The Board of Directors of a major airline is concerned about the possibility of an economic downturn affecting demand for air travel. Consider that you are a manager and have been tasked to do an environmental analysis for the industry and a destination analysis to determine which of the flight destinations are most popular.

 

 

Identify some of the questions you might have about the overall environmental industry trends (political, economic, social, technological, environmental, and legal, or others). You might include questions such as "What affects demand?" or "Who is likely to travel the most in the next five years?" "How are fuel prices determined" or "How can fuel efficiency be improved?", for instance. a. Identify at least one question for each of the environmental factors (political, economic, social, technological, environmental, and legal). b. For at least one of the questions, hypothesize the answers to it, and identify where you might go to evaluate resources. For instance, if you asked a question regarding what affects demand, you might hypothesize that personal income could be a factor, and you might conclude that evaluating the overall U.S. economy or household income from data on the Bureau of Economic Analysis site could be valuable information.

 

a . Questions related to each factor

Environmental analysis is a tool to analyse the performance and according to that outcome decisions are taken to increase the efficiency and productivity. There are six factors included in this analysis.

1. Political factor 

• How changes in tax structure will affect the tourism industry?

2. Economic factors

• How will a change in exchange rate affect travel ?

3. Social factors

• How air travel will be affected by the safety measures taken by the travel companies?

4. Technological factors

• Which new incentive scheme is impacting the booking of tickets online?

5 legal factors

• How will safety law be enforced in the travel industry?

6. Environmental factors 

• How much co2 is emitted in one flight?

b. Hypothesis

• How will a change in exchange rate affect the travel ?

The change in exchange rate will affect the travel and thinking of the consumers as the fare charges will be affected and to study that managers need to study the fluctuations in demand and supply in advance.

Destination analysis is a term used to study the location according to the customer requirements and his likeness. Manager understands the demands of the customers and uses his resources accordingly.

Step-by-step explanation

Environmental analysis - it is a tool that is used to analyse the overall performance of the organization, to study the level of organization efficiency and these results are further used to make decisions regarding the business. Changes are happening very frequently and a small change can affect the overall performance, so it is important to analyse all the environmental factors constantly so that decisions can be made accordingly. This analysis consists of many factors that will help to analyse the situation.

a. Questions related to each factor

1. Political factor - it includes all the political aspects which will affect the country as well as business. The decisions taken by the government which directly or indirectly affect the business and its working are included in this factor. There are many decisions like policies implemented, tax rates, subsidies, changed policies etc. all these affect the business and its decision making.

For tourism industry factors like relation with other countries, border issues, and taxes will be analysed. 

• How changes in tax structure will affect the tourism industry?

2. Economic factors - these include the aspects which will have an impact on the purchasing power of the customers, which will further impact on the capital of the firm.  These include the interest rates, inflation and deflation, economic growth rate, and money exchange rate. Tourism and travel agents are most exposed to the changes happening in the exchange rates and other economic crises. 

• How will a change in exchange rate affect the travel ?

3. Social factors - variation in the culture of different countries, their language, culture, lifestyle, wealth and education are the socially eligible factors affecting the industry. In the tourism industry factors like age, population, safety measures etc will affect the growth and development. 

• How air travel will be affected by the safety measures taken by the travel companies?

4. Technological factors - technology is changing at fast speed,and these advancements are affecting the business and its decision making process, as it's important for the industry to follow the change to compete in the market. Changes in automation, incentive, ticket booking applications etc. will have an impact on air travel.

• Which new incentive scheme is impacting the booking of tickets online?

5. Legal factors - regulatory bodies and their decisions are the legal factors that will have an impact on the performance of the industry, as changes rules and regulations by legal bodies, consumer laws and employment laws are under this. As import export rules are different in other countries which will create a barrier for travel.

• How will safety law be enforced in the travel industry?

6. Environmental factors - the factors like change in climate, pollution are included under this, as people have different attitudes towards environmental factors in different countries, so accordingly the change will be there. Plastic waste, fuel emission are also considered under this factor.

• How much co2 is emitted in one flight?

b. Hypothesis

• How will a change in exchange rate affect the travel ?

The exchange rate is the difference in the value of money among different countries and this rate changes when other factors impact the business and the environment, change in these rates will affect the rate of air travel to a great extent. As with changes in the rate of a particular country, leisure travel to that country will be reduced.

To analyse this change, industry and managers should consider the fluctuations in demand and supply of the different currencies and also rate of inflation and deflation, this will help them to predict the change in advance and can adjust their working according to that or provide for Hedging against such Currency fluctuations.

Destination analysis - in this process all the aspects of the tourism industry are studied in detail to analyse the customer needs and requirements. The manager will try to understand the customer and his demands, and then manage the resources accordingly. Management will analyze the destinations which are favourably differentiated from others and are in more demand compared to others. This will create an image in the minds of the tourists for a destination. Under this the traveller will go through the basic information about the destination, places to visit, popularity of the destination, travel cost, food availability and culture. This will provide a brief knowledge about the location in the mind of the traveller.