Business Strategy for British Airways: Analysis and Evaluation
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This project analyses and evaluates the business strategy of British Airways, including the resources and capabilities, competitive environment, and strategic directions. It includes PESTLE analysis, SWOT analysis, Porter's Five Forces analysis, McKinsey analysis, and Porter's Generic analysis.
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BUSINESS STRATEGY
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Table of Contents INTRODUCTION...........................................................................................................................3 MAIN BODY...................................................................................................................................3 TASK A...........................................................................................................................................3 Analysis and evaluating the organisation resources and capabilities.........................................3 Analysis and critically evaluation of the competitive environment...........................................7 Identificationand justificationof thebusinessorganisation’sexistingand possible competitive edge......................................................................................................................11 Effective strategies and objectives for fulfilment ofstrategic objectives..........................11 TASK B.........................................................................................................................................12 Critical evaluation of various types of strategic directions available to business.....................12 Justify and recommend thegrowth platform and strategies..................................................13 Evaluating the different ways and means for the purpose of observing thestrategies for getting success.........................................................................................................................13 Plan of strategic management..................................................................................................13 CONCLUSION..............................................................................................................................14 REFERENCES..............................................................................................................................16
INTRODUCTION Business strategy refers to the combination of alldecisions which are taken and actions which are performed by thebusiness for accomplishing the goals of businessand secure the competitive position in the market. It isthe backbone as it is roadmap leading to the goals desired. If there is any fault in roadmap which may result in getting business lost in the crowd of competitors. Business objective without a strategy is no less than a gamble ifbusinesses enter in the marketwithout a planned strategy. With the increasing competitionthe significance of the business strategyis becoming apparent and a huge increase inbusiness strategies types which are used by the business(Acuña-Carvajal, 2019). This project is made in context of British Airways which isthe flag carrier of the United Kingdoms airlines. The airline is headquartered in London, England, near themain hub at the Heathrow Airport. Firm is the second largest UK based airline based on the size of fleet and passengers carried. Airlines was founded in the year 1974 after renaming the Aircraft Transport andTravel Limited(Aldea, acob and Quartel 2018). This project will outlay the application of the suitable frameworksfor analysing the macro factors influence onfirm and its strategies. Along with it the analysis of internal environmentof the company by the use of proper models. In addition the Porter Five Forces application for evaluating the forces for the industry in which the firm operates. Further the application of theories and models for developing and interpreting the strategic planning for the firm will be done. MAIN BODY TASK A Analysis and evaluating the organisation resources and capabilities Pestle analysis -It is a tool used for gaining the macro picture of the environment of the industry and assists the firm for forming the impressionof factors whichmay impact the industry and business. Political factors-British Airwaysgets impacted bythe change in the policies of the government. After the invasion of Russia on Ukraine, Russia put the ban on s the flights of UK for using the airspace of Russia in retaliation of sanctions imposed by the Uk on them. British airlines flight operations came to a hault andthis all political scenario caused the drop in share of the market(Bayo-Moriones, and et. Al,. 2020). It also
increased the operations cost as they are unable to use Russian airspaceand look for alternative routes. Economic factors- In the start of2020cases of COVID increased at a fast speedand for preventing its government imposed the lockdown and because of itthe British Airways experienced thehuge loss as the economic activity was halted. Passenger revenue was decreaseddue to the expensive cost of fuel and currency hedges as pound experienced the historic depreciation during COVID pandemic. Fluctuations in the price of fuel has direct impact on the industry. Social factors- Low fares of the tickets attracts the travellers towards the airlines as they do not want to spend more money on the tickets. British Airwaysknows this mindset of the people andhas decreased the planes legroom and added the extra seats for offering cheap tickets and compete with the competitors who are offering low fares. Technological factors- Airlines used automation technology for collecting the post flight review from passengers. Use of this technology saves thedata collection cost and give pathway for the consumers living in the various parts of globe to connect with them. Legal factors-British Airwaysis subjected to theaviation relatedand nation specific rules and regulations consisting of discrimination, fairness and disability. Any law violation will lead to heavy fines, bans and damage the image of brand. Environmental factors- By the increased number of aircraft and flightsevery year the impact of environmentalfactorshas become the prime concern for the regulatory authorities all around the globe(Bui, and et. Al,. 2022). Airlines keep a responsible attitudetowards the climate and society by acknowledging theglobal warming and working for mitigating the carbon emissions. Swot analysis –It is a frame work used for identification and analysing the firms capabilities and its main goal is increasing the factors awareness which impacts the decisions of the business. StrengthsWeaknesses Safety-Airlines is fortunate for having thelownumberofaccidentsand Dependentonthelocalmarket- Airlines revenueprimarily depends on
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incidents. British Airwayshas a good image for safety and hasconsistently rankedinthetop20safest airlines(Chen, and et. Al,. 2018). Sustainability- Airlineshas putted lot of focus onbecoming a sustainable brand.Firmhasbeentryingfor reducingthecarbonfootprintby investing in the fuel efficiency. themarketofUK.Ithasgreatly impacted the firms sales after the covid 19 crisis , so they need to start the new schemesforincreasingthesalesin global markets. Engine of Rolls Royce- Rolls Royce Trent 1000 engine has created many challengesfortheairlines.Ithas reduced the British Airways punctuality and availability of the aircraft. OpportunitiesThreats Service expansion- Firm may expand many servicesfor the growth of the revenue. They may start the premium services which will attract the high end consumers and businesses. Global expansion- Airlines need for expanding in the global markets which will aid instabilizing the sources of revenueandincreasetheconsumer base. Marketcompetition-Increasein competitions has took away the share ofmarket.Firmsneedtofightthe competitionandregularlyspendthe money. Brexit-It has created a lot of economic uncertainty which has significant effect on the airlines(Elias Mota, B.A.,and et. Al,.2020).Newlawssetisalso impacting the airlines working. Stakeholdersanalysis-Itreferstothetoolsandtechniqueswhichisusedfor identification of theexpectation and requirements of major interest of internal and external environment both in the project. It is a methodology used for promoting the reform in policy and process of institutions. High Power and High Interest-In this category the leaders and management of the airlines are included as they have high power of taking decisions in the firm regarding its business operations and also have high interest as theyat the top positions andtheir main motive is to generate more profits(Habib, A. and Hasan, M.M., 2021).
High Power and Low Interest-Government is the one who has the high power in the firm as theymake policies and regulations regarding the airlines which they have to follow but they show no interest as they do not interfere in the activities of the business. Low Power and Low Interest-Local communitiescome in this categoryas they have no power and no interest in the firm. They don't interferein theairlines operations and cannot impact any of the decisions of the company. Low Power and High Interest-Consumers are included in this category as theyhave low power in the airlines and cannot take any decision in the firm but they have high interest in the services of the airlines as they book tickets and travel from theairlines generating revenue for the firm. Vrio analysis-It is a internal analysis which aid the businesses for identification of the advantages and resources which givethemcompetitive benefit.(Hristov, I. and Appolloni, A., 2022).It consists of the value, rarity, imitability and organised. ResourcesValueRareImitationOrganizedCompetitive Advantage Intellectual rightsof the property Extremely valuable Very rareRisk is lowCompany is using at full extent Strong competitive advantage Sales force and Manageme nt YesNoImitated by rivalsLotofpotential for upside Sustainable competitive advantage Product portfolio Yesitis valuable NoCanbeeasily imitated by rivals Usingitasa good effect Shortterm competitive advantage Value-For British Airways theresources which are valuable are intellectual property rights, work force and portfolio of products or services.All thesehave created high value for the airlines by giving them competitive advantageagainst the competitors.
These resources have helped them to provide the consumers with better quality services leading to more profitability(Kabongo, J.D., 2020.).They are the strong competitive advantage for the firm. Rare- For the firmthere is no rare resource which would help them to fight the high competition in the aviation sector. Sales force is rare but to a limited extent which and portfolio of the services whichis also not so unique in comparison to competitors. So this resource ishas created sustainable advantage for the company. Imitation-Rights of the intellectual property is the only resources which can not be imitated by the other firms and other resources such as sales force and service portfolio can be easily imitated by the rivals creating the sustainable advantage for the airlines.Organized-All the above mentioned resources are being used by the airline at their full potential sothis resource has short term competitive advantage for the British Airways. Resources like work forcehas some potential of improvement. Analysis and critically evaluation of the competitive environment Porters Five Forces analysis-It is a simple but very effective business tool for analysis which is used for determination of which strategy has potential for being profitable in the firms competitive environment. Power of competitors-Airline industry is divided in 2 main sectors which are schedule and budget airlines. Wherethescheduleairlines operate globally whereas budget airlines focus onthe short destination. British Airways have to competein the both sectors. Sharein the market is not much significantin compare to the competitors. So this power islowfor the airlines. Threat of new entrants-In the airline industry threat of new entry isvery lowas there are many entry barriers and regulations. But new participants are coming in the market which is creating challenge forthe British Airways butdue to high operating cost they don't survive in market. Power of consumers- The consumers power ismoderateas consumer havedifferent choices such as low cost airlines , easy jetand the airlines schedule. They have vats range of options to choose and there is less cost of switching but there are lessfirms in this sector their power becomes moderate.
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Power of suppliers-Suppliers power ishighas thereis less no. of suppliers in market which are Air bus and Boeing. They collectively provideplanes to more than 600 airlines. British Airways hascontract with them andthey cannot back from it. Sothe suppliers greatly impact the industry.Threatofsubstitutes-ThisforceismoderateasUKisaislandandmajor transportations to the world is by sea or air. But after the launch of tunnel from UK to France the travellers have got new route for travelling. So the British Airways has some threat but to less extent. McKinseyanalysis-It is the tool for analysing the firms organisational design and main goal o of this model is for depicting how effectiveness may be achieved in the firm. Strategy- British Airwayspursue the strategy of business of service differentiation. Airline differentiates the services by relying extensively oninformation technology and digitalization andprovides high level of service customization.Aggressive global expansion is the other business strategy used by the airline. Structure- Airline is owned bythe International Airline Groupwhichis thebiggest group inEurope. British Airways follows the hierarchical structurewhich reflects the large business size. Systems-Besidefromstandardsetoforganisationsystemslikerecruitmentof employees and appraisalsand system of quality control, airlines maintains the numbers of sectors specific systems. They include check in systemfor passenger, handling of baggages and many others. Style- Collaborative style of leadership isused by British Airwayswhichis effective for them in cutting the cost. This style fosters the creativity, motivation and commitment from the juniors. Skills- British Airwaysemployees have access tothe onlinelearning module for the developingtheperformance and personal feedbacks in management and administration community. They also have a development programme for the females where the middle executives take residential courses.
Staff- In the British Airways the use of technology has decreased therequirement of employees. Employees are encouraged by thesuccessful business growth and rewarded with the best remunerations in the industry for influencing the performance. Shared values- British Airways is facing with the change constantly. For managing the changesome questions are asked like is culture helpful for improvements and do values tandem with the strategy and pressure.
Porters Generic analysis-These strategies are used for determining the direction of the firm. They are the ways for gaining competitive advantage. Cost Leadership-It is strategy in which theBritish Airways becomes thelow price provider in industry. Ways for implementing the cost leadership strategyvaries and depends on the industry's structure. Airlineshas access to raw material, technology and economies of scale etc. They look for the sources for becoming the cost leader by providing less priced services. Differentiation strategy-By this strategy the main purpose of the airline is tooffer the services which are innovativeand attractivein comparison toservices of other rivals. Their full focus is on becoming innovative in the sector with the dimensions which are valued by the buyers. For this British Airways has selected to provide best services to the consumers so they consider it as unique and vital. Focus strategy- British Airways by this strategy usethey focus on the one specific markets inindustry. They examines the dynamics of the market and their requirements before developing the low cost services for market. They seek the cost advantage in the target segment. Differentiation focus- In this strategy the airlines seeks the differentiation from its target segment and focus on building some differentiation in the market as compare to the rivals in the specific markets.
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Identification and justification of the business organisation’s existingand possible competitive edge It isthe primary element forany type of the effective strategyand marketing.By maintaining the data relatedto other airlines related to their business operations will assistthe British Airways for identifying theweaknesses and strengths. It also assists indeveloping the appropriate suggestions for avoiding the competitive edge on the rivals.By the aid of Porters Five Forces model the airlines can effectivelyevaluate the trend of theaviation sector. With it the airlines will become more dynamic by fulfilment of needs and wants of consumers. Effective strategies and objectives for fulfilment ofstrategic objectives Different types of tools and techniques are required by the firm for the attainment of set objectives in a efficient manner. By these techniques help they can easily eliminatethe challenges which come in the way of performing the business activities(Yoon, Y. and Sengupta, S., 2021). British Airways I used some strategies which are mentioned here- Managing therelations with consumers-Itis used by British Airwaysmanagers which assists them in developingin a better way and maintain healthy relationship with the customers. According tothe ongoing conditionof the business there is increase in the competition. It is vital for the airlines for developing the relationship with customers. It helps them in retaining and enhancing the firms consumer base. Motivation strategies-Various types of motivating strategies are being used by British Airways for motivating employee's. By help of the strategy they can achieve the airlines objectives resulting in growth and success in market(Tseng, and et. Al,.2022).
TASK B Critical evaluation of various types of strategic directions available to business For the overcoming of the different types of issues and challenges which occurin the business firm, it is vital for the managers of the airlines to adopt the different kinds of strategies. British Airways managerare using Porters generic model and Bowman strategy clock model stared below- Bowman's strategy clock analysis Low cost and low value addition-It assists the British Airways for the maintenance of service price which will help them in attaining the competitive edge over the rivals. Low cost-It helpsthe airlines for providing the services with the help of economies of scale which will allow them to provide services at low price. Hybrid-With the help of thisstrategy British Airwayscan effectively involvesthe value in services on regular basis. Differentiation-Byimplementing this strategythe managers of British Airwaysput more efforts by providing services to customers. Focused differentiation-It assists the airline in providing better services with premium quality which they can offer at extra cost. Airlines managers can concentrate on various techniques for gaining the more revenue. Risk high margins-It aids them in taking high cost of services and allow for increasing the service value(Salehi, M. and Arianpoor, A., 2021). Monopoly pricing-There is monopoly in the aviation sectorand airlineis providing high quality services to the customers. There is immense competition faced by the airline in service segmentation, so airline should decrease price of services. Loss of market share-By this strategy the airline is not able to provide services which gives value to customer leading to less share in market.
Justify and recommend thegrowth platform and strategies From the above analysis it has been recommended to British Airwaysmanagers must focus on differentiation strategy from Porters Generic model and differentiate from t Bowman model.These help themin attaining the competitive edge over the rivals. All the methods allows the airlines tobecome more creative in marketfor reducing the competition. For providing the improved services to the customer the airlines should adopt these strategies(Peng, C.W., 2020). Evaluating the different ways and means for the purpose of observing thestrategies for getting success Plan of strategic management Background-British Airwayswhich isthe famous Britishairlinecompany of United Kingdom providing cheap and quality services to customers. Different issueslike decline in sales and profits are faced by the airlines. Structure of Organisation-British Airwayuses hierarchicalorganizational structure which helps them in getting competitive edge and advantage of specialization. Vision-Airlines vision is to provide the expectational service bywarm welcome to ensure that consumer arrive safely at the destination. Mission-British Airways mission is to create the sustainable future for the earth and b be carbon net zero by 2050. Marketing Mix Marketing mix refers to thefour Ps of marketing whichare the vital elements of marketing strategy(Kurtz, H., Hanelt, A. and Firk, S., 2021). . It isthe actions and tactics set which the company used for promoting the brand. Product-It is the service or goods which is traded. Good should be deliver the minimum level of performance as other variables of marketing mix will nor help. British Airways provides the services to the passengers at reasonable prices. Price-It is called the value which is put in the service or good. Itis dependable on the productioncost, supply demand and direct. British Airwaysuse the premium costing strategy for high quality service in market.
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Place-Itis the point of sale. In each industry the customers eye makesthem easy for consuming the services which is the main purpose of the company's place strategy. Airline pays for the premium slots of the airspace. Promotion-It is theactivitieswhich is undertaken for developing the product and services. It includes thereports of press, advertising, commissions, incentives and awards.BritishAirwayusethedifferenttechniquesformarketingforproviding services(Kong, X., Jiang, F. and Zhu, L., 2022). Strategy Development Differentiation strategy has been adopted by British Airways management for overcoming the different issues. Airline uses the digital techniques for the development. Implementation According to the British Airway leaders strategy implementation is very important and leads to the airlines long term development and growth. Evaluation British Airwaymanagers pay focus ontheimplementationof the strategies formulated. The main purpose of the airline is to focus on issuesand developing the strategies for overcoming the smooth business functioning. CONCLUSION The above projects analysis concludes that the strategy of business refers to the set of plans, actions ans objectives whichoutlayshow business willfight the competition in target market with services and goods which is vital for the success of company. The report discusses the analysis of the firm capabilities and resources by the use of Pestle and Swot model. Along with it the evaluation ofcompetitive environment bythe use of Porters Five Forces model is also done. Identifyingand justification of company's existing edge is stated. In addition the strategies developmentforachievement of the objectives is done. In part B thecritical evaluation of different types of strategic decisions which are available to company. In end the Justification and recommendations of appropriate strategies for growth is done withways of adopted strategies can be observed for getting success is stated.
REFERENCES Books and Journals Acuña-Carvajal, and et. Al,. 2019. An integrated method to plan, structure and validate a business strategy using fuzzy DEMATEL and the balanced scorecard.Expert systems with applications,122, pp.351-368. Aldea, A., Iacob, M.E. and Quartel, D., 2018, October. From business strategy to enterprise architecture and back. In2018 IEEE 22nd International Enterprise Distributed Object Computing Workshop (EDOCW)(pp. 145-152). IEEE. Bayo-Moriones, and et. Al,. 2020. Business strategy, performance appraisal and organizational results.Personnel Review. Bui, and et. Al,. 2022. Circular business strategy challenges and opportunities for Industry 4.0: A social media data‐ driven analysis.Business Strategy and the Environment. Chen, and et. Al,. 2018. How business strategy in non-financial firms moderates the curvilinear effects of corporate social responsibility and irresponsibility on corporate financial performance.Journal of Business Research,92, pp.154-167. Elias Mota, B.A.,and et. Al,. A.P., 2020. Business strategy for sustainable development: Impact of life cycle inventory and life cycle impact assessment steps in supply chain design and planning.Business Strategy and the Environment,29(1), pp.87-117. Habib, A. and Hasan, M.M., 2021. Business strategy and labor investment efficiency.International Review of Finance,21(1), pp.58-96. Hristov, I. and Appolloni, A., 2022. Stakeholders' engagement in the business strategy as a key driver to increase companies' performance: Evidence from managerial and stakeholders' practices.Business Strategy and the Environment,31(4), pp.1488-1503. Kabongo, J.D., 2020. The intellectual structure of the journal Business Strategy and the Environment: A 25‐year author cocitation analysis.Business Strategy and the Environment,29(1), pp.170-179. Kong, X., Jiang, F. and Zhu, L., 2022. Business strategy, corporate social responsibility, and within-firm pay gap.Economic Modelling,106, p.105703. Kurtz, H., Hanelt, A. and Firk, S., 2021, March. Digital Business Strategy and Firm Performance: An Empirical Investigation. InInternational Conference on Wirtschaftsinformatik(pp. 606-624). Peng, C.W., 2020. The role of business strategy and CEO compensation structure in driving corporate social responsibility: Linkage towards a sustainable development perspective.Corporate Social Responsibility and Environmental Management,27(2), pp.1028-1039. Salehi, M. and Arianpoor, A., 2021. The relationship between business strategy and management entrenchment.International Journal of Productivity and Performance Management. Tseng, and et. Al,.2022. Building a data‐driven circular supply chain hierarchical structure: Resource recovery implementation drives circular business strategy.Business Strategy and the Environment.
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Yoon, Y. and Sengupta, S., 2021. The role of business strategy on the adoption and effectiveness of broad-based employee share ownership.Journal of Organizational Effectiveness: People and Performance.