Domestic Environment of Delta Airlines
Delta Air Lines, Inc. is commonly known as Delta. It is among the major airlines of the United States that are operating today. Delta Airlines operates in the airline industry and it’s headquartered is in Atlanta, Georgia. The environment of the US airline industry can be regarded as the domestic environment of Delta Airlines. However, the existing reports reveal that Delta Airlines has transformed its business in a marvelous way. The US airline industry is broad such that more than one hundred airlines operate therein, and approximately eleven million flights depart annually. Moreover, Delta Airlines is a large part of the US Airline industry and it carries the one-third of the world’s air traffic (Swiercz et al 15).
It is also realized that there are various reasons that impact the business of the Delta Airlines including employees, profitability, and issues of the aircraft manufacturing industry (Netessine et al 38). But the point of consideration is that Delta Airlines has survived throughout history even when the largest airways were remained failed including, Eastern, TWA, Pan Am, etc. By the vision of business theorists, Delta Airlines can be envisioned as the machine bureaucracies.
According to the current data, Delta Airlines is the largest passenger carrier because the company has overcome all domestic problems. By analyzing the information about the Delta Airlines it is realized that the smartest decision made by the organization is the decision to merge with Northwest Airlines (Swiercz et al 15). That is why the Delta Airline competed successfully with the government rules and regulations and has become the world’s largest airline. The business theorist added that Delta Airline is highly competitive and volatile which is generating a high profit, but the current operating model cannot guarantee future success. Beside the machine bureaucracy further, handy tools are required to compete with the domestic challenges and HRM issues.
Netessine, Serguei, and Robert Shumsky. “Introduction to the theory and practice of yield management.” INFORMS transactions on education 3.1 (2002): 34-44.
Swiercz, Paul Michael, and Barbara A. Spencer. “HRM and Sustainable Competitive Advantage: Lessons from Delta Air Lines.” Human Resource Planning 15.2 (1992).
Global Environment of Delta Airlines
For Delta, sustainability is meeting the financial goals and growth of a company including its profitability with time, via innovative means and business practices which could, in turn, curtail the environmental impact of Delta operations and foster the welfare, health, and productivity of the individuals and communities which are employed to serve. This depicts the Delta Airline’s commitment to corporate social responsibility. The most favorable global environment for Delta Airlines is in Europe particularly the United Kingdom. The characteristics of the United Kingdom which best aligns with Delta Airlines are the cultural similarities, language, religion, the technological innovation and economic status as both countries are developed (Delta Airlines, n.d.).
All these factors are deemed to have a positive impact on the growth of Delta Airlines. They could prove to be apt exogenous factors. Delta Airlines focused on the environmental, social and governance sustainability. Besides being a plausible location for Delta Airlines, the United Kingdom also offer some barriers for Delta Airlines to operate in their country. First and a foremost barrier to consider is a geographical location. Delta Airlines is an American airline, they have to establish a business in other continents which are far away from America. Delta Airlines will also have to conduct thorough research to fathom the target market of the host country.
In terms of geography, Delta Airlines will have to pay whatever it cost to start its operations in the UK which is part of Europe. However, Delta Airlines could start a joint venture with British Airways to start its operation in the United Kingdom or they could collaborate with any other local airline. In addition, extensive research of the market and population would be helpful. Here, Delta Airlines could take an outright advantage of the similarities between them and the host countries. All these strategies could help to overcome the preceding barriers (Business in a Global Environment, n.d.).
Business in a Global Environment. (n.d.). Retrieved from https://saylordotorg.github.io/text_exploring-business-v2.0/s07-business-in-a-global-environme.html
Delta Airlines. (n.d.). Environmental, Social and Governance Sustainability. Retrieved from https://www.delta.com/us/en/about-delta/sustainability
Technological Environment of Delta Airlines
Delta airlines are using innovative technology to bring the advancements in their services and planes. Both hard and soft technologies are used by delta for example recently delta introduced the facial recognition boarding in the newly built airports, delta has introduced the smartphone service for the flight attendants and they can use them for better recognition of their passengers. Small chips are inserted as soft technology and they are very helpful in recognizing the data. Wireless inflight entertainment systems are used as hard technology and many more. Audio and video are provided in the airplanes, passengers can play apple and iPod music during flight, they can charge their devices and can run their choice TV. These technologies are used for both domestic and foreign flights (Delta, 2019).
The company can face technology barriers, in hard technology, many barriers for example cost of technology, the risk attached with technology, attaining the best developers, investment issues, competition domestic and foreign, and the restrictions by the government to access the modern technologies are very common and delta faces most of them. The barriers to soft technologies can be the same because the developers are the same. In August 2016, delta faced many problems during winter’s snowstorm and 20,000 flights got canceled. Technology barriers can affect the company domestically and foreign both (Schawalder, 2014).
Delta airlines have set up the backup plan for the resuming of their flights in case of any technical failure. It has created a cloud-based system which is very effective in terms of lowering the initial costs and implementation costs (Joseph & Rosenfeld, 2018). In hard technology strategies, delta always focuses on the older technologies first, developers keep in mind the problem of previous technologies and how they can cope up with the next one. In soft technologies, Delta prefers to buy the off the shelf technology, also they involve more third parties to prevent any risk factors attached to the implementation of technologies.
Delta airline should start to increase the foreign flights as compared to domestic flights because on foreign flights they will be having more and more room to implement the technology. Delta should only start thinking about the new technology if it has sufficient money for investment. In case of the failure of the technology, delta can face problems because there will be no backup plan. Delta should hire competent and expert developers so that there will be no room for mistakes.
Delta. (2019, June 19). Technology. Retrieved from Delta: https://news.delta.com/tags/technology
Joseph, L., & Rosenfeld, E. (2018, September 25). Delta resumes operations after a ‘technology issue’ briefly halted flights. Retrieved from CNBC: https://www.cnbc.com/2018/09/26/delta-air-lines-issues-ground-stop-due-to-technology-issue.html
Schawalder, J. (2014). The future of inflight entertainment in Europe, according to passenger expectations: Why airlines should embrace consumer technology. Anchor Academic Publishing (aap_verlag).
Political-Legal Environment of Delta Airlines
Delta Airlines is one of the major airlines in the United States. It has a wide network in the United States as well as across Europe. Delta Airlines has been subject to the political and legal influences which exist both in a domestic and global level. Delta Airlines like the rest of the airlines in the world is curbed by the restrictions and regulations pertaining to the tax policy, international trade, and market competition. It is also affected by terrorism, war, and diseases. Government actions have substantially affected the operations of Delta Airlines at the domestic level. The incident of 9/11 has proved to be ominous for all airlines across the world including Delta Airlines. Delta Airlines has repeatedly partnered with a government which created extraordinary value for them (Fern Fort University, n.d.). The eased government regulations have made Delta Airlines expand its operations and boost its revenues. Moreover, the deregulation of 1978 has found to be baleful for the airline industry. The laws related to passenger security, environment, and labor had subdued their earnings (Pratap, 2018).
Delta Airlines has been subject to perpetual obstructions and barriers in the airline industry. Like other major airlines, Delta Airline encountered many threats including the increasing fuel prices in the world market which could potentially curtail its profitability, the appreciation of the domestic currency which could affect the prices of the airline making it difficult for the foreign fliers to use the services. Security is the constant threat and barrier for the airline to overcome as Delta Airlines has to remain vigilant and upgrade their security system perpetually by adopting advanced technology in order to cope with terrorism (News Hub, 2009).
Delta Airlines also faces limitation in the domestic market which affects its operations across the world. Some of these limitations are anti-trust laws against the major airlines in the country. The rate of technological diffusion is another key barrier for Delta Airlines. Delta Airlines being a major airline of a country faces fierce competition, hence US airline companies want to restrict the competition from the foreign carriers. Labor cost poses and other critical limitation to Delta Airlines as it leads to the augmenting labor costs. Moreover, trade tariffs and trade regulations pertaining to their services, favored trading partners, tax rates, and pricing regulations by the government are some of the limitations faced by Delta Airlines. The business cycle also raises limitation, for instance, the recession of 2008 hit the American airlines hard (McKenna, 2018).
Fern Fort University. (n.d.). Delta Air Lines, Inc. PESTEL & Environment Analysis. Retrieved from http://fernfortuniversity.com/term-papers/pestel/nyse4/2708-delta-air-lines–inc-.php
McKenna, E. (2018). Delta Airlines: A Strategic Analysis. Honors Senior Capstone Projects.
News Hub. (2009). Delta: Global Recession, Rising Oil Prices Forcing Additional Changes to Business. Retrieved from https://news.delta.com/delta-global-recession-rising-oil-prices-forcing-additional-changes-business
Pratap, A. (2018). Delta Airlines PESTEL Analysis. Retrieved from Notesmatic.com: https://notesmatic.com/delta-airlines-pestelpestle-analysis/
SocioCultural Environment of Delta Airlines
The cluster of countries share the same culture, nationalism, geography, language, taxes, sometimes currency and many other social and cultural aspects. The Middle East is one of the main regions with the largest and most competent airline industry. Some of the eminent airlines of the Middle East are Qatar Airways, Emirates Airline, and Saudi Arabian Airlines. Delta Airlines could work with the world most competent airlines industry which is in the Middle East. Delta Airlines could collaborate with EL AL which is world finest airlines with the impeccable defensive system. They have anti-ballistic missile technology for defense purposes. EL AL is the first airline which such defensive technology. Hence, collaboration with the Middle East would help Delta Airline to add defensive technology to prevent an incident like 9/11 in the future (Reed, 2014). Moreover, America has a long-standing existence in the Middle East since 9/11. Thereby, Americans are believed to have a long-term association with the Middle East. Domestically American has close similarities with the United Kingdom and Canada. As they have the same languages and are close trade partners. Hence, the group of these two countries could be a plausible cluster choice for domestic collaboration (Nijkamp & Kourtit, 2014).
Many sociocultural factors can affect the prosperity of the company and its operations in two different cluster countries. Some of the key socio-cultural factors are culture, language, education, religion, customer preferences and attitudes of the people towards foreign goods and services. Moreover, they have to deal with the ubiquitous variety of political, legal, economic and technological factors. Sometimes a cluster of countries have people with different attitude and beliefs, for instance, the Muslim countries sometimes do not prefer the goods and services of European countries due to religious differences. Moreover, Delta airline could face plenty of issues in Middle East countries such as differences in taste and food. Muslims prefer halal food, whereas Delta Airlines being an American airline does not have any such religious condition (Al-Sayeh, 2014).
Delta Airline merged in the domestic market with Northwest Airline, this collaboration helped Delta Airline to survive in the competitive environment whereas Northwest Airlines finished. Today Delta Airline is relishing high profits. They learned a lot from there bankruptcies. The cost-cutting was one of the most beneficial decisions they have made. Some primary factors behind the failure of Delta Airlines included the global financial crises of 2008. The cultural misalignment between Northwest Airline and Delta Airlines led to the failure of both companies.
Al-Sayeh, K. (2014). The Rise of the Emerging Middle East Carriers: Outlook and Implications for the Global Airline Industry. Massachusetts Institute of Technology.
Nijkamp, P., & Kourtit, K. (2014). Aviation Clusters: New Opportunities for Smart Regional Policy. Central European Conference in Regional Science.
Reed, T. (2014). How Delta Air Lines Mapped A Path To Success And Followed It. Retrieved from Forbes: https://www.forbes.com/sites/tedreed/2014/05/10/how-delta-airlines-mapped-a-path-to-success-and-followed-it/#24d6bce38b46
Economic Environment of Delta Airlines
According to Rostow the economies of the countries actually go through the 5 stages of economic growth which include the traditional society, preconditions to takeoff, takeoff, drive to maturity and age of high mass consumptions. Delta Airlines is a significant part of the US airlines industry is relishing a good economic existence at both domestic and global level. Thereby, it could be inferred that Delta Airlines is at the fifth stage of development which is the age of mass consumption. Delta Airline might have passed the traditional society and takeoff stages in its early days. It started taking off when its productivity rises which were indicated by its rising profitability (Jacobs, 2019). It started relishing a significant presence in the domestic economy and finally reached the stage of a drive to maturity. Then Delta Airline starts to diversify its customer base by expanding its presence in the global market. They opted innovation and their presence in the countries like the United Kingdom became invincible. Afterward, they reached the stage of the age of mass consumption where output grows drastically and expansion in the consumer base become rapid. Delta reached the last three stages such as takeoff, drive to maturity and age of mass consumption. But the initial two stages are not observed in the case of the airline industry (Malek, 2005).
On the other hand, we can see an alignment between the external and internal environment of Delta Airlines and Galbraith’s concept. Galbraith stated that large enterprises are characterized by abundant planning and overwhelming advertising. He also posited the theory of firm stating that the firm always attempts to maximize their profits. We can see Delta Airlines constantly striving to enhance their profitability in the corporate world. They expand their presence across the borders just for the sake of high profits. Delta Airline’s pursuit for profitability while fulfilling the corporate social responsibility is what makes them survive through thick and thin. The limitation we can observe in Delta Airlines’ way was corporate social responsibility and changing the economic cycle (The Library of Economics and Liberty, 1908-2006).
Though Delta Airline managed to survive it encountered many restrictions in terms of growth and profitability. At many points, Delta Airline had to work towards its survival rather than focusing on corporate growth. At some point, Delta Airline had to focus on maintaining its profitability rather than growing it to unprecedented levels. This is when Delta Airline contravened Galbraith’s conviction regarding the firm’s growth (Thoma, 2006).
Jacobs, J. (2019). Rostow’s Stages of Growth Development Model. Retrieved from ThoughtCo.: https://www.thoughtco.com/rostows-stages-of-growth-development-model-1434564
Malek, O. (2005). Development Theory – Rostow.
The Library of Economics and Liberty. (1908-2006). John Kenneth Galbraith. Retrieved from https://www.econlib.org/library/Enc/bios/Galbraith.html
Thoma, M. (2006). John Kenneth Galbraith’s Contributions to Economics. Retrieved from Economist’s View: https://economistsview.typepad.com/economistsview/2006/04/john_kenneth_ga.html
