Evaluation of Internal Environment

Discuss about the Business Report on Air New Zealand.

Air New Zealand is the national airline organization of New Zealand. This airline organization is located at Auckland and operates with 20 domestic flights and 31 international flights across 19 countries around the world. The particular airline company delivers its services to Australia, Asia, South West Pacific, UK and North America. In this report the internal environment of Air New Zealand will be discussed along with the external and internal factors affecting the operations of the organization, the various sustainability approaches taken by the airline organization and recommendation for employee performance improvement.

For understanding the internal environment of Air New Zealand certain resources like reputational, tangible, human, innovational and relationship have to be evaluated besides the cultural categories like long term orientation, risk avoidance, individualism and power distance.The organization should make effort to construct its organizational structure in a way that would ensure organized systematic approach of running business. Reputation of an organization is interlinked with tangible, human, innovational and relationship resources. In the context of tangible resources the airline organization has taken up a new philosophy of entering the low-cost market in order to achieve the objective of maximizing the overall group returns based on capital employed. This objective implies to cost reduction and turning into a long –term oriented business maintaining the interests and providing values to its shareholders, customers and employees. With respect to human resources the airline company maintains competent managers and staffs who are efficient in handling the customers and providing them with satisfactory services (Purce, 2014). Encouragement is provided to the employees by rewarding them for their performances. All of the above discussions contribute in determining the reputation of the airline company. Air New Zealand is considered to have the best corporate reputation in the country. It is the most reputable company in Australia. The resources that affect the reputation of Air New Zealand are innovative technologies, employee performance, customer services and tangible resources (Fernández-Olmos &Díez-Vial, 2015. 25(3), 213-226). The airline company has so far reflected satisfactory performance with respect to the mentioned reputational resources. However, it is necessary to mention that the company needs to give importance to certain factors which creates better internal environment. For instance, the company needs to have strong human resource, skilled and industrious employees willing to provide better effort for further growth and development. The company should make effort to increase its scope of volunteer activities. The objectives of the particular airline company are to increase the total group return based on capital employed, to promote balance and diversity to the earning streams of the group and to take the complete advantage of the competencies of the group in the markets where they have influence. The company also maintains a good customer service team that handles the queries and complaints in an appropriate manner. This helps the organization in attaining competitive advantage over the other airlines. In order to increase the factor of competitive advantage, importance should be given on physical resources such as new facilities, availability of advanced equipment. The company needs to make it easily accessible to target and potential customers. The management of the company gives importance to the opinions and feedbacks of the workers by supporting the concept of Individualism (Triandis, 2018). The company needs to stress on its value system to improve internal environment. Value system indicates the company’s ethical beliefs to fulfil and perform business aims and objectives. The particular company emphasizes on maintaining equality within the working environment. The persistence of a communication gap between the staff and the higher authority may result in the disintegration of the performance thereby affecting the overall performance of the organization. Thus Air New Zealand takes great care in maintaining proper interaction between its staff and management for preventing any kind of misunderstanding and ensuring a proper management of the business operations.

Resources for Evaluating Internal Environment

External environment indicates the factors which reside outside, such as political, economic condition society, impact or influence the business operation. Air New Zealand needs to consider the external factors in order to tackle any changing situations and take actions accordingly. Political, legal, social or cultural, demographic, environmental, economic and technology, are some examples.

Impact of external environment on Air New Zealand can be evaluated and analysed with proper precision by using strategic management and analytical tools like PESTLE. By using PESTLE analysis, major strategic issues or the impact of political, economic, socio-cultural scenario on a business organisation and its operational process can be analysed at considerable extent (Nataraja& Al-Aali, 2011. 22(1), 15-32). This, in turn may impact upon the future productivity and profitability of the company largely.

Political factors:  political scenario of a nation or a region has the potentiality to provide long term impact upon the future growth prospect of a company. By taking the context of the respective organisation, it can be stated that, the governmental authority of New Zealand is attentive enough to provide diverse range of scope and opportunities to the respective airline company, so that the successful growth in both productivity and profitability of the organisation can be ensured in international market (O’CONNELL, 2012. 25(3), 213-226). Almost 82% of the total share value of the Air New Zealand is undertaken by Government of New Zealand. However, the company need to conduct constant monitoring of government policies, regulations and taxes which tend to change frequently. This tendency of change often leads to instability of the company management.

Economic factors: economic scenario of any nation has the potentiality to provide impact upon any business organisation extensively. Keeping eyes on the economical state of affairs, prevalent in New Zealand and other gulf countries, it can be comprehended that, financial status of those countries are good and favourable enough, from which, the respective airline company can get scope to maintain sustainable future growth. Apart from that, in those countries, demand for airline services is relatively higher with respect to other transportation systems, which in turn may expand the scope to increase the profitability rate of the respective organisation to a greater extent. Although global economy shows uncertain scenario, the domestic economic condition is well-established, devoid of significant risk. Hence, the company possesses good economic condition at present.

Social factors: social factors mainly include the lifestyle, standards of living of the population of a nation, nation income rate of the country, employment rate, preferences and so on. Air New Zealand has the aim to provide services in accordance to the affordability range, cultural perception and preferences of the population. In order to fulfill this objective, the employers and employees of the respective organisation always try to offer such services, so that cultural, economic perception of the services users cannot be violated by anyways (Cui &Li, 2015. 44, 34-41). In other words, the company is considerate towards cultural diversity.

External Environment Analysis

Environmental factor: for an airline company, it should be imperative to make such risk management strategy by using which, organisational management can provide attention on protecting the environment from adverse effect from the organisational operational activities. Air New Zealand, was the first ever company in gulf countries thatemphasised upon the use of “carbon offset program” at the time of manufacturing aircrafts (Chiaramonti et al. 2014, 136, 767-774). The basic aim of this program is to reduce the air pollution level to a greater extent. The respective company, from last two decades, is the active member and contributed largely towards the Air New Zealand Environment Trust.

Innovation:  In order to maintain long term growth in productivity and profitability, business organisation has the necessity to adopt and implement technological innovation within operational process. From the point-of-view of “innovation”, it can be stated that, the organisation must have to provide comfortable seating and favourable service facilities to the consumers in accordance to their preferences and demands (O’CONNELL, 2012). It can be one of the best possible ways to stay in advance position in competitive market environment in international level.

Relational factor:  employee and employer’s relation in workplace settings is considered as one of the important internal factor which in turn can provide long term impact upon the growth rate of the organisation. In case of Air New Zealand, the organisational hierarchy are tried to maintain flexible communicative channel at every level within workplace settings.

According to the sustainability reports of Air New Zealand, a new framework was developed in the year 2015 which outlined the implementation of the sustainability programmes and activities that were to be undertaken for that specific period. There are numerous sustainability programmes undertaken by the company towards making a contribution to the growth and development of different sectors such as environment, tourism, trade and enterprise and others (Wheelen et al, 2017). These sustainability initiativesundertaken by the company aims at contributing to the society at large as well as making Air New Zealand a more sustainable airline, environmentally, socially and economically. Four examples of sustainability initiatives by Air New Zealand are as follows:

Minimization of the carbon footprint through adequate fuel efficiency, utilising biofuels, carbon offsetting programmers and achieving excellence in the operations. This also includes waste management and utilization of renewable electricity. Through this initiative the company aims to achieve 100% ground fleet electric (wherever feasible), 1.5% improvement in annual aviation fuel efficiency and Zero waste to landfill at Auckland (ground) by June 2020

Evaluation of Political, Economic, Sociocultural, Environmental, Innovation and Relational Factors

One of the sustainability initiatives undertaken by the company includes growing the economic value of tourism sector. This programme is planned to be made successful by destination promotions and development of the market. The long term plan of this sustainability programme includes increasing the seats available into, out of and around New Zealand by 21% by the month of June, 2020. Also, value of New Zealand destination promotion will be included.

Another sustainability initiative undertaken by Air New Zealand includes making contribution to the communities at large. This programme includes development of the communities of wider New Zealand with the help of various community programmes and air connectivity. The company takes into account the welfare of society. This attitude of the company shows that the company ne e

These sustainability initiatives undertaken by the company is beneficial to both the company and the different sectors that they contribute in (Eagle et al, 2015. 16(5), 1013-1033). There are many positive impacts of sustainability on the business. The sustainability initiatives undertaken by the companies contribute to the maximum resources utilization that are available in the company. For instance, recycling of the materials, using conservation methods and reducing the emissions enable the company to reduce its costs and also utilise its resources more efficiently. Another positive impact on the business is that the stakeholders try to invest more when they acknowledge the company’s sustainability initiatives (Holden, Linnerud & Banister, 2017. 25(3), 213-226). The sustainability initiatives satisfy the stakeholders including the investors as well as the people which impacts the goodwill of the company and thus the business reaches new heights of success through these sustainability initiatives (Schaltegger and Wagner, 2017. 3027-3035).

Sustainability is being embraced by renowned companies now-a-days, as sustainable economic growth and reduced environmental impact have become primary focus of most of the business organisations (Carley& Christie, 2017). As for aviation industry, fuel efficiency and reduced emissions are key factors to become sustainable. With growing number of businesses are opting for sustainable business operations, Air New Zealand has also adopted certain sustainability goals to aim for sustained economic growth. A number of sustainability initiatives have been undertaken by Air New Zealand, such as, an extension of the partnership of Air New Zealand with the Department of Conservation, an extension of the airline’s sponsorship of Antarctica New Zealand and the New Zealand Antarctic Research Institute, and a new supplier code of conduct (Zou et al. 2014. 59, 306-330). All these developments have been made in order to meet the sustainability goals of the airlines company.

Sustainability Approaches of Air New Zealand

In order to align these developments into the business practice, the company has to accomplish certain tasks. The employees of a company play a pivotal role in incorporating sustainable changes in the ongoing business practice. Therefore, the employees must be aware of the sustainable developments which are going to be implemented in the business. The employees are encouraged to embrace sustainable changes and it is the responsibility of the management that the employees are provided with required support in order to embrace these sustainable changes at ease (Holden & Banister, 2017. 3027-3035). There are several ways through which employees can be helped in adapting to the changes the company will be going through. Four of the important ways are discussed below:

Communication: There should be effective communication between the management and the workforce in order to make them understand the depth of the reasons behind the implementation of sustainable developments (Liu et al. 2016. 16(5), 10-103).

Leadership: With the help of effective leadership, the workforce will be familiar with the sustainable changes and the ways through which these changes can bring improvement in environment as well as business.

Incentives: Employees should be handed with both financial and non-financial incentives so that they are encouraged to follow the guidelines more efficiently. Non-financial incentives refer to recognition for certain milestones achieved by the employees in the context of sustainable development. Financial incentives should be rewarded if necessary to boost the confidence of the employee working to meet sustainability goals (Barkemeyer et al. 2014. 22(1), 15-32).

Motivation: Motivation is the key factor of inspiring the workforce to work hard and achieve the sustainability agendas defined by the company. A motivated employee is driven towards achieving the organisational objectives and produces the desired result for the organisation.

Hence, by following the above mentioned ways, a company can support their employees in embracing the needful sustainable change and initiate effective sustainable economic growth.

Conclusion

It can be concluded that Air New Zealand is able to maintain a better internal environment with the undertaking of proper business strategies and sustainability initiatives. However, it is recalled that the company needs to consider certain steps and factors require for the purpose. Ethics, strong and devoted group of employees. On the other aspect, the company needs to give importance to external environmental factor. Maintaining external factors enabled the company to manage and tackle sudden change of the outside surrounding world where the company operates.

References

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