This paper undertakes a strategic internal analysis in micro and macro level of Japan Airlines JAL. To begin with the analysed industry has to be defined. The airlines industry comprises passenger air transportation; both scheduled and chartered, but excludes air freight transportation. The increasing airlines’ support by the government helps the airline industry to protect their international business. Moreover the so-called open sky agreement makes it possible to establish a merger in the airline industry.
According to Yamakawa, Ahmed and Kelston the so-called BRIC-countries that are Brazil, Russia, India and especially China, and other Asian countries are characterised by fast-growing economies. This might afford a huge chance for the airline industry, because they offer extremely attractive markets to strengthening the ability to secure market shares.
Table of Contents
- 1. Internal Analysis – Strategic Capabilities
- 1.1.1 Competences
- 1.1.2 Resources
- 2. External Analysis
- 1.2.1 PESTEL-Analysis (macro-environment)
- 1.2.2 Porter's 5-Forces Analysis (micro-environment)
Objectives and Key Themes
This analysis aims to provide a comprehensive overview of Japan Airlines' (JAL) strategic situation, examining both internal capabilities and the external competitive landscape. The analysis utilizes a framework combining internal and external analyses to understand JAL's performance and challenges.
- JAL's internal strengths and weaknesses
- The competitive dynamics within the airline industry
- The impact of macroeconomic factors on JAL's performance
- Analysis of JAL's resources and competences in comparison to its main competitor, ANA SKY
- Assessment of the competitive forces impacting the airline industry
Chapter Summaries
1. Internal Analysis – Strategic Capabilities: This chapter delves into a detailed assessment of JAL's internal strengths and weaknesses. Focusing on competencies, the chapter highlights JAL's strengths in quality service and well-coordinated networks, particularly within the Asia-Pacific region. However, it also reveals critical weaknesses, such as a lack of a distinct core competence compared to ANA SKY, and significantly higher operating costs due to a larger workforce and less efficient resource management. The analysis utilizes financial data (Figures 1, 2, 4, and 5) to illustrate JAL's poor financial performance relative to ANA SKY, showcasing considerable losses and a lower profit margin despite a larger number of flight routes. The chapter attributes these challenges to factors such as inefficient cost management, internal management power struggles, and government pressure to maintain unprofitable routes. The chapter effectively lays the groundwork for understanding JAL's vulnerability within the industry.
2. External Analysis: This chapter shifts focus to the external environment impacting JAL, employing both PESTEL and Porter's Five Forces analyses. The PESTEL analysis identifies several macroeconomic factors influencing the airline industry, including government support, growth in BRIC countries, the aging population's increased travel spending, and the growing role of internet communication and social networks. The chapter suggests that these factors present both opportunities and challenges to JAL and the industry. Porter's Five Forces analysis reveals a highly competitive landscape. The analysis underscores the strong supplier power due to the duopoly of Boeing and Airbus, vulnerability to fluctuating fuel prices, and the presence of substitute transportation options such as high-speed rail. Intense rivalry among airlines, driven by low-cost carriers and high fixed costs, further complicates the competitive dynamics. This external analysis provides context to the internal challenges highlighted earlier, painting a fuller picture of JAL's strategic position.
Keywords
Japan Airlines (JAL), ANA SKY, airline industry, strategic analysis, SWOT analysis, PESTEL analysis, Porter's Five Forces, competitive advantage, financial performance, cost efficiency, resource management, macroeconomic factors, industry rivalry, fuel prices, BRIC countries, global competition.
Japan Airlines Strategic Analysis: Frequently Asked Questions
What is the purpose of this document?
This document provides a comprehensive strategic analysis of Japan Airlines (JAL), examining its internal capabilities and external competitive landscape. It uses a framework combining internal and external analyses to understand JAL's performance and challenges, comparing it to its main competitor, ANA SKY.
What topics are covered in the analysis?
The analysis covers JAL's internal strengths and weaknesses, the competitive dynamics within the airline industry, the impact of macroeconomic factors on JAL's performance, a comparison of JAL's resources and competences with ANA SKY, and an assessment of the competitive forces impacting the airline industry.
What is included in the Internal Analysis section?
The internal analysis assesses JAL's strengths (quality service, well-coordinated networks in Asia-Pacific) and weaknesses (lack of distinct core competence compared to ANA SKY, higher operating costs, inefficient resource management). It uses financial data to illustrate JAL's poor financial performance relative to ANA SKY, attributing these challenges to inefficient cost management, internal management issues, and government pressure.
What analytical frameworks are used in the Internal Analysis?
The internal analysis focuses on identifying JAL's competencies and resources, effectively performing a form of SWOT analysis to understand the company's internal capabilities and limitations.
What is included in the External Analysis section?
The external analysis uses PESTEL and Porter's Five Forces analyses to examine the macroeconomic and microeconomic factors impacting JAL. The PESTEL analysis considers factors like government support, BRIC country growth, an aging population's increased travel spending, and the influence of the internet. Porter's Five Forces analysis highlights the competitive intensity of the airline industry, including supplier power, fuel price volatility, substitute transportation options, and intense rivalry among airlines.
What are the key findings of the PESTEL analysis?
The PESTEL analysis identifies both opportunities and challenges for JAL arising from macroeconomic factors. These include the potential for growth in emerging markets (BRIC countries) and the increased travel spending of an aging population, alongside challenges such as fluctuating fuel prices and intense competition.
What are the key findings of Porter's Five Forces analysis?
Porter's Five Forces analysis reveals a highly competitive airline industry characterized by strong supplier power (Boeing and Airbus duopoly), vulnerability to fluctuating fuel prices, the presence of substitute transportation options, and intense rivalry among airlines, particularly from low-cost carriers.
How does the analysis compare JAL and ANA SKY?
The analysis repeatedly compares JAL and ANA SKY, highlighting ANA SKY's superior financial performance and more efficient resource management. JAL is shown to lack a distinct core competence compared to its competitor, contributing to its weaker position in the market.
What are the key takeaways from the analysis?
The analysis reveals JAL's vulnerability due to internal inefficiencies and a highly competitive external environment. It underscores the need for JAL to improve its cost efficiency, resource management, and develop a clear competitive advantage to address its challenges and improve its financial performance.
What are the key words associated with this analysis?
Key words include: Japan Airlines (JAL), ANA SKY, airline industry, strategic analysis, SWOT analysis, PESTEL analysis, Porter's Five Forces, competitive advantage, financial performance, cost efficiency, resource management, macroeconomic factors, industry rivalry, fuel prices, BRIC countries, and global competition.
- Quote paper
- Dominique Futterer (Author), 2010, Strategic Analysis of Japan Airlines JAL, Munich, GRIN Verlag, https://www.grin.com/document/161461
