United Airlines: operations and business overview

United Airline Multinational Ventures

United Airlines

United Airline

United Airlines is an air transport company that operates in a number of countries around the globe undertaking passenger and goods transport services. The corporation's headquarters are in New York City with branches set up in major trade cities to provide ease in management and contact with clients. In the past five years the corporation has increased its fleet of aircrafts by twenty percent owing to the rising demand in air transport around the globe. The corporation practices decentralized management with policy guidelines to ensure uniformity and brand identification in its operations.

The corporations' initial flight route comprised of local weekly flights in the U.S. To major destinations around the state. As the demand for air travel increased the company increased its flight routes and frequency depending on demand. Opportunities for a global operation came around when major airline companies continued to undergo bankruptcy owing to rising costs. As these opportunities presented themselves, the corporation adopted a strategy to control small manageable flight paths with a high demand as it slowly picked up more risky paths. The caution in this case is to create a brand identity with foreign local market before indulging in global market. Introduction of new flight path is vetted through an interrogation of the market size, it sustainability and the economic trends in the market. The corporation also target to venture in markets where competition is relatively stiff to build is brand and guarantee consumer loyalty.

Global market for air travel has seen significant changes and challenges over the past few years. As the demand for air travel significantly increased in the U.S.A. prior to the terrorist threats, many the air travel company had started to emerge. This widened the competition spectrum and reduced the revenues in the industry. The terrorist threats brought in significant challenges to airline companies significantly warranting an increase in cost outlay. The required security measure saw major airline companies combine their flight plan. Competing companies either merged the corporation management to increase their control over the market or significantly cut their flights to reflect the reduction in market demand. Further to the threat of terrorism the industry has faced up with increasing cost of crude oil that necessities increase in air travel fares or reduction of other costs. Some firms in the industry reduced their human resource baggage preferring to outsource some services others chose to reduce flights.

The observed changes and challenges pushed airline companies to strategically align themselves with the market needs. United Airlines in these changing times in the industry sought to reduce it number of flights in the market to reflect the changes in demand. The firm also made arrangement to reflect the required security measures and ensure flight and passenger safety. In a bid to counter the falling demand, the corporation undertook to market their flight ventures and determination to ensure passenger safety. Where demand for passenger fell significantly, the corporation undertook to compensate with cargo hauling and transport in order to retain revenues.

The strategy for united airline has always been to remain innovative reflective of the changes in the market and industry. This gives it an all-round perspective not to falter in the face of challenges. United Airline has also compensated the falling demand for passenger demand in the industry as a whole by retaining some flight where other airlines subcontract them in passenger transfers. This aspect allows the corporation to maintain short flight plans that are locally sustainable and cost effective in challenging economic times. These measures allow the corporation to maintain substantial flight plan and attract a major pool of clients in the local market. Significantly, the subcontracting measure for other firms opens the airline to learn more about client needs and model their services to the specific demand. In the difficult times while other airline companies reduced their flight plan by up to thirty percent, United Airline reduced their by only eight percent. United airlines has also seen it potential increase in attracting more clients once the air travel threat continued to reduce. More local air travel passengers have embraced their services with the increased dominance of the corporation's brand.

The corporation dominance in the local U.S. market has allowed it to increase its service provision in foreign markets. The stability experienced in the local market allows the corporation to open up new flight plans with a degree of competence in servicing the demand. The cooperation has managed to also introduce long haul flights to major destination around the globe and purchase higher capacity aircrafts. In their continued growth plan, the corporation targets to venture in China a first growing economy with higher potential in demand for air travel with the high population high potential production industries in the region.

Target Market

China's rapid economic growth has presented numerous opportunities and challenges for foreign firms there. Many large corporations have established a China center to coordinate and control their operations in the country. As firms have increased their presence in China, there are numerous opportunities for an air travel company. The changes in the country reflect the need for efficiency and timely transport solutions that open businesses and goods to more opportunities. The region is a burst with new innovation and high production levels for both industrial and consumer goods. China is largely an industrializing nation that focuses in production for global market.

To united airlines, this provides an opportunity to offer cargo transport services as well as passenger services to the growing economic residents in the region. There are opportunities for international passenger flight presented by the openness of the country to holiday makers who wish to explore the culture. The potential presented by the industrial growth also allows for business travel into the region. Corporations and individuals are seeking to source more and more of their products form the region owing to their low cost and applicability.

China is also growing to become a major central region for the East Asia owing to its revamped economic growth. With this in perspective, setting up a regional airline subsidiary in china will offer an opportunity for United Airlines to extend its services to the other countries in the region. The corporation will set up a base in central china where most of the corporations and individuals setup their outreach centers. The subsidiary will operate independent of the interference of the head branch but, will be guided by the policies of the corporation in service provision. The subsidiary will also adopt in the corporation's policies the cultural perspective of the people of china. In service provision this will ensure that conflict of the service provision with the culture does not occur.

Risks, Opportunities, and Threats

The country has undergone a transitional stage in it politics and has slowly stabilized it governance structure that has presented opportunities for its growth. The stability observed in the region has brought about the increasing inflow of foreign investment and holiday makers. This offers an opportunity for United Airlines to set up operation base in the region. The political stability in the region also reduces the risks in operations with the region. The political stability presents opportunity for productive relationship with regional market such as those targeted by United Airlines. Legal institution of a business venture in political stable region presents little or no challenge in registration and acquisition of operation licenses. The political stability reduces operational cost that are likely to come up where political instability in envisaged.

The country has also adopted international regulation in business and relations with other countries in the globe. This reduces the difficulties in contracting with service providers, acquiring assets and contracting employees. To some extents the corporation mandate in contractual capacity will require little of no adjustment from it corporate operation standards in the other regions in the globe. This presents an opportunity for the corporation to start its operations in the region and explore potential for its growth.

China economic upcoming presents opportunity for other multinational airline companies to explore the market. This presents a challenge relating to competition in the market. The threat in this case comes in the form of under cost pricing system by airline corporations in a bid to capture the market demand initially. The measure works mostly in circumstances where the market is new and there is need to create brand loyalty. This strategy mostly adopted by multinational corporations where they envisage competition from local firms or from other multinationals. The economy in the region has its own preferences in line with their business needs and culture. This is a challenge to the extent that United Airlines need to understand the market need and adopt its service provision to these specifications. The underlying cost in this may mean that the corporation will need to be aligned to the market needs and has a learning curve to its strategy before it can start operations.

Human Resource recruitment

The differences in culture, labour market, and employment systems between China and other countries create challenges for multinational companies attracting and maintain qualified staff in Chinese market. In the past time of China, there was no human resource management in enterprise, three "iron" (fixed) practices replaced conventional human resource management. During the industry period, the government would manage all of the company's operation, and the managers were informed what to product and how to product by the government. In 1980s, after the Chinese opening-up and reforming policy has been introduced by Deng Xiaoping, the concept of human resource management has been developed because of the return of foreign companies.

Whereas, young people were usually assigned to jobs by the state, and the human resource management did not function well since it was purely administrative in nature. In this situation, the people who have been assigned job were considered as lifetime employment in China, which is also named "iron rice bowl." The iron position means that the managers can keep their job all of their lives and the payment are not related to performance. The iron wage have been given also indicates that managers need not be responsible for workers' salary and the company's benefits.

The managers are not motivated as there is no extra incentive if they work hard. Therefore, the managers' working efficiency would much lower than expected. They will commonly come later and leave earlier or even be absent to do private personal things in the working time; they will lose their technical skills and be difficult to train, after a period of time, most of the managers will strain their attitudes towards work and ultimately depreciate their personal value. Accordingly, when foreign multinationals start running business in China, they encounter difficulties in human resource management, and find that attracting qualified managerial staff in China is a challenge.

Culture differences

Besides of the aspect of human resource management, there are some other challenges that foreign multinational company met in Chinese market. Culture is also an important factor which has influenced the international operation of business in China. People from different countries always have different traditions and attitudes towards business. If foreigners want to manage business in China, they firstly need to understand the fundamentals of Chinese though and study of the Chinese business culture. In China, three philosophy traditions -- Confucianism, Taoism, and Buddhism had dominated Chinese people for thousands of years, people considered them as philosophy rather than religion. The Confucianism refers to human relationship, which oriented Chinese people's thinking and way of behavior; the main contribution is to ask people trust each other, avoid conflict and keep harmonious between each other. So when doing business negotiation with Chinese, foreigners may discover Chinese are a group of "gentlemen" with implicative and transigent. Taoism is a kind of doctrine which is famous for Yin Yang principle of dualism. The latter feng shui which is probably the most popular belief in Chinese businessman is derived from Yin Yang Eight Diagrams principle. It indicates that people's fortune are affected by their environment, and more specially, the position of building relative to its physical environment and the interior layout and arrangement of furniture can influence the events occur to the occupants of the building.

Many Chinese businessmen believe feng shui and consider it as a main strategy for business success. These philosophy traditions have been the roots of Chinese culture, which would play an important role in business behavior and decision-making. However, it is a big challenge for the foreigners because the unique business values and beliefs in China are and fundamentally different from other countries especially western countries. On the other hand, because of the deep influence by Confusion, people in China would rather believe people more than any other contracts during the business activities. So if foreign multinationals want to do business in Chinese market, they need to take a people oriented approach and establish a high level of trust relationship with Chinese partners, which is called "guanxi" in China.

There are a number of different challenges that multinational company operating the Chinese market. It could be culture differences, government limitations and human resource management problems. While attracting and retaining commitment managerial staff is considered as the main challenge that faced in China since the insatiable demand for a limited number of qualified managerial staff. Although multinational company has realized the human resource management problems in China and introduced a variety of employee retention strategies, it also faced some challenges in attracting and retaining qualified managerial staff. For example, the short of talent in China due to the unpractical education system and embarrassing output of university graduates; different recruitment and selection system between foreign companies and China; un-perfect salary incentives for Chinese staff; and high expatriate failure rate in China mainly because of culture shock.