Strategic Planning and Analysis of British Airways

This report provides an analysis of the strategic planning and capabilities of British Airways. It includes a PESTLE analysis, Porter's five forces, SWOT analysis, and McKinsey's 7s model. The report also discusses the strategic direction and action plan for the company.

Business strategy

Executive summary
In organisation, strategic planning is used to manage and monitor the organisational
resources so that the company become able to acquire their objectives. By diversifying the
organisational base British Airway can enhance its presence across the world. Main aim of this
report is to describe the strategies formulated by British Airway . For this the respective firm will
analysis the PESTEL framework and SWOT matrix and porter's five forces. The organisational
will identify its abilities by conducting McKinsey’s 7s model and VRIO analysis. The Ansoff
Matrix make enable the British Airway to apply an effective strategy out of four strategies in
order to the company's development. Due to this, British Airway will enjoy the benefits of its
business expansion as it become able to survive for a long time period in the market.

Table of Contents
INTRODUCTION .............................................................................................................................3
Overview of the chosen organization ...........................................................................................3
PESTLE Analysis..........................................................................................................................3
Porter's five forces.........................................................................................................................5
Strategic capability.......................................................................................................................6
SWOT analysis of chosen organisation.........................................................................................8
TWOS matrix................................................................................................................................8
Strategic plan for British Airway .................................................................................................9
strategic planning ( Porter’s Business-level strategy)...................................................................9
Strategic direction ( Ansoff Matrix)............................................................................................10
Action plan .................................................................................................................................11
Evaluation and control ................................................................................................................11
CONCLUSION AND RECOMMENDATION ..............................................................................11
REFERENCES.................................................................................................................................12

INTRODUCTION
Business strategy is considers as compendium of intentional choice that an business
organization makes in order to maximize their value over a given time period. By making
effective strategy, an organizational become able to accomplish the competitive advantages and
also expand the market in major organizational condition. There are different aspect of the
strategic management which are used by organization for the production of plans. All aspects
make enable the organization to make different strategic priorities and the objective that assure
betterment of a company (Anfer and Wamba 2019). The firm selected for this report is British
Airway that flag carrier airline of UK. It was established by British government in 1974. Being the
manger of British Airway, it is duty of the manager to educate their team and face the
organizational challenges. For this, manager need to develop a strategic plan in order to sustain the
business growth. This report will be based on the analysis of macro environmental factors,
strategic capability, analysis of internal factors, strategic plan for chosen organizational, strategic
planning and direction, implantation of action plan, evaluation and control.
Overview of the chosen organization
British Airway is a flag carrier airline in United Kingdom, its headquarter is situated in
London. This company is a part of the Intentional Airline Groups. Major subsidiaries of this
company include the BA City Flyer, that serves destination in UK and the continental Europe. It
flies to above 170 destination in 70 nations. This company has a fee around 280 aircraft, including
A380 and 787. this airline carries approximately 40 million customers in a year and serve them
team and meals. Currently, it has around 40000 employees that include 15000 cabin crew, 5500
engineers and 3600 pilots. This airline also offer the opportunities for graduates and has around
150 place for the the apprentices every year.
PESTLE Analysis
British Airway faces many difficulties that can be economic, political in nature. In relation
to respective company, there are some leading opportunities and challenges created by various
legal, political, social and other factors which are mentioned below:

 Political factors- In aviation industry, the political factor play central role in term of
political stability and perception of safety (Ardakan and Ebadi 2021). British Airway is a
business and it need to be regulated. UK's government ensure that measures should be
taken against the violence and any unlawful immigration. Thus, this company follow the
rules and regulation made by the government in order to make sure that there is safety and
security for all passengers flying using the British Airway.
 Economic- There are certain elements such as currency exchange rates, overall economic
climate and inflation rate in UK has an importance and direct impact on the performance
of British Airway. Cost of the fuel is another important economic component for the
respective company. Decrement in the fuel's price proved to be a significant economic
factors that is very beneficial for the business (Amrutha and et. al., 2022). Furthermore,
there is wide range of the economic factors that have indirect impact on the revenue of
British Airway. For instance, rapid fall in he oil price causes a decrement ion the passenger
revenue of GBP 288 millions.
 Social factors- These element including the demographic changes are also play vital role
in the aviation industry(Arjomand Kermani and et. al., 2021). Main target market of the
British Airway is the millennials whose travel habits are very different from previous
generation who spend more than baby boomers on the air travel in leading Western
market. Fear of the COVID 19 has spread in the society leading the individual cutting back
in the travel to foreign destination. It is bound to hit operation and revenue of the flight
operations like British Airway.
 Technological factors- The technology is considered as central factors that drive growth
of the airline sector. Digital technology is very helpful for the airline industry as it grow
their customer base more efficiently (Soret. and et. al., 2022). The British Airway is also
investing in the technology so that it can make their fleet more fuel efficient that offer a
superior experience to their passengers. For this company it become very essential to check
their website constantly as now passengers to do online check in to save their time. It help
this company to keep them up to date and resolve queries that customers have asked.
 Legal factors- These factors are most important concern for entire aviation industry (Basu
and et. al., 2021) There are several legal elements that impact the British Airway. Apart
form the passenger security, environmental impact and convenience, there are some laws

related to the labour and other operational areas that are required by British Airway to
remain compliant with their domestic market.
 Environmental factors- These elements are a central concern for all the airline operators
in aviation industry. the noise, air, water pollution, waste management and land take are
common environmental factors that the British Airway have to face. The respective
company has taken some steps to minimize the environmental impact in order to make
their business model sustainable. Parents company of the British Airway, IAG has
committed to bring their carbon footprint to the net zero. They has also offset their carbon
emission for their domestic flights in UK and make them net zero carbon (Pavloudakis,
Roumpos and Spanidis, 2022).
Porter's five forces
By analysing the porter's five forces in relation to British Airway, its position can be
analysed in the market and airline industry. In context of the respective company, its Porter's five
forces are mentioned below:
 Threats of substitute products- This is defined as the threats of the substitute products or
services for the business organisation. Here in context of the British airways it is been
identified that the threat of the substitute services is low because the company offers the
various offers and discounts and provide with the best services to its customers. And for
those customers brand name is not much important as compare to customer demands
because it saves their money which is the positive point for them.
 Bargaining power of suppliers- This is the potential of the suppliers for bargaining with
the business organisation. This only happens when there is less suppliers an more of the
organisations. It is been identified that the British airways acquire the high power of
suppliers. As this can impact the British airways and its maintenance of the services can
impact the business organisation.
 Bargaining power of customers- This is related to the power of the customer to bargain
with the organisation(BEIKI, He and Sarpong 2022).In context of the British airways the
buyers have te high power at the regional level which means that the maximum of the
customers are attracted towards the low fares of the services which makes the power of the
customers high.

 Potential of new entrants- This is related to the power of the new entrant within the
industry. In context of the British airways there is the low power of the new entrant
because the the company is well established and the new entrant will take time to settle in
the UK economy.
 Competition in the industry- This is related to the number of competitors within the
industry. It is identified that the completion in the industry is medium because the British
airways try to manage to offer the both kind of services to its customers the difference in
the prices according to the services matter a lot in the airline industry. But the competition
cannot eliminated in the airline industry.
Strategic capability
This model describe the organisational capability to enlarge and execute tactics that gain to
sustain a competitive edge (Farrukh and et. al., 2020). To determine the capabilities of British
Airway, VRIO analysis and McKinsey’s model in relation to respective company is discussed
below:
McKinsey’s model
 Structure- It show organisational chart of the companies. the British Airway is owned by
the international airway group. This company has mainly two group that are management
board and the customer and operation executive .
 Style- It define the way in which an organisational is managed by their top level
management. British Airway has autocratic leadership style that has been very effective
for them since company's leaders objective is to minimize the cost. This style of leadership
limit the motivation and commitment from the subordinate. British Airway need to
implement different style in order to overcome these limitations.
 Strategy- The British Airway pursues business strategy of the service differentiation. For
respective company, a creation of the alliance and code sharing as it can improve the
airline for satisfying their customer's requirements (Kerridge and Simpson 2020).

 Skills- It is concern with the performance of the organisational staff. British Airway need
to research that what skill they are required in order to reinforce new effective strategy and
structure that help them to gain a competitive advantage.
 Staff- It is concerned with that how many and what type of employees a company need to
recruit, motivated and trained (Lin and et. al., 2021). For British Airway, technology has
minimized need for employees. It motivate its employees by reward and successful
business growth with best remuneration to influence their performance.
 System- It refers to the procedure and daily activities that staff in order to get done their
work. In British Airway, their working system is formalized with some informal system
for managing the relationship between airlines and agents. Its system is mainly concerned
with the customers support and order processing.
 Shared values- It involve guiding concept and the vision underlying the desired business
destiny of the organisations. British Airway is continuously faced with the changes. Main
values of British Airway is to satisfy its customer's requirements and enhance company's
market share.
VRIO Analysis of chosen organisation
The VRIO analysis of British Airway is a resources oriented analysis which is used to
provide details in changing the culture within respective company. The resources based strategic
analysis is based on the assumption that the strategic resources provide the opportunities to
British Airway to build sustainable competitive advantages against their competitors in market. In
context of the British Airway, its VRIO analysis is discussed below:
 Value- Its describe the company's assets that add the organisational value(Parnell, J.A.,
2018). Intellectual property, trademark and patent rights are the valuable resource of the
British Airway and it help the company to thwart competition. Its another valuable
resources is its global presence as it diversify company's revenue and isolate the balance
sheet from an economic cycles.
 Rare- The rare resources make enable a company to gain competitive advantages. In
relation to British Airway, the customer community is its rare resources as it help the
respective company to build a relationship with their customers which is not possible for

all business organisations. Copy right and intellectual property are also rare as no one
could copy them.
 Imitability- When the entrants could not imitate their assets in a short time period, them
these assets accomplish the competitive edge in effective manner globally (Pitelis and
Wagner 2019).In relation to British Airway, its has a great customer network and loyalty
as if other competitor tries to gain it then they will not get success in this. It is also very
hard to imitate for its rival to imitate the culture and community dedication.
 Organisation- British Airway is leveraging customer loyalty to the good effect. It has lot
of the potential to utilize its excellent sales force. The respective company is leading player
in airline industry and it is most diversified firm in that industry. Its talented and expert
staff make give their pre-eminent efforts that help to acquire competitive advantages of
respective company.
SWOT analysis of chosen organisation
 Strength- British Airway has around 150 international destination crossways 6 continents
and also has a fleet size of more than 260 aircraft. This company has a great substantial
brand presence with various services like lounge, first class, loyalty program and many
more across the world. The respective company uses excellent advertising and marketing
globally with sponsorship of many events like Wimbledon, Olympic and other etc. that
boost brand of this company.
 Weakness- British Airway is facing competition from its other leading airline competitors
on all the routes (Rehman and Anwar 2019). Due to this, the company has a limited market
share. This company is depend on the UK market as it generate its 50% revenue form UK
market that can be risky in globalised economy.
 Opportunities- British Airway has the opportunity to alliance and code sharing with the
other global leading airlines as it help the respective company to boost their business. It
can expand its market in new developing countries that help British Airway to increase
their market share. (Sheng and et. al., 2019).
 Threats- A rise in the fuel cost is a threat for British Airway as it can reduce the profit
margin of the considered firm. The labour cost is also increasing which that increase the

expenses of British Airway. Another big hurdle for the respective company is competition
that adversely impact the firm's market share.
TWOS matrix
Strength Weakness
Opportunities The British Airway has good
market positions that help the
company to grab the
opportunity to make alliance
with another big organisation.
The company has a limited
market share that can impact
the opportunity to coding share
with big companies.
Threats British Airway is operating in
many countries that help the
company to overcome from the
threat of competitions.
Due to the rising of fuel price,
company is lacking to perform
efficiently. It can restrict their
new ideas.
Strategic plan for British Airway
It is very essential for British Airway to make a strategic plan and also manage it
effectively in order to get success in market. In context of British Airway its strategic plan is
discussed below:
Vision
The vision of British Airway is to become most responsible airline in the world and have
brought all their corporate social responsibility practices together under the banner “one
destination”.
Mission
British Airway's mission is to ensure its customers fly confidently that together, they are
acting very responsibly for taking care of the world they live in.

Objectives
 It want to enhance its market share globally.
 It want to increase its customer base in world wide.
 It want to generate more revenue by producing services effectively.
strategic planning ( Porter’s Business-level strategy)
Porter generic model
This is the tool which is used by the business organisation in order to evaluate the best
strategy for the company which can help it to have a competitive advantage. The various strategies
are discussed below:
 Cost leadership- This is the strategy where the business organisation concentrates on
keeping the prices low in order to attract customers . This is the strategy which is used in
increase the market share of the company (Teirlinck, P., 2020).
 Differentiation- This is the strategy which is used by the company in which it focus on
differentiating its products or services with its competitors. The company seeks to be
unique with its competitors which will help in gaining more competitive advantage.
 Focus- This is the strategy where the organisation can decide whether it should be cost
focus or differentiation focus/ this is the strategy which is used to be more alternative in
order to have the competitive advantage and earn more profits.
Chosen strategy
British Airway is adopting the differentiation strategy in which it will produce its service
in a unique way. Under their strategic plan, respective company is going to introduce a new
aircraft in which they will provide service only to business people. In this aircraft they will also
provide the facility of different cabins and conference room for business meetings. This strategic
plan will help British Airway to gain competitive advantages.
Strategic direction ( Ansoff Matrix)
 Market penetration- In this, organisation efforts to grow their business by using its
existing offering in the existing markets.
 Market development- In this a company tries to expand their business within a new
market by using their existing offering (Vardarlier and Zafer 2020).

 Product development- Under this strategy, organisation tries to create a new product
targeted at their existing markets in order to achieve growth.
 Diversification- In this, firms tried to develop and grow their market share by launching or
introducing any new offering in the new market.
British Airway have chosen the product development strategy as it will provide a new service for
business people. This strategy help the company to satisfy its targeted customers and also expand
the market for its new service. By this the company become able to achieve the stability in
demands.
Chosen directions
From the above analysis it is analysed that British Airway should use the Ansoff matrix as
with the help of this model the company can develop its product to target new market or increase
its market shares in order to enhance its revenue streams. It will help the respective firm to classify
their strategic choice and also evaluate the risk with a quick and simple understanding. It will
make enable the British Airway to figure out one most effective strategy out of the four direction
that will lead to a successful growth and development in the business.
Action plan
 British Airway will promote their new strategic plan through social media such as
Facebook, Twitter and many other platform. This technique will be very beneficial for the
respective company as mostly people are engaging on social media.
 British Airway is also providing additional benefit with their services like separate cabins
and conference rooms that will help them to attract more customers.
Evaluation and control
To evaluate the success and performance of a plan there are several techniques in the
organisational (Windahl, Karpen and Wright 2020). British Airway will evaluate the success of
this plan by different ways as it will compare market share and popularity of its company by many
other top companies. They will also evaluate this by observing like and comments on social
media regarding their company and services. There are also some other methods to evaluate and
control the plan like KPI the company can measure their employees performance and trained them
to increase their performance so that the customer can get maximum satisfaction.

CONCLUSION AND RECOMMENDATION
From the above report it is concluded that British Airway offer different service to
different type of customers. To make their strategic plan successful, they need to analyse the
external environment effectively. They also need to evaluate their strength and opportunity in
order to overcome their weakness. It is recommended to the British Airway that its should adopt
the product development strategy as it help them to attract more customer and also provide a wide
market to expand service. Hence, it is very essential for organisation to to make effective action
plan in order to implement their strategic business plan efficiently.

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