Harvard Case - China Eastern's World-Class Dream: Shanghai-Based Globalization
"China Eastern's World-Class Dream: Shanghai-Based Globalization" Harvard business case study is written by Jie Li, Xin Shane Wang. It deals with the challenges in the field of Marketing. The case study is 8 page(s) long and it was first published on : Dec 9, 2019
At Fern Fort University, we recommend China Eastern Airlines adopt a multi-pronged strategy to achieve its world-class ambitions. This strategy should prioritize building a strong global brand, leveraging technology for enhanced customer experience, and strategically expanding into new markets.
2. Background
China Eastern Airlines, a major Chinese airline headquartered in Shanghai, is aiming for global dominance. Facing fierce competition from established international carriers, China Eastern needs to differentiate itself and build a strong brand presence. The case study highlights the airline's desire to expand its network, enhance its customer experience, and ultimately become a world-class player.
The main protagonists of the case are:
- China Eastern Airlines: The airline seeking to achieve global dominance.
- The Leadership Team: The decision-makers responsible for charting the airline's future.
- The Global Market: The competitive landscape of international airlines.
3. Analysis of the Case Study
To analyze China Eastern's situation, we can employ a combination of frameworks:
1. SWOT Analysis:
- Strengths: Strong domestic market presence, growing fleet size, government support, potential for leveraging China's economic growth.
- Weaknesses: Lack of global brand recognition, limited international network compared to competitors, potential for cultural barriers in international markets.
- Opportunities: Expanding into new markets, leveraging technology for enhanced customer experience, building a strong global brand, collaborating with other airlines.
- Threats: Competition from established international carriers, economic fluctuations, geopolitical instability, potential for safety concerns.
2. PESTEL Analysis:
- Political: Government policies regarding aviation, international trade agreements, geopolitical tensions.
- Economic: Global economic growth, fuel prices, currency fluctuations.
- Social: Growing demand for air travel, changing consumer preferences, cultural differences.
- Technological: Advancements in aircraft technology, digitalization of travel services, development of AI and machine learning for operations.
- Environmental: Sustainability concerns, carbon emissions regulations.
- Legal: Aviation regulations, competition laws, data privacy regulations.
3. Porter's Five Forces:
- Threat of New Entrants: High barriers to entry due to high capital investment, regulatory hurdles, and established players.
- Bargaining Power of Buyers: High, as passengers have numerous choices and can easily compare prices and services.
- Bargaining Power of Suppliers: Moderate, as airlines rely on a limited number of aircraft manufacturers and fuel suppliers.
- Threat of Substitute Products: High, as passengers can choose alternative modes of transportation like high-speed rail or cruise ships.
- Rivalry Among Existing Competitors: High, as the airline industry is highly competitive with numerous established players.
4. Competitive Analysis:
- Direct Competitors: Singapore Airlines, Emirates, Cathay Pacific, Korean Air, etc.
- Indirect Competitors: High-speed rail, cruise ships, other modes of transportation.
- Competitive Advantages: Focus on Chinese culture and hospitality, leveraging technology for a seamless customer experience, offering competitive pricing.
5. Market Segmentation:
- Business Travelers: Value convenience, efficiency, and connectivity.
- Leisure Travelers: Seek affordability, comfort, and unique experiences.
- International Students: Need affordable and reliable travel options.
- Expatriates: Require seamless connections and familiar services.
6. Brand Positioning:
- China Eastern should position itself as a modern, reliable, and culturally rich airline.
- Emphasize its commitment to innovation, technology, and customer service.
- Highlight its strong network within China and its expanding global reach.
4. Recommendations
China Eastern Airlines should implement the following recommendations to achieve its global ambitions:
1. Build a Strong Global Brand:
- Develop a comprehensive branding strategy: Define a clear brand identity, mission, and vision for the global market.
- Invest in marketing and advertising: Launch targeted campaigns across multiple channels, including digital platforms, social media, and traditional media.
- Focus on brand storytelling: Share the airline's history, culture, and values to connect with international audiences.
- Develop a robust brand management system: Ensure consistent brand messaging and experience across all touchpoints.
2. Leverage Technology for Enhanced Customer Experience:
- Invest in digital platforms: Develop a user-friendly website and mobile app for booking, check-in, and flight information.
- Implement AI and machine learning: Personalize customer interactions, optimize flight schedules, and improve operational efficiency.
- Offer seamless connectivity: Integrate with other travel platforms and services for a smooth travel experience.
- Invest in customer relationship management (CRM): Collect customer data to understand their needs and preferences, and tailor services accordingly.
3. Strategic Expansion into New Markets:
- Focus on key growth markets: Identify regions with high potential for air travel growth and prioritize expansion.
- Develop strategic partnerships: Collaborate with other airlines, travel agencies, and tourism boards to increase market reach.
- Offer competitive pricing and attractive packages: Develop pricing strategies that are competitive and appealing to target markets.
- Adapt to local cultures and preferences: Tailor products and services to meet the specific needs of each market.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: Building a strong global brand, leveraging technology, and expanding into new markets are aligned with China Eastern's mission of becoming a world-class airline.
- External customers and internal clients: The recommendations address the needs of both international and domestic customers, as well as the needs of internal stakeholders.
- Competitors: The recommendations are designed to differentiate China Eastern from its competitors and position it for success in the global market.
- Attractiveness: The recommendations are expected to generate positive returns on investment through increased brand awareness, customer loyalty, and market share.
6. Conclusion
China Eastern Airlines has the potential to become a world-class airline. By focusing on building a strong global brand, leveraging technology for enhanced customer experience, and strategically expanding into new markets, the airline can achieve its ambitious goals.
7. Discussion
Other alternatives not selected include:
- Merging with another airline: This option could provide access to a larger network and resources but could also lead to cultural clashes and operational challenges.
- Focusing solely on the domestic market: This option would limit growth potential and could lead to stagnation in the long run.
The key risks associated with the recommended strategy include:
- Competition from established international carriers: China Eastern needs to differentiate itself and offer unique value propositions to attract customers.
- Economic fluctuations: The airline needs to be prepared for potential downturns in the global economy.
- Geopolitical instability: Political tensions and conflicts could disrupt travel patterns and impact the airline's operations.
8. Next Steps
To implement the recommendations, China Eastern should take the following steps:
- Develop a detailed implementation plan: Outline specific actions, timelines, and resources required for each recommendation.
- Establish a dedicated team: Assemble a team of experts to oversee the implementation process.
- Monitor progress and adjust strategies: Regularly evaluate the effectiveness of the recommendations and make necessary adjustments.
- Communicate effectively with stakeholders: Keep internal and external stakeholders informed about the airline's progress and vision.
By taking these steps, China Eastern can successfully navigate the challenges of the global aviation market and achieve its dream of becoming a world-class airline.
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Case Description
As one of China's top three major state-owned air transportation companies, China Eastern Airlines Corporation Limited (China Eastern) had built an international brand image with a global influence. With the airline's unique Shanghai-based globalization, China Eastern's strategy remained focused on expanding its global footprint. In the face of growing competition from domestic and international rivals, China Eastern strove to carry out cross-border business, strengthen its co-operation with partners in the aviation industry, and accelerate its globalization process. Over the past three years, China Eastern had introduced its "Pacific Plan" and made concerted efforts in expanding its route network and optimizing transit opportunities in the North American market. With the implementation of the Belt and Road Initiative (a global development strategy adopted by the Chinese government), what strategy should China Eastern use to continue to expand its Shanghai-based globalization?
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