PEST Analysis of the External Environment Essay

The constitution provides an analysis of the encase Study for Westjet Airlines, Canada. The case is taken from the work through by Peter Yannoupoulus (pg 376-380) Problem Statement The fol down(p)ing problem statements argon proposed 1. Westjet Airlines total debt is higher(prenominal) relative to its sh arholder equity a footmark that may call for external financing. The order needs a dodging to ensure its self-sufficiency. 2. Westjet has many competitors and has to come up with strategies to ensure it remains in the market and cook ups mesh.The major questions that management of Westjet have to deal with is whether to stay fresh its stead quo of offering low cost and low cause, whether to venture more in the third company guide segment or whether to be touch on in the Trans borders segment. The management has to check the best strategy it will recitation to achieve its elaboration plan and decision must be do urgently. PEST Analysis of the External Environment Pol itical/ Legal later the 9/11 attack operating in the atomic markets has experience uneconomical due to change magnitude costs.Legal measures by the government translated to higher costs to escape cock paths, which were transferred to consumers. Non-profit airport authorities have likewise led to the growthd prices that act as a disincentive to air transportation. Most customers are price sensitive and care must be taken to maintain its competitiveness. Westjet incurred added costs by providing amenities to its customers like leather seats, snacks leg retinue and television. Economic It offers prize services, empowers its employees and shares profits. This path it maintains its competitiveness.Having good relationships with employees creates good relationships with customers. Employees can make decisions and solve customer problems without the unnecessary delay of contracting the management. Employees are make to feel as if they are part of the company. By offering quality services and on job training it improves its highly do employees skills. It employs answer people who to a fault have a right attitude. Employees are motivated by the profit sharing where they get additional money from what the company makes.Through its employees share purchase plan, it encourages its employees to invest in the companys stock. Pricing Its fares are 55% lower than air Canada fares. It offers services at a low cost so as to increase the dealing flow. It attracts passengers who would prefer other means of transport as well as those without the traveling idea but attracted by the prices. Westjet intends to expand its scope to serve the central and eastern Canada. By early 2004, it was serving 24 Canadian cities. (P. 376) Environment/ Technological In increasing its efficiency Westjet may be obliged to incur high costs but the benefits are outlay it.For instance the installation of winglets that cost $ 635,000 per plane would result to $ 112,500 savings p. a per pl ane. (p. 379) Social and Cultural Westjet airlines provide passenger, cargo and third party charter services to Canadas domestic market. It started its operations in 1996 with 3 aircrafts and 220 employees by 2003. It has expanded and now employs 3610 employees and 14 aircrafts. It has entered an agreement with Air transit, the leading Canadian charter airline and it rent its airplanes during off-peak seasons like in winter months. It besides did its maintenance and rented some of its simulators.Competition Air Canada, the largest competitor has more resources and a higher command in the market. It accessed over 90% of Canadian airline industry, US trans border and international markets. It makes counter decisions to be at split grounds than Westjet. Other low fare competitors include Cantet, HMY airways, Zoom airlines, Tango, and retire and Zip air. Decisions Alternative and Solutions Alternative -1 Tran border expansion Westjet may decide to expand in Tran border operations. Ve nturing into this area calls for increased cost in increasing aircrafts.Tough competition from subsidiary airlines of stronger airline could threaten its low fare strategy. There is very high competition in the trans-boarder market as it includes both the Canadian as well as the US airlines. Replacing the older aircrafts would also be essential to pave way for efficient aircrafts to travel non-stop across cities in Canada as well as across the borders. Alternative -2 Offer low cost and low fare and increase Canada market Westjet can maintain its status quo. It can sanction or empower its employees results to increase their satisfaction that is further projected to the customers.Its small size will ensures low cost structure and fewer employees. operational in the profitable routes makes it more efficient than large airlines. It must also ensure that it offers convenient schedules. It can increase or maintain these profits by increasing its scope. Westjet can advertise its services extensively through it the advertising and new media division in its sales and marketing. Advertisements can be through magazines, outdoors advertising, radio, television, and transit messaging and web advertisement. (P. 378).It can also increase offers to act as incentives like random promotion for instance, the tip ministers day special. Westjet offers tickets less reservation system through Internet bookings that are very convenient and effective to consumers. It also eliminated unnecessary costs that go with printing distribution and tracking of tickets Alternative -3 Venture more in charter segment. Westjet can opt to expand in the third party sector or the charter services. It is appropriate as the unutilized aircrafts can be utilized during winter. It can team up with established charter flight businesses.Most Favored Alternative The strategy that best suffice Westjet expansion is to expand its operation in Canada. Westjet has only exploited 10% of its possible market shar e and therefore has more potential to expand. (p. 375). It can increase the number of flights made and venture into areas that have not been exploited. Profits and ROI In 2001 Westjet had $ 478 million profits that rose to $ 680 million in 2002. It can exsert with this trend if it exploits the unexploited 90% of its potential. (P. 380)References Peter Yannoupoulus. West Jet Airlines Case 4 pg 376-380