Business Environment Analysis

The internal and external business environment of TransGlobal Airlines is analyzed using the PESTEL analysis tool. Notably, it is an acronym for political, economic, sociological, technological, environmental, and legal factors (Çitilci & Akbal?k, 2020). The analysis is given below.

Political

The industry is one of the US’s most taxed and regulated sectors. Several political factors influence the operations of companies involved in this sector, including TransGlobal Airlines. However, trade restrictions are the single selected political factor in this case. It entails the political process which influences policy formation. Politicians are actively involved in the formulation and passage of trade restriction laws. They are more likely to influence the decision to areas of favour or trade restrictions that favour their interests. For instance, restrictions on mergers and acquisitions will affect Transglobal Airlines’ decision to acquire two airlines. For example, the approval by government officials for a merger or take-over of airlines is influenced by legislators.

Economic

Economic conditions influence the operations of a company in various ways. For instance, changes in global economic conditions influence the aviation industry. According to Atems (2021), the economic downturn resulting from the global COVID-19 pandemic adversely affected the sector and reduced its worth from $810 billion in 2019 to $688 billion in 2020. As a result, the acquisition of two airlines by Transglobal Airlines will enhance the company’s economic welfare because it will increase its synergy amid high inflation rates.

Sociological

Issues related to demography influence the aviation industry. Demographic characteristics influence the spending of individuals in the industry. One sociological factor selected is the age of the target markets. Notably, the age of individuals affects the frequency of travel. People between 20 and 50 trip more than other ages; thus, the company must focus its marketing activities on this notable age group. Further, accessing this market segment will entail a marketing plan based on the features desired by the social group.

Technological

Factors associated with technology consider innovation and inventions that affect business. Mobile technology is such a factor that is selected for Transglobal Airlines. Notably, through mobile apps, this technology has changed TransGolabal’s customer support and bookings. The company must ensure it is up to date with technological developments to remain competitive. Using mobile application technology cuts costs for the company and makes it more efficient in generating profits.

Environmental

Concern for natural environment protection and sustainability influences the operations of airline companies. One such factor is pollution. Airplanes are often associated with air pollution. As a result, airline corporations, including Transglobal Airlines, must ensure they use clean energy and reduce their footprint on the natural environment.

Legal

Legal factors pertain to what is allowed and disallowed in the performance of a business. One factor under this category that influences the activities of TransGlobal Airlines is labour laws. Labour laws must strictly be adhered to avoid lawsuits that can be expensive for the company in the long run. Notably, the company should ensure timely contracts for its workers and fair pay failure, to which action from the government and labour unions can be sparked.

References

Items, B. (2021). The response of the US aviation industry to demand and supply shocks in the oil and jet fuel markets. Transportation Research Interdisciplinary Perspectives, 11, 100452.

Çitilci, T., & Akbal?k, M. (2020). The Importance of PESTEL Analysis for Environmental Scanning Process. In Handbook of Research on Decision-Making Techniques in Financial Marketing (pp. 336-357). IGI Global.

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In your role as controller of a division of TransGlobal Airlines, you are responsible for assessing the possible acquisition of the two identified small airlines in the Caribbean specializing in chartered flights for luxury vacations using light aircraft (60 passengers or less).

Business Environment Analysis

One of the critical steps in this acquisition process is analyzing, understanding, and identifying all the external and internal elements that can affect the organization’s performance, and, as businesses are greatly influenced by their environment, all the situational factors that determine how day-to-day circumstances impact firms. You can assess situational factors by performing a business environment analysis. The analysis considers the threat or opportunity level these situational factors might present. These evaluations are later translated into the decision-making process. The study helps align strategies with the firm’s environment. You will use the PESTEL method to perform this analysis.

Prompt
Use the information provided to you in the TransGlobal Airlines Information document to perform a business environment analysis using the PESTEL method. Your task is to analyze the internal and external business environment of TransGlobal Airlines by identifying the impact of each PESTEL factor on the business environment.

Specifically, it would be best if you addressed the following rubric criteria:

Identify one political factor that can affect the company’s business environment and explain any potential impact on acquisition strategy.
Identify one economic factor that can affect the company’s business environment and explain any potential impact on acquisition strategy.
Identify one sociological factor that can affect the company’s business environment and explain any potential impact on acquisition strategy.
Identify one technological factor that can affect the company’s business environment and explain any potential impact on acquisition strategy.
Identify one environmental factor that can affect the company’s business environment and explain any potential impact on acquisition strategy.
Identify one legal factor that can affect the company’s business environment and explain any potential impact on acquisition strategy.