PEST Analysis

PEST Analysis
When establishing any business or organization, it is essential to identify and carry out an analysis and evaluation of not only the internal factors but also the external factors that are likely to affect the future performance of the business or organization. In the study of external factors that are likely to affect the operations and success of an international airline business project in Japan, an analysis of macro-environmental factors was carried out. The main macro-environmental factors that were likely to have an influence on the global airline business in Japan include political factors, economic factors, social factors, and technological factors. The analysis of the external factors is, therefore, referred to as the PEST analysis. The primary purpose of carrying out a PEST analysis is to help with the strategic development of the anticipated activities involving the international airline business project. Moreover, the analysis will assist in identifying the strengths and weaknesses that exist in Japan concerning the airline business project in comparison to the other potential countries that the airline business project could have worked with. Moreover, a city and airport analysis will be carried out in Japan to identify any other factors that may affect the operations of the prospective airline business project between the United States of America and Japan.
Comprehensive PEST analysis
Political factors
The international airline business project intended to operate in Japan has an advantage of performing well since the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) had certified twenty-seven regional airports in Japan as Inbound Promotion Airports in July 2017. The international airline business project can, therefore, carry out its operations in any of the twenty-seven airports. Furthermore, the certified regional airports will be provided with financial incentives by the MLIT since the ministry aims at encouraging tourists from other countries to visit the different regional areas within Japan. The financial incentives offered by the ministry include discounts on landing fees and also financial support for the expansion of the route slots and facilities in these airports. The government of Japan is encouraging the airlines in Japan to offer more international flights from the certified regional airports to reduce the pressure being faced by major international airports such as Osaka and Narita. With the opportunities provided by the government of Japan for airlines to operate smoothly, the prospective international airline business project is expected to perform well in the future..

The political clashes between Japan and North Korea have negatively affected the airline industry in Japan. In August 2017, North Korea announced that it was planning to launch ballistic missiles over Japan into the Pacific island of Guam. With this announcement, the number of passengers traveling through Japan Airlines reduced by about 3%. The prospective airline business project intended to operate in Japan is likely to face a lot of uncertainties when it comes to performance. The difficulties will arise due to a reduction in the number of passengers traveling to Japan due to tensions between the two countries.
Economic factors
The economy of Japan has been uncertain since it has been floating on the lower ranks when comparing economic performance with the other developed countries. Similarly, the growth of the GDP has mainly been constrained for many years. Japan’s economy has been performing poorly due to excessive government spending. The government intended to address the fiscal issues by reducing the cost of pensions on the aging citizens of the country through means such as introduction of social security reforms in order to increase the rate of participation of the labor force. When it comes to income tax, the top personal income tax rate in Japan is about 40.8% and the top corporate tax is about 23.9%. The local taxes are expected to further increase. However, the initially weak governance has been improved since both the legal and regulatory systems are now fair and balanced. Even though the rate of unemployment was quite high, the government has offered many tax credits, subsidies, and other incentives to attract foreign investment. The airline business project is intended to perform well if the economy of Japan continues to do well in the coming years.
Social factors
The main target group in Japan when it comes to the airline industry is mainly the elderly. The main reason why elderly consumers are targeted is because they have more free time and also very few financial concerns than the other younger and working-age adults. The older consumers are, therefore, likely to spend more when it comes to traveling. Over the years, the number of people over the age of sixty-five years has increased. About 33% of all the citizens of Japan were older than 65 in the year 2015. However, research conducted by the National Institute of Population and Social Securities Research suggests that the number of people aged 65 and above is likely to rise to 40% by the year 2050. The prospective international airline business project is, therefore, likely to perform well in Japan due to the promised increase in the number of travelers, especially from older customers.
Japan airlines is also likely to benefit from the Tokyo Olympics and Paralympics that are to be carried out in the year 2020. There is an expected increase in landing and departure slots. The result of these activities will be an increase in the number of passengers on an annual basis. With the anticipated increase in the number of passengers, there will be an increase in Japan Airlines Market Share. With the expected increase in the share of international flights in Japan, the international airline business project is likely to perform well in its operations in Japan.
Technological factors
Over the past many years, Japan has continued to perform exemplary well when it comes to technological development. For instance, Japan has come up with several projects in the past, such as the invention of a commuter aircraft that can take off and land in a vertical position, three conventional airliners, and also supersonic planes. With the continued exemplary performance of Japan when it comes to technological development, the international airline business project is expected to perform well in Japan. The performance of the international airline business project is promising since the other technological projects that Japan has undertaken in the past, such as the industries engaging in electronics, computers, and cars, have been successful.
City analysis
The international airline business project is expected to operate in one of the international airports in Tokyo. The primary purpose of choosing Tokyo is because the city is mainly densely populated, thereby creating a broader market for customers traveling both within the country and also to other parts of the world. Moreover, most of the technological advancements made by Japan have been carried out mainly in Tokyo. Therefore, operating in Tokyo is likely to be promising for the international airline business project in the years to come.
Airport analysis
The international airline business project is expected to operate at Narita international airport. The main reason for choosing Narita is because it is not only Japan’s largest airport but also Tokyo’s premier international airport. Moreover, the airport is continuously undergoing several expansions, such as the extension of the parallel runway, refurbishment of the airport terminal, and also the construction of a new railway link to Tokyo.
Based on the findings from the research that I carried out, I have recommended launching international airline travel from Texas in the USA to Tokyo in Japan. To enhance the presence of the airline in the new international market, I will ensure there is a lot of flexibility, especially when it comes to schedule and traveling timetables to ensure that there is the ease of travel among the potential customers. Similarly, apart from passenger flights, the airline will also provide cargo services in order to ensure that cargo can also be transported easily both within Japan and also between Japan and the United States of America. With these strategies in place, the airline is expected to perform successfully in the future.

References
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