Demonstrate an understanding of the role and functions of accounting in an organisation.
Examine the link between accounting and other key management functions.
Explain the ways in which accounting policies can be influenced by factors external to a business.
Demonstrate an appreciation for organisational factors.
British Airways is the selected organization is the selected organization in the assignment. It is shortened to BA, which is known as the flag carrier airlines of the United Kingdom. It is the largest airline organization in the entire United Kingdom measured in terms of fleet size. However, when this particular airline, measured in terms of passengers, it is denoted as the second largest airlines in United Kingdom (Britishairways.com, 2016).
The objective of this particular assignment is to analyze the current business situation of British Airlines. The study will focus on some of the important factor, which will analyze the current business situation with the application of different kind of Situation Analysis tool. The four tools, which are highlighted in the study, are Market Segmentation tool, PESTEL Analysis Tool, Porters 5 Force tool and Critical success factor tool (Anderson, Havila and Nilsson, 2012). The present assignment is divided into three parts. The first part of the assignment will analyze the entire situation analysis tool in the organization; the second part of the assignment will cover all the accurate management tools and models, which will analyze the internal strategic positions of the company. However, the final part of the study will conclude about the key drivers for change for BA and its implantation process (Aras and Crowther, 2012).
The first part of the study will conclude about the analysis of different kinds of marking tools in the organization. The notion of market segmentation is a special type of marketing strategy, which involves dividing proper target marketing into different subsets of customers. British Airways maintains a huge target market in the business operations. British Airways maintains five factors in the development process of a proper market segmentation process. The five identified factors are loyal to the loyalty, urgent travelers, and business travelers, budget conscious and regular travels (Bertelsen, 2012). Different kinds of travelers, which are highlighted in the study, comprise different utilities in the overall business plan of the selected organization.
The second marketing tool, which is used, is the application of the SWOT Analysis. SWOT Analysis is one of the most common and important situation analysis tools which mainly used in the process of situation analysis purpose. There are four factors in the SWOT Analysis process, which will conclude both the internal environment scanning as well as the external environment scanning (Baum, 2012). Strength and weakness are the two factors, which conclude the internal environment scanning, and on the other hand, Opportunities and Threats are the other two factors, which conclude the external environment scanning. Strong Brand image, Open sky agreement, international business operations, and skilled staffs are the strength of the BA. One of the addition point which is highlighted in the study, BA was the official airline for the 2012 Olympic (Cabezas and Diwekar, 2012). The three main weaknesses, which are highlighted in the process of situation analysis of BA, are cost of management, decline in profitability and labor strike. Due to the popularity of the airlines and reduction of travel cost, majority of the tourist prefers airlines as the best way to travel as compared with the other modes of travel communication system. Increase in the competition level is the only identified threats for the selected organization (Griffin and Moorhead, 2012). One of the most important factors which majority of the Airline Company faces in the business operations is the increase in the daily fuel cost. In order to solve this particular problem the organization needs to develop proper pricing strategies in the overall business operations (Jin, 2012).
In order to scan the external environment, the concept of PESTEL Analysis is highlighted. There are six important factors, which are highlighted in the development process of the PESTEL Analysis tool (Kinicki and Fugate, 2012). The six factors in this particular marketing are tool are Political, Economical, Social, Technological, Environmental and Legal are the highlighted factor in order scan the external environment (Lake, 2012). The political condition of United Kingdom is stable as compared with the other nations. Like all other airlines, British Airlines must observe the rules and regulations, which is developed by Federal Aviation Authority (Mangum and Kerr, 2012). One of the significant political factors, which are highlighted, and affects the operations of the business are is the power of trade union. One of the major problems, which the aviation industry in the United Kingdom is facing, is the increase in the insurance cost due to the global fear of terrorism. However, the demand for air travel is determined by very high-income elasticity (Phillips and Gully, 2013). There are some barriers for the entry of the new firms in the aviation industry of United Kingdom. The social factor concludes the cultural influences, which varies from one country to another. It comes from different tastes and habits of different people in the globe. BA also faces cultural problems in the organizational operation (Robbins and Judge, 2012). The airline industry serves a vast industry of global destinations carrying passengers from one destination to another. It is one of the most challenging jobs for the British Airways to bring harmony in the organizational plans and procedures. Based on the latest news, the British Airways has invested a huge amount of money to the Lotus Technology for the technological advancements. The entire airline industries are constantly looking for the development and improvement process of both technological up gradation and security improvement. With the rapid development of the technological development, the British Airways has decided to adopt the majority of the technological advancement in the overall business operation (Robinson, 2012). Maintaining proper greenery in the environment and ensuring less pollution during the aviation process is the ultimate of the British Airlines. However, different plans and polices of the government and different interest rate structure of the government affects the legal factor in the airlines industry.
The political and legal condition of the United Kingdom puts a positive effect in the overall business. The BA was benefited in different ways by the plans and polices which the UK government develops. The Economic condition of the UK is also stable. The rate of inflation and the rate of deflation in UK are very much less as compared with the other European Country. It maintains a stable rate in the overall economic process. The UK is one of the technological sound countries and maintains a rapid pace with the applications of the modern technology. The contribution of different kind’s modern technology in the business operations helped British Airways to develop a strong business plan, which includes different application of modern technologies. The role of British Airways is very much significant towards the contribution for the society. It plays a vital role in the development process of the corporate social responsibility.
Porters five force is another important tool, which is used in the process of situation analysis process. There are five important factors, which are highlighted in the development process of this particular marketing tool (Schermerhorn, 2012). The notion of the five forces includes the supplier’s power, buyer’s power, entry, and exit of the firms, threats of substitution and intensity of competitive rivalry.
Cost of fuel, aircraft, and labor, which are the main factors for the suppliers power in BA. A different kind of costs, which includes mainly aviation cost, contributes the buyer’s power. The entire airline industry in the United Kingdom falls under the notion of the monopolistic marketing structure (Snene, 2012). The entry and exit of new firms is not restricted, however there are few barriers in the entry and exit of the new firms in this particular industry. In order to develop a proper customer base the BA needs to develop a strong and a proper pricing strategy, if the passengers get other alternate option, the group will easily substitute BA with other airlines. There are different barriers which majority of the aviation industry faces in the entry and exit process. However, there are certain possibilities of substitution in this particular market. The entire airlines industry in United Kingdom maintains a good level of completion. The decision-making of one company affects the decision making of other industry. This particular industry falls under the concept of the monopoly market structure. There are few aviation companies and large number of passengers. The threats of substitution always remain the same for the organization.
Some of the critical success factor of the British Airways is reflected in the following part of the study. Core Competences, vision statement and mission statement and goal setting objectives are the three key points, which are responsible for the critical success of the BA (Zorc et al., 2012). All these factors were developed by this particular organization keeping in mind the requirements of the organizations.
The second part of the study will analyze the application of different kinds of management tools in the overall performance of the organization. There are certain organizational goals and activities. With the application of these management tools, the organization will get the opportunity to achieve the common organizational goals and objectives. The application of Porters generic management tool will allow British Airways to develop a proper competitive platform. There are four factors, which conclude the application of cost leadership, differentiation, and cost focus and differentiation focus. These are the four factors, which BA follows in the organizational plans and procedure. Choosing the right generic strategy is one of the most challenging jobs for the organization.
The role of the value chain management plays a vital role in the overall objectives of the organization. The British Airways develops a set of activities in the organizational plans and procedures, which starts from operating in a specific industry. This particular concept helps in the development process of a proper competitive advantage. The resources of the organization are limited; it is one of the most challenging jobs for the organization to develop a proper value chain system among the customers.
This point of the study will analyze the importance of the culture in the organization. Different employees join the organization from different cultural backgrounds. The way of working and communication differs from one another, if all the employees follow their own way of working style and communication it will lead to confusion in the organizational plans and procedure. In order to solve this particular problem the job of the management is to bring harmony in the organization. The notion of the Hofstede cultural framework is highlighted in this part of the study. In order to develop proper cultural dimensional activities in the organization, some of the most important and highlighted factor which BA follows towards the Hofstede cultural framework are power distance, individual Vs collectivism, Uncertainty avoidance and long term orientation are the most significant factor in the overall cultural framework. Application of this particular theory will allow the organization to focus on Hierarchy, Centralization, Salary range, Participation, Ideal Boss and Privilege & status symbols. BA is benefited in different ways.
The importance of the stakeholders is immersing in every organization. British Airways maintains a versatile stakeholder’s base. The role of the stakeholders plays an important role in the development process of the organizational growth and performance. Some of the important stakeholders in the British Airways are Customers, employees, suppliers, media, financial institutions, shareholders, and local community (Britishairways.com, 2016). All the stakeholders play a vital role towards the expansion process. The organization maintains a good and a coordinal relationship with the all the stakeholders are is very transparent about the organizational policies. The stakeholder’s matrix includes the analysis of four factors. The four factors are Protect, Good Relation, Low Priority, and monitor (Cabezas and Diwekar, 2012).
The close competitors of British Airways are Deutsche Lufthansa AG, Japan Airlines, and United Airlines INC. These are the three companies, which compete with the British Airways. The decision making process of one organization is affected by the decision making process of the other organization (Aras and Crowther, 2012).
The British Airways has developed four main key drivers in order to develop a proper business structure. The key drivers are Financial Segment, Customers, and Orientations and employees (Britishairways.com, 2016). These are the key drivers which allows the organization to develop a smooth and a strong organizational plans and procedure. Finance is the backbone of all the organizational plans and procedure. Customers are the key result in the business operations and orientations of employees will allow the organization to achieve the common organizational goals and activities. However, GDP growth of an economy, increasing disposable income in the economy, corporate profits, airlines demands, and passenger traffic are the key drivers, which these particular airlines developed in the operations of the business.
The present study is divided into three parts. Different kinds of marketing tools such as market segmentation, PESTEL Analysis, Porters 5 forces and all the important factors, which concludes the success of the organization, are the key marketing tools, which this organization has developed in the operations of the business. The second part of the study will conclude about the organizational operations. Porter’s generic tool, value chain management, the notion of the culture in the company, which includes the concept of the Hofstede theory are the key concepts, which are used in the organizational operations. The final part of the study will conclude about the key drivers which majority of the airline companies follows in the operations of the business.
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