External and Internal Environments Research Assignment (Essay Sample)

ASSIGNMENT 2: EXTERNAL AND INTERNAL ENVIRONMENTS
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Assignment 2: External and Internal Environments
Air transport is the most reliable and growing means of transport in the transportation industry. As a mode of transport, it is the most recent in the industry, a gift of the 20th century to the universe. The unique feature about the transport is that it does not require any particular surface or track for it to operate, but instead uses the air like the way. Further, the most powerful advantage related to this mode of transport is the quickness involved in travelling. Air transport is categorised into two sections, just like many other forms of transport, including the passenger and the cargo segment. Several airlines therefore exist, each classified under various factors including cost, comfort among many others. Different countries also have their various airlines travelling from regions to regions. Forward Air Corporation is the leading provider of air transportation, located in North America (Borenstein, 2014). The company deals with cargo transportation, at a cost-efficient and reliable means among different others corporations. An analysis of the company’s internal and external environments aims to assess the company’s performance and how it can be improved.
General environment
The general environment includes some dimensions in the wider society which influences an industry and the individual's firms related. The environment is made up of seven segments including, demographic, economic, Socio-cultural, global, political, technological and physical segments. Forward Air Corporation mainly deals with cargo transportation and operates approximately 18 pools of network operations and distribution centres. Also, the company has delivery services reaching more than 27 storefronts in 27 states (Borenstein, 2014). Specifically, economic and demographic segments would rank the highest in influencing the company as constituents of the general environment.
The demographic segment is the actual identification of the market in a particular industry, as a whole. The firm should determine the way it will segment the market among different locations and further profile each section individually. For the corporation to achieve high performance, it should access the advantages of each separate section and later on consider the segment with the best potential. The increase or decrease of population in various places will highly affect the company’s performance considering that the population is what provides the market. The effect of the segment to the overall industry concerns the overall development of the various regions to where air transportation as industry operates. High income among the population will mean larger development, which will influence the industry positively.
The Economic segment, on the other hand, means the economic stability in the market within the market that particular organisations are competing. /// suggests that understanding of this segment is essential not only to an individual firm but also the entire industry. Forward Air Corporation’s performance depends on the economic growth, availability of credit, interest rates as well as the foreign exchange. The company is highly affected by these factors considering that they are the very ones that will determine the prices in the industry as well.
Forces of competition
The Five Forces tool developed by Porter is a powerful instrument in any organisation, as it helps in understanding the business situation at any given moment. They include buyer power, supplier power, competitive rivalry, the threat of substitution and new entries (Magretta, 2013). For Forward Air Corporation, competitive rivalry and threats to new entries are the most significant forces in the air transport industry. Competitive rivalry involves the number and capability of the competitors in a certain industry and individual organisations in particular. If a company has many competitors offering same standard and attractive products and services, the company will certainly have less power in the market as customers may consider other firms with the best deals. On the other hand, if no business in the market does what a particular company does, then the company will have effective advantages in the market (Magretta, 2013). In Forward Air Corporation, competitive rivalry determines the sustainability of the business in the industry. Since its establishment, the firm has maintained a good position in the market through the various strategies put in place in serving the customers. For instance, the firm has invested much in the cargo segment of the transport and is among the leading companies in carrying air cargo from places to places. Also, the company uses different innovations to address the competitive rivalry. In doing this, Forward Airline Corporation attracts new customers to the company over and over, while retaining the existing ones.
The threat of new entrants is another significant force facing the company, common to the aviation industry in general. According to Magretta (2013), the market growth in air transport has steadily been increasing for a long period, mostly because of the introduction of new airlines every day. The ability of new parties to enter the aviation industry affects the power of a particular industry in a major way. Forward Air Corporation is also a victim of the situation but has managed to preserve a favourable position in the industry through its strong protection of its key technologies as well as diversified economies of scale. As a result, new competitors have always found it harder to enter the company’s market and weaken its position.
Addressing the forces in the future
Rivalries will always exist within any industry regardless of the products or customer involved in the same. As a business, Forward Air Corporation is projected to face competition for all through its operation specifically from airlines dealing with cargo transit from locations to locations, including Qatar and Etihad airlines. With the increase in time, the competition will keep on increasing as new firms will keep on entering the market. The company should incorporate more innovative features in their performance so as to capture the rising trends and development in the industry. In doing so, the company will be able to address the competitive rivalry as a market force and as such, maintain its level in the industry. Additionally, there will always be new entrants in the market in the future, as new airlines are introduced in the industry (Magretta, 2013). As mentioned earlier, there is more room for competition shortly, and airline companies should, therefore, develop mechanisms to figure out ways that will prevent new entrants from driving them out of the market. Forward Airline Corporation can address these forces in the future, through variation of prices in their services. By regulating the prices, customers will hardly migrate from the company seeking new entrants to the market. The organisation will, therefore, maintain the client while at the same time retain the existing ones.
External threats and opportunities
Like all other businesses around the world, the airline industry is faced with a series of threats both external and internal, which highly affects an organisation performance immensely. The external threats are the ones that affect an organisation from outside the company and in most cases; the company may lack control of them (Magretta, 2013). Forward Airline Corporation faces a series of potential external threats, including political, economic, technological, environmental and legal. These factors influence the company’s fundamentals through various aspects leading to a low performance of the same overtime. Political factors involve interventions by the government on certain economic operations in particular industries. Forward Airline Corporation operates in a very controlled political environment that restricts different aspects in the transportation of cargo. As a result, the company is limited to certain operations which in turn limit the business’s performance.
Economic factors include the cycles in individual countries like peaks and troughs. The company faces threats from this aspect, considering that a decrease in economic condition profoundly affects the market. Technological advancement is also a risk to the enterprise and is among the major threats that affect the company’s cooperation massively. The increase in technology has increased competition to the company given that even passenger will soon be transporting heavy cargo along with the passengers as well. Environmental threats are also a major concern for the company, considering that the industry consumes more than 200 million tonnes of fuel annually. The industry’s impact on the environment has raised a lot of concerns from different parties which directs the industry, including Forwarding Air Corporation. The company should deal with the most serious threats including environmental and technological to improve the performance as well as do as per the requirements. Environmentally, the company should invest in recent developments and alternative fuel options that are environmental-friendly. Further, the company should invest further in technology and keep updated with the current development, to be able to keep up with the competition in the industry.
The airline industry, specifically the Forward Air Corporation has significant opportunities that can boost its operations in the industry. They include the high reduction of fuel costs, especially in America. The company can use this opportunity to increase its service in the market at lower fuel prices and further serve the customers ma...