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  • China Airlines

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    FasihahNor
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    Porter of China Airline Chinese Airline Industry -The airline industry is very a volatile and slow growing industry. Many times the revenue does not go up in the same rate as the expenses. It is one of the industries that have one of the lowest returns on investment in many parts of the world. It is nearly impossible to enter the industry and extremely difficult to stay in business in many countries, especially in China. -Since the majority of the airlines in China are stated-owned, new entrant would have many disadvantages. New entrants have to find suppliers that offers them acceptable price and also to attract travellers to accept their service. In addition, new entrants face competition amount other airlines as well as other substitute products for airlines. -Other factors such as economic downturns and government regulations also prevent new entrant from entering the industry. Therefore new entrants are very hard to enter the industry in China. -The major business in the airline industry is for passengers. However, there are a small portion of the airline are for shipping purposes. The shipping airlines are usually in a separate base and act as a subsidiary company of a big airline. There are three major airline companies that play the roles of oligopoly in the Chinese airline market. The “Big Three” are called China Eastern Airline, China Southern Airline and Air China Airline. Each of the airlines hold around 30% of the total market share in China and the remaining 10% belongs to all other small airlines. The majority of the “big three” shares are owned by the government and also some of the small airlines. -There are very few private airlines in the industry. Many private and other small airlines are merged with the “big three” in the past years. Few factors had affected the Chinese airline industry in the past 10 years. The 9/11 had small impact on the airline industry around the world as a whole as well as the SARS which affected many airlines in Asia countries. All three airlines suffered a loss in fiscal year 2008 due to the great recession. However, all three airlines quickly recovered in the fiscal year of 2009 and had significant increase in net income in the fiscal year of 2010. -The barrier for new entrant is very high in the airline industry in China. Both the fix cost and the variable cost are expensive due to the economics of scale. All three airlines have very high technology as well as low cost suppliers. It would be very expensive to implement all the same requirement. -The airline's name is recognized by almost everyone in china who had traveled by airplane. The public image is very hard to be replaced by a new entrant especially in the airline industry. -Travellers would not want to choose to travel with a new airline. Also many travellers would not want to change airlines if they're really comfortable with the current airline. New entrant would have to take customer switch cost into consideration. In addition, new entrant required to a large amount of money to recover start-up loss since they need to stay competitive in many areas. -Another expense for new entrants is the distribution fees. They need to advertise their airline to the market in order to compete with all other airlines. One of the biggest issues is government regulation. The biggest three airline companies are owned by the government. The government would not allow many private airline companies in the market. If a new entrant happens to survive and doing well in the industry, the government would most likely to force it to join with one of the three airlines. -The major suppliers of the airlines in china are the aviation groups and aircraft manufacturing companies. There are many aircraft manufacturing companies in China but the majority are state owned organizations. Some of the small manufacturing company are private but they only provide parts to small airlines and they do not have research and d

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    Porter of China Airline Chinese Airline Industry -The airline industry is very a volatile and slow growing industry. Many times the revenue does not go up in the same rate as the expenses. It is one of the industries that have one of the lowest returns on investment in many parts of the world. It is nearly impossible to enter the industry and extremely difficult to stay in business in many countries, especially in China. -Since the majority of the airlines in China are stated-owned, new entrant would have many disadvantages. New entrants have to find suppliers that offers them acceptable price and also to attract travellers to accept their service. In addition, new entrants face competition amount other airlines as well as other substitute products for airlines. -Other factors such as economic downturns and government regulations also prevent new entrant from entering the industry. Therefore new entrants are very hard to enter the industry in China. -The major business in the airline industry is for passengers. However, there are a small portion of the airline are for shipping purposes. The shipping airlines are usually in a separate base and act as a subsidiary company of a big airline. There are three major airline companies that play the roles of oligopoly in the Chinese airline market. The “Big Three” are called China Eastern Airline, China Southern Airline and Air China Airline. Each of the airlines hold around 30% of the total market share in China and the remaining 10% belongs to all other small airlines. The majority of the “big three” shares are owned by the government and also some of the small airlines. -There are very few private airlines in the industry. Many private and other small airlines are merged with the “big three” in the past years. Few factors had affected the Chinese airline industry in the past 10 years. The 9/11 had small impact on the airline industry around the world as a whole as well as the SARS which affected many airlines in Asia countries. All three airlines suffered a loss in fiscal year 2008 due to the great recession. However, all three airlines quickly recovered in the fiscal year of 2009 and had significant increase in net income in the fiscal year of 2010. -The barrier for new entrant is very high in the airline industry in China. Both the fix cost and the variable cost are expensive due to the economics of scale. All three airlines have very high technology as well as low cost suppliers. It would be very expensive to implement all the same requirement. -The airline's name is recognized by almost everyone in china who had traveled by airplane. The public image is very hard to be replaced by a new entrant especially in the airline industry. -Travellers would not want to choose to travel with a new airline. Also many travellers would not want to change airlines if they're really comfortable with the current airline. New entrant would have to take customer switch cost into consideration. In addition, new entrant required to a large amount of money to recover start-up loss since they need to stay competitive in many areas. -Another expense for new entrants is the distribution fees. They need to advertise their airline to the market in order to compete with all other airlines. One of the biggest issues is government regulation. The biggest three airline companies are owned by the government. The government would not allow many private airline companies in the market. If a new entrant happens to survive and doing well in the industry, the government would most likely to force it to join with one of the three airlines. -The major suppliers of the airlines in china are the aviation groups and aircraft manufacturing companies. There are many aircraft manufacturing companies in China but the majority are state owned organizations. Some of the small manufacturing company are private but they only provide parts to small airlines and they do not have research and d

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    © All Rights Reserved
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    47 Ansichten2 Seiten

    China Airlines

    Hochgeladen von

    FasihahNor
    Porter of China Airline Chinese Airline Industry -The airline industry is very a volatile and slow growing industry. Many times the revenue does not go up in the same rate as the expenses. It is one of the industries that have one of the lowest returns on investment in many parts of the world. It is nearly impossible to enter the industry and extremely difficult to stay in business in many countries, especially in China. -Since the majority of the airlines in China are stated-owned, new entrant would have many disadvantages. New entrants have to find suppliers that offers them acceptable price and also to attract travellers to accept their service. In addition, new entrants face competition amount other airlines as well as other substitute products for airlines. -Other factors such as economic downturns and government regulations also prevent new entrant from entering the industry. Therefore new entrants are very hard to enter the industry in China. -The major business in the airline industry is for passengers. However, there are a small portion of the airline are for shipping purposes. The shipping airlines are usually in a separate base and act as a subsidiary company of a big airline. There are three major airline companies that play the roles of oligopoly in the Chinese airline market. The “Big Three” are called China Eastern Airline, China Southern Airline and Air China Airline. Each of the airlines hold around 30% of the total market share in China and the remaining 10% belongs to all other small airlines. The majority of the “big three” shares are owned by the government and also some of the small airlines. -There are very few private airlines in the industry. Many private and other small airlines are merged with the “big three” in the past years. Few factors had affected the Chinese airline industry in the past 10 years. The 9/11 had small impact on the airline industry around the world as a whole as well as the SARS which affected many airlines in Asia countries. All three airlines suffered a loss in fiscal year 2008 due to the great recession. However, all three airlines quickly recovered in the fiscal year of 2009 and had significant increase in net income in the fiscal year of 2010. -The barrier for new entrant is very high in the airline industry in China. Both the fix cost and the variable cost are expensive due to the economics of scale. All three airlines have very high technology as well as low cost suppliers. It would be very expensive to implement all the same requirement. -The airline's name is recognized by almost everyone in china who had traveled by airplane. The public image is very hard to be replaced by a new entrant especially in the airline industry. -Travellers would not want to choose to travel with a new airline. Also many travellers would not want to change airlines if they're really comfortable with the current airline. New entrant would have to take customer switch cost into consideration. In addition, new entrant required to a large amount of money to recover start-up loss since they need to stay competitive in many areas. -Another expense for new entrants is the distribution fees. They need to advertise their airline to the market in order to compete with all other airlines. One of the biggest issues is government regulation. The biggest three airline companies are owned by the government. The government would not allow many private airline companies in the market. If a new entrant happens to survive and doing well in the industry, the government would most likely to force it to join with one of the three airlines. -The major suppliers of the airlines in china are the aviation groups and aircraft manufacturing companies. There are many aircraft manufacturing companies in China but the majority are state owned organizations. Some of the small manufacturing company are private but they only provide parts to small airlines and they do not have research and d

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    INTRODUCTION China Airlines

    Introduction
    In Dec 2010, China airlines Ltd, announced that it had recorded sales revenues of
    138.14 Million dollar as for flights carrying people. The companys Sales Revenue
    increased by 41 % from Dec 2009 in which the company had achieved 98 Million
    Dollars. This increase was followed after the companys announcement in January
    2010 that its recorded Sales reached an amount of 358 Million dollars in Dec 2009
    including civil and cargo services. These numbers show a huge deficit in the total
    revenue of flights carrying civilians where the main source of profitability was based
    and focused on Cargo flights services.
    Still CAL, China airlines Ltd, didnt complete its Mission well in terms of increasing
    profitability and developing its services in order to boost its revenues. Still Civil flights
    consider covering 38% of the companys recorded sales. In our paper we stated the
    companys Vision, Mission, and Objectives in order to state a plan for developing the
    companys civil flights using an edited Business Model. CALs problem was in its
    high costs among competitors who used the LCC (low cost control) in their business
    in order to create a competitive advantage. In our paper we edited the companys
    business model in which we entered some of LCC programs that may attract more
    customers and compete strongly with competitors. For that CAL developed its
    systems to be number one leading systems among other airlines especially those in
    emerging markets such as Mainland china. We stated in our paper the new eticketing system which ensures comfort and satisfaction to customers more than
    other airlines plus it did open its system for online booking by agencies for tourism
    purposes also. Note that CAL did face an increase in the international fuel costs
    which is a main source of increasing its flight costs. For that our paper stated that
    CAL should always buy new aircrafts with engines of less fuel consumptions and
    from there an idea of selling its old fleet come out since old airplanes usually
    consume more fuel than new ones.
    In addition to its Business model, our paper discusses a main issue which faced CAL
    during the past 20 years which is Safety and Security. Many crashes and disasters
    were facing CAL Passenger airplanes in which about 20 crashes had occurred from
    20 years ago (one accident each year). The reasons of such crashes were mainly
    from Airplanes maintenance and pilots mistakes. In the crafting strategy section in
    our paper we introduce some important strategies which CAL started implementing
    in the last 3 years. Some HR new policies were taking place in recruiting
    professional and experienced pilots instead of military ones. Maintenance teams

    were more exposed to the agreement of International Safety programs on monthly


    basis in which both Pilots and Maintenance teams were subject to exams on regular
    basis. CAL also was renovating its fleets in which it made several deals by buying
    new Boeing 777 aircrafts and sold its old ones. This strategy reduced critics that
    were pinpointing on CALs fleets ability to maintain Safety and Security to its
    passengers and increased some voices inside CAL who were the first who asked for
    the selling strategy for fuel costs purposes.
    Our paper stressed on the importance of releasing the international restriction on
    Taiwan Island, the origin place of CAL, due to the conflict between Taiwan and
    Mainland China. This issue encourages the companys mission in accomplishing its
    Open door policy to reach all regions in the world and especially places in Mainland
    China and places around Europe. This policy in CALs Mission obliged the company
    in the last three years to develop their competitive advantage strategy in order to
    compete strongly with international airlines, so we stated some of those strategies
    used and may be used by CAL in order to compete successfully.
    We ended our paper with stating some future plans that CAL should implement in
    order to increase its Passengers Airlines profit and enhance some of its LCC
    strategies in its Business Model regarding its Cargo channels which had proven its
    success during the international Sanctions on Taiwan and CAL especially.

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