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Political Factors

Discuss about the Energy Situation and PESTLE Analysis.

‘Denver International Airport’ that is also known as ‘DIA’ & ‘DEN’ is placed in Denver, Colorado, United States. DIA is the biggest airport in the US. Along with this, it is the sixth busiest airport in the US and eighteen busiest airports in all over the world. Denver has the 3rd leading domestic connection network within the nation (DEN. 2017). Denver airport is the main center for Frontier Airlines as well as Great Lakes Airlines.  It is the 4th prevalent center for United Airlines.  Moreover, it is the only airport in the US that has implemented an ISO 14001 licensed environmental management system to cover the complete airport effectively.

A PESTLE analysis is an effective marketing tool that is used by the business organizations to evaluate the macro-environmental factors that have major impacts on the organizations. Along with this, it is also used by the business firms to track the environment in which they are operating or also willing to operate their businesses. A PESTEL analysis is only valuable to analysis macro-environmental factors such as: political, economic, social, technological, legal and environmental factors (Wilcox and Jenkins, 2015). ‘Denver International Airport’ uses this tool to discover the external factors that have an impact on its operations. The PESTEL analysis of Denver is given as below:

Political Factors: Political Factors have an effect on the organizations with regard to government regulations as well as legal issues; and also delineate both formal & informal rules in which business firms are obliged to operate their businesses. Political stability, government policies, trade restrictions, tax policy, environmental regulations, employment & labor law, tariffs, and so on are the major examples of these political factors. Political factors may vary from one nation to other nation. However, the airport industry is inclusive and covers the entire globe (Prather, 1998). Along with this, according the report, the aviation industry has been generated approximately $709 billion in the year 2016. The government regulations of the nation concentrate on concerns such as: patient security, safety, and some other issues. Moreover, in the united stated, in 1978, the deregulation occurred that reduced the restrictions within the industry.  Deregulation abolished the rules as well as regulations those were associated with the prices and entry of the airport organization into domestic markets. As a consequence, the popularity of the industry increased. The increased popularity also enhanced the revenues of the airport industry in the United States. On the other hand, it should also be noted down that, the state of affairs is not the similar in all the markets. It is because of some markets are highly regulated in the United States. The highly regulated markets reduce the revenues of the organizations (Haberberg and Rieple, 2008). Moreover, in such markets, the international flights are highly regulated in place of domestic (national/home) flights.

Economic Factors

In addition to this, Denver International Airport (DIA) also operates its business in a heavily regulated political environment. It is because of in airline industry passengers are more valuable than airlines and their safety is the main concern of the government. In other words, it also can be said that, passenger safety must be dominant for the airline organizations. By considering the patient safety, the US government has established strict regulations for the operations of airline organizations (Schloh and Hardship, 1996). As a consequence, it is clear that, ‘DEN’ operates in a highly regulated political atmosphere of the nation. The United States has strict regulations for the airports and airlines. It is because of such organizations face numerous risks that may cause of accidents, irremediable damages, and deaths of passengers. So, the US government has been created and implemented lots of policies, rules, and regulations to protect passengers in accidental cases. Thus, Denver needs to fulfill all the rules and regulations to operate its business within the nation.

On the other hand, the government of the nation also offers lots of relaxations to airports and airlines. The government is strict for the patient safety not for the airline industry of the nation. It is because of airline offers numerous benefits that improve the economy of the nation (Williams and Curtis, 2007). As a result, the government of the US generates value by being associates of the airlines companies. The political environment has been relaxed in some markets only to lead affiliation in an effectual and a more comprehensive manner. The affiliation between the government and airline companies is not beneficial for these two but beneficial for passengers also. Along with this, industrial regulation and political environment in a coordinated manner provide benefits to all over the world.  So, it is evident that government regulations as well as political factors of a nation play numerous important roles to decide the growth and abundance of the airlines companies within nation. Thus, it is obvious that Denver airport operates its business in an extremely regulated political milieu. ‘DIA’ is also enjoying lots of benefits due to the affiliation between the US government and the airline industry. The partnership has boosted the profitability and revenues of the airline companies (Kerzner, 2012). Therefore, Denver International Airport is doing well in order to intensify its relationship with the government of the nation.

Economic Factors: Economic factors have numerous significant impacts on the growth and success of the business organizations. For case, economic growth, inflation rates, interest rates, interstate taxes, exchange rates, embargoes, recession, unemployment, wage rates, cost of living, credit availability and so on are the major economic factors. Further, these economic factors can be divided into two factors like: macro-economic and micro-economic factors. These both factors emphasis on all the events those have an effect on the internal as well as external economic environment. The micro-economic events are related to the viability and internal soundness of the business (Liebhold, Work, McCullough and Cavey, 2006). Moreover, the macro-economic events contain interest rates, inflation rate, recession, exchange rate, unemployment, working hours, financing availability, and so on. On the other hand, economic factors of a nation have huge influence on the airline companies. The US airline industry has seen numerous downward spirals. The airports and airlines of the nation are still not recovered from the consequences of the 9/11 attacks. Along with this, Denver airport is also affected by the recent recession as well as slow economic growth of the nation. The economic instability of the nation reduced the revenues of the ‘DIA’ and other similar companies. Moreover, because of the recession, Denver airport also reduced its costs to accomplish competitive advantages over the competitors (Whitehead, 2012).


In addition to this, the prolonged downturn, oil prices fluctuations, and a looming global slowdown are other hinder economic factors that are affecting the growth and success of DIA within the economy of the nation. Denver is trying its best to manage and retain its passengers effectively (Schloh and Hardship, 1996). As a consequence, it has implemented an automated baggage system to reduce delays, condense waiting times at baggage carousels, decline airline labor costs, and improve the reputation in the global market. ‘DIA’ is also dealing with increased high fuel prices and operating & maintenance costs in an effectual manner. Apart from this, the recession had left numerous positive effects behind it. Due to the recession, airports like Denver airport have changed their style of working.  They also improved their service standards and also reduced their prices to attract more and more customers. The airport is a base of the whole airline industry. In current, the industry is adjusting its business as per the changing economic conditions of the nation (Zalengera, Blanchard, Eames, Juma, Chitawo and Gondwe, 2014). But, a lot of growth is estimated in the upcoming years; and due to the growth of airline industry, the future of Denver airport can be seen bright in the future time period.

Social Factors: Social factors or socio-cultural factors analyze the social environment of the market, and measure determinants such as: demographics, cultural trends, population analytics and so on. Along with this, these factors involve the shared belief as well as attitudes of the populace. These socio-cultural factors contain population growth, cultural aspects, cultural expectations, health consciousness, population dynamics, age distribution, career attitudes, norms, global warming, et cetera.  These social factors focus on the security and safety of the populace (Ho, 2014). In addition, high trends in socio-cultural factors have an effect on the demand and supply for the products or services of the companies. Business organizations may change their management strategies to take advantages of these social trends for the growth and success of the business.

On the other hand, it is well-known that ‘Denver International Airport’ is the biggest airport in the United States.  It considers social cultural factors to improve the business of the airline industry.  Moreover, airports and airlines develop social values for the growth and success of the businesses. There are lots of industries that earn profits from the airlines (Wilcox and Jenkins, 2015). Airports and airlines are major means of transportation for the people and business organizations. They both are highly influenced by the social factors and forces as well. In this situation, the ‘DIA’ has reduced its prices to meet the needs and requirements of the passengers. It also creates employment to improve its social image in the eyes of customers. The relationship between the airports, airlines, and societies is also changing the view of the users. Now, people are seeing the industry in a very new way (Kerzner, 2014). Along with this, the social perception of air travels and passengers has been changed. It is being seen as safer as well as opportune for the continuous development of the Denver airport in the nation.


In addition to this, by considering the high social trends, Denver is emphasizing its attention on the advanced technologies. It is also maintain professional atmosphere within the area. Due to the increased technologies, people have been very aware about the environment of the airport and airlines. Denver airport makes use of social media to make its strong relationship with customers. It also ensures them that they would be benefited by using its services (Kalinke, 2013). Moreover, due to the superior and automated services of DIA, the number of professional passengers has been increased at the airport. Social changes or factors can be seen in the favor of the DIA. Social factors or social cultural factors are obtaining value for the airports as well as airline industry.  Denver airport has improved its communication facilities and skills for the business class travelers. As a consequence, it can be supposed that, the social factors are in the favor of the DIA; and also playing a major role in the growth and development of the airports and airline industry as well.

Technological Factors: Technological factors are related to the innovations in the technologies that may have an effect on the operational activities of the business organization. These factors may be favorable or unfavorable for the businesses (Gregoric, 2014). Along with this, technological factors include technological aspects such as: technological awareness, research & development, technology incentives, automation and rate of the technological changes in the business processes. Technological factors take into consideration all the events that may have an effect on technology. It is because of technology becomes obsolete within few months; so business organizations are required to consider such factors. Moreover, technological factors also have significant effects on airports and airlines as well. It is true that, the airline industry makes use of technologies in its operations. Denver airport also hired many experts to use the advanced technologies in its business activities. The technological changes also implemented by DIA to attract and retain more and more customers (Bitelmal, 2010). It also uses social media (Facebook, Twitter, YouTube, etc.) to ensure that the social as well as technological changes are adopted and implemented by the airline industry.

On the other hand, Denver airport and airline industry has been adopted latest technologies to survive in today’s very tough as well as complex business environment. The use of latest technology is helpful to improve the operational efficiency and overall performance of the industry. Moreover, the other fact is that the aviation industry can understand the importance of technological factors only by implementing heavy use of advanced technologies in its business operations. The technological factors of the nation are favorable to the DIA. It is because of the US government extremely focuses on the advanced technologies to improve the overall performance of the business corporations (Albers, 2008). As a consequence, the airline industry is also paying its attention on the advanced technologies to facilitate its customers. Social media has made it simple for the industry to interact with its consumers. What is more, with the help of technologies, customers can access their required information on right time and place. Hence, it can be said that, technological factors have numerous favorable impacts on the airports and airline industry. 

Legal Factors: Legal factors also influence both eternal as well as internal side of the businesses. These factors involve certain laws and acts that influence the business milieu in a specific country or nation. Legal factors include consumer rights & laws, advertising standards, safety standards, employment legislation, trade regulations & restrictions, product labeling & product safety, labor laws, health & safety, and so on (Haberberg and Rieple, 2008). Along with this, an organization is obliged to trade according to the rules and regulations of the country in which it is operating its business. If an association trades globally then it becomes very difficult area to get right seeing that each nation has its individual set of rules and regulations. In this situation, Denver airport fully understands the rules and regulations of the United States and operates accordingly. It is fully aware about the changes in legislation and also knows their impact on its business operations. Moreover, DIA is a major part of airline industry. The legal factors of the industry are related to the air traffic as well as passenger safety. For the most part, passenger security is an important area in this industry (Schloh and Hardship, 1996). In this context, the airports and airlines are fully liable to prevent air crashes or any other type of disaster for the passenger safety.


On the other hand, in recent years, the number of complaints against airlines from both customers and workers has been increased. As a consequence, the regulators have become very strict with the airports and airlines. They are changing their strategies and also observing that the airports as well as airlines are not violating any laws. Moreover, new laws have been enforced as regards how the airlines take care of their passengers. On the whole, in US the laws that are associated with the convenience of the tourists are quiet austere. In this situation, DIA is doing well and operating its operations according to the laws and regulations of the nation. It makes its best efforts to ensure the regulation bodies that it is not violating any law. DIA is fully aware about the safety and security of the passengers as well as visitors (Liebhold, Work, McCullough and Cavey, 2006). Due to this, Denver airport did not face any legal issue in its operations. The popularity of the airport is increasing constantly in all over the world.

Environmental Factors: Environmental Factors involve all the events those may influence the environment of business organizations. Environmental factors contain environmental aspects for example weather, geographical location, climate, temperature, climate change, global changes in climate, environmental offsets, natural calamities, et cetera  that may affect business industries. Along with this, these environmental factors have significant impact on the airline industry. It is well known that, in current, climate change has become a major topic of concern to the business organizations; and as a consequence, they are restructuring their operations to adopt and implement innovation as well as concept of green business (Zalengera, Blanchard, Eames, Juma, Chitawo and Gondwe, 2014). Moreover, it is also well-known that, climate change has entered into the social consciousness; and therefore passengers are counting their carbon footprint to show that they are environmentally conscious. For this reason, the airlines being obliged to espouse ‘green flying’ and to be alert to the apprehensions of the ecologists.

On the other hand, Denver airport is fully aware about these changing environmental factors. It is also performing its corporate social responsibilities to fulfill its duties towards the people of the societies. Moreover, airlines are developing CSR programs to address environmental issues in an effectual and a more comprehensive manner. In the United States, environmental associations are keeping their eyes on the ways that the airlines and airports are using to deal with environmental issues effectually. The Denver airport and airlines are providing eco-friendly environments to their passengers (Ho, 2014). Along with this, airline industry is making its best efforts to bring eco-friendly plans in the marketplace. These types of plans would be helpful to reduce environmental issues like noise, pollution, etc. in an efficient manner. For this reason, it can be assumed that,   Denver airport and airlines are fully aware towards the environmental issues. They are performing their business functions in a very eco-friendly way in order to provide eco-friendly environment to the passengers.

Conclusion

On the premises of the above analysis, it can be assumed that, Denver airport is doing well in the environment of the United States. The airport is an essential part of the airline industry. Along with this, it is also observed that, it is performing its operations in a highly regulated business environment. But, the other fact is that highly regulated environment is essential for the safety of the passengers and visitors also. Moreover, Denver airport is using advanced technologies to interact with its customers. It is also making use of social media to know the views and preferences of the customers. Overall, it can be said that, it is offering a very friendly environment to the passengers and also taking care about their safety and security.

References

Albers, M. (2008). Lufthansa in Its Competitive Environment. Germany: GRIN Verlag.

Bitelmal, M.A. (2010). Strategic challenges facing airports in gaining competitive strengths: lessons from the practice of Dubai International Airport (Doctoral dissertation, © Mohamed Abdalla Bitelmal). Available At: https://dspace.lboro.ac.uk/dspace-jspui/bitstream/2134/8094/1/PhD_Thesis%5B1%5D.pdf [Accessed On: 5th April 2017]

DEN. (2017). About DEN. Available At: https://www.flydenver.com/about [Accessed On: 5th April 2017]

Gregoric, M. (2014). PESTEL analysis of tourism destinations in the perspective of business tourism (MICE). In Faculty of Tourism and Hospitality Management in Opatija. Biennial International Congress. Tourism & Hospitality Industry (p. 551). University of Rijeka, Faculty of Tourism & Hospitality Management.

Haberberg, A. and Rieple, A. (2008). Strategic Management: Theory and Application. UK: OUP Oxford.

Ho, J.K.K. (2014). Formulation of a systemic PEST analysis for strategic analysis. European academic research, 2(5), pp.6478-6492.

Kalinke, L. (2013). Innovations in Sustainable Airport Planning Efforts: A Case Study of Hartsfield-Jackson International Airport.

Kerzner, H. (2014). Project Recovery: Case Studies and Techniques for Overcoming Project Failure. USA: John Wiley & Sons.

Kerzner, H.R. (2012). Project Management Case Studies. USA: John Wiley & Sons.

Liebhold, A. M., Work, T. T., McCullough, D. G. and Cavey, J. F. (2006). Airline baggage as a pathway for alien insect species invading the United States. American Entomologist, 52(1), pp. 48-54.

Prather, C. D. (1998). Denver International Airport: Lessons Learned. Journal of Aviation/Aerospace Education & Research, 8(2), pp. 15-21.

Schloh, M. and Hardship, F. (1996). Analysis of the denver international airport baggage system. Retrieved May, 2, p.2013.

Whitehead, J. (2012). What You Need to Know about Strategy. UK: John Wiley & Sons.

Wilcox, M. and Jenkins, M. (2015). Engaging Change: A People-Centred Approach to Business Transformation. USA: Kogan Page Publishers.

Williams, J. and Curtis, T. (2007). CIM Coursebook 06/07 Marketing Management in Practice. NY: Routledge.

Zalengera, C., Blanchard, R.E., Eames, P.C., Juma, A.M., Chitawo, M.L. and Gondwe, K.T., (2014). Overview of the Malawi energy situation and A PESTLE analysis for sustainable development of renewable energy. Renewable and Sustainable Energy Reviews, 38, pp.335-347.

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