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Business Strategy Case Study on China Airline

In: Business and Management

Submitted By sweetcheeksfifi
Words 2574
Pages 11
Executive summary
China Airlines Ltd. (CAL) is a Taiwan-based airline. It was founded in 1959. In the early years, it undertook mostly military contract work. It was then declared as the official airline of Taiwan in 1968. Early on, CAL had a lot of problems including poor safety in 1990s which severely discredited the image, faulty pilot recruitment policies, lax maintenance systems, high cost operational structure, inefficient corporate culture, and strained political relations between China and Taiwan which prohibited the airline from launching flights to route in China. On top of that, the economic crisis caused the company huge loss. However, CAL put remarkable efforts to revive their business to profitibility. This report provides analysis, evaluation, and recommendation for China Airlines.

Strategic Difficulties • Outrageous crashes record (safety issue): there were 12 fatal crashes in its history that heavily discredited the image and revenue of CAL. All due to low standard of recruiting and training captain, pilots and crews, wrong policies and low standard of maintenance at the time (cost-cutting in maintenance), and desperate responses to save its image. • Constrain on China and Taiwan relationship: Taiwan’s airlines (flights and cargo) were required to land in Hong Kong or Macau before entering the mainland China, which wasted time and added extra unnecessary costs. Moreover, tourists travelling from China were not allowed to travel to Taiwan individually but only in groups. CAL also was banded from many countries because of its relation with PRC. As a result, Taiwan’s airlines faced huge losses in revenue and the international expansion opportunities. • Low cost airline threat: CAL faced competitions from many Taiwanese carriers and Chinese government-own budget airlines which operated on domestics as well as international routes. •...

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