CBMEC 2 – STRATEGIC MANAGEMENT

Adopted Company
CEBU PACIFIC AIR

Submitted by:

December 2020

TABLE OF CONTENTS
I. GENERAL SITUATION
a. History
b. Milestone/Timeliness
 c. Current Company Situation
d. Company Strategic Posture
i. Vision
ii. Mission
iii. Goals and Objectives
iv. Values
v. Strategy
vi. Strategic Directions

II. ORGANIZATIONAL CHART AND ITS STRATEGIC OWNERS AND MANAGERS

a. Forms and Types of Business Organization
b. Organizational Chart
c. Strategic Board
d. Strategic Hired Agents or Managers

III. EXTERNAL ENVIRONMENT SITUATION

a. Societal Environment
i. Natural
ii. Demographic
iii. Political-Legal
iv. Economic
v. Social-Cultural
vi. Technology

b. Task Environment
i. Competitors
ii. Suppliers
iii. Distributors
iv. Creditors
v. Customers
vi. Employees
vii. Communities
viii. Managers
ix. Stockholders
x. Labor Unions
 xi. Governments
xii. Trade Associations
xiii. Special Interest Groups
xiv. Products
xv. Services
xvi. Market

c. Industry Analysis
i. Nature of Industry
ii. Competitive forces

IV. INTERNAL ENVIRONMENT SITUATION

a. Review of Company Posture
b. Review of Company Culture
c. Review of Company Resources
i. Marketing
ii. Finance
iii.Operations
iv.Research and Development
v. Human Resource Management
vi.Information System
vii. Others

V. ANALYSIS OF STRATEGIC FACTORS

a. Situation Analysis
i. External Critical Factors
1. Opportunities
2. Threats
3. EFE Matrix
ii. Competitive Analysis
1. Competitive Factors in the Industry
2. CPM
iii.Internal Critical Factors
1. Strengths
2. Weaknesses
 3. IFE Matrix
b. Review of the Vision, Mission and Objectives

VI. STRATEGIC ALTERNATIVES AND RECOMMENDED STRATEGY

a. Strategic Alternatives
i. TOWS Matrix
ii. Groupings and Evaluation of Strategies (Pros and Cons)
iii. Quantitative Strategic Profile Matrix
b.Recommended Strategy

VII. CONCLUSION AND RECOMMENDATION

a. It must have the following:
i. First Paragraph: Summary of Findings based on results of the various data analysis
conducted.
ii. Second Paragraph: Developed alternative strategies with their review or assessment of the
viability and fit to the current firm’s status and environment.
iii. Third Paragraph: The concluding statements gearing to the recommended strategy
iv. Fourth Paragraph: Practically and locally stated recommended organizational strategy and its
supporting OKRs and Strategic Directions.

VIII. IMPLEMENTATION AND CONTROL PLAN

a. Organizational Level
i. Overall Strategy
ii. Strategic Directions
iii. OKRs
v. Plan and Activities (Suggested Template)

SD#
KRA Activities Locus of Timeline Budget Performance
Responsibility Indicator Year 1 Year 2 Year 3
                 
                 
                 
b. Functional and/or Divisional Level
i. List of Applicable Strategic Directions and OKRs
ii. Plan of Activities (Use the same template)
 IX. RECOMMENDED POLICIES
a. Organizational Level
b.Functional and/or Divisional Levels

I. GENERAL SITUATION
a. History
The Philippines' leading airline, Cebu Pacific (CEB) entered the aviation industry on March 1996 and pioneered the
"low fare, great value" strategy. It has flown over 180 million passengers since inception. Aside from its 25
international destinations, CEB also creates an extensive network across the Philippines with its 36 domestic
destinations. It operates from seven strategically placed hubs: Manila, Cebu, Clark, Kalibo, Iloilo, Davao, and
Cagayan de Oro.

The airline continues to devise creative pricing strategies so it may constantly offer low year-round fares for all its
flights. CEB, the leader in innovation in the country's aviation industry, is the first local airline to introduce web
check-in, E-ticketing, and seat selection in the Philippines. It has its own lifestyle rewards program called GetGo, to
give back to frequent fliers more benefits and free CEB flights.

As it goes all out in its customer-first initiatives, CEB is among the first airlines in Asia to invest in an integrated
facility and technology for social intelligence and customer engagement with its Customer Command Center.  The
24/7 command center is equipped with social monitoring, publishing and engagement tools—all tasked to assist
travelers on their concerns and inquiries.
CEB is also the preferred air cargo carrier in the Philippines, linking islands together through exchange of goods. It
provides competitive, fast, flexible and straightforward air cargo service to an extensive network, including
individual shippers and cargo agents within the country and overseas. Moreover, CEB will be the only passenger
airline in the Philippines with dedicated cargo aircraft as it expects the arrival of its converted freighter planes within
the year.

CEB has achieved full compliance with the International Air Transport Association (IATA) Operational Safety Audit
(IOSA)—considered as the accreditation with the highest standards for safety in the airline industry, joining a roster
of 429 airlines worldwide that have strictly complied with the most stringent of international standards governing
aviation safety. 

Customers have learned to anticipate a uniquely upbeat flying experience with CEB, as this is the only carrier that
offers fun in the skies with its "Fun Games" on board, together with its entertaining, internationally renowned inflight
magazine, Smile. Passengers can also help Filipino children by donating spare change inflight thru the "Change for
Good" initiative, in partnership with UNICEF. Cebu Pacific is the first and only partner of UNICEF in the
Philippines and Southeast Asia to date.

Recently, the airline has launched "Juan Effect," a sustainable tourism program, aimed at engaging travelers and local
stakeholders alike, to mitigate the impact of tourist arrivals on the environment. 

b. Milestone/Timeliness

 In late August, 1988, Cebu Air was established in Pasay City, Metro Manila, the Philippines, but it only
started operations almost 8 years later, in early March, 1996.

 In February 1998, Cebu Pacific Air was grounded by the government, but continued its services next month,
after the re-certification of its aircraft.

 In late November, 2001, Cebu Pacific Air started operating international flights with a twice-daily service to
Hong-Kong.

 On the 1st of March, 2002, Cebu Pacific Air introduced thrice-weekly flights to Seoul.

 In the following years, Cebu Pacific Air continued to introduce new routes and increase flight frequency for
some of the existing ones.

 In late May, 2008, Cebu Pacific was named as the world’s number one airline in terms of growth, ranking
fifth in Asia for Budget Airline passengers transported and 23rd in the world.

 On July 22, 2008, Cebu Pacific became the first airline to use the new Terminal 3 of the Ninoy Aquino
International Airport and the first airline to operate international commercial flights from the new terminal.
 In August, 2009, Cebu Pacific opened its Twitter account, being the first airline in the Philippines to use
social media.

 In January 2010, Cebu Pacific gained an International Organization for Standardization (ISO) 9001:2008
Certificate, an upgrade of CEB’s ISO 9001:2000 Certificate obtained in February 2003. The new certificate
guarantees that Cebu Pacific Air has consistent business procedures covering all key processes in the airline,
including adequate records for all transactions, effective monitoring processes and mechanisms for
continuous improvement.

 In April 2010, Cebu Pacific disappointed with the European Union’s decision to blacklist all Philippine
airlines from flying to the EU, based on the International Civil Aviation Organization (ICAO) Significant
Safety Concern from December 2009.

 In May 2010, CEB increased Airbus A320 orders by seven, on top of an existing order of 15 aircraft. The
first for the 180-seat brand-new aircraft scheduled to be delivered from 2010 to 2014 arrived in October and
was used to add routes and frequencies on CEB’s network of 33 domestic and 14 international destinations.

 In June 2010, Cebu Pacific became the Philippines’ largest airline by total number of passengers flown on
domestic and international routes. CEB claimed the Nº 1 domestic carrier in 2009 when it captured 50% of
the domestic market share, in 2010, with 51% market share it was again the Nº 1. The airline operated the
youngest aircraft fleet in the country, composed of 8 ATR 72-500 and 21 Airbus aircraft.

 In February 2011, Cebu Pacific bagged the Budgie$ Friendliest LCC Award at the Low Cost Airlines World
Asia-Pacific Conference held in Singapore, besting other contenders like Air Arabia, Air Asia, Jetstar Asia,
SpiceJet and Spring Airlines.

 In May 2011, Cebu Pacific Airlines was named the most sociable airline in the world by Planely.com, an air
travel-focused social networking site that saw 142 airlines joining its contest.

 In July 2012, Cebu Pacific CEO, Lance Gokongwei won the global low-cost airline Leadership Award. The
Airline Strategy awards, event that recognizes the airline industry’s best in leadership, marketing, and
innovation. Previous years Airline Strategy awards in the Low Cost Leadership category include Jetstar’s
Alan Joyce, Ryanair’s CEO Michael O’Leary, and Air Asia’s Tony Fernandes.

 In December 2012, Cebu Pacific Air took delivery of its 41st aircraft with tail number RP-C3271. Cebu
Pacific is the only airline in the Philippines with its fleet acquired 100% brand-new, making it one of the
youngest and most modern aircraft fleets in Asia.

 In June 2012, Cebu Pacific ranked 15th in Airline Business Magazine’s list of the world’s top 75 low-cost
carriers (LCC) based on 2011 passenger numbers. Cebu Pacific also ranked 15th in 2010. The world’s three
largest LCCs in 2012 were Ireland’s RyanAir, UK’s EasyJet and USA’s Southwest.

 In January 2014, Cebu Pacific and Tigerair, the largest budget carriers based in the Philippines and
Singapore, have signed a strategic alliance. Subject to regulatory approval, Cebu Pacific and Tigerair will
collaborate commercially and operationally on international and domestic air routes, thus creating the biggest
network of flights to and from the Philippines.

 In February 2014, Cebu Pacific Air announced that it has signed a share purchase agreement to acquire 100%
of Tigerair Philippines, including a 40% stake of Tiger Airways Holdings Limited.
  Starting April 11, 2014, Cebu Pacific has been removed from the list of airlines banned from operating in the
European Union (EU) member countries. This confirms Cebu Pacific’s commitment to safety and full
compliance with international aviation safety standards. This enabled Cebu Pacific to continue flying to the
EU.

 In May 2015, to reflect the relationship between Tigerair Philippines as a wholly owned subsidiary airline of
Cebu Pacific Airlines, Tigerair Philippines was rebranded as Cebgo. By October, Cebgo returned 5 Airbus
A320 to Cebu Pacific, thereafter operating a whole turboprop fleet of ATR 72.

 In June 2015, Cebu Pacific Airlines announced an order of 16 ATR 72-600 aircraft to be operated by Cebgo
to meet growing demand for inter-island services in the Philippines. With the delivery of the first ATR 72
600 in October 2016, the airline also became the launch customer of the new high-density Armonia cabin.

 In January 2016,  Cebu Pacific received its first brand-new Airbus A320 with the new livery, the 34th A320
in the low-cost carrier’s fleet.

 In May 2016, Cebu Pacific became a founding member of Value Alliance, the world’s largest low-cost
carrier alliance. Cebu Pacific is currently the only Philippine carrier to be a member of an airline alliance.

 In June 2017, Cebu Pacific placed an order for 7 Airbus A321ceo aircraft. The first Airbus A321 200 is
scheduled for delivery in March 2018.

 In August 2018, Cebu Pacific launched thrice-weekly service between Manila and Melbourne, its second
destination in Australia.

 In January 2019, Cebu Pacific took delivery of its first Airbus A321neo aircraft in a single-class
configuration with 326 Economy seats. Five more A321neo aircraft of the 32 on order will be added to the
fleet this year to Cebu Pacific’s expansion plans.

 The only fatal accident in the history of Cebu Pacific took place on the 2nd day of February, 1998, when
Cebu Pacific Flight 387, a DC-9-32 travelling from Manila to Cagayan de Oro, crashed on the slopes of
Mount Sumagaya due to a pilot error, killing all 104 people on board.

c. Current Company Situation

Cebu Pacific’s financial losses deepened in the second quarter of this year as the impact of the Covid-19 pandemic
began to be felt more severely. The Philippine airline and its subsidiaries made an operating loss of Ps6.29 billion
($129 million) in the three months ended 30 June, it reports. This compares with a profit of Ps4.96 billion in the
corresponding period in 2019.

An operating loss of Ps693 million had been incurred in 2020’s first quarter. The first-half operating loss of Ps6.98
billion compares with an operating profit of Ps8.81 billion in the same period of 2019. At the net level, a second-
quarter loss of Ps7.96 billion compares with a profit of Ps3.79 billion a year ago. The company made a first-half net
loss of Ps9.14 billion after a profit of Ps7.14 billion in the six months ended 30 June 2019.

First-half revenue was down 61% at Ps17.3 billion. Second-quarter revenues dwindled to Ps1.42 billion from Rs23.5
billion in the same period of 2019. “The overall decline in revenues was brought about by the impact of the Covid-19
outbreak which started with cancellation of flights to China, Hong Kong, Macau and South Korea in varying periods
due to the imposition of travel restrictions,” says the airline. “With the rapid escalation of the situation surrounding
Covid-19, the Philippine government implemented a community quarantine which then prompted the group to
suspend all its scheduled flights beginning 19 March 2020.”

It adds: “While some sporadic arrangements for sweeper flights to assist with stranded tourists did occur, for the most
part the group’s operations were virtually nil until April when some cargo flights within the Philippines and
eventually to countries like Japan, Thailand, China, Hong Kong recommenced. Commercial passenger operations
restarted only last 3 June for domestic flights, but in a limited capacity.”

The airline’s cash positioned weakened as the pandemic took hold. It started out the year with cash and cash
equivalents of Ps18.2 billion, but that had been reduced to Ps9.71 billion by 30 June.

However, the airline says it is confident in its ability to raise cash for liquidity needs.
“The group remains in a strong balance sheet and equity position at the end of the period. The group believes that it
remains a resilient airline despite the adverse impact of the Covid-19 outbreak,” it says.

It adds that it is working to mitigate the impact of Covid-19 on its business operations. These efforts include
“negotiations with key suppliers on capital expenditure commitments and related cash flows, as well as with other
suppliers and stakeholders as they impact the group’s cash flows”. As of 30 June, the group operated a fleet of 77
aircraft: 30 Airbus A320s, seven A321s, five A320neos, six A321neos, eight A330s, eight ATR 72-500s and 13 ATR
72-600s, according to a 12 August filing to the Securities and Exchange Commission of the Philippines.

The Airbus aircraft are operated on both domestic and international routes, and the ATR turboprops on domestic
routes, including destinations with runway limitations. The average age of aircraft in the group’s fleet was 5.36 years
at 30 June.

d. Company Strategic Posture

i. Vision
Cebu Pacific: The most successful low-cost carrier in the world
ii. Mission
"Why everyone flies."   

 Cebu Pacific brings people together through safe, affordable, reliable, and fun-filled air
travel.
 We are committed to innovation and excellence in everything we do.
 We are an employer of choice providing opportunities for professional and personal
growth.
 We have a deep sense of family values throughout our airline.
 We enhance the quality of life of the communities we serve and are an active partner in
our nation's progress.
 We offer our shareholders a fair return on their investments..

iii. Goals and Objectives

CEBU PACIFIC is targeting to reach 300 million passengers flown by 2022 as it works on
increasing capacity and improving its network. Candice Jennifer A. Iyog, vice president for
marketing and distribution of the budget carrier, told reporters last week the new target is in line
with the company’s earlier announced objective of reaching 200 million passengers by 2020.
 “It’s a goal that we’ve set for ourselves — 300 millionth by 2022,” she said.

Cebu Pacific is ramping up its fleet to have 83 aircraft by end-2022 from 71 aircraft as of
end-2018. This will be comprised of eight units of Airbus A330s, 18 A320ceos (current engine
option), five A320neos (new engine option), seven A321ceos, 27 A321neos, 16 ATR 72-600 and
two ATR CF. Aside from upgauging, the company is also adding more frequencies to its flights in
gateways where congestion is not an issue, such as in Clark and Cebu.

Our Purpose
To move people, create opportunities, and broaden perspectives, enabling everyone to lead richer
and fuller lives

iv. Values
 SERVICE 

We put people at the heart of service. 

 INTEGRITY 

We do what is right. 

 TRUST 

We cultivate trust and commit to collaboration. 

 COURAGE

We relentlessly pursue new ideas and better solutions.

 BEST OF FILIPINO SPIRIT 

We live the best of Filipino spirit at all times. 

v. Strategy
By continuing their strategy of "unbundled fares" and cutting out frills, like inflight food
service, the low-cost carrier (LCC) is able to offer tickets at a lower price and appeal to the price-
sensitive Philippine market.
There are four generic strategies that are used to help organizations establish a
competitive advantage over industry rivals. Those are Overall Low-Cost Provider
Strategy, Broad Differentiation Strategy, Focused Low-Cost Strategy, Focused
Differentiation Strategy and Best-Cost Provider Strategy. Cebu Pacific’s main goal is
to provide an opportunity for everyone to travel anywhere and everywhere they
wanted with a fun-filled experience that is conveyed with passion for excellent
service, using a strategy that imbibes certain characteristics of the other type of
competitive strategies, but more dominantly combines strategic emphasis on low cost
and differentiation.
 Cebu Pacific will use Best-Cost Provider strategy because goes well with the
company’s objective which is to become global, offer premium service that will
attract customers, becoming their preferred airline that will meet customers' needs.
Using Best- Cost Provider strategy can attain a competitive edge over rivals in
hitting a broader market which is composed majority of consumers seeking for a
low cost opportunity to travel.

Aside from focusing in using a low-cost strategy Cebu Pacific also push into
achieving it through maintaining tight control over production and overhead costs but
still provide with an upscale product at much lower cost than the competitor in the
airline industry. Because of this advantages are competitors are likely to avoid a price
war, since the low cost firm will continue to earn profits after competitors compete
away their profits especially in airline industry. also powerful customers that force
firms to produce goods/service at lower profits may exit the market rather than earn
below average profits leaving the low cost organization in a monopoly positions.
Buyers then loose much of their buying power. It is also hard for new entrants to
move in the industry because low cost leaders create barriers to market entry through
its continuous focus on efficiency and reducing costs.

Aside from that using this strategy also improve Cebu Pacific’s ability to adapt to
environmental changes, learn new skills and technologies, and more effectively
leverage core competencies across business units and products lines which should
enable the firm to produce produces with differentiated features at lower costs.

Cebu pacific will also use under market penetration such as effective advertisements
will be made for the Cebu pacific in the TV and radio ads, print newspapers and
magazines. There will also have an establishment of Research and Development
(R&D) Unit which has a special economic significance apart from its conventional
association with scientific and technological development. R&D investment generally
reflects a government’s or organization’s willingness to forgo current operations or
profit to improve future performance or returns, and its abilities to conduct research
and development. Some Secondary Strategies Cebu Pacific could use is Under
Horizontal Integration which will have to do with Merging with other Airlines. In
microeconomics and strategic management, the term horizontal integration describes
a type of ownership and control. It is a strategy used by a business or corporation that
seeks to sell a type of product in numerous markets. Horizontal integration in
marketing is much more common than vertical integration in production. Horizontal
integration occurs when a firm in the same industry and in the same stage of
production is being taken-over or merged with/by another firm which is in the same
industry and in the same stage of production as of with the merged firm. Cebu Pacific
has a good financial position therefore; it has the capacity to merge with another hotel
company in the industry. If Cebu Pacific merge with another airline, it would be
possible for both companies to compete not only in the Philippine industry but also
with the other foreign countries as well.

Renovation of Cebu Pacific facilities to a more modern and futuristic style can
also affect some good impact to consumers. New facilities design and development is
more than often a crucial factor in the survival of a company. In an industry that is
fast changing, firms must continually revise their design and range of facilities. This
is necessary due to continuous technology change and development as well as other
competitors and the changing preference of customers. A system driven by marketing
is one that puts the customer needs first, and only produces services that are known to
customers. Market research is carried out, which establishes what is needed. If the
development is technology driven then it is a matter of changing what it is possible to
make. The facilities are developed so that hotel processes are as efficient as possible
and the services are technically superior, hence possessing a natural advantage in the
market place.

vi. Strategic Directions

Cebu Pacific Functional strategies main goal is to achieve corporate and business
unit objectives and strategies by maximizing resource productivity to develop &
nurture a distinctive competence to provide a company competitive advantage.

Through a carefully planned objectives for Cebu Pacific Functional strategies we

will work in achieving success over the whole airline industry which are for
Profitability in producing at a net profit in business, increase in market share gaining
and holding the share for airline industry. Producing human talent through recruiting
and maintaining a high-quality workforce. Financial health acquiring financial capital
and earning positive returns. Cost efficiency using resources well to operate at low
cost. Product quality producing high-quality goods or services. Innovation
developing new products and/or processes. Social responsibility making a positive
contribution to society.

It is concerned with developing and nurturing a distinctive competence to

provide a company or business unit with a competitive advantage. So it is very
much important in any kind of industry.
Cebu Pacific Airline will be focusing on Marketing Strategy, Research &
Development Strategy, Human Resource and Management Strategy, Financial
Strategy, Information Management Strategy and Manufacturing Strategy. These
functions are an important aspect in developing a strategic business plan because the
success of the company will depend in the planning for different department for
specific functions.

Marketing Strategy Marketing strategy deals with Pricing, selling and distributing
a Product. Here the companies use 2 types of strategies: Market Development. And
Product Development. In Market Development a Company or a Business Unit:
Capture larger market share of an existing market-Market saturation and Market
Penetration Develop new markets for current products

Research and Development Department is of great importance in business as the

level of competition, production processes and methods are rapidly increasing. It is of
special importance in the field of Marketing where companies keep an eagle eye on
competitors and customers in order to keep pace with modern trends and analyze the
needs, demands and desires of their customers.

There will also have an improvement of quality standard services. This

means by providing the best attention to the customer and addressing his or her
needs or the company’s need. The service that is going to be given to them by
must be excellent.

In our continuous quest for excellence, it is our ongoing commitment to provide a

―Customer Comes First‖ philosophy. We strongly believe that the products and
services we are providing to the customers must be of the highest levels of
International Standards and Quality. Our dedication and commitment to them is of
utmost importance to us.

In providing a Total Management and Staff Commitment to Quality, we are

continuing to strive to better ourselves and services through a process of self-
auditing, corrective action, external checks and by educating and training our work
force in the latest work methods and procedures. We accomplish this through the
regular monitoring and checking of critical control points during a production
process to ensure that the required Quality standard is always achieved.

We are into quality and it is our goal to provide the highest quality of services
presented and delivered to the exact specifications of our customers, by maintaining
the utmost levels of customer satisfaction. Once our hotel is appreciated, we will
continue to maintain this high level of commitment, by providing the optimum level
of service and assistance whenever and wherever needed.
II. ORGANIZATIONAL CHART AND ITS STRATEGIC OWNERS AND MANAGERS
a. Forms and Types of Business Organization
The Cebu Pacific Group is a Filipino airline group headquartered in Manila that
operates subsidiary low cost-carriers; Cebu Pacific and Cebgo (formally Tigerair
Philippines). The group aims to create the largest budget airline network between Asia
and the Philippines. Cebu Pacific and Cebgo are both based at Manila Ninoy Aquino
International Airport and jointly market and sell their services using codeshare and
interline arrangements. Both airlines also jointly operate common routes. The group's
fleet comprise of Airbus family and ATR aircraft. 

Controlled by the Gokongwei family's JG Summit Holdings, Cebu Pacific Group

owns 100% of Cebgo. The investment was finalised with Cebu Pacific's purchase of an
outstanding 40% share in the airline from Tiger Airways Holdings in Mar-2014.

b. Organizational Chart
c. Strategic Board

Position Name

Chairman James L. Go

Director John L. Gokongwei, Jr.

Director Lance Y. Gokongwei

Director Jose F. Buenaventura

Director Robina Gokongwei Pe

Director Frederick D. Go

Independent Director Antonio L. Go

Independent Director Wee Khoon Oh

Independent Director Cornelio T. Peralta

d. Strategic Hired Agents or Managers

Position Name

President and Chief

Lance Y. Gokongwei
Executive Officer

Chief Finance Officer Andrew L. Huang

Chief Information Officer Laureen Cansana

President and CEO -

Alexander G. Lao
Cebgo

Vice President Capt. Samuel Avila

Vice President Rosita D. Menchaca

Vice President Candice Jennifer A. Iyog

Vice President Michael Ivan Shau

Vice President Joseph G. Macagga

Vice President Antonio Jose L. Rodriguez

 Vice President Robin C. Dui

Vice President Rhea M. Villanueva

Vice President Atty. JR Mantaring

Vice President Alex B. Reyes

General Manager Nik Laming

Corporate Secretary Rosalinda F. Rivera

Asst. Corporate Secretary William S. Pamintuan

 
Senior Consultants

Position Name

Chief Executive Adviser Michael B. Szucs

Executive Adviser Rick S. Howell

Senior Adviser Ian Jeffrey Wolfe

III. EXTERNAL ENVIRONMENT SITUATION

a. Societal Environment
i. Natural
On a national level, Juan Effect aims to encourage responsible travel among passengers, and
empower everyone to change at least one everyday habit. On a local level, Juan Effect will
collaborate with island stakeholders to concerted action for the conservation of the environment.
Siargao will serve as the Juan Effect pilot module, wherein the airline together with the
Department of Environment and Natural Resources, local government units and tourism
associations, will work together to implement sustainable tourism action plans. The local
initiatives  will be rolled out before the peak tourist and surfing season begins in Siargao in
September 2018. "As Cebu Pacific aims to fly 22 million passengers in 2018, we recognize
sustainable tourism as a key priority for the airline. The Juan Effect program is a call for all
stakeholders to come together, collaborate and cooperate towards concerted efforts, to ensure that
the tourism industry progresses sustainably," said Lance Gokongwei, President and CEO of Cebu
Pacific.
During the Juan Effect launch, Gokongwei also announced Cebu Pacific will replace non-
recyclable plastic spoons, forks, stirrers and cups with sustainable alternatives on all its domestic
and international flights starting October 1, 2018. The shift to eco-friendly utensils for inflight
meals and refreshments is part of initiatives by the airline to push for sustainability and reduction
of inflight waste. It will also cover flights mounted by subsidiary Cebgo.
On the average, the Cebu Pacific group mounts about 400 flights daily across 37 domestic and 26
international destinations. Those flights use approximately 18,500 pieces of plastic spoons and
forks, plastic cups, and plastic stirrers daily. "Part of the Juan Effect program is looking at the
way we do things at Cebu Pacific. We want to cut down on our use of non-recyclable plastic to
only what is necessary, and are committed to rolling out more initiatives to help protect our
planet and ensure that we operate sustainably," added Gokongwei. The change to eco-friendly
utensils for inflight catering is just the latest in environmental initiatives that Cebu Pacific is
integrating into its operations and core strategy.
Over the past several months, the carrier has invested in technology and other operational
measures that help reduce fuel burn and its consequential carbon emissions. These include a fuel
management system that helps optimize operations; the Runway Overrun Prevention System
(ROPS) cockpit technology for its Airbus fleet, which monitors and calculates optimal runway
landing conditions; and Area Navigation (RNAV) data for more accurate navigation and
approaches to various airports.
ii. Demographic
Cebu Pacific Air's Primary Target Market are both business and leisure travelers , male and
female, social class BCD, single and married. Price conscious, internet and technology savvy
professionals and leisure tourists who want/love to travel locally are CEB's target. Cebu
Pacific has grown faster, quadrupling its international traffic over the past decade, but on a much
smaller base. As part of Cebu Pacific airline's expansion efforts in the Asia-Pacific region, Cebu
Pacific boosted our presence in the international market by opening another international sales
office. In May 16, 2018, they formally opened in Japan office located in Chuo-ku Tokyo. This
office reflects the next stage of growth in the Japanese market. It further strengthened our
presence in the Australian market with our Melbourne route on the back of competitive fare
offerings for both passenger and cargo services. In addition, we added frequencies in some
international destinations from our hubs outside Manila to make it easier for residents in the
Northern part of Luzon, Visayas and Mindanao to fly to Macau and Narita, For the domestic
market, CEB maintained leadership with a 51% market share based on the Civil Aeronautics
Board (CAB) statistics. CEB remains the leader on all important metrics - most passengers, most
seats, most destinations and routes, and daily flights. We bolstered our network with the
introduction of the Manila-Batanes Poute which emerged as the most requested destination
among netizens on social media. We also added several routes out of our Clark hub such as
Cebu, Davao and Bohol.

iii. Political-legal
These are the Cebu Pacific Air C forces that tends to be altered by the influence of government
on the infrastructure of country. The political factors may involves environment regulations,
employment laws, tariffs, tax policy, trade restrictions, political stability and reforms. It is
noteworthy, that the charities needs to be included where a government are not willing services
and goods to be provided.The Philippines' leading carrier, Cebu Pacific (PSE: CEB), is in
full support of the government's contact tracing efforts as it
launches Traze, a unified national QR code-based app that will automate the contact tracing
of the aviation sector for the Department of Transportation and all its attached
agencies. Beginning November 28, 2020, all passengers transiting through Airports will be
required to register on the Traze app.CEB continues to implement multi-layered safety
measures in accordance with global aviation standards to ensure inflight transmission is virtually
nonexistent. These include daily extensive cleaning and disinfection protocols for all aircraft and
facilities, mandatory wearing of face masks and shields for passengers and crew, and contactless
flight procedures. Our aircraft are equipped with hospital-grade HEPA (High Efficiency
Particulate Air) filters, proven to eliminate viruses, including the novel coronavirus, with 99.9%
efficiency. 
iv. Economic
The Cebu Pacific Air C economic factors or forces involves interest rates, inflation, and
growth of economy, cost of living, working hours, wage rate and exchange rates. Combining
these factors, it last greater and inevitable impact on organization.
v. Social-cultural
The culture or social influence on certain businesses vary from country to country. It is
significant to consider these factors. The social factors includes safety and health consciousness,
various demographics, population growth rates and cultural aspects.
vi. Technology
Notably, Cebu Pacific Air C technology is one of the most important way of being competitive in
the highly competitive market arena. Not only this, it drives globalization, the factors includes
environmental and ecological aspects, and available services as well as products. An organization
should innovate and be compatible with the technologies.

b. Task Environment
i. Competitors

ii. Suppliers
iii. Distributors
iv. Creditors
v. Customers
vi. Employees
vii. Communities
viii. Managers
ix. Stockholders
x. Labor Unions
xi. Governments
xii. Trade Associations
xiii. Special Interest Groups
xiv. Products
xv. Services
xvi. Market
c. Industry Analysis
vi. Nature of Industry