What contributed to HNA’s success in the China Airline Industry?
- China’s comfortable market conditionsRising in-between category ( lifting per capita income )Entry into WTO growing in imports and exportsMigration of rural population into urban metropolissInflux of foreign investing
- Deregulation of civil air power market.
- Strategic Decisions:Unconventional attack for a regional start up air hose – chose to vie as a bole line feeder Development of feeder paths in Western China – consistent with authorities program to develop the “Silk Road” Effective acquisitions that helped them to spread out faster
- Effective use of capital markets ( internal and external ) to spread out operational graduated table and lower operating costs.
- QualityExcellent flight safety criterionsPunctuality rate is first in China.
- Clear Scheme: To be low cost supplier Focused on cost construction and operating efficiency. Cost per ASK was really lowLower care costSimilar theoretical account of planesRan aircrafts longerInvesting in engineeringLower staffing cost per ASK.
- Started outside CAAC – did non hold to adhere to authorities criterion. Forced them to be more aggressive
- Strong Interrelation among the blocks of concerns contributes to increasing gross for their air hose concern.
What are the challenges that the company faces at both the concern and corporate degrees?
- Business Unit of measurement. Monetary value of Oil ( air hose )High funding costs ( air hose )Entry of budget hotel rivals ( hotel )Entry of upscale international franchise ( Hilton etc ) into hotel industry ( hotel ) Recognition evaluation house downgraded the air hose to 2nd lowest evaluation
- Corporate degree. High debt degree puts the company into trouble of raising financess to spread out Relative industries block – of import to keep relevancy to its air hose concern.
- Be the company’s increasing comprehensiveness a distraction to the air hose concern or a path to competitory advantage? The increasing comprehensiveness might work in favour for HNA’s air hose concern as they seek to revamp itself into Grand China Airline.
By increasing its comprehensiveness. it can assist to beef up the new air hose trade name name to other parts of the universe. Particularly for the hotel concern. HNA can use them to advance the trade name presence of its air hose concern to tourers. However. HNA demand to be careful of the comprehensiveness of concern it can widen to. It should be kept within the boundaries of the air hose industry such that whatever industries it is seeking to spread out to. it should lend straight to its air hose concern ( obvious synergism ) . For illustration the departmental shop concern does non make synergism with the air hose concern.
