Strategic Management of British Airways

This report discusses the importance of strategic planning for British Airways, including environmental analysis, SWOT analysis, and recommendations for future direction. It covers the benefits of strategic planning, the role of environmental analysis in the strategic planning process, and an analysis of the internal and external environment using Porter's five forces and PESTLE analysis. The report concludes with recommendations for the future direction of British Airways.

Running head: STRATEGIC MANAGEMENT
British Airways
Name of the Student:
Name of the University:
Author Note:

1STRATEGIC MANAGEMENT
Executive Summary
The aim of the report is to find out the importance of strategic planning and the and identification
of the strategic planning into the British Airways. The British Airways is the leader in the United
Kingdom with respect to the airline industry. The British Airways has faced several competitions
from the competitors in the UK market and the other airline service providers over the past 10
years. The report consists of the critical discussion on the benefits of strategic planning on
British Airways; critical discussion on the environmental analysis which includes the internal
and the external environment as part of the strategic planning process; there is a preparation of
the of a report on the SWOT analysis based on the findings of the PESTLE and the Porter's five
forces; also recommendation is included that will direct the British Airways for a period of 3 to 5
years. The strategy of the British Airways is solely based on customer satisfaction, compliance
with the environmental laws and the maintaining proper employee relations.

2STRATEGIC MANAGEMENT
Table of Contents
Introduction......................................................................................................................................3
Benefits of Strategic planning.........................................................................................................4
Role of environmental analysis in the strategic planning process...................................................4
Internal environment analysis (Porter's five forces)........................................................................4
External environment analysis (PESTLE).......................................................................................4
SWOT analysis................................................................................................................................4
Recommendations............................................................................................................................4
Conclusion.......................................................................................................................................4
Reference.........................................................................................................................................4

3STRATEGIC MANAGEMENT
Introduction
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

4STRATEGIC MANAGEMENT
British Airways, environmental analysis, SWOT analysis and recommendation for the future
direction of British Airways.
Benefits of Strategic planning
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).

5STRATEGIC MANAGEMENT
 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).
Role of environmental analysis in the strategic planning process
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

6STRATEGIC MANAGEMENT
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 Şengül 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 (Dragnić 2014).

7STRATEGIC MANAGEMENT
 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
(Dragnić 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 (Dragnić 2014).

8STRATEGIC MANAGEMENT
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).

9STRATEGIC MANAGEMENT
 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).
Internal environment analysis (Porter's five forces)
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

10STRATEGIC MANAGEMENT
 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

11STRATEGIC MANAGEMENT
 Short haul flights including the Ferries and Eurostar
External environment analysis (PESTLE)
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.
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.

12STRATEGIC MANAGEMENT
SWOT analysis
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-

13STRATEGIC MANAGEMENT
 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.
Recommendations
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.

14STRATEGIC MANAGEMENT
 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.

15STRATEGIC MANAGEMENT
Reference
Albrechts, L. and Balducci, A., 2013. Practicing strategic planning: in search of critical features
to explain the strategic character of plans. disP-The Planning Review, 49(3), pp.16-27.
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].
Dibrell, C., Craig, J.B. and Neubaum, D.O., 2014. Linking the formal strategic planning process,
planning flexibility, and innovativeness to firm performance. Journal of Business Research,
67(9), pp.2000-2007.
Dragnić, D., 2014. Impact of internal and external factors on the performance of fast-growing
small and medium businesses. Management: journal of contemporary management issues, 19(1),
pp.119-159.
GRADE, G.B., 2013. Global Business Situation And Opportunity Analysis. Growth, 4(Q1),
p.2014.
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.

16STRATEGIC MANAGEMENT
Türkay, O., Solmaz, S.A. and Şengül, 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.