Flight Centre’s External Change Factors: PEST Analysis

Political factors

The Australian market is the main business hub for Flight Centre. The government has adopted a free market policy where barriers to market entry have been eliminated. The same policy is practiced in the United States, the United Kingdom, and Canada, which are major markets for this firm. This policy has seen the number of rival firms enter this industry at very high rates, a fact that has increased market competition. Following the terrorists attack at the World Trade Centre on September 11, 2001, governments in the United States, United Kingdom, Canada, and Australia developed stringent policies concerning the identity of the clients in this industry (Dunford & Palmer 2002, p. 380).

The law requires travel agencies to have the full identity of their clients, their purpose of travel, and any other information that may be relevant to the security apparatus. This regulation has had an impact on the operations of this firm. Some clients consider such information confidential. As such, they would avoid agencies that seem to investigate a lot about their personal lives (Anderson & Anderson 2010, p. 70). This puts the firm in a very delicate scenario. On one side, it is required to gather this information from their clients to operate legally. On the other hand, they are obliged to deliver products, which are in line with their customers’ demand. The management of this firm has been keen on explaining to its clients the need to gather this information to protect its market share.

Economic factors

The performance of Flight Centre has been boosted by the economic prosperity that has been experienced in Australia. According to Becker and Murphy (2000, p. 57), Australia has experienced impressive economic growth within the past two decades. The recent economic recession that affected the firm’s main markets did not have a serious impact on its operations, though it slowed its growth. Porters 5 Forces analysis of the attractiveness of the market reveals some factors about the economic environment. A high level of competition in the Australian market following rapid market entry by rival firms shows that economy of this country is growing (Bennett 2011, 68).

Technological factors

Technology has affected this firm in various ways. The emergence of e-commerce has made it easy for smaller firms to get into the market, posing a serious threat to the firm. Technology has also increased the power of the buyers as they can shop around the internet looking for the best alternatives (Cameron & Green 2012, p. 72). Despite these challenges brought about by emerging technologies, this firm has benefited a lot due to the emerging technologies. Its marketing strategies have been made simpler because of the advanced internet technologies.

Socio-cultural factors

The social environment has had a positive impact on this firm as the global society becomes integrated. This integration has increased rates of travel into and out of this country. It has also helped the firm to develop an organizational behavior that is sensitive to the cultural diversity of the employees of this firm.

Internal Forces of Change

The case presents several internal forces of change at the firm that is geared towards managing the changing external environmental factors. The biggest internal force of change at Flight Centre is its leadership. The management of this organization has remained very flexible to various environmental changes, making it easy to initiate and support new ideas at the firm. Highly educated and technology conscious employees is another strong internal force of change. They are keen to identify changing trends in the market and develop mechanisms to respond to these changes as appropriate. The structures put in place by the management such as web-based marketing and integrated electronic communication systems at the firm have been important in supporting change.

Most Important Factors

From this case, the most important factor that has enabled this firm to succeed in the market is its leadership strategies that embrace change. The managers of this firm have been supportive of new ideas that may help improve its operations in the market. The decision of the management go global is also an important factor. This has not only expanded the firm’s market share but also enabled it to understand global forces of change and their relevance to this firm. Finally, the emphasis laid on research has been of benefit in managing change. As Harrington (2006, p. 38) say, managing change requires regular research.

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