Hna Case Analysis

Siyu Chen BMGT 495 Professor Schlake 04/09/15 HNA Case Write-UP I believe HNA Group’s “six criteria for evaluating industries it might enter” are sound criteria for such corporate strategy decisions. First criterion for evaluating industries is “the attractiveness of the industry”. Before entering a new industry, HNA has to estimate the potential profits it might gain and the potential growth of the market. If the potential risk outweighs potential profits, HNA might not want to enter the industry. The “financing capability and financial risk” examines the same principle. “The life cycle of the product or business” determines how long a product or business can stay in the market. HNA wants to enter a market that is in growth or maturity stage instead of the decline stage. Another significant criterion is the “barriers for entering and withdrawing”. If the barrier of entry is high, HNA might not enter the market. I think HNA’s five blocks of business are reasonable and logical. The first block is the air transportation block that generates most of its revenues. Moreover, HNA was just given the approval of flying to the U.S. The expanded agreement between the two countries would bring HNA more opportunities and profits. The second block is the airports block. By constructing airports, HNA could enhance the company’s overall reputation. The third block is the tourism block. By establishing a travel agency, the market for airlines and hotels would be driven up. The fourth block is the hotel block. Customers that are loyal to

HNA would not just purchase its airline tickets but also stay in its hotels. The hotel group generated approximately 25% of its earnings through such bundled packages. The last block is the relative industries block that includes a department store, an insurance agency, an aviation import company, and a computer system company. If one of the blocks has to be dropped, it would be the relative industries block. Although those companies are...