Skip to main content

External Environment Analysis (PESTLE, Porter’s 5 forces, Opportunities, and Threats) of the Nepal Airlines Corporation

External Environment Analysis (PESTLE, Porter’s 5 forces, Opportunities, and Threats) of the Nepal Airlines Corporation

Nepal Airlines is the national flag carrier of Nepal, established in 1958 and headquartered in Kathmandu, Nepal. 

External Environment Analysis - PESTLE Analysis 

Political: 
The airline industry is widely obstructed by regulations and restrictions so the government-owned Nepal Airlines has been suffering due to poor management, high political interference, and corruption.   

Economic:
According to the forecast of economic models, the Nepal GDP per capita (PPP) was projected to trend around 2690.00 USD in 2020, and also the economic condition of the Nepalese citizens is improving. This signifies that air travelers are increasing significantly and the aviation industry will ultimately keep on growing. 

Social: 
The Nepalese youths are migrating to India/Malaysia and mostly gulf countries to earn money due to the unemployment condition in Nepal. Also, many Nepalese students are going abroad for higher studies to gain quality education from foreign institutions. Also, Nepal is a tourist destination annually more than 700,000 tourist visits the beautiful Himalayan country.

Technological:
According to the various pieces of literature available on different websites, there is a lack of modern technology at airports which leads to improper security checks. The new wide-body aircraft Nepal airlines own the most fuel-efficient engines and it helps to save the fuel to some extent.

Legal:
According to various news portals online, there is an unnecessary VAT that has to be paid by airline companies for importing spare parts that have been affecting the growth of the aviation industry in Nepal.

Environment: 
The Tribhuvan International Airport (TIA) is so close to the city and can cause sound pollution. The solution to this problem is to operate a few international airports in the country.

External Environment Analysis – Porter’s 5 forces 

1. The Threat of New Entrants: Moderate 
• There is no doubt that entering into the aviation industry requires very high investment and various legal procedures and it should be strictly followed.
• There is a chance of new airlines entering the domestic aviation industry which will increase challenges in the domestic market.

2. Rivalry within the Industry: High
• In both domestic and International segments, there has been strong competition in the aviation industry and it’s always challenging to be top in a competitive environment.
• The main problem for Nepal Airlines Corporation to struggle in the competitive market is the lack of aircraft and spare parts.

3. Supplier power: High
• The aircraft from the key makers such as Airbus and Boeing are expensive and are difficult to purchase for NAC at the need moment. This is the reason why NAC needs economic support from the Nepal government and other authorized bodies.
• The new Chinese aircraft for domestic purposes were frequently grounded due to technical issues.

4. Consumer power: High
• Consumers have their own preferences and choices and they go for quality service at a reasonable price.
• There are too many choices and availability of competitive ticket prices online which creates challenges for the Nepal Airlines Corporation.

5. The threat of substitutes: Moderate
The buses and trains can be easily accessed from the Nepal-India border while traveling to India but for the international flight, there is no substitute for Nepal Airlines because they provide international airfares at a reasonable price as compared to other aircraft carriers.

External Environment Analysis – Opportunities and Threats

Opportunities:
The Bhairahawa international airport is in operation and the Pokhra international airport will be in operation soon. It will help to expand the international air services. Also, the world’s leading travel guide Lonely Planet crowned Nepal as one of the ‘Best Value Destinations’ in 2017. The introduction of Airbus 330-220 aircraft in 2018 leads to fleet expansion.

Threats:
New aircraft from the existing and new players in the domestic and aviation industry can increase competition. Also, the lack of legal laws and vision and corruption are obstacles to growth.

The major issues that are hindering the NAC's growth

1. Unethical political influence
2. Corruption inside Corporation
3. Poor Management
4. Lack of essential engineers and pilots
5. Lack of aircraft
6. Inadequate investment and improper vision
Labels:

Comments

  1. Gora RajaJuly 14, 2023 at 11:56 PM

    I would like to tell you that your blog is very knowledgeable, and I like the stuff you've shared. Thanks for sharing your airline experience with us. Keep at it. 

    Best Aviation Academy in Chennai
    Aviation Courses Training in Chennai

    ReplyDelete

Post a Comment

Popular posts from this blog

Strategic Management - Importance of Internal Factor Analysis

Importance of Internal Factor Analysis 1. Internal factor analysis helps to analyze its resources and functional strengths and weaknesses. 2. Internal factor analysis helps to understand the factors and work upon those factors so as to gain competitive advantage, growth, and profitability in the firm. 3. Internal factor analysis helps to internally assess the organization and formulate, implement, and evaluate the strategic plan and cross-functional decision so as to achieve the company's primary objective of above-average return and competitive advantage. 4. Internal factor analysis explains the company's available resources or ease of access to resources and whether those resources are rare, easily, or hardly imitable, and whether substitute available or not. Resources are defined by their type, nature, and amount. Internal factors analysis helps to understand the organization internally and with a clear understanding of its competencies and capabilities that
Read more

Importance of Modulation in Communication System

There is a huge importance of modulation in the communication system . It is defined as the modification process of the message signals in the communication system. In the modulation process, the message signal of very low frequencies is impressed. And, only the carrier signal of high frequency is passed through the transmission process. It is one of the important techniques in which the addition of a signal is done to an optical signal carrier or electronic wave carrier. It is very important as it uses the properties of a periodic waveform the most. It is used in communication just to pass the signal which bears information from one source to another destination. Here, a transmitter is used which is normally present to modify the message signal. In this process, the message signal is modified in a suitable form and it is transmitted over various communication channels. This whole process of modification of message and carrier signals is termed as modulation. The need for
Read more

Importance of External Environmental Analysis in Strategic Management

External Environmental Analysis (EEA) is the analysis of the external environment which helps in analyzing the trends and activities of the industry in the marketplace. The processes of EEA are: 1. Scanning 2. Monitoring 3. Forecasting 4. Accessing Micro and Macro factors in the Business Micro factors look at the specificity and macro factors look at the overall economy/business. Micro factors can be influenced because it is an assessment of the specific firm, and Macro factors are less influenced because it is external factors that are difficult to predict and understand. Therefore, micro factors are the factors of the specific firm such as the functional department, policies, procedures, laws, and others which can be influenced and changed when necessary. But, macro factors are external factors/segments such as demographics, political, legal, socio-cultural, technology, environment, and legal issues that can be difficult to predict and influence. External Environmental An
Read more

Top 5 Advantages of Digital Communication System

Good Reasons To Choose Digital Communication System 1. The digital communication system has high noise immunity. High noise immunity means the digital communication system is more immune to noise as compared to the analog communication system. In an analog communication system, the system has less noise immunity compared to a digital system. The noise produced in an analog communication system is very high compared to the digital communication system. Therefore, the digital communication system is preferred for better noise immunity. 2. It has many advantages in storing and processing various data and information. The data and information stored or retrieved in a digital communication system can be achieved in any format like audio or video, etc. But in an analog communication system, the information processed is hard to obtain in any desirable format. It can't achieve in the format demanded by the user. Therefore, the digital communication system is preferred for a bet
Read more

Study of Evolution And Classification of Computers

Evolution of Computer Technology The computers were evolved in various time periods and the various factors or fundamental technology were responsible for the evolution of computers as per human needs. How are computers classified? The classifications of computers are based on fundamental technology like speed, memory, storage capacity, size, etc. These factors (fundamental technology) were the reason behind the evolution of computers. Each new generation is characterized by various important factors like a smaller size, greater speed, larger memory, huge data storage capacity and more. History about the evolution of computers: They are classified into five generations. They are named as first generation computers, second-generation computers, third generation computers, fourth generation computers, and fifth generation computers. The computers evolved in the various generation has its own significance value. They were very precious and important at that time period. All
Read more

The Opportunities and Threats of Globalization in International business

Globalization provides opportunities to international business operators are as follows: Political Liberalization  The political ideology of any nation removes the barrier to conducting trade activities. There is a friendly environment for the investors to conduct the business which is the major reason for the opportunity for globalization. Technology The technology is innovated and novelties are found every day. It is creating the opportunity to globalize as the innovation has made able to operate the business in any corner of the world. Cost  The opportunity of globalization is the cost factor. To gain economies of scale i.e. efficiency in labor, the businesses are operating all around the world. Market  The need for expansion of the market to operate competitively is another opportunity to globalize the business. Competition  The competitive intensity is raising due to which business investors are more influenced to operate globally to grab the opportunity. Howev
4 comments
Read more

Importance of Switching System in Telecommunication

There is an important role of the switching system in the field of telecommunication. Switching System is defined as the system which is generally used to establish a connection between entities and outlets. The other important function of the switching system is to establish and release the call made by the user. The switching system is mainly divided into two major headings. They are termed as manual switching system and the automatic switching system. And, the automatic switching system is also classified into two parts. They are known as electromechanical switching system and the electronic switching system. The electromechanical switching system is further divided into step-by-step switching system and the crossbar switching system. Also, the electronic switching system is further divided into space division and time division switching system. The time division switching system is also classified under two headings. They are digital and analog time division switching sy
Read more

Importance of Instrumentation Amplifier Having A Linear feedback

Instrumentation Amplifier Design and Analysis It is best to choose the Instrumentation amplifier. There are various differences between the instrumentation amplifier and isolation amplifier. An instrumentation amplifier is similar to an operational amplifier which is a closed loop device having a linear feedback. It is very important in electronic circuits as it has the constant gain factor. The gain error in the instrumentation amplifier is zero which is very useful. The input impedance of the instrumentation amplifier is infinite. It has zero noise level and offset dc is also zero. The output impedance of the instrumentation amplifier is also zero which is also the important characteristics of the instrumentation amplifier. In practical consideration in electronic circuits, the output impedance, offset dc and noise level is very low. Similarly, the input impedance of the instrumentation amplifier in practical consideration is very high. Also, the gain accuracy in this a
Read more

The Business Idea of Online Card Design

Business Development Plan of Online Card Design (BDP Sample) Do you know online card design has been one of the most neglected industries in the country? The new business is emerging day by day, and many cultural programs are held in many places in our city. The trend of business card exchanging is increasing a lot lately. There are some card designers as well as card printers. As we have diversity in the culture we have many cultures locally. And there are many e-commerce sites in the country. But, there is no site that provides a card design facility and delivery to the end customer. The customers can choose from millions of templates that are designed by the local designer who is an expert in their field. This will be an opportunity for the designer who will design the templates and the end customer who will enjoy the design made by them. It’s a stop for both the parties which can be very profitable Online card design, the idea is old but there is no current market competitor
16 comments
Read more