Strategic Planning And Environmental Analysis Of British Airways

Strategic Planning and British Airways

British Airways was founded in the year 1974 and British Airways is one of the largest airline service provider in the United Kingdom and is the second largest in Europe. The British Airways comes in the second place just after the Air France-KLM in Europe. British Airlines provide more flights across the Atlantic Ocean in comparison to the other airlines. It is only in 2008 that the British Airlines lost the old glory because in the UK the fame of an airline service is measured in terms of the number of passengers that flies in that airlines. British Airways is considered as the founding member of the alliance Oneworld in the year 1998. The company Oneworld had several tie-ups with Royal Jordanian, Quantas, Malev, Japan Airlines, Iberia, Finnair, Cathay and American Airlines. The main headquarters and the base are both located in Gatwick airports and London Airlines and there is an extended network of flights to different countries of the world. In March 2008, The British Airlines transferred 50 percent of its activities to the Heathrow airport terminal 5 (British Airways 2018). From the beginning of the year 2009, a majority of the flights take off from the terminal 5, however, there are exceptions like Sydney, Singapore, Bangkok, Madrid, Lisbon, Helsinki, and Barcelona from the terminal 3. For around several years, the fleet of British Airways consisted of the Boeing airlines, however, by the end of the year 1998, the British Airlines inducted the Airbus into its fleet. For the purpose of the long and overseas flights, the company uses the Boeing 747-400. British Airlines can be considered as the largest operator of the Boeing Airlines all over the world. Currently, the number of the operational Airbus and the Boeing airlines is 231. British Airways offers its passengers from 2 to 4 different classes of international flights. For all the flights, Club World and World Traveller are available which are business class and economy class respectively (British Airways 2018). This study is based on the critical discussion of the strategic planning of British Airways, environmental analysis, SWOT analysis and recommendation for the future direction of British Airways.

Strategic planning is only meant for the big companies is a widespread misconception. Whereas, in reality, any form of business can be benefitted from the through the implementation of strategic planning. Whether it is the aim for the high growth, increasing the capital and buying a competitor there is a need for right strategies involving control, plans, structure and strategies that will optimize the return from your investment. Strategic planning is actually visualizing where the business, company or organization will stand in future and also determining the requirements that will help to reach the target (Dibrell, Craig and Neubaum 2014).  The benefits of the strategic planning are beneficial for the British Airways by the following ways:

• Involving the employees into the strategic planning exercise irrespective of the small or large company. When the employees are entrusted with the ownership of the target and goals, then it can help the British Airways to reach the estimated goals. The benefit of involving the employees into the planning is that the involvement builds the enthusiasm within the employees and will bring British Airways and its employees on the same page (Albrechts and Balducci 2013).
• Getting assistance from outside source- the vital part of the successful strategic planning is to bring in assistance from outside sources that will help in framing the strategic planning process. An external consultant can provide fresh ideas into the British Airways and will help set the future goals and will also show strategy to achieve them. This process is beneficial for British Airways in about bringing the company closer to its targets and goals (Dibrell, Craig and Neubaum 2014).
• Risk minimization- during the periods of economic instability, strategic planning plays an important part. Strategic planning will help British Airways to assess the current business environment, competitors, weakness, strengths, resources, current situation. Being better equipped to make the vital decisions, strategic planning an important role in risk minimization. Strategic planning can be helpful for the British Airways to realize the initial goals that the company had initially set and has lost the sight of it (Dibrell, Craig and Neubaum 2014).
• Increases the profitability and market share- market trends can be effectively measured and future predictions through a strategic planning process. Regarding the British Airways, the company can make the analysis of the preferences of passengers that are travelling and the type of passengers preferring a specific type of service. This sort of analysis can help British Airways to gauge the market trends and will also help in increasing the profitability and market share of British Airways (Albrechts and Balducci 2013).

Internal and External Environment of British Airways

For the growth of the business and the managers need to recognise and anticipate the various changes that are occurring in the external and the internal environment. Changes are bound to occur and the thus the organization and the companies must identify the changes and modify it for the purpose of taking the best advantage.

External and the internal environment- each and every business have it’s external and the internal environment. The human resource of an organization or a business is associated with the internal environment and the way in which employees undertake the work in accordance with the organizational mission. The internal environment of a business or an organization is changeable and controllable through the management and the planning process. Whereas, the external environment, on the other hand, cannot be controlled. The managers of a concerned company cannot control the economic conditions, changes in the law and the other business competitors. The manager, however, has the power to control the conduct of business in an organization or a company and can measure the how the business reacts to the changes that are occurring in the external environment (Türkay, Solmaz and ?engül 2011).

Internal environmental factors- the factors that impact the internal environment of a business and the wellbeing of the same can be effectively found out from the strategic planning process. The strategic planning process analyses and examines the weakness and the strengths of an organization. The various external factors are listed below:

• Human resource- the capability, experience and knowledge plays an important role in the determination of organizational success. Due to these, organizations pay specific attention to the employee recruitment and also engages in the provide training to the volunteers and the staffs in order to build up the organizational capability.
• Organizational culture- for the success of the business, the culture existing within an organization is important and vital. The attitudes of the volunteers, employees and the staffs to move an extra mile also create a significant value. The ability of an organization to implement the developmental strategies even there is a thorough planning process can get significantly affected due to the negative attitude. The positive attitude, however, makes the management of the business a lot easier and the positive effects are noticed, felt and even appreciated by the managers of the organization, and the customers of the business (Dragni? 2014).
• Organization structure- Organizations and the businesses are often hindered by its governance, constitution and structure. Organization structure is actually the way works and regular business activities are carried out by the members of the organisation in accordance with the organizational goals. The organization that operates in an environment which is competitive. The organizational structure plays an important role in both hindering and helping the organization to react (Dragni? 2014).
• Management- the leadership styles and the type of management employed by the managers of a company directly affect the morale of the staffs and the employers. The other effective forms of management in which the employees are provided with the power to make decisions. Whereas, there will be a situation in which the staffs and the management will disagree, however working together can effectively reduce the problems.
• Assets- the internal environment can be poorer and richer by the proper utilization of its assets. The internal environment can be made both depressing and uplifting just by utilization of the assets. The productivity and the performance of the employees can be increased just by modifying the internal environment.
• Financial strength- it is an important part of the company that influences the internal environment of an organization. Even if the other internal factors are in a good condition, the financial strength still plays a major role in the strategic planning process. When a company struggles financially then this can hamper its normal functioning (Dragni? 2014).

External environmental factors- the external environmental factors are the factors that cannot be controlled by the organization or a company, however, it can respond to the changes. the various external factors are as follows:

• Economic conditions- the economic conditions in an economy will impact the spending patterns of the citizens. The unemployment rates increase, interest rates increases and as a result the consumption reduces.
• Market competition- in the external business environment, the business competition is constantly changing. The competitors although come and go, however, the marketing strategies change due to the changing external environment (Jane, Justus and Francis 2014).
• Technology- the technological progress has occurred at a fast rate and it had impacted the conduct of the business. There is a risk of losing the market share if the organization and the companies do not adapt to the technological changes. It is not just the adaptation; the service delivery is also an important aspect.
• Climate change- the bad impact of climate change will eventually fall on the nations and the business overall. A business that depends on the change of climate like the agri-business will be negatively impacted due to the climate change.
• Legal – through the legislation, the taxation is the most obvious change. Reforms in taxation policies are brought overnight and sometimes these changes take a long time to process. There are other changes that bring problem are environmental laws, consumer laws, industrial relations, workplace health and safety (Jane, Justus and Francis 2014).
• Media- the media undergoes significant and rapid change. The main reason behind all these changes is the advancement in technology and the rise of the internet. Previously the job advertisements used to come in newspapers, and now they are conducted online.
• Political- similar to the law, government policies also impact the conduct of the business.
• Demographic- change in population undergoes constantly, the composition also changes with the population getting older and the thus the requirements of the people change with time (Jane, Justus and Francis 2014).

Porter’s five forces is an excellent tool which will analyse the competitive environment of the airline industry and also assess the market position of the British Airways (Ochieng, Riwo-Abudho and Njanja 2013).

Strength	Force or threat
High	Competitive rivalry · British Airways handles both the long and the short flights. The long-haul flights have some differentiation in comparison to the other competitors with respect to service offering and pricing. · The market for short haul is fragmented with the other small airlines · The increased competition is due to the consolidation of the competitors. · It has a direct competitive rivalry with the Virgin Airlines.
High	Supplier power · There are the two major aeroplane manufacturers (Airbus and Boeing) that provide a high amount of competitiveness and provides an opportunity for bargaining. · The British Airways has the only one supplier for fuelling at the airport. · The rights of landing are provided to the existing users · In order to increase the bargaining power, the British Airways employees use trade unions for collective bargaining.
Medium	Buyer power · Low concentration of the buyers in comparison to the suppliers, that leaves with little bargaining power. · The high usage of the internet usage has increased the customer interaction. · Due to the economic conditions, there is a surge in the low-cost carriers.
Low	Threats of New Entrants · Significant barriers exist for the new entrants. The presence of the competitive environment and the high cost of the requirements. · The barriers are present at the exit which deter the new entrants
Low	Threats of substitutes · There are few options for the substitutes · No substitutes for the long haul flights · Short haul flights including the Ferries and Eurostar

In order to understand the scenario of the airline industry and specifically British Airlines, there is a need to perform the PESTLE analysis (GRADE 2013).

Political- Heavy regulation; the increase in security provisions due to the past terrorist attacks.

Economic- Global economic crisis, the recent separation of the United Kingdom from the European economy; the surge in oil prices due to the increase in global oil prices and the weakening condition of the American Dollar; The sharp decline in the consumer spending due to the low global market issues.

PESTLE Analysis of British Airways

Social- According to the national statistics, UK has an ageing population and the increase in the rates of unemployment.

Technological- Recent data reveal that the online customers are willing to compare the ticket prices before making the final move. Check-ins and the online booking services are being increasingly used by airline authorities.

Environmental/Ethical- Energy consumption controls and noise pollution controls; the presence of limited land and the expansion of the Heathrow airport is not possible due to the neighbouring greenbelt area; Consumer is more aware and are more concerned about their actions and its environmental impacts; loss of baggage and the loss of flight.

Legal- price fixing and collusion; agreement on open skies; recognition of the industrial action and the trade unions.

The SWOT analysis of the British Airways will be an effective way to identify the strengths and the weakness of the company (Parton and Ryley 2012).

Strength-  

• The development of the terminal 5 led to improved mobility in the Heathrow airport.
• In terms of the stability and financial size, British Airways is the biggest in the UK
• The formation of Oneworld and the prospering partnership with the United Airlines.
• British Airways is a brand and the airlines carry the name of United Kingdom air travel.

Weakness-

• Employee relations is poor and there are evidence of cabin crew strikes, however, the problems are not dealt carefully.
• Change and innovation are slow in terms of adaptation in British Airways.
• Trust issue and the reliability is at the optimum level due to the surge in a terrorist attack.  

Opportunities-

• Increase in the prominence and emergence of the new markets which also includes the budget travelling
• Reliability in terms of the service rendered by the competitors of British Airways is a big issue
• Due to the high cost of competition and the global economic crisis, several competitors are forced to exit the market.

Threats-

• The operational costs are reduced by the competitors of the British Airways which is interfering with the previous strategies of the company.
• Environmental awareness is constantly rising among the consumers and is forcing British Airways to reformulate its policies.
• The open agreement has proven to be competitive for the British Airways from the other competitors.

The several recommendations to the British Airways are as follows:

• Compliance with the laws and legislation is essential for British Airways to continue its operations.
• Increasing the security provisions at the Heathrow airport due to the increased terrorist activities will help gain consumer faith.
• British Airways must pay attention to the latest technological advancements to attract more consumers and passengers.
• British Airways must look for changing the company strategy with respect to the changing climate laws.
• British Airways must maintain friendly employee relations in order to carry out its operations without the interruptions.

Conclusion

 From the above discussion, it can be concluded that British Airways is a reputed company in the United Kingdom and it has a brand image. The company spreads the name of United Kingdom through the services it renders. In this study, the internal and the external factors are factors that contribute to the environmental analysis is done. The study internal and the external environmental analysis is conducted through the tools like porter’s five forces, PESTLE analysis and SWOT analysis. Through these tools, the strategic planning has been done and the recommendations are suggested for the British Airways.

Reference

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British Airways, 2018. About BA | British Airways. [online] Britishairways.com. Available at: https://www.britishairways.com/en-gb/information/about-ba [Accessed 24 Feb. 2018].

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Jane, N.K., Justus, M. and Francis, K., 2014. Influence of external organizational environment on performance of community-based HIV and aids organizations in Nairobi county, Kenya. European Scientific Journal, ESJ, 10(28).

Ochieng, I., Riwo-Abudho, M. and Njanja, L., 2013. Impact Of Organization Characteristics On Sustainable Competitive Advantage During Strategic Change In Airlines.

Parton, J. and Ryley, T., 2012. A business analysis of XL Airways: What lessons can be learned from the failure?. Journal of Air Transport Management, 19, pp.42-48.

Türkay, O., Solmaz, S.A. and ?engül, S., 2011. Strategic analysis of the external environment and the importance of the information: Research on perceptions of hotel managers. Procedia-Social and Behavioral Sciences, 24, pp.1060-1069.