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SWOT and PEST Analysis of American Airways

SWOT and PEST Analysis of American Airways

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Published by: CheapestPapers on Aug 06, 2012
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Surname 1 Name:Course:Instructor:Date:
Surname 2IntroductionSWOT analysis is a method of analysis that reflects on Strengths, Weaknesses,Opportunities and threats involved in a prospect. It specifies the objectives of that venture andidentification of both external and internal factors that work in favor or not in favor of that venture.The technique was coined by Albert Humphrey of Stanford research Institute in the late 1960’s andearly 1970’s. Strengths are the general characteristics of that venture that make it stand out amongothers. Weakness entails the characteristics that put the venture to a disadvantage in comparison toother ventures. Opportunities are the external factors that can lead to improvement of the venture.Threats are the factors in the business environment that could be troublesome to the venture.SWOT analysis assists in setting objectives for an organization.PEST analysis abbreviates for Political, Economic, Social and technological strategy of analysis. It entails the factors on the macro environment. Modification of the strategy led toinclusion of legal and environment factors.PEST analysis focuses on the following componentsPolitical factors - show the extent to which the government influences a business venture. Theycover areas like policies on taxation, laws on labor and environment restrictions on trade, tariffsand the stability.Economic factors- these have a prime impact on the operation of the business. Thesefactors include inflation, currency exchange rates, growth of the economy and interest rates.Social factors like culture, growth rate of the population, age distribution, and attitudes tocareers. Companies some times change their managerial strategies to conform to these socialaspects. This includes recruiting old workers, and holding seminars to train workers.Technological factors aspects like automation, incentives on technological innovations, andrate of change in technology.
Surname 3Environment- this includes aspects of both ecology and environment such as the weather,changes in climate and climate. These can help in the creation of new ventures or the collapse of some others.Legal factors include antitrust laws, discrimination laws, employment laws safety laws andmany others. They affect the company’s operations, costs and demand for products.For the betterment of this airline, a merger would benefit in countering competition fromother airlines like Delta airlines and Northwest Airlines which as of now control much of the U.Sairline market.American Airlines is a subsidiary of AMR Corporation and one of the leading airlines inthe U.S. It has two subsidiaries, that is American Eagle and American Connection. It is the secondlargest airline in the world based on revenues used in its operation, its size of fleet and milescovered in passenger transport. It has an extensive operation of both domestic and internationalflights in North America, Latin America, Europe, Asia and the Caribbean. It was formed throughacquisitions by around 82 small airlines in 1930 and has extensively grown since then.In regard to American Airways, PEST analysis puts into account the political, economic,social and technological environments within which this company operates. Within the macro-environmental aspects, focus is put on those factors that impact more on the airline.The September 11, 2011 terrorist attack markedly shook the political stability of the United States.This led to a fall in business and air travel. This had negative implications on income generationand profits. Other factors that implicated negatively on the Airlines business include regulation on pricing, legislation of wages and trade union requirements, emphasis was put on the airport, andthe national security as well and the policies of 1978 being deregulated.Prior to the September 11 attack, the United States economy was in some mild recession. Theindustry was fighting carriers on discounts. The economic aftermath of September 11 impacted

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