Describe about the Environmental scan, External competitive factors,competitive strategy and Ethical issues of British Airways?
The assignment will discuss the major factors such as external and internal factors with respect to Pestle and porter’s analysis. The competitive strategy of the chosen organization will be discussed with respect to the competitive factors and strategic initiatives. Different functional areas will be implemented with respect to strategic initiatives in the assignment followed with the ethical issues in the assignment. Thus, it will conclude as a summary.
This report has been prepared on British Airways, one of the leading and established airline companies in the UK. The major business faced by the organization has been included in this work. BA provides commercial services to the clients from the national and international market. The company is known for the extensive routes and improved code sharing method. BA also renders cargo services to the clients, and it is known for its reliable and cost effective services. The predecessor of the company was AT&T, which was in the year 1919. In the year 1924, the airline company includes eight companies that render services to major parts of the European nations and the UK. The company through strategic planning extended the services to different parts of the globe (Buxey, 2000).
Pestle analysis helps to understand the different factors called as political, economical, social, technological, legal and ecological factors. British airways focused on successful research to deal with the business successfully. It is vital to understand the different factors that impacts on the organizational performance.
External general factors
Pestle analysis
With the change on the different policies and taxes, the charges of freight can be carried that impacts the business and the rules and policies of the business are required to be followed by the management of the company. With respect to the same, the internal policies are designed by the company to increase the changes in terms of freight charges and passenger flight tickets also impacts the business performance. With the increase in the security in the aviation industry, the company also has to ensure the rules important for safe travel of the passengers. The factors associated with the political reasons had a direct and major impact on the business purposely plan drafted by the company. Deregulation acts or policies introduced by the federal authorities from the UK or different countries. Constant changes in the rules and policies drafted by the authorities had impacted the strategies for business performance by the company. The expansion plan had to be implemented after analysing the benefits associated with the same. In this process, the management had aimed to provide low cost services to the clients. Through this method, BA intended to retain larger stake in the industry. The threat was also associated with the increasing number of terrorism attack, which had affected the airline industries. Air attacks, hijacks, and other factors always have a negative impact on the business performance. The threat prevail to exist in the industry despite of the necessary security measures introduced by the management of the company Due to increase in the introducing of the safety measure methods, the operational expenses associated with handling the airline industry has increased. Such factor majorly affects the business performance, despite of implementing corrective steps for improving the quality of services (Karuppusami, & Gandhinathan, 2006)
The slow performance of the company with respect to the recession in the global world also impacts the business and BA has also expanded its business in the past by moving into ventures and partnership with different airline companies across the world. The recession in the United States of America in the year 2008-2009 had the huge affect on the level of performance of the business and in terms of freight charges. The global recession also has a drastic affect on the business that is important to produce cheap and inexpensive services afforded by the client. In the economic factors, the company has to analyse the global crisis on the business performance. It includes analysing the global economic crisis, which has a direct impact on the business objectives. The fluctuations in the oil and gas price impacts the price of the services rendered to the clients. Due to recession and global financial crisis, the demand of the travel industry decreases. This affects the business strategies prepared by the management. Besides this the company always works towards rendering quality services to the clients, as this will enable to remain ahead of the competitors. There are there airline companies that face serious financial crisis. This impacts the stability of the company and its future goals (Prajogo, & McDermott, 2005).
Many customers go for travel through different modes of transportation such as buses, trains and others. It depends on the distance intended to be travelled by the client. British Airways has been changing the perceptions and views of the travelers and trying to motivate them to travel through flight modes. This could increase the business of the company and also the management is concerned on offering high quality and better services at an affordable price. It also includes the requirements of the clients and there is willingness to pay the price for the services by the management to existing and potential customers. The expectations of the customers from different parts of the globe have increased tremendously. Increase in the earnings of majority of the people positively affects the business. However, increase in unemployment and reduction in the earning ability of the customers has also impacted the business. Customers fear about various terrorist threats, and thus prefer to choose options when it comes to flying (Quesada and Gazo, 2007).
The technology has been the major concern for the company and it also increased the threats of terrorist’s attacks. Therefore, the management looks for the up gradation of security policies for the company. This will help to deal with the security of the clients and is required to enhance the level of performance for the company. Thus, the technology includes up gradation on security checks for passenger travel and freight travels. The effectiveness of the system and price are the major factors that are to be concentrated by the management. Due to increase in the level of competition, companies these days work towards introducing better technology. Through this method, the management of the company work towards providing quality and reliable services to the clients. This includes sharing the required information with the customers with the help of the latest technology. In this method, the management ensures to provide services like booking through online method, access of important information through smartphones, and others. With the help of such services the company works towards improving the quality of services that has been proposed to be rendered to the clients. The company has introduced effective technology, through which the customer can save a lot on the check-in and check-out time. This is one of the most important factors, through which the quality of services proposed to be rendered to the clients can be improved. Besides this, the company has also proposed to provide internet reliable services, which includes video and web access (Schermerhorn et al., 2003).
With respect to high technology and the introduction of Boeings, it decreases the costs that occur on the consumption of fuels. This will involve with respect to the ecological system and it will cause less pollution in terms of air. Thus, an effort can be made with respect to the organization and for this, the system of data processing that could be changed.
The legal factors for the increase on the venturing into new business that is required to be careful and needs to be managed. This will help to maintain high level of transparency and stakeholders could attract easily towards the business performance. The airline industry is increasingly regulated and the scope of such rules and regulations arrive from infrastructure challenges to route flights and slot capacity through new security and environmental needs. In this method, the company work towards following the rules and regulations associated with the customer rights and employee protection. Both the factors are quite important and play a key role in the up fitment of the services that has been proposed to be rendered to the clients. The management also works towards developing and implementing environmental guidelines, through which the challenges associated with the business execution, are drafted and implemented. The trade unions are recognized and corrective steps are implemented by the business authorities. In order to carry out the tasks in the right manner, the company has also entered into the open sky agreement. Through this method, the management intends to reduce on the disagreements and other factors that can affect the business performance (Salaheldin, 2009).
Few environmental issues in the aviation industry are noise, air pollution, land take, water pollution and waste management. The aircraft noise has the ability to affect the quality of life and half a million people resides close to the UK airports. Aircraft and vehicles have access to airports that emits air pollutants like carbon monoxide, hydrocarbons etc. It can affect the habitats and heritage. Like many organizations, British Airways also face challenges with climate change and government as well as policy makers require airlines to deal with the growth of emissions. (Researchkorner, 2013)
In this process, the management work towards reducing the wastages and polluting the atmosphere. The aircrafts are designed and tested to emit less carbon or cause noise pollution. Such factors are meant to improve the performance of the airline services. As the airline consume less fuel, it is possible for the company to reduce on the operational expenses. The company, along with the staffs works towards creating green issue awareness. This would help in reducing the pollution caused to the environment (Schwager, 2004).
Porter’s five forces
The five forces model was developed by Michael Porter and is very powerful with respect to its ability to deal with the market scenarios. In this, British Airways market situation will be discussed on the basis of five forces. It will enable the company to increase profitability.
Customers are highly price sensitive and want greater service on an affordable price. The less concentration of customers to suppliers indicates that there is a little bargaining power and it is strong in the low cost market with respect to low differentiation between market offers. The use of internet provides awareness to deal it in a better approach.
There is high power of bargaining among suppliers and there are two existing and major aero plane manufacturers known as Boeing and Airbus with huge competitiveness. This creates high bargaining power and British Airways are limited with a sole supplier for fuels and they use collective bargaining through trade unions in terms of increasing the power of bargaining.
The threat of entrants depends upon the barriers to entry such as significant barriers towards new entry with respect to the competitive environment. There are high costs of capital and barriers to exit are in position that reduces new entrants. The failure of recent airlines like Zoom and XI also deter new entrants. Thus, there is high amount of supply chain and distribution networks.
The threat of substitutes focus on the ability of the buyer to switch to other product and hence, alternatives and substitutes to air travel, it is easy to know that there is no other approach towards long haul air travel with respect to time, amount and thus, the substitutes for short haul locations exist that varies from coach to car to rail.
British Airways concentrates on both the long haul as well as short haul flights. There is a little differentiation within long haul among the competitors and the company in terms of pricing and service dealings. The short haul market is highly fragmented with many other small players. Thus, the direct competitive rivalry is fierce with Virgin Airways. It was aggressive in which company goes to move in mergers by the British Airways. There has also been increase in the competition.
The key success factors for industry indicate the requirements for improving the performance of the airline company. Management of the company makes decision in order to achieve the decided overall goals and target. In order to realize the key success factors for the industry, it is essential to gather the required knowledge related to business execution. In this method, the challenges are evaluated and corrective steps to implement the right strategies are implemented.
One of the challenges that impact the performance of the company is related to the management. With the help of strong and foresighted management, it has been possible for the company to handle the changing demands and needs of the customers. In order to operate the business and introduce extension plan, it is necessary to analyse the success key factors. Through this method, BA could analyse the challenges involved with the business execution. British airlines successfully analysed the market environmental factors, through which the required changes could be implemented. In this case, the management planned for the economic growth and evaluated the world trading fluctuations. Required information was collected, as the management intended to venture into international business. The relevance of the airline companies has tremendously increased, due to globalisation. Travellers choose to travel to different locations in the world for personal and business purpose. Due to decrease in the cost of travel, it has now become possible for the travellers to choose the services rendered by the airline company. BA has introduced Boeing services which made the services quite reliable and cost effective (Cleland and Ireland, 2002).
The other key success factor is associated with the analysis of the external factors that can directly impact the business performance. Through the evaluation, the management analysed the opportunities and the major threats that could affect the performance of the company. The challenges were analysed, and proposal to introduce procedural changes were introduced by BA. Such a factor was done through positive implementation of the strategic plan. Negative aspects associated with the threats associated with external factors of the business were analysed. Through such a procedure an attempt was made to improve the quality of services that were provided by the company to the clients (Das, Kumar, & Kumar, 2011).
The challenges faced by the airline industries are increasing. Thus, it is important to draft an effective strategy through which the corrective measures can be introduced for improving the quality of the services. Challenges associated with the investors and clients expectations have to be handled on a timely manner. Through this process, the management will be able to introduce the right steps through which the corrective policies can be introduced (Singh, & Smith, 2006).
Competitors performance and price offering has to be checked. This would help in improving the performance and productivity for the company. At the time of analysing the competitors offer, the company evaluates the type of services and price that is being rendered to the clients. Through this process, the company adopts and implements the corrective steps through which the quality of services for the clients can be improved. At the time of introducing new offers for the clients, it is necessary to analyse the price involved in the process. This has to be done to understand the benefits that would be derived by the company (Wong, and Aspinwall, 2005).
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Strengths The major strength is that it is known as 3rd largest airline companies and the company carries long haul flights to deal with the different parts of the world. The company constantly works on serving clients with respect to best services. Thus, it believes in gaining better image with respect to consumer needs. |
Weakness The company faces huge issues with many strikes that create flight cancellations. There could have no conclusion that occurs between the company and the crew unit. |
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Opportunities The company can introduce reasonable flights for the customers; it can include better services for the company. |
Threats Poor economy threats lead to high level of competition and it easily impacts the changing economy. |
(Nalley, 2014)
Sustainable competitive edge allows the organization to develop the competitors and also it performs consistently. A sustainable competitive edge is, when firms possess value creation process and also leads to the production successfully. Therefore, a sustainable competitive edge helps to allow the improvements of the company’s position and enables the business to deal with the competition over a long period of time.
The current market condition and the competition that exist in the market where the company intends to deal with the new venture with an effective way. Creating sustainable competitive edge is vital for all companies and it entails pricing factors over competitors with the required resources. These attributes focus on highly trained and skilled personnel human resources with the help of new tools and technologies.
British Airways possess two major competitive advantages such as strategic alliances with other airlines and direct flights to worldwide. It is served by its alliance with 13 other airlines such as American airlines, Cathay Pacific, etc. British Airways is able to fly to over 550 locations in the world. It possesses strong advantage to provide the fastest flights to London and it possesses non – stop services. It saves the time of the customers and also the changing flights. Thus, to deal with the sustainable advantage, British Airways must focus on value chain activities that will be complex for competitors to replicate. Other sustainable advantages that is carried by British Airways are dealt under resource based skills and competencies.
They were the 1st London airlines to be known as a training center and were classified as cabin crew with the Level 2 and they had the ability to fly and manage the passengers safely with the large economies of scale with respect to the suppliers.
It appears that the main reason of the trouble is associated with the British Airways is due to unplanned management and because of the insufficient awareness; it should focus on administrative system. British Airways should incorporate and concentrate on protecting the market place and service areas. It is believed to be most successful for the performance. British Airways should result in profits and it could improve the growth for British Airways in terms of value-added services. It could also improve the experience of the customers and other value added services could improve to make it more competitive. This way, it could endeavor to decrease the costs and improve the customers as well employee’s fulfillment.
Thus, it has appeared that strategic management could identify the intentions of an organization and it can also attain these intentions. Thus, it offers issues with respect to the performance of the organization and helps the managers to plan in a tactical way.
Transformational leadership can help British Airways to achieve the major changes and the leaders can create a vision for the future with respect to the employees in terms of emotional commitment. With British Airways, the key to success could lead to higher profits and it could deal with the passionate commitment for the ability to share the vision of the employees.
British Airways treat its staff as the biggest assets and thus, it works on different ways to increase the productivity. Decisions regarding business improvements depend on effective planning and it also utilizes the staff for the organization. There are different areas in implementing strategic initiatives such as:
With respect to the employee’s performance, the organization’s outcomes are evaluated. Effective management on financial challenges and the staffs of the company is known to be the major key performance indicators for the organization such as British Airways. New venture needs strong investment and it is vital to control the expenses. There are different functions in an organization where the decisions could be taken by the managers with respect to entering the new and different market, drafting and designing policies involved in the business and dealing with best plans for data procurement which could be useful for the company.
The managers make decisions to execute the tasks properly and it is important to gather the data with respect to the management and communicate to the higher level of management. The operational managers execute the task with respect to the processing tickets in an effective approach. This way, British Airways can increase the productivity.
Marketing: With this process, the brand awareness id developed with the company and British Airways is one of the leading companies that aim to store better market share. For the effective marketing function, it is communicated with respect to the team in the company. Advertisements focused by the marketing team helped to increase the brand awareness among different market segments.
Finance: This is important function that concentrates on project preparation and helps to motivate the company. The level of transparency is maintained and it is done to make proper use of KPI and ratios with respect to business performance.
Supply chain: The supply chain helps to ensure the business performance and it has no problems with the stocks and marketing for the company.
Customer service: The Company aims to increase the quality of the services and it also renders effective services. This ensures best services with respect to tickets booking, queries resolving etc. It will evaluate the performance. With this method, the company desires to meet the right approach for maintaining the customer relations. The aim of the customer service is to deal with the quality of the services are effectively measured and controlled by the management. This will increase the sales for the company for profit margins.
Besides this, the system should adopt to be ethical with respect to the staff members and management. With respect to the same, no one can deal with the information regarding the information of the company without being authorized.
Ethical practices are meant to deal with the members that don’t make inappropriate use of the information and the authorities should be used in a prescribed manner. This ensures that the same is not exchanged and is not authorized to deal with the information.
Conclusion
The key factors affecting the business performance has to be analysed. This will help in introduce the best policies through which the required changes for improving the business performance can be introduced. In this method, the challenges faced by the management for implementing the corrective steps have to be analysed. For this, the required information and other details regarding the business performance have to be collected. This will help in improving the proposed service quality by the company.
References
Buxey, G. (2000). “Strategies in an Era of Global Competition,” International Journal of Operations and Production Management, 20(9), 997-1016.
Cleland, D. I.; Ireland, R. L. 2002. Project Management: Strategic Design and Implementation. New York: McGraw-Hill.
Das, A., Kumar, V., & Kumar, U. (2011). The role of leadership competencies for implementing TQM: An empirical study in Thai manufacturing industry. International Journal of Quality & Reliability Management, 28(2), 195-219.
Karuppusami, G., & Gandhinathan, R. (2006). Pareto analysis of critical success factors of total quality management: A literature review and analysis. The TQM Magazine, 18(4), 372-385.
Nalley, J. (2014). “The goals and objectives of British Airways: Business management.”
Prajogo, D. I., & McDermott, C. M. (2005). The relationship between total quality management practices and organizational culture. International Journal of Operations & Production Management, 25(11), 1101-1122.
Quesada, H. and Gazo, R. (2007). “Methodology for Determining Key Internal Business Processes Based on Critical Success Factors,” Inter. J. of Physical Distribution and Logistics Management, 13(1), 5-20
Researchkorner. 2013. SWOT analysis and pestle analysis of British Airways: Research Korner.
Schermerhorn, J. R.; Hunt, J. G.; Osborn, R. N. 2003. Organizational Behaviour, 8th edition. John Wiely & Sons, Inc., USA.
Schwager, H. P. 2004. Organizational strategies to address stakeholder relationships: A customer portal perspective. PhD thesis. Aubum University.
Salaheldin, S. I. (2009). Critical success factors for TQM implementation and their impact on performance of SMEs. International journal of productivity and performance management, 58(3), 215-237.
Singh, P. J., & Smith, A. (2006). An empirically validated quality management measurement instrument. Benchmarking: An International Journal, 13(4), 493-522.
Wong, K. Y.; Aspinwall, E. 2005. An empirical study of the important factors for knowledge-management adoption in the SME sector, Journal of Knowledge Management 9(3): 64–82.
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