Hna Group Essay

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106225758 According to case, HNA group has 5 primary blocks of business – air transportation, airport operations, hotels, tourism, and relative industries. HNA’s establishment started in the air transportation business, complemented by its entrance in the airport operations business. The HNA group wanted to leverage its experience and resources in other lines of business, similar to airline and travel, that would integrate horizontally and offer the opportunity to bundle services and add customer value. It can also be seen as an attempt to diversify its risk among its independent, yet linked, business lines and bring in more customers under the HNA umbrella, thus creating synergies that customers can explore and consume. HNA had six criteria to evaluate if it was appropriate to enter in a new business, which in the end needed to add appropriate value to HNA Group. In looking at if integrating various business blocks is strategic, we can apply the “Better Off” and “Best Alternative” test to see if HNA Group has achieved added value. The “better-off” test will ask if combining multiple business units will enable them to capture more value together than they would as independent units. In this respect it is important to consider and analyze industry attractiveness, competitive advantages, and risk considerations. Within the industry, HNA Group has positioned itself as the leading low-cost carrier in China. It has gained competitive advantage through cost savings associated with reorganizing and sharing management experience/practice among its business blocks. In addition they have the possibility to offer bundled goods and services to customer base in the travel domain, which will add corporate value to HNA. However, the strongest competitive advantage only encompasses two of the five business blocks, and those are air transportation and airport operations.

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