General Motors Marketing Analysis

General Motors Marketing Analysis

Company Profile of General Motors

When it comes to automobiles, one of the most recognized brands out there is General Motors. The American multinational corporation based in Detroit, Michigan designs, manufactures and sells vehicles as well as automotive parts.

With a history that dates back to 1908, General Motors has had a critical role in both the American as well as global auto industry. Some of General Motors well-known brands presently in the market include Buick, Cadillac, Chevrolet and General Motors. The company builds cars and trucks through its other units: General Motors Daewoo, Isuzu, Opel, Vauxhall and Holden units.

The present General Motors that we know today is a result of a company split following a government backed Chapter 11 bankruptcy reorganization. In November 2010, General Motors had its initial public offering, which was one of the highest ever recorded (General Motors, 2014).

Marketing Strategy and Environmental Scanning

The core of any effective business plan is a marketing strategy that will outline how a business will set out to deliver its products to the satisfaction of its customers. Success requires effective marketing in order to remain competitive in today’s global market.

Organizations, regardless of its size must be able to identify and understand external influences to be able to adapt to the present realities that will ensure the company’s survival and success (Albright, 2004: 39).

Plans are based on forecasts which in turn are based on assumptions about what is to be. Scanning the horizon of possibilities is a prudent measure that companies take in order to identify new developments that will test past assumptions or provide insight on new perspectives to possible future threats or opportunities (Gordon & Glen).

A vital tool that will aid companies to focus on strategic and tactical plans is environmental scanning. Environmental scanning is the internal communication of external information about issues that may potentially influence an organization’s decision-making process. It helps organizations flush out external threats thus enabling them to maneuver appropriately (Albright, 2004: 40).

General Motors Marketing Analysis
General Motors Marketing Analysis

Environmental scanning may act as an early warning system that will detect and warn companies about important changes and “danger zones” allowing for plans to be altered as necessary. Futurists do environmental scanning in one way or another, all with the ultimate goal to distinguish what is constant, what changes, and what constantly changes. The basic goal of a scanning system is simply to find early indications of possibly important future developments to gain as much lead-time as possible (Gordon & Glen).

Stoner and Freeman (in Costa & Teare, 2000: 156) defined strategic planning as “the development of long range plans for the effective management of environmental opportunities and threats in the light of corporate strengths and weaknesses.” It is therefore accurate that through scanning or the so-called “realized” approach identification and management of environmental opportunities as well as threats can be helpful in the fundamental management of competitive advantages of companies.

In addition to this, environmental scanning can be classified under different areas including social, economic, technological, and political/regulatory. An analysis of these different areas will give an organization a comprehensive assessment regarding the organization (Ginter & Duncan, 1990: 91).

Previous experience on the environmental scanning process has revealed that too much priority is given on the short term which has led to a limited understanding of information. This has led to a basic goal of extracting information, customer service, and the like which ignores the other factors present in the general environment (Costa & Teare, 2000: 157).

The General Motors Way

In analyzing the advantages of General Motors as an organization, there have emerged a number of key strengths including its industry knowledge. With its long history in the automotive field, General Motors has an expertise many can replicate. Time and time again it has been a proven industry leader. In addition to this, technology and innovation has critically improved the company’s products and services and as such have provided customers with key technological advancements that are not only necessary but highly demanded.

Analysis of Strategies, Strengths and Limitations

Recognizing the abovementioned realities, there are still a number of areas of improvement that General Motors needs to focus on including its human resource inefficiency and mediocre scientific achievements, to name a few.

From a marketing standpoint, these situations are potential marketing threats. These internal and external issues hurt the image of General Motors as a company.

In the recent years, General Motors has undergone a number of changes, including its marketing strategy. With a new vision and communications platform called “Find New Roads,” General Motors aims to be the touchstone for the brand as it develops new products and technologies for sale in more than 140 markets (Evans, 2013).

With regards to General Motors efforts, a well done environmental scan has enabled it to identify the realities of the industry and understand its key competition and potential difficulties in meeting the challenge of competitors (Albright, 2004: 40). In this key aspect, General Motors has been able to realign its focus and capitalize on the opportunities that can be found in Asia, specifically China.

In reconsidering its emerging-market strategy, General Motors has been working towards positioning itself for emerging markets of its Chinese partner SAIC Motor Corp (Shirouzu, 2013).

Globalization is a market reality; in order to improve upon the new direction of General Motors to move towards Asia, strategists need to take its efforts a step further and stress test their scanning models. Geographical expansion brings about different considerations. It’s important that through analysis, General Motors can determine the circumstances of desirability as well as risk and restrictions (Beinhocker et al, 2009: 56).

By delving into developing markets, General Motors will be able to think about producing a lower end range of vehicles that consumers from developing markets would be keener on purchasing. An environmental scan would show that emerging markets are not as badly hit by financial setbacks and thus still possess a higher growth rate which equates to an increasing buying power. This would mean while other regions would have slower auto sales, areas in Asia could be a strong sales point.

Scanning would also bring about competitive intelligence as a result of an analysis of competitors and competitive conditions in particular industries or regions. This would enable managers to make informed decisions about marketing, R&D, as well as long-term tactical business strategies. It enables managers to cast a wider net and analyze information about the various sectors of its external environment that will support forward planning (Choo, 1999).

In the case of private transportation sales, a market like China has a high demand for automobiles and it can be safe to say that there will not be any environmental emission deals coming up soon. This can show this as a great potential for profit given the smaller investment, rapid production and low initial costs.

The process looked into identification of emerging issues and trends as well as situations and drawbacks that may affect its success and future. This new strategy opens a lot of opportunity for rapid sales (Shirouzu, 2013).

This example as well as others shows that General Motors has made efforts to stay ahead of the game but this is not enough. General Motors marketing strategies have a need for more improvement. It’s been noted that while their global presence cannot be underestimated, their focus and primary marketing strategies are centered on a limited number of countries. Each country requires its own marketing approach given each economy and marketing conditions vary from each other. A much more tailored, innovative and globally applicable strategy must be applied to achieve multiple targets on a larger scale.

As an example, consider nature, in the last few years, the market has seen an increase in the demand for alternative fuel technologies. Environmental scanning would flag this as rising market trend that General Motors needs to look into. Research and development must be supported to work towards being able to address this future pattern. The company must look towards tweaking its image to make it more concerned for the environment to achieve credibility in this area.

However, the company is already lagging behind its competitors, specifically Toyota. Although General Motors has been producing more efficient products, it is not rising to the challenge that its rivals have been able to in the last few years.

As mentioned earlier, there are various aspects that a scan can look into, be it social, economic, technological and the like. For businesses like General Motors, given its size and holdings, focus tends to be on the economic but such a one-sided scan can lead to misrepresentation or error in analysis leading to a gap between the goal and the outcome which puts an organization in jeopardy. It is imperative scans be as holistic as possible. This is related to the earlier recommendation on the unique marketing strategies per region. A wider analysis of current and potential change and the assessment of the impact of changes on the organization (Ginter & Duncan, 1990: 91)

In reviewing the marketing strategies of General Motors as discussed in their annual reports, their efforts bulk in the areas of publicity, direct marketing, sales promotion as well as traditional advertising.


For General Motors to continue on its path to growth and success, its marketing strategy must be on point. A vital component of its marketing system should include a comprehensive environmental scanning process.

The process should emphasize market research that focuses on specific target markets with strategic identification and unique approaches per market. There should be a parallel unique point of sale concept per targeted area that takes into consideration not only competition and economics but a holistic review of the various factors affecting market conditions.

Relatedly, strategic expansion will require optimal strategies form increasing sales. Realities of this shift in economic power, especially in emerging markets, should focus on affordability and practicality with a balance of quality and optional luxuries.

The research has revealed that General Motors has taken steps in the right direction but fail to grasp the full extent of the shifting patters in the global consumer market.


General Motors (2014) About Our Company, [Online]

Evans, H. (2013) General Motors Develops New Global Marketing Strategy, [Online]

Albright, K.S. (2004), Environmental scanning: radar for success, Information Management Journal, May-June, p.38-45.

Shirouzu, N. (2013) ‘General Motors rethinks emerging market strategy, hedges on China partner’, Reuters, 27 Jan.

Costa, J. and Teare, R. (2000) ‘Developing an environmental scanning process in the hotel sector’, International Journal of Contemporary Hospitality Management, Vol. 12, No. 3, p.156-169

Beinhocker, E., Davis, I and Mendonca, L. (2009) ‘The 10 trends you have to watch’, Harvard Business Review, 87, 7/8, pp. 55-60, Business Source Premier, EBSCO Host,

Ginter, P.M. and Duncan, W.J. (1990) ‘Macroenvironmental analysis for strategic management’, Long Range Planning, Vol. 23, No. 6, p.91-100

Gordon, T. J., and Glenn, J. C., ‘Environmental Scanning’, AC/UNU Millenium Project, Ver 2, p. 1-33.

Choo, C. W., ‘(1999) ‘The Art of Scanning the Environment’, Bulletin of the American Society for Information Science, vol. 25, No. 3.

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Market Analysis Nike

Market Analysis Nike

Nike Inc. is a globally leading organisation involve in the development, design and global marketing and selling of apparel, athletic footwear, equipment and accessories. Nike is one of the largest sellers of athletic apparel and footwear worldwide with more than 200 subsidiaries all around the world. Nike is famous for its cutting edge technology.

Nike was founded in year 1964 by Phil Knight and Bill Bowerman as an importer and distributor of Japanese shoes and was named as Blue Ribbon Sports. It officially became Nike, Inc. in 1971. The company is one of the largest manufacturers of sports equipment and suppliers of apparel and athletic shoes.

PESTEL Analysis


The company has favourable relationship with other countries and has its subsidiaries in around 200 countries. Every country has its own laws and regulations and therefore the company faces the risk of different tarrifs and non-tarrifs, regulations and laws in diverse countries. The adverse trade protection by Nike in global businesses affects its services and selling.


The economic downturn worldwide that reduces consumers’ confidence to spend money and hence affects the consumer purchases. Moreover, being a global brand the companies dealing in diverse countries create diversity in currency and exchanges which is sometimes unprofitable for Nike. Nike can take advantage to outsource the low cost manufactures as it does not have its own manufacturing unit and it globally outsource the manufacturing services from where it get from cheaper rates.

Socio-cultural factors

Nowadays, consumers are becoming more brand conscious and the buying habits of youth have changed a lot within two years. Moreover, the market share of female customers is increasing and Nike does not concentrate on them. Furthermore, there is diversity in the living habit of every individual. Therefore, all such things create issue for the company.

On the other hand, Nike get benefits because people are becoming more of brand conscious.

Technological factors

Nike is considered as a technologically innovative company that manufacture technically superior quality products. But the company is required to follow the concept if lean manufacturing and to use the up to date technology.

Environmental factors

 The company needs to follow certain policies regarding the safety of environment and every country has its own policy. The environmental sustainability is important issue and is relevant for the companies. Reduction in the consumption of energy comes under the corporate social responsibility. Nike has introduced the “green” products.

Legal factors

The legal factors that affect the working of the company are the variation in laws and regulations in diverse countries. Like the law related to the company’s social responsibility.

Unique Value Proposition

The company has unique value proposition on the design, durability and quality of its products. Nike’s primary strategy that is the reason for its unique value proposition is its innovativeness.  A value proposition is something a company provide its target customers that help in giving them a better result of choosing the company. Nike Inc. practice the form follows value. For creating such value it uses the following resources –

  • Design or R&D for new products;
  • Marketing of the new products that means to drive and create demand for it; and
  • Distribution of the new products that means to make sure they reach fast to the end user.

Nike has been among the greatest value creators because of its organisational form that entail concentration of people, processes and resources. Generally, the company has achieved maximum profitable growth giving higher level of productivity and low cost of production and it’s positive and flexible responses to the changing taste of customers.

Market Analysis Nike
Market Analysis Nike

Nike’s Global Strategy

The primary strategy of Nike is to build its presence in almost every major world posting event like Olympics, World cups, skating, etc.

Nike’s global marketing strategy includes 4 P’s of marketing – Product, Promotion, Price, and Place. The company has almost every range of products that include sports apparel, footwear, equipments and accessories. In starting, Nike was only targeting consumers related to sports but later they realized to expand and started emphasizing on casuals as well in countries like India where people wear sport shoes as casuals.

Nike uses Value based pricing and Price Leadership strategy. Value based pricing strategy is the one in which company decides the price of the product on the basis of value placed by the consumers. Nike has spent so much to maintain its brand value and this is the reason people customers like to buy Nike’s products for its symbol and are willing to pay even higher amount for the same.

The company also uses psychological pricing strategy where people think .99 is cheaper than .00. Nike also uses Higher Pricing strategy in which people feel that they are purchasing products of higher quality and higher prestige.

Global Sourcing

The company has relocated the manufacturing of its clothing and footwear in around 40 countries and employ around 8, 00, 000 people to do so. Nike manages a global virtual company from its headquarter through the combination of R&D functions and low cost of production.

Brand Portfolio

The company has followed the strategy to extend its brand and product line form only sports footwear to sports apparel, equipments and accessories. For that it has owned some affiliated businesses that include – Converse, Inc., Cole Haan, Nike Golf, LLC, Umbro, Ltd. These businesses play an essential role in the growth of the company.

Nike’s focus on long term financial objectives

The long term financial strategy of Nike include the following:

  • High single-digit revenue growth (average annual rate)
  • Mid-teens Earnings Per Share growth (average annual rate)
  • 25 % Return on Invested Capital
  • Increasing dividends within a target calendar year payout range of 25-35% of trailing four quarter earnings per share

Porter’s Five Forces

Barriers to Entry – Low

The barriers of entering to the industry of athletic footwear are very low. Though the companies have a great potential to enter into the industry because of the high level of competitiveness into the industry but the huge companies like Nike and Adidas maintain their competitive advantage and control their costs in such a way that it is really difficult for the new entrants to compete with them. Moreover, the company has a strong brand power that helps it in competing with the new entrants and to beat them. So, the entry of new entrants is quite low.

Bargaining Power of buyers – High

The number of buyers is quite high in comparison to the number of companies present in the market. Therefore, the companies are required to manufacture differentiated products and make use of most innovative strategies to market and sell their products in the market. Because of such reasons it is necessary for Nike to attract and retain the consumers and it is also necessary for the company to build strong brand. The strong brand value of Nike provides its customers loyalty and trust. The brand image is also necessary because most of the buyers are cost sensitive. This shows that the bargaining power of buyers is quite high.

Bargaining power of Suppliers – Low

The material that is primarily required for the industry entail cotton, rubber, and leather and there are so many suppliers of these materials in the market and therefore, the bargaining power of suppliers is very low or does not exist. The companies need to depend on a single supplier for these materials and they can switch over to the substitutes and this is the primary reason that suppliers have less bargaining power.

Threat of substitutes – Low

When we talk about fashion items than so many substitutes are there but for professional athlete no substitute for shoes is present. An athlete does not have any substitute to switch and therefore the threat of substitute is low.

Rivalry among existing competitors – High

The company has strong competition with companies like Adidas, Puma, and Reebok. The rivals are extremely fierce and the company is considered hyper competitive. Therefore, there is a requirement of differentiated strategy that Nike is following. Still the rivalry among existing competitors is quite high.

SWOT Analysis


Nike is a highly competitive company that sponsor top athletes and gain valuable coverage.

The company has a strong brand image. Nike is a global brand and is considered as number one brand in sports items.

Nike is a very lean organization with no factories. It does not tie up cash in manufacturing workers. Rather it focuses on innovative products through its strong R&D. Nike start production of products when it is required and that too at lowest possible cost. Therefore, if the prices of product increases and the company is able to produce it at low prices in some other area then it move its production or manufacturing to that part.


The first and foremost weakness of the company is that it is highly dependent on footwear market and does not have diversified range of sports products that erodes market shares of the company.

Nike does not have its own retailers and retail is the most sensitive sector. This is decreasing the prices of Nike’s products because retailers try to emphasize on Nike for low prices.


Nike considers it as a sports brand and not meant for fashion purpose. But development of the company’s product can offer it many opportunities because consumers do not buy its products for the purpose of sports.

Nike has a very strong image and high income group like to purchase its product for the sake of prestige and therefore Nike has opportunity to make development in the existing products like sports wears as well as to enter into the new market like that of  jewellery and sunglasses.

Nike should focus more on global expansion because even some emerging markets like China have a richer consumer to spend lavishly on sports products.


The costs and profit margins of the company are unstable over long run because of the company’s exposure to international trade. This is a global issue that Nike being a multinational brand is facing and because of which the company may be manufacturing and selling products in loss.

There is no sustainable competitive advantage in the industry because the market for the sports apparel and shoes is highly competitive and competitors in any way want to take away Nike’s market shares.

The retail sector as we discussed above is highly competitive and people really want to go for a best deal. Therefore, consumers make comparison between prices before purchasing a product and this is another threat for Nike.


Nike should concentrate on the impacts of its global expansion on its brand integrity and loyalty of the customers. Moreover, the company should push itself in digital sports. The company should also concentrate on the Women Athletics. Nike has a very strong image and therefore it can also concentrate on fashion products with the sports products. Nike should also concentrate on application of lean in manufacturing its products.

Being a global brand the company is required to deal with consumers in diverse locations and countries and therefore Nike needs to monitor the movement of foreign exchange. For that it is necessary for the company to engage itself in substantial forward hedging of the currency that provides it with the moderate shift in the value of currency and save Nike from loss incurred because of dealing in diverse currencies.


Katz, D., 2004. NIKE Kingdom. Triumphpublish Co., Ltd.

I hope you liked this post written on the market analysis of Nike. What other marketing strategies do you think will help Nike maintain its position as the number one sports clothing manufacturer in the world? Let us know in the comments.

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Ryanair Business Environment

An Internal and External Business Environment Analysis of Ryanair

The objective of this research paper is to conduct an analysis of internal and external business environment of a service company. For this purpose airline global industry has been chosen as a case study because of its importance in the current economic and political scenario. International investment, world trade and economic growth are some important factors deriving this industry (Porter, 1986). The present paper will undergo strategic analysis of internal and external environment of Ryanair in relation to its performance in the global Airline industry. It will allow identification of factors that affect the profitability and popularity of a company. In the end recommendations will be suggested accordingly. Lets look at the Ryanair business environment.

Company Background – Ryanair Business Environment

Ryaniar has a long standing reputation amongst low cost airlines in Europe. Ryaniar Ltd was founded by the Ryan family in 1985 and within ten years of its establishment the company gained immense popularity because of its image as a low rent airlines. The company provides scheduled services between the UK and Ireland through its 297 Boeing aircrafts. The company still manages to maintain its image as popular airline of the world. The Ryaniar Company focuses on budget conscious leisure and business travelers for its services. People who choose other transport services to reduce the expanses of their travelling remain to but the primary target of the company. The company also aims to expand and improve its services in low fare market. The mission of Ryaniar Ltd is to become the most profitable and attractive low fare airline in Europe low cost carriage sector by brining continuous improvements in its services.

Market Description

Currently the growth and development of low cost airline is being favored in the European Airline industry and it remains the main determining factor for the evolution of an airline company. Almost 18 percent of the transport supply is being done by low cost airlines and the seats are mostly limited to medium and short haul flights. These low cost carriages are also deemed important for the passengers who want to find seat for point to point moves.

Belobaba et al. (2009) writes that global airline industry has grown by 12 percent in 2010 and the major player in this context remains to be the United States of America. The market growth is further expected to increase in years to come. It is believed that by 2015 the growth will reach to $714 billion and the number of passengers will also grow to 3 billion. Domestic market shows the leading market segment in the global airline industry and America holds about 45% value of the industry. A number of challenges are also being faced by the global airline industry after global financial crisis. By 2010 many consumers started to cut back their leisure spending and relapsed air travel by train or other cheaper means of transport. This fall in revenue is mainly fueled by increased unemployment rate and economic uncertainty (Belobaba et al., 2009).

Some negative events have also declined the business of airline industry and amongst them rising fuel prices increasing the cost of operations are most common in the history. Several times they have put a dent on the industry’s operations. Along with that, other negative players are also there amongst them increased security threat, political unrest, uncertain and exchange rates are at the top of the list.

According to a report Published in the Telegraph UK the low cost sector has increased its growth by 12 pc in the last decade. However, even the low cost airlines are not free of the negative market affects that undermines overall activity of the industry but still they are making more business that the high cost European airlines (The telegraph, 2014).


After its establishment Ryaniar faced a great deal of competition. European Union deregulation in 1990 resulted in some substantial changes on the British industry. The most important of which is the focus of people on budget airlines offering comparatively shorter routes. These airlines provided a great deal of competition and grew on expense of traditional British airlines. Later increase in fuel prices after 2008 economic crisis also resulted in further decline of luxury airlines. Competition is also not very strong as the industry is not in a healthier state to support the business of expensive airlines and a number of airlines are under the threat of disappearance because of bankruptcy. European Union promotes low wage, low cost and low income flag carriers.

Ryanir Business Environment
Ryanir Business Environment

Challenges Faced By Ryaniar

Operating environment of the airline industry is being affected by a number of challenges that range from safety issues to consumer preferences, spending patterns, political instability, weather, security and natural disasters. All these factors affect the operating environment of Ryaniar Ltd also and most of them are beyond the control of the management of any airline. The expenses of flight cannot be controlled regardless of the number of passengers travelling in the plane. In addition to this, when shrinkage in airline industry happens, the remaining cost of operations remains the same that presents immense challenges to the management. Dobruszkes (2006) adds that operating environment of some low cost airlines has become favorable because they have adopted some cost reduction strategies that mainly include the management of the marketing cost, fleet reducing services, airport maintenance, route alteration and recharge policies. Appropriate techniques for maintenance of Engines, maintenance cost of hangers, management of staff cost and marketing cost to increase productivity are also adopted. In this scenario, companies that focus on small operating basis and start internet ticketing generate more revenues (Dobruszkes, 2006).

In the European market variation related to differences in the geography and scope of the airline persist. Most of the short and middle haul airlines focus on Western Europe and the distance for flight is 1.4 hours during this time an area of 634 kilo meters is covered. The total area covered by Ryaniar and most of the other low cost airlines is less than 1000 kilometers and in most of the cases international connections are not present. In addition to this, most of the low cost airlines influencing Easy Jet and Ryaniar are poorly penetrated in central and Eastern Europe markets. Some networks are also designed for tourists to take them to their desired destinations. These airlines do not focus on the capital city but they also maintain their attention to small cities and towns where low cost flights are easier to be managed (Mason, 2001).

Services Provided By Airline Industry

The services delivered by the airline can be divided into three main categories mainly including freight services, logistics and rail passenger’s airbus. Superior services are usually delivered to the clients that are willing to pay more. Product scope of Ryaniar Ltd is large as it promotes many services. It offers a range of destination around in Europe. In addition to this, hospitality, carriage, aircraft control system and assistance in booking rest houses is also provided. Like all other airports, services at the Ryanair airports are also available that include flat beds lounges and fast track security system.

Intangibility of Services

Ryanair business environment services are intangible and cannot be smelled, touched and tasted. It cannot be processed physically possessed.

Inseparability of Production and Consumption

Inseparability of production and consumption means the production of a service cannot be separated from its consumption by customers happen simultaneously. Customers buy specific type of product and take it home but services cannot be taken home, instead they are provided in a specific manner.


Perishability is another characteristic of the service that means once services are produced they cannot be stored because of which supply demand gap arises.


Heterogeneity means that variation in the quality of services because of which standardization cannot be maintained. This makes the maintained of quality of service delivery a difficult task for service providers.


Customer safety and quality issues are at the heart of any service sector and same is true for the airline industry. Here the quality of services acquires central place for the organizations. Quality of services is assured by the notion of truth that primarily reflects the importance company gives to handle each and every customer. Therefore, for service industries it becomes extremely important to design and manage activities in a way that can assure good quality services to the passengers (Janawade, 2013).

According to Janawade (2013) service quality management is still the subject of debate for the management of airline companies. The diversity of the airline services makes it harder for the administration to maintain good standard of services at each front. The quality of flight meals clean and airy airports, luxurious waiting areas, hygienic environment of washrooms, customer care and maintenance of airplanes are some areas of quality that remain the focus attention of the administration. Sometimes it becomes harder for the company to maintain superior quality services when budget is low and economic uncertainty prevails in the market. This is the reason for which some airlines fail to maintain good quality in-flight environment. The issue of measuring service quality has always been raised by the customers who pay a huge amount to travel across the world. Business class customers are often more cautious about the way they are treated at the airport and also in the airplane. Some other areas are also there that create major issues for the management and they include mishandling of baggage, late flights and misinformation (Janawade, 2013).

Along with the quality of services the rate of accidents and incidence also becomes the prime concerns for passengers who opt to travel in an airline. Total rate of incidents, rate of accidents, mid air collision and pilot’s deviations are some of the events that affect the safety of airline operations. The overall safety ratio of the global airline industry has declined in the past decade. Many technological issues arise because of poor maintenance of the aircraft. Moreover, the entire industry is under the threat of customer safety issues mainly generated by political unrest and legal bindings of the company. Airline industry remains the center of attention of the government and public as far as the passenger’s safety issues are concerned and many times these issues have resulted in serious debates that presented the industry with a number of challenges (Janawade, 2013).

There are a number of regulatory issues as well that affect the service delivery in the airline industry. Airline industry remains the center of attention of the government of a country and hence is mostly subjected to extensive regulations of the government. Many legal compliance and regulatory requirements are there for the industry. In the US airline industry FAA (Federal Aviation Administration) regulations matter greatly, which change from time to time and put airline industry under scrutiny. Same is true for other areas including Europe, Australia and Asia. Other acts such as transport security act result in federalization of some security procedures. Government of the UK keeps proposing increase in taxes that directly affect the revenue generation of the industry. In addition to all this, other regulatory changes are also expected that may range from security concerns to fuel emission and environment safety issues. All these factors may further affect the business deleteriously.

Success of Organization in the Management of Challenges

As stated above a number of challenges are being faced by the airline industry and they are regulated by the key players in the industry. Key players in the airline industry are those that have direct or indirect affect over the business and amongst them airline manufacturers, air navigation service providers and air-port construction teams are important, along with them, political atmosphere of a country and fuel price are also some intangible factors that affect the business of the airline industry. Policies and procedures of the ‘department of the trade and industry’ can positively or negatively affect then business (Mason, 2001). Along with this, employee’s turnover rate has become a major problem for the companies that tend to develop and make progress. A good human resource management system can aid companies to reduce turnover rate by keeping employees satisfied with the job. Companies with a high rate of employee’s turnover often face a great deal of pressure in terms of the management and training of their employees (Richard et al. 2001). The global airline industry has managed its growth by maintaining its operations in suitable limits of economy. Dobruszkes (2006) explains that European airline industry is the one that prefers evolution of low cost airline networks. Because of the demands and competition trend in the market this concept became famous after 1995. The European low cost airline scope has actually met by Ryaniar and Easy Jet that have felicitated customers who previously chose other transport system because of high rent of the airlines. Ryaniar airline alone has carried 70 million passengers in the year 2012 and is expected to increase its size.

Bamber et al. (2013) writes that though turnover rate of employees in an industry vary greatly with time and many factors play their part in this context. Sometimes nature of the job and low wage becomes the cause of a high turnover rate in case of some industry such as fast food and call centers. When compared to the other sectors the rate of employee’s turnover in airline industry is comparatively low (Bamber et al., 2013).

Richard et al. (2001) also say that airline industry show low turnover rate compared to any other industry of the world. Overall turnover rate of the industry is 9 percent that shows employees are not replaced very quickly over a particular time period. However, increased fuel prices and deregulation act in the late 1980s have made the industry less attractive. Operating cost has increased to a considerable extent and worker’s pay has reduced. Many other airline companies in the world including that of American and Asia have also decided a wage cut off to reduce the cost of operation within the system. In addition to this, 100,000 employees of only American airline industry were laid off after deregulation act. This has given rise to an uncertain working culture and some of the employees opt to find jobs in another industry that is less uncertain than the airline sector (Richard et al. 2001). Bamber et al. (2013) conclude in their research paper that airline industry needs to maintain its attractiveness in order to keep employees happy and contented with their jobs.

Forces Deriving the Airline Industry

A number of forces derive the airlines industry that range from customer satisfaction issues, strategic planning, point to point roots, terminal and aircraft facility, online booking services, reduced lines at the ticket corner and economy of scale. Along with customer safety other factors are also there that create management challenges for the airline companies. Staff safety at the airport is also one of the major concerns of the administration that results in poor working morale of the staff members.


Bamber, G. J., Gittell, J. H., Kochan, T. A., & Von Nordenflycht, A. (2013). Up in the air: How airlines can improve performance by engaging their employees. Cornell University Press.

Belobaba, P., Odoni, A., & Barnhart, C. (Eds.). (2009). The global airline industry (Vol. 23). John Wiley & Sons.

Dobruszkes, F. (2006). An analysis of European low-cost airlines and their networks. Journal of Transport Geography14(4), 249-264.

Hanlon, J. P. (2007). Global airlines: competition in a transnational industry. Routledge.

Janawade Z., 2013, customer perception quality of complex services, France, Paul Cezanne University, p. 2-14.

Mason, K. J. (2001). Marketing low-cost airline services to business travellers.Journal of Air Transport Management7(2), 103-109.

Porter, M. E. (Ed.). (1986). Competition in global industries. Harvard Business Press.

Richard, O. C., & Johnson, N. B. (2001). Strategic human resource management effectiveness and firm performance. International Journal of Human Resource Management, 12(2), 299-310.

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