As “controller of a division of Transglobal Airlines,” I am entrusted with assessing the potential acquisition of two crucial Caribbean airline companies. Nevertheless, one of the essential stages in doing so is assessing intrinsic and extrinsic corporate aspects influencing Transglobal effectiveness. As a result, PESTEL would be useful in performing a corporate environmental assessment to assist in choice-making.
Political Factor: Political factors are important in PESTEL assessment because the emphasis is on how federal laws and procedures interact with a specific nation’s economic system and other variables that can influence organizations (Yuksel, 2012). As a result, political destabilization is one ideological component that can impact the firm’s business surroundings. The airline’s foremost endeavors would involve lavish vacations performed by the light aircraft, so the corporation is uncovering itself to novel destinations. As a result, ideological destabilization would be a cause for major worry, as it is one of the crucial variables that prevent travelers from touring specific nations or particular destinations within those nations. Moving to an unsteady nation may create ambiguity about the airline’s long term and lead to failures because the business will not create profits as anticipated.
Economic Factor: Economic variables are important because they regard the various aspects of the economic system as well as how the position on each may affect corporations (Yuksel, 2012). Furthermore, factors such as interest and investment returns influence how businesses may incorporate finances into specialized economic systems. Thus, interest percentages are a crucial economic component that can impact the airline’s corporate surroundings. This factor can be used by the corporation to forecast the economic expansion path of the recently obtained corporate. Acquisition expenses seem to be fairly significant in the situation of high-interest charges with such unexpected price increases deterring shareholders. As a result, if interest charges in the Caribbean are quite significant, the acquisition may endure hardships.
Sociological Factor: PESTEL considers social variables because they are connected to ethnic and population societal patterns. These social standards are critical in evaluating customer actions. As a result, one important social aspect to take into account is the global epidemic lifestyle patterns (Yuksel, 2012). The firm’s goal is to acquire “airlines in the Caribbean majoring in commissioned flights for deluxe trips.” As a result, understanding Caribbean lifestyle patterns is critical, particularly during the coronavirus flu outbreak. Luxury preferences would perform a substantial function in lifestyle patterns. Therefore, if the social and cultural tendency of individuals in the Caribbean is to engage in recreational actions such as luxury trips, the acquisition would be regarded as a lucrative endeavor, and vice versa.
Technological Factors: Technological factors focus on business advancement as well as the economic system as a whole. Failure to keep up with contemporary patterns in a particular sector can be detrimental to a company’s bottom line (Yuksel, 2012). As a result, one of the significant elements, in this case, is the industry’s technological demand. The airline industry necessitates substantial technological improvements, which is the driving force behind increasing airline operational effectiveness. Superior connectivity is being observed as a result of innovation, which improves travelers’ travel experiences while also lowering airline expenses. This demonstrates the airline firm’s reliance on technological advances. As a result, if the Caribbean airlines do not have adequate innovation, this will result in additional expenses and an impoverished consumer encounter following the acquisition.
Environmental Factor: Environmental factors include the ecological effects of corporates. With the emergence of notions such as sustainable development and CSR, this component is becoming more important in how businesses undertake their corporate operations (Juneja, 2015). The extent of environmental damage produced by airlines is the ecological determinant being regarded in this scenario. Jet fuel emanations frequently cause water and air contamination. Because each nation has distinct contamination legislation, trans-global airlines would have to recognize Caribbean regulations before making an acquisition to avoid having their aircraft forbidden on the occasion of a legislation infringement.
Legal Factor: Legal variables pertain to lawful influences that define what a company can and cannot perform. As a result, one of the legal variables that the corporation must consider is the hiring legislation that prevails in the Caribbean. Following the acquisition, most of the worker foundation would be derived from the Caribbean, making compliance with labor laws critical. In addition, because one of the corporation’s goals is to be one of the finest work environments globally, it would have to guarantee adherence to employment regulations, which would increase the likelihood of the acquisition being successful.
References
Juneja, P. (2015). PESTLE Analysis of the Global Aviation Industry. Managementstudyguide.com. https://www.managementstudyguide.com/pestle-analysis-of-global-aviation-industry.htm
Yuksel, I. (2012). Developing a Multi-Criteria Decision-Making Model for PESTEL Analysis. International Journal of Business and Management, 7(24), 52–66. https://doi.org/10.5539/ijbm.v7n24p52
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