COMSATS Institution of Information

TechnoIogy, Lahore.


Subject:

EIectronic Business

Submitted to:

Mr. Kashif Luqman

Submitted by:

Khurrum Faiz

MBA-SP10-14c-60





Date: 19 Oct, 2011
PEST ANALYSIS:
The macro-environment includes all factors influencing a company that are not
within its control. These include political, social, economic and technological factors.
These are known as PEST factors. A technique of analysis of the macro
environment is PEST analysis. Environmental analysis should be continuous arid
precede all aspects of planning. Since the airline industry is very much influenced by
changes taking place in the environment and has undergone rapid and dramatic
changes during the last decade, this analysis is especially important for PA.
POLITICAL FACTORS:
Political factors always have a great influence on the way businesses operate in the
airline industry and the spending power of customers. n recent years it has been
observed that government played an active role in increasing competition in the
airline industry. A number of new airlines such as AirBlue and JS Air have been
awarded licenses to enter the domestic market. Pakistan has achieved some
political stability in recent years. f the management of PA believes that the present
government will perform well (consistently), then there will be more investment in the
form of purchase of new airplanes and latest technology. The over all industry will
grow resulting in more luxurious and comfortable flights. With the military takeover
government policies have become more liberal.
ECONOMIC FACTORS:
Currently, Airlines industry has three major players: Pakistan nternational Airlines,
an Airblue, Aero Asia and Shaheen Airlines. Their target market includes domestic
travelers as well as Pakistanis living abroad particularly in the UK and USA. These
countries have strong economies coupled with high purchasing power. Customers
purchase behavior depends very much on prices of the competing airlines as well as
services offered. As inflation rate is unstable in Pakistan, spending power of
consumers has effected in the long term. n fact growth in Pakistani economy has
resulted in an increase in spending power and has positively impacted the airline
industry. Economically, the new millennium has been highly volatile; the September
11 attacks revolutionized the whole world. Consequently, there was a global
depression in the North America, South America, Australia and Europe. However, in
Asia especially Pakistan the effect in the short term was otherwise. The economy
began to boom because of greater remittances from abroad and whole sum
immigration by expatriates. As a result, demand for air travel in South Asia rose.
Economic conditions of Pakistan are however improving. PA has cost a advantage
over its competitors because of its newly acquired, improved, long distance aircrafts
from
Boeing which give longer range and better fuel economy than any other jet
currently produced. This cost advantage is a barrier to entry for new firms. However,
this cost advantage will not be significant on domestic routes.
SOCIAL FACTORS:
The social arid cultural influences on business vary from country to country. The
social structure of Pakistan is closely tied. The trend is now changing as the general
public is educated and is pursuing professional goals. Customers are more aware of
market conditions and available options and want to get best value for their money.
They spend considerable time and money on entertainment hence increasing the
need of in-flight entertainment systems. Also, word of mouth has a significant impact
in the use of airline services. Hajj attracts a huge number of customers. The social
environment of Pakistan is turning liberal with the new regime. The initiative to
automate check-in and ticket booking process might not be very popular with the
general public (even educated population) is still technology averse. E-ticketing
might also face significant challenges as consumers are generally reluctant to
provide their credit cards information over the phone and the internet. The
consumers, however, have a warm reaction to the prospect of less costly but quality
service flights.
TECHNOLOGICAL FACTORS:
Technology is vital for competitive advantage and is a major driver of the airlines
industry. Major technological changes are taking place in the airlines industry with
innovations in the reservations and booking systems. n-flight entertainment systems
and auto check in counters are two examples of such innovations. nternet plays a
key role in e-ticketing as consumer can easily reserve tickets or check the status of
the flight. A key issue will be the extent, to which technological advancements (such
as nternet) impact distribution and cost synergies from industry consolidation, can
offset upward pressures on costs. PA has always led the path of technological
innovations by introducing new technologies ahead of its competitors such as its
auto check-in counters which has helped it gain market share. t was the first airline
in Pakistan to install Sabre system followed by the market leader.
RECOMMENDATIONS FOR PAKISTAN INTERNATIONAL AIRLINES:
DecentraIization:
PA should decentralize its structure that would lead to the easy management,
increased motivation, easy access to information and resolution of the conflicts (as
they would be resolved by the immediate manger time span would then reduced).
Since employees issues regarding their behavior would lessen, so it would
ultimately lead to more satisfied employees that would result in enhanced
productivity of the organization.



Strategic Business Unit:
PA should make its different departments into Strategic Business Unit. Every SBU
should have a defined business strategy and a manager with sales and profit
responsibility. As PA is a large organization, so it must be convert into
SBUs.Different factors should be determined for the success of SBUs which as
follows. The degree of autonomy given to each SBU manager. The degree to which
an SBU shares functional programs and facilities with other SBU's The manner in
which the corporation evaluates and rewards the performance of its SBU managers.

Transparent poIicy adoption:
PA should adopt transparent policy that employees should be promoted on merit
basis. And Chairman of PA should be appointed from with in the organization. Union
should support it, it will motivate the employees and PA will grow in profit. PA
should not induct new employees till the time they are needed on the basis of my
personal observation at Rawalpindi station have seen that a task which can be
performed by person PA had 3 employees for that.PA should give bonus to the
industrious and competent employees.
EmpIoyee Empowerment:
PA should make efforts towards empowering the employees that is going to lead to
more employee participation in the decision making process and also result in more
employee satisfaction and enhanced motivation. Apart from this, employees would
feel more independent to discuss the issues explicitly without hesitation. This would
also enhance team work process at PA as quality team and cross-functional teams.
The employees will work with more commitment and dedication and every employee
would work to his/her fullest due to increased motivation. However, with
empowerment comes accountability, so it is suggested that while they empower their
employees, there should also be a "controlled check on them to ensue the correct
usage of power delegated to every employees within their circumscribed limits.
Overhead Costs:
PA should also reduce its overhead costs that are it should mange its resources:
labor more effectively, so that with less input, more out put can be achieved and the
saved resources can be utilized in other areas such as introducing more training
courses for the employees so that the quality of the workforce could be increased.
Hiring the services of expertise can improve the efficiency of their services, so by
saving the overhead costs, they can utilize that money for the expertise services. So
by analyzing the various segments of the organization and making the right
corrections, it can substantially improve the standards of Organizational behavior.