Introduction

Maintaining the current market share, or being capable of growing in terms of market share, in this continuously changing world means that businesses cannot afford to stand still. In order to keep ahead in the face of increasing global competition, companies must closely follow developments in their external environment, which consists of: society, legal systems, economic factors, These factors are interrelated and are capable of significant change.

The industry chosen in order to analyze these factors and to which extent firms should take these factors into account is the airline industry. The external environment in which airlines operate is particularly volatile and difficult. All the factors mentioned above have a great impact on the airline industry in particular. Therefore the airlines industry is deemed to be an adequate proxy for the analysis.

In an attempt to analyze the external factors in order to evaluate how and to which extent companies should assess these external factors the SLEPT method will be used, i.e. an investigation of the Social, Legal, Economic, Political, and Technological influences on a business. Furthermore the reactive and anticipatory approaches will be discussed to evaluate which is more useful. In this report the following airlines will be used to explain the theory supplied: United Airlines and Virgin Atlantic. These were chosen, because of the differences in size and ways of operating.

Social factors and their significance when it comes to business-economics

By Rink Sikkes

Social factors consist mainly out of cultural factors and social trends, namely health consciousness or consumer lifestyle. They also consist out of demographic factors, for example age distribution and population growth.

Every culture has different wants and needs, so when a business just focusses on only one culture or group of people, other cultures might feel left out and they will be less attracted to the company its service or product. For this reason a business needs to modify its business strategy to a large variety of cultures. To achieve superior customer service Virgin Airlines has done research into cultural diversity and they offer their staff training in cultural awareness. This way they are able to identify every cultural nuance affecting customer satisfaction.[1] This suggests that businesses have to put a substantial amount of effort into focusing on cultural diversity as they can increase customer satisfaction when they do that.