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Aviation Strategic Management

Executive Summary of Air China: Swot Analysis

The executive summary discusses the national airline of the People’s Republic of China. Air China is one of the major airlines of China having its base headquarters in Shunyi District, Beijing. This report comprises the SWOT analysis of Airlines based on several trusted sources. This report not only discusses the strengths and weaknesses of the aviation company but also studies the opportunities and threats existing in the external environment. This report also studies the end conclusion of this strategic tool analysis and how the company has planned to act upon the same. The main purpose of this report is to analyze both internal and external factors affecting the company’s performance.

Table of Contents

Introduction

Air China’s Key Strengths

Air China’s Key Weaknesses

Air China’s Key Opportunities

Air China’s Key Threats

Conclusion

References

Introduction to Air China: Swot Analysis

Air China is the flag carrier of the People’s Republic of China. It is one of the leading aviation companies in the Chinese industry. According to Air China (2017), they have been trying to raise and expand their domestic and international routes from China to the rest of the world. Air China endeavors to turn into an a-list carrier and has made methodologies, for example, extending courses because of the developing number of Chinese explorers, joining the Star Alliance to serve its reliable clients and auxiliary divisions of smaller aircraft to support and enhance income.

A SWOT network is a 2x2 lattice that has the interior key elements recorded in the primary column; Strengths and Weaknesses. It also incorporates the outside key variables recorded in the subsequent line; Opportunities and Threats. This SWOT key analysis permits organization administrators to handily see the entirety of the organization's qualities, shortcomings, openings, and dangers in a single network. This paper specifically discusses the SWOT analysis of Air China, as its the flag carrier of China and it plays an important national role. This report comprises the Air China Aviation airline’s strengths, weaknesses, and the opportunities and threats associated with the aviation industry in China.

Key Strengths

Air China is China’s flag carrier, although it competes strongly against other major national carriers including China Southern Airways, China Eastern Airlines, and Hainan Airlines, and many more. There are several strengths of the Air China company that helps the company to maintain its current position. Air China enjoys the benefits of its various strengths like its cost structure, distribution and reaches program, financial position, supplier’s community, return on capital expenditure, and automation benefits.

For instance, Air China holds a bigger number of outlets in each province of China upheld by solid dispersion networks helping the organization to be effective. In these 32 years, since 1988, the company has gathered several reliable distribution networks to reach the major of the potential market. Moreover, the company also hold a firm grip on their suppliers. The company possesses such a strong relationship with their dealers that they not only help in delivering supplies to them but also helps in promoting the brand name and their products and services. The frequent Automation process of the company also barges with a lot of benefits to the firm as it guides the firm to make efficient use of the resources and plan for cost-saving exercises. Besides this, it also helps the company to have a quality check of its products and services at regular intervals, update them, and scale them considering the demand in the market. As per Fern Fort University (2020), the Air China company also enjoys good returns on capital expenditures on the project that they had launched earlier or a few years back. As the company is also good and successful at launching new projects, therefore it helps the company to generate new revenue streams too.

The company also possess some other benefits and strengths that helps the company to have an edge over their competitors like their low-cost structure, that helps them to produce at low cost and sell them at affordable prices. Furthermore, impressive presence at social media platforms, a skilled workforce, innovative teams, strategic partnerships, and strong brand portfolio strengths are just like a cherry on the cake for the company.

Key Weaknesses

Shortcomings are where Air China needs development. Shortcomings are where a firm can improve utilizing SWOT investigation and expand on its upper hand and key situating. There are several key areas where the competitors have an edge over the Air China company.

Even though china owns several intellectual property rights and trademarks, but a huge amount of the Air China property is rented and they need to pay a large number of rents of those properties. Besides infrastructure cost, the workforce at Air China is concentrated with generally neighborhood laborers, and low measures of laborers from other racial foundations. The absence of enhancement makes it hard for representatives from various racial foundations to modify the work environment, prompting the loss of ability. Uneven cash flows are among one of the weaknesses of the Air China company. Their unstable financial planning leads the company towards unnecessary unexpected borrowings. The company also needs to practice more investment exercises in terms of new technologies and research and development. Int the current scenario, the technological advancement at the Air China firm is not sufficient that comply with the vision of the company. Moreover, the Churn rate of the company is also high in comparison to other competitors, therefore to overcome this weakness company needs to spend more on training and development sessions. Air China operates at low cost, therefore they developed another shortcoming besides its strength i.e. now they lack consistency and have more chances of quality damage.

The company also possesses some other shortcomings due to which their competitors are prevailing more benefits. These factors and weaknesses the company needs to improve as soon as possible. Furthermore, other segments where the company needs to work a little harder are on their outdated market research program, high workload, low work morale, low current ratio, diminished current assets, and lack of legal experiences.

Key Opportunities

Opportunity is a trademark that increases the value of something and makes it more exceptional than others. According to Gurel & Tat (2017), Opportunities implies that factors are more worthwhile when contrasted with something different. In this sense, opportunity alludes to a positive, ideal, and innovative trademark.

There are several opportunities available in the aviation sector in the Chinese industry to which Air China can exploit their benefits. As nowadays the usage of the internet is on peak all across the world, therefore the company should try to establish their presence more on online platforms. In the era of technological development, the company should operate on advanced technology to reduce cost and for better data collection and marketing exercises. The populace has been developing and is expected to develop at a positive rate for the upcoming years. This is an opportunity and benefit for Air China as there will be an expansion in the number of potential clients in their segment. The diminishing transportation cost of shipping is also an emerging opportunity for the company. The diminished cost of transportation will help the company to reduce the costs of their products, attract more customers, and gain profitability (Fern Fort University, 2020). Increased globalization is another opportunity that Air China can cater to expand its operations internationally all over the globe. This will help the company to have an entrance to these new markets and exploit the opportunities available in these markets positively.

There are many other opportunities available to the Aviation sector of the country. Some common and other significant opportunities prevailing in the market are reduced trade barriers, loosened regulations, peak in tourism sectors, reduction in tax rates, and many more. Besides them, lower interest rates, lower rates of inflation, expansion of the e-commerce industry, and an increase in customer spending are other opportunities that Air China can cater to.

Key Threats

The danger is a circumstance or condition that risks the completion of an action. It alludes to a disadvantageous circumstance. Consequently, it has a negative trademark that ought to be kept away from. Threats are basically the awareness alarms for the company.

There are several threats to the market that can impact the company’s performance. The interest of the profoundly gainful items is occasional in nature and any far-fetched occasion during the pinnacle season may affect the productivity of the organization in the short to medium term. Moreover, rising and stocked raw material will be a threat to the company and its profitability. The growing strengths of the competitors and them having an edge over Air China is another threat to the company. Development in new technologies by the competitors is another major threat to the company in the longer run. Expanded advancements by contenders have been a danger for Air China. On most media, there is more mess than any time in recent memory, and clients are assaulted with numerous messages. This decreases the adequacy of limited time messages via Air China. As the exchange rates keep fluctuating therefore, it can hampers the profitability of the company.

Conclusion on Air China: Swot Analysis

This can be concluded from this SWOT analysis that there are various internal factors that are beneficial and both harmful for the company. Various strengths like brand portfolio, low-cost structure, and good relationships with the suppliers are essential for the company and will help the company to boost. But, the company also possesses several internal weaknesses onto which Air China needs to be more focused on like market research, improper cash flow, and others. Moreover this can also be concluded from the report that there are various available opportunities in the market to which a company can garb and exploit for their benefits. Besides, where the opportunity comes, threats came attached to it. Therfore, Air China should be aware of all these factors to sustain longer in the industry.

References for Air China: Swot Analysis

Air China Ltd. (2017). Air China Awards and Prizes. Available at https://www.airchina.us/US/GB/about-us/prizes

Fern Fort University. (2020). Air China SWOT Analysis/Matrix. Available at http://fernfortuniversity.com/term-papers/swot/1433/1312-air-china.php

Gürel, E., & Tat, M. (2017). SWOT analysis: a theoretical review. Journal of International Social Research, 10(51).4

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