Responding to a changing external business environment
An United Airlines case study

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Page 2: Assessing the external environment

One useful way of assessing an organisation's external environment involves grouping forces into five areas using a SLEPT analysis. A recent analysis of factors affecting United Airlines produced the following:

Social influences

Many UK travellers fly frequently to various destinations. Because they have plenty of choice and also know something about key world issues and events, their travel selections are influenced by many different factors.

For example, the widely reported SARS epidemic and various acts of terrorism each caused a significant fall in numbers travelling to certain destinations. Over a period of time, however, others factors that influence travel destinations and people's willingness to fly come into play, and travellers regain confidence in destinations and in modes of transport they had temporarily deserted.

Legal influences

Like all airlines, United must observe the rules and regulations of the USA's Federal Aviation Authority (FAA) and the UK's Civil Aviation Authority (CAA). This leads to heavier costs and more administration. Under current USA/UK agreements, only four major airlines may land at Heathrow on direct flights between the two countries. These are United Airlines, American Airlines, British Airways and Virgin Atlantic. With European legislation focusing upon opening up this market, any form of anti-trust legislation could lead to increased competition.

Economic influences

Governments are under pressure to create 'open skies' as well as to force down prices on high traffic routes such as Heathrow. In recent years, airlines have had to cope with higher landing charges as well as additional taxes imposed upon the air-travelling public. World events such as SARS and the Iraq war also have a direct economic influence upon airlines' activities.

Political influences

The political environment is determined largely by governments and powerful decision makers able to create laws, regulations and codes. Transatlantic carriers look for Heathrow landing slots as well as USA landing rights, but American politicians are under pressure to protect lucrative internal USA flights from overseas competition as travellers arrive at key hubs and then travel onwards within the USA. Politicians are also involved in European/US negotiation of bi-lateral agreements and in many countries it is they who frame and enforce anti-trust legislation as well as, perhaps, minimum wage legislation.

Technological influences

The safety of passengers and crew remains a prime concern for all airlines. Faced with rapidly advancing technologies, United is actively aware of an ongoing need to invest in aircraft and update its fleet while at the same time providing more and improved customer service benefits, both in-flight and on the ground.

United Airlines | Responding to a changing external business environment