Air from reaching their desired goals or objectives.

Areas to look into when analyzing the external factors are customer analysis, competitive analysis, market analysis and environmental analysis. Customer analysis contains segments, motivations, unmet needs while competitive analysis relates to strategic group placing, performance evaluation, identify objective, strategies, culture, cost structure, strengths, and weakness completely. Market analysis consists of overall size, projected growth, profitability, entry barriers, distribution system, cost structure, trends and key factors while environmental analysis can be divided into five broad categories which identifies the external opportunities, threats, trends and strategic uncertainties that is economic factor, competitive factors, political, governmental and legal factors, technological factors, and lastly social, cultural, demographic and natural environment factors (Fred & Forest, 2015).

PESTEL analysis can used when analyzing the external factors as it is a framework or a tool to analyze factors that have impacts to an organization. PESTEL stands for political, economic, social, technological, environmental and legal. Political factor is all about how and to what degree the government intervenes in the economy. This could include government policies, political stability or instability in overseas markets, foreign trade policy, tax policy, labour law, environmental law, trade restrictions and many more (Fred & Forest, 2015). As such, it is clear that political factors have impacts on organizations on how businesses are conducted hence required to respond to the current yet anticipated future legislations and adjust marketing policy accordingly.

Economic factors such as economic growth, interest rates, exchange rates, inflation, disposable income of consumers and businesses have significant impact on how Yunnan Lucky Air does business and also how profitable they are. According to the Civil Aviation Administration of China (CAAC), it anticipated an average annual growth rate of 15% for air traffic up through year 2020 in which increase of Chinese people’s disposable income was also sighted significantly. These factors can be further elaborated down into macro-economical and micro-economical factors which macro-economical factors deal with management of demand in any given economy where government uses interest rate control and taxation policy as main mechanism while micro-economical factors deal with ways of how people spend their incomes that has large impact on B2C organizations.

Social factors are also known as socio-cultural factors which involves the shared belief and attitudes of the population. It includes the population growth, age distribution, health consciousness, career attitudes and others. These factors are of particular interest as they have a direct effect on how marketers understands customer behaviour and what drives them. This can be seen in airline e-commerce in China where roughly 80% of the web users are young people under 35 years old whose purchase power was limited.

Technological factors is where technological landscape changes drastically and how it impacts the way Yunnan Lucky Air markets its services. These factors affects marketing and the management in three distinct ways that is new ways of producing goods and services, new ways of distributing goods and services and lastly new ways of communication with target markets. China has had its technology infrastructure improved in recent years whilst Yunnan Lucky Air took leverage on its parent company, Hainan Airlines for IT support that gives them strength in IT operations. Products and services were offered thru a menu of services via Luckyair.net website.

Environmental factors only appeared in the few years back as it has become important due to increasing scarcity of raw materials, pollution targets, doing business as an ethical company and carbon footprint targets. Yunnan Lucky Air had some issues whereby fuel is a raw material that goes extinct as years pass by gradually.

Legal factors includes health and safety, equal opportunities, advertising standards, consumer rights and laws, product labelling and product safety. It is obvious that Yunnan Lucky Air had to be aware on what is legal and what is not legal when providing their services to customers. if Yunnan were to go international and globally, it would become a very tricky area to get rights as each different country has its own set of rules and regulations.

Figure 3 : PESTEL Analysis

With external factor and PESTEL analysis, opportunities identified within Yunnan Lucky Air are the growth of population and elderly generation that allows Yunnan to have a range of series of target markets and this indirectly signifies that overall air travel is predicted to increase rapidly. With the help of new technologies such as Web 2.0, the strong driver behind the Web 2.0 trend prompts desire to create a web that is interactive with its customers rather than a boring web store and indirectly boosts e-commerce if making use of internet for marketing. Lastly, longer flights are a growing market

On the other hand, threats identified was the fuel as the price as set by the National Development and Reform Commission (NDRC) furthermore carriers in China were not allowed to hedge oil price risk through financial instruments. Route optimization to reduce fuel expenses was also prohibited due to safety concerns. Increase in competitions from competitors poses a great threat as there were already 25 airlines operating in China since 2007 which Yunnan Air Lucky found themselves in