Describe about the Strategic Analysis Plays in a Business or Organisation.
Companies prior to formulating policies assess their own strengths and potentials, internal resources and capabilities. Internal analysis of companies helps them properly allocate resources such that they can be adequately utilized to render competitive advantage to the company. This part of the report is an analysis of British Airways internal resources and capabilities that the company employs to gain significant advantage in competing in the market. The company owns a substantial fleet size and has a stable base of employees. Internal resources comprises of financial, resources, physical assets, human resources, structural-cultural resources and intangible resources. Along with which it employs certain products and services that attracts customers and renders efficiency to the company.
British Airways is an extremely efficient airline in terms of its resources and capabilities (Wright, 2013). Internal analysis of the company lies in realizing its resources, core competencies and capabilities. A comprehensive SWOT analysis will help analyze the company’s strengths and weaknesses such that it can utilize its opportunities and act on its threats. British Airways aligns its internal competencies with its vision, mission and strategic objectives. Such alignment helps it’s to attain a strategic plan through which it allocates resources and attains competitive advantage in the market. It is the world’s leading premium airline and it is currently aiming to make the company more cost effective such that it can focus on customer service as a long term company vision. The airline is continually inventing products and services that enable it to service its customers well (Dollinger, 2008).
British Airways mission statement is focused on delivering services that can matter to people, thus stressing on how they fly (Insight, Retrieved on 6th December 2016). Its vision has been to improve employee and customer satisfaction, maintaining competitive strength, improving fuel efficiency and develop equipments for disabled people. British Airways market segment has always been for long-haul customers, it is planning to enter short-haul routes as well by stretching its resources and capabilities. Its wants to provide low cost carrier benefits to customers in the short-haul segment as well. Internal analysis deals with the process of identifying along with evaluating company specific characteristics as resources, capabilities and core competencies. While comparing the company’s vision, mission and strategic objectives.
Resources : Resources comprise of assets of the company that it utilizes for carrying on work activities according to its defined objectives. British Airways resources comprised of financial resources, physical assets in terms of its fleet, intangible resources as its premium brand name and structural-cultural resources of British inheritance (Tassabehji, 2014). The company’s resources are its inputs to provide capabilities for complex and co-ordinated network of its routine activities. In terms of resources it has a huge fleet size encompassing a large number of long haul routes. The company has an internal customer base and through its Executive Club flyer program it attracts more number of customers. It flyers program awards customers for flying repeatedly with the airline. It has bases for servicing at several parts of the world, where it has built its hub including Heathrow at London, UK.
Human resources of the company are highly trained and have high levels of skills. There are divergent roles that are required for comprehending company functions (Harvey, 2009). The company generally hires British workforce, as they can comply with cultural standards provided by the company. The company indulges in employee engagement programs in order to further skills and knowledge levels of employees. The employees of the company enjoy high levels of motivation and job satisfaction, they are offered various perks and other incentives from the company. Such perks and incentives include free travel and other family benefits.
Financial resources analysis reflects that the company has a steady flowing profits of about 10%, which is its operating margins (Metcalf, 2008). Its subsidiaries further generate business for the company. Open Skies and BA City Flyer has been providing alliance services with OneWorld, and has franchised some routes. The company has devised certain programs whereby it combines hotels, cabs and travel packages to customers. These offers have attracted immense customer base for the company as it offers attractive and lucrative deals. These resources have contributed to making the company gain sustainable competitive advantage given market conditions. These are often visualized by customers as distinctive advantages as they provide superior value compared to other airline in within long-haul routes.
Competencies: British Airways core competencies lies in its ability to offer clubbed programs and premium facility to its customers. It offers business class and economic class passenger facility such as access to airport lounges, pick-up and drop facilities and so on. British Airways functions on high levels of operational efficiency and is extremely punctual in its services. Its high level of passenger servicing reflects its brand image amongst customers (Yarger, 2012). The company enjoys high level of brand recall value and image amongst its customers. Through its online portals and e-marketing initiative it has been effective in attracting a large number of passenger from world over. E-services are other competencies that the company has started and has helped it to greatly reduce costs. This service further enabled customers to book hotels, cab services through their website. Further the company introduced auto up-gradation facility for passengers between booking and checking-in to their flights.
Value Chain Analysis : Another distinctive advantage that a company offers to its customers by way of providing value from products and services they offer (slideshare.net, Retreieved on 5th Decemeber 2016). British Airways provides value to its customers by packaging its products in attractive form, clubbing with various deals and offers. The company through its flyer programs also enables customers to take advantage of flying to more number of places by pairing with its alliance partners. It has an interactive e-portal that offers customer various services such as easy ticket printing, check-ins and so on. The company has a messaging system, where customer receives updates regarding their accounts and any offers provided by the company. It also has a help line number that responds to customer needs and queries.
British Airways always suffered from high debt obligation, with increased incidence in debt servicing ratio. High amounts of foreign debts make it difficult to pay off principal along with interest amount. This highly reduces company’s capability to generate fund flow for its existing activities and for expansion (Nicolini, 2006). Another major weakness of the company is its high dependence on the European market. Slowing down of the European economy in the recent past has highly impacted the company in terms of losing out on revenues. The company needs to change its focus market from Europe to grow further.
British Airways have immense opportunities from business agreements with other relines. Joint agreement with American Airlines, Iberia to operate in North America and Europe is a part of their global cooperation. This step enabled customers to have more flight schedule and options to fly anywhere in the world.
Global recession has had a major impact on the airline industry as well, with growth rates declining to 3.1%. Many airlines including British Airways experienced losses especially in the premium business class passenger segment (Mueller Loose, 2013). As the company primary focus 47% is on premium customer segment it got highly affected. Thus with major alliances taking place in the airline industry companies including British Airways is gradually recovering their revenues.
Conclusion
The internal analysis of the company provides several negative aspects of the company. Yet the company is developing multiple strategies and strategic policies in order to develop its revenues and business. Reports and data suggests that alliances and mergers have had a positive impact on the company. The company needs to divert its focus segment to developing counties in order to reduce risks of its business. The company also needs to introduce certain low cost careers such that it can compete in short-haul segments as well, stretching utilization of its resources and capabilities.
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