HNA case study Essay

1. What contributed to HNAs success in the mainland China Airline Industry? 1. Chinas prosperous market conditions advance middle class (rising per capita income)Entry into WTO growth in imports and exportsMigration of rural population into urban citiesInflux of immaterial investment2. Deregulation of civil aviation market3. Strategic DecisionsUnconventional approach for a regional start up air passage chose to compete as a trunk line feeder development of feeder routes in Western China consistent with government plan to develop the Silk Road telling acquisitions that helped them to expand faster4. Effective utilization of capital markets (internal and external) to expand operational scale and lower run costs 5. CultureEncompasses Chinese culture and Western modern managementLazy Ant opening and Swapping System6. QualityExcellent flight safety standardsPunctuality rate is first in China7. Clear Strategy To be low cost providerFocused on cost expression and ope evaluation ef ficiencyCost per ASK was very lowLower maintenance cost corresponding model of planesRan aircrafts longerInvestment in technologyLower staffing cost per ASK8. Started outside CAAC did non have to adhere to government standard. Forced them to be more aggressive 9. Strong Interrelation among the blocks of businesses contributes to increase revenue for their airline business 2. What are the challenges that the company faces at both the business and corporate levels? trading UnitPrice of Oil (airline)High financing costs (airline)Entry of budget hotel competitors (hotel)Entry of upmarket international franchise (Hilton etc) into hotel industry (hotel) Credit rating firm downgraded the airline to second lowest ratingCorporate levelHigh debt level puts the company into difficulty of raising funds to expand relative industries block important to maintain relevance to its airline business 3. Was the companys change magnitude fullness a distraction to the airline business or a route to competitive advantage? The increasing breadth might work in favor for HNAs airline business as they stress to revamp itself into Grand China Airline.By increasing its breadth, it can help to strengthen the new airline brand name to other parts of the world. Particularly for the hotel business, HNA can utilize them to promote the brand battlefront of its airline business to tourists. However, HNA need to be careful of the breadth of business it can extend to. It should be kept within the boundaries of the airline industry such that whatever industries it is trying to expand to, it should contribute instanter to its airline business (obvious synergy). For example, the departmental store business does not create synergy with the airline business.