Nature
The American Airline was founded in 1930 by consolidating various small airlines into the aviation corporation. The airline has been the biggest in the US since 1990 and had pioneered in various fields to gain a competitive advantage over competitors. The American Airlines has a fleet of more than 622 jet aircraft and flies 2450 flights daily to 182 locations (Britannica, 2018). The American Airlines is the fourth largest in passenger mile transported, operating revenues, and passenger fleet size. The airline has also pioneered a variety of policies that influence the organization’s standard practices and structure. The company introduced a computerized reservation system in the 1960s and revolutionized the marketing and distribution of the travel industry. In 2010, the company ranked 120 on the Fortune 500 of companies and also founded one-world airline alliance.
Structure
The organization’s executives include the president, chairman, and chief executive officer. The organization also has an executive vice president; people and communication, financial officer, and corporate affairs ("American Airlines", 2018). The organization emphasizes diversity and inclusion in employees and customers to incorporate various ethnicities, races, gender identity, sexual orientation, religion, and disabilities. The organizational culture works to restore the organization as the most preferred airline in the world by ensuring diversity and prioritizing on recruiting, retaining, and engaging talents with unique capabilities ("American Airlines", 2018).
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Products or Services
The American Airlines Group is made up of American Airlines and the American Eagles and offers an average of 6700 flights on daily basis to more than 350 destinations in 50 nations. The company has hubs in Chicago, New York, Miami, Phoenix, Los Angeles, Dallas, Philadelphia, and Washington, D.C. The company founded One-World Alliance, with members serving more than 1000 destinations and over 14250 daily flights in more than 150 countries. The alliance commits to providing the best level of services and convenience to various travelers globally. The American Eagle is a regional carrier operating under service agreement and codeshare with the American Airlines. The subsidiaries of the American Airline Group are three such as PSA Airlines, Piedmont Airlines, and Envoy Air. The group has other six contracted carriers such as SkyWest, Compass, Republic, Trans States, Mesa, and ExpressJet.
External Factors Affecting Success of American Airlines
The two key factors in the American Airline’s that can affect its success includes political and environmental factors. The company is forced to alter its models, pricing, cost structure, and revenue to suit its customer’s changing needs in various economic conditions.
Political Factors
The political factors that impact the success of American Airways include the various governmental interventions influencing operations of air transport. The political factors are necessary for protecting safety measures and passengers’ interests of airline operations in the vast regions the airline operates. The various political factors include international trade, competition, tax policy, and war, terrorism, or disease outbreak.
The airline trade has critically contributed to the growth of the global economy, but exploitation of airline transport in various areas around the globe are limited because of government restrictions. The American Airlines is limited to expanding into various foreign markets that do not cooperate with America. The airline has trouble to expand in a country like Russia, despite looking so lucrative because the US does not trade with it. Tax rates vary among economies, requiring the American Airways to pay higher taxes in some countries in order to operate, stretching its operational costs and decreasing the revenue base. The outbreak of diseases, war, or terrorism can significantly affect the American Airways because it is difficult for it to operate due to the imposed risks. Competition, on the other hand, influences the success of the airline industry and is often regulated by political activities because politicians are responsible for formulating laws.
Environmental Factors
The success of the American Airlines is largely influenced by the ecological factors. The major expenditure of the industry is fuel, and the company is required to invest more in ecologically friendly and fuel-efficient aircraft (Karimabadi, 2018) . The issue of climate change impacts the American Airlines because they are now required to practice “green flying” in order to protect the environment. The procedure involves huge finances and holds passengers responsible for their carbon footprint.
Impacts of Primary Stakeholders on the Financial Performance
The primary stakeholder can influence the American Airline’s financial performance through governance and social responsibility, customers, employees, business associates, and the community. The stakeholders can influence the financial performance of the company by utilizing the stakeholder power by using the various types of partner’s forces such as enlightening force, monetary force, voting force, political force, and legitimate force. The economic power is possessed by suppliers, customers, and retailers.
The financial performance can be influenced by governance and social responsibility that establishes objectives and visions that leaders oversee in the organization. Most companies increase their profit by balancing environmental and social responsibilities with the profits they make to improve their reputations (Friedman, 2016). The management of American Airlines can actively ensure social responsibility and environmental preservation by abiding by flying regulations to improve their reputation and increase profits.
Customers directly influence the financial performance of an organization depending on the way they are treated. Sustainable organizational success and profit maximization are achieved by increasing customer satisfaction and ensuring long-term relations. The American Airlines should use customer relationship management and collect information on customers for more efficient and targeted marketing and sales efforts by helping customers based on their demands and needs.
Employees in the organization are important stakeholders in profit maximization when effectively involved in the company’s decision making. Motivated and satisfied employees are determined to ensure the organization's success and provide strong customer services. The American Airlines should be committed to supporting its employees to ensure effective strategies.
Business associates influence an organization's financial performance by ensuring a close collaboration between buyers and suppliers to achieve the best value to end customer. The American Airlines should ensure a win-win attitude to maintain the company's interests while collaborating with other organizations. Valuing relationships with other organizations and taking into account shared values with various business is important in gaining a competitive advantage.
The community where the organization operates also influences the financial performance of a company. The organization's decisions affect the community and the management should focus on decisions that gain favor in the community (Friedman, 2016). The American Airlines should keep ethical considerations in mind before making vital decisions and should be involved in the community’s events and charitable programs to improve community support.
Controversial Corporate Social Responsibility Concern
The corporate social responsibility implies partnerships intending to upgrade occupants and the society in a way that is considered responsible for the company's activities that influence individuals, their surroundings, and other groups. The idea of corporate responsibility is built on the foundation of making pledges to give back to the society and the organization’s partners. The American Airlines has displayed positive things in corporate social responsibility about its relationships with stakeholders and supports various charity work and community events. However, there are claims and incidences where the company disrespected passengers and their own employees. The American Airlines claims providing support to veterans but numerous lawsuits have been filed by the veterans against the company. One retired veteran accused the organization of not providing payment for his sick leave, while another one sued the firm for underpayment of his services (Karimabadi, 2018).
Reference
American Airlines. (2018). Retrieved from https://www.aa.com/i18n/customer-service/about-us/diversity/inclusion-and-diversity.jsp
Britannica, E. (2018). American Airlines | American company. Retrieved from https://www.britannica.com/topic/American-Airlines
Friedman, J. (2016). Stakeholder Relationships: Key to a Sustainable Enterprise. Retrieved from https://www.huffingtonpost.com/john-friedman/managing-stakeholder-rela_b_1415255.html
Karimabadi, S. (2018). Ignoring Social Responsibility Can Destroy Your Brand, a Lesson Learned From United Airline. – Saeed Karimabadi. Retrieved from http://karimabadi.ca/corporate-social-responsibility/
