Module 4-2 Report: Business Environment Analysis 1
Political
The airline industry is heavily regulated, which creates a sense of insecurity when it
comes to acquiring or sustaining travel destinations. For example, US sanctions may ban airline
travel to certain destinations that sponsor terrorism or perpetrate human rights violations on their
people (Elmerraji, 2021). Similarly, political unrest may result in declining customers and
unprofitable routes which trigger withdrawal from the area. These ever-changing political trends
make it extremely difficult for any airline to predict potential impacts on the business
environment, thus creating uncertainty in any acquisition.
Economic
Economic trends have a substantial impact to the airline industry as airlines are seen as a
luxury item and are easily expendable. When the global economy slows down, the number of
individuals traveling can decrease which may result in lowering prices or job cuts. Also, rising
costs in oil or raw materials can show a negative trend in the company, especially if the number
of customers are declining as well. When looking into an acquisition, it is key to look at
companies with good financial standing.
Sociological
The sociological conditions of any situation can impact an airline organization
considerably. Airline accidents related to the company’s carelessness can cause a sharp decline in
customers, and harassment or passenger mistreatment can create a deep impact on an
organizations reputation. The changing desires of customers can also influence the buying habits,
so it is important for the company to keep a close eye on these as it can create a clear image for
the future. For international airlines such as our company, these impacts can generate a profound
Module 4-2 Report: Business Environment Analysis 2
and longer-lasting impact. In relation to acquisitions, the company should pay close attention to
the prospective company’s reputation and customer retention.
Technological
Technology is advancing at an exponential rate, which creates an ever moving target for
the business. Enhancements in technology offer a safer, more efficient, and eco-friendly industry.
TransGlobal should invest in this technology as it can bring improvements to the safety, services,
and security of passengers. A substantial upgrade to the communication systems with air traffic
can aid in the avoidance of crashes or technical faults. When looking at companies for an
acquisition, the average age of the aircraft can be a key indicator of the organizations
technological development.
Environmental
The airline industry has been reported to be a large contributor of pollution & carbon
emissions; as it is responsible for 5% of global warming (Timperley, 2020). There are numerous
alternatives available such as solar, electric, and zero-emission planes which can be explored.
Fortunately, TransGlobal is already in that direction as our goal is to reach net-zero carbon
footprint by 2075. For the acquisition, examining other companies’ environmental concerns can
aid in an informative decision.
Legal
The airline industry is heavily regulated by various governments which influence airline
organizations. Airlines must comprehend and abide by these rules and regulations in order to
avoid legal proceedings. Employee conditions and flight times are elements which the company
should be cautious as they aid in offering a safe and comfortable experience. When reviewing
Module 4-2 Report: Business Environment Analysis 4
REFERENCES
Elmerraji, J. (2021, November 3). Countries sanctioned by the U.S. and why. Investopedia.
Retrieved November 4, 2021, from https://www.investopedia.com/financial-
edge/0410/countries-sanctioned-by-the-u.s.---and-why.aspx.
(n.d). MBA 620 TransGlobal Airlines Information..
https://learn.snhu.edu/content/enforced/874178-MBA-620-X1513-OL-TRAD-
GR.21TW1/Course%20Documents/MBA%20620%20TransGlobal%20Airlines
%20Information.pdf?_&d2lSessionVal=AkQdkTQd0FgLyhtlIsyygZtSy&ou=874178
Timperley, J. (2020) Should we give up flying for the sake of the climate? available
at: https://www.bbc.com/future/article/20200218-climate-change-how-to-cut-your-
carbon-emissions-when-flying
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