Pestle Analysis Biman Bangladesh Airlines free essay sample

PESTEL Analysis on Biman Bangladesh Airlines Introduction PESTLE an analysis is very important for case analysis political, economic, social, technological factor of any company. We have selected Biman Bangladesh airlines for doing Pestle analysis. So, this entire report will cover the importance of Pestle analysis and we will show how The pestle analysis of Bangladesh Airlines are flying. Biman Bangladesh airlines is the leading airlines Industry and oldest airlines industry in Bangladesh. We are selecting Biman Bangladesh Airlines because the flag carrier airline of Bangladesh.Its main hub is at Shahjalal International Airport in Dhaka, and also operates flights from Shah Amanat International Airport in Chittagong, earning revenue from the connecting service to Osmani International Airport in Sylhet. Biman provides international passenger and cargo service to Asia and Europe, as well as major domestic routes. It has air service agreements with 42  countries, but only flies to 16. The airline was wholly owned and managed by the Government of Bangladesh until 23  July 2007, when it was transformed into the countrys largest public limited company by the Bangladesh. We will write a custom essay sample on Pestle Analysis Biman Bangladesh Airlines or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The airlines headquarters, Balaka Bhaban, is located in Kurmitola, Dhaka. It is the benchmark for the all other airlines organization in Bangladesh. Background of the Industry Biman Bangladesh Airlines Ltd the national flag carrier of Bangladesh has started its journey from scratch virtually with no aircraft, no ancillaries. It came into operation immediately after the war of independence. Despite many odds on its journey towards a long and challenging way to progress, Biman has been able to establish its reputation as an airline of welcome smile and an ocean of hospitality.Biman now carries the nation’s flag to South Asia, South-East Asia and Far-East, Gulf and Middle-East region and European. A steady progress has been made with better services ensuring increased passengers. To make Biman passengers feel â€Å"once Biman always Biman† the airline has recently brought in some qualitative changes in its service concept. Biman has been aiming in achieving the goal of being truly international commercially viable airline of the region with its warmth and friendliness, care, safety record, traditional hospitality and comfort of the services it offered. Biman is now flying even higher with great pride around the globe with the bi-color, the nation’s flag. What is PEST ANALYSIS? A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors: †¢ Political †¢ Economic †¢ Social †¢ Technological ? Political Factors Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. Some examples include: †¢ Tax policy †¢ Employment laws †¢ Environmental regulations †¢ Trade restrictions and tariffs Political stability ? Economic Factors Economic factors affect the purchasing power of potential customers and the firms cost of capital. The following are examples of factors in the macroeconomics: †¢ Economic growth †¢ Interest rates †¢ Exchange rates †¢ Inflation rate ? Social Factors Social factors include the demographic and cultu ral aspects of the external microenvironment. These factors affect customer needs and the size of potential markets. Some social factors include: †¢ Health consciousness †¢ Population growth rate †¢ Age distribution †¢ Career attitudes Emphasis on safety ? Technological Factors Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. Some technological factors include: †¢ R;D activity †¢ Automation †¢ Technology incentives †¢ Rate of technological change ? Environmental factors Environmental factors include ecological and environmental aspects such as weather, climate, and climate change, which may especially affect industries such as tourism, farming, and insurance. †¢ Weather †¢ Climate †¢ Climate change †¢ Environmental law Legal factors Legal factors can affect how a company operates, its costs, and the demand for its products. †¢ Discrimination law †¢ Consumer law †¢ Antitrust law †¢ Employment law †¢ Health and safety law. PEST Analysis on Biman Bangladesh Airlines ? Political factor Incompetent and corrupt management, falsified repair bills, unprofitable routes all these lacking for political intrusion. A parliamentary sub-committee has found corruption involving Tk 700 crore in purchase and maintenance of aircraft and equipment of Biman Bangladesh Airlines in the last 18 years.Giving an example of corruption in purchase, a Biman official said the price of an elevator slew switch used for flight control system was showed $7,500 in the bill while its market price was only $235. ? Economic Factors The VRS (voluntary retirement scheme) provided compensation based on length of service, at a cost t o the government of over $40  million borrowed from the World Bank. The government is the sole shareholder of the 1. 5  billion shares, but intends to offer 49  percent to the private sector while retaining majority ownership.How Oil prices increasing, is this affecting their profits from increased fuel costs. The authorized share capital was increased to BDT  2  billion in 1987, During the same period, Biman reported its biggest annual loss of over US$120  million (BDT  8. 3  billion as of 2010), with a US$100  million (BDT  6. 9  billion as of 2010) loss reported the following year. Biman also fell behind on millions of dollars in payments to its fuel supplier, the Bangladesh Petroleum Corporation. ? Social Factors Biman has air service agreements with 43 countries. the 2005–06 fiscal year, Biman carried 1. 15  million passengers, a growth of 70% over the previous decade. Safety measures they employ on board and on the ground. Population’s growth does an ageing population affect them i. e. baby boomers, lots of people in that life stage have more disposable income to spend. ? Technological Factors McDonnell Douglas DC-10s and Airbus A310-300s make up most of Bimans international fleet. Fokker F28s make up the remainder of the fleet for the domestic and regional sectors.Bimans fleet contains the second-to-last Douglas DC–10 to come off the production line (l/n 445), and only three other Airbus A310–300s were produced following Bimans purchase of two new Airbus A310s in 1996. As things improve technology becomes cheaper. Its most distinguishing feature is the two turbofan engines mounted on under wing pylons and a third engine at the base of the vertical stabilizer. ? Environmental factors Environmental factors include ecological and environmental aspects such as weather, climate, and climate change, which may especially affect industries such as tourism, farming, and insurance.Furthermore, growing awareness of the potential impacts of climate change is affecting how Biman operate and the products they offer, both creating new markets and diminishing or destroying existing ones. ? Legal factors An initiative in 1998 cost Biman $1. 6  million in consultancy fees with no positive results. Legal factors include discrimination law, consumer law, antitrust law, employment law, and health and safety law. These factors can affect how a company operates, its costs, and the demand for its products.Macro-environmental Issues Opportunity: †¢ One statistics shows in Bangladesh air transport sector has 8% annual growth rate. This indicates opportunity to carry more passengers across different destinations. †¢ Biman has air service agreements with 43 countries, but only operates its routes to 18, so when it have sufficient aircraft then it can able to conduct flights to other destinations. †¢ The annual Islamic pilgrimage to Makkah Al Mukarramah for the Hajj is undertaken by thousands of Bangladeshs predominantly Muslim population. In 2010 about 60% more Bangladeshi muslims went Jeddah for Hajj from the previous year. †¢ International travellers to and from Shahjalal International Airport surged to 35. 23 lakh in 2009 from 26. 18 lakh in 2005, according to air transport data of Civil Aviation Authority of Bangladesh. Imran Asif, chief executive of Regent Airways, said air travel market grew more than 6 percent in the last one decade. The market share of the local airlines rose to 38 percent in 2008 from 33 percent a year ago, according to traffic movement data at Shahjalal International Airport.So, there is a possiblity to grab this share. †¢ A syndicate of nine local banks has finalized a proposal to give Biman Bangladesh Airlines Ltd a loan of $114. 75 million for procuring two aircraft from Boeing. Biman is taking the $114. 75 million loan from the local banks syndicate led by Eastern Bank Ltd at a low interest rate of 4. 57 percent. Biman signed an agreement with Boeing in 2008 during the caretaker governments rule to purchase 10 aircraft for $1. 31 billion to strengthen the fleet of the national flag carrier. Conclusion