British airways What is the business environment Business Environment is a collective approach of analyzing the internal and external factors which can be controlled by the organization for better performance, increasing profits, and growth in the market. (Business Jargons, 2019) The business environment shows various changes and creates more opportunities for the organizations. It characterizes a firm's competitive factors to bring changes and seek efficiency in the current strategies. A company overcomes challenges arising in the environment and adopts changes to improve performance as it brings development. (Taouab and Issor, 2019) Importance of the business environment for company 1.The process of making decisions depends on the business environmental factors and strategy applied to gain profitability. 2.The business environment changes across the globe so the company needs to analyze decide and implement strategies accordingly. 3.British Airways need to develop such outputs that bring marginal productivity by setting the prices according to the business environment. 4.Strategies are implemented and developed that accompany globally and bring positive change in the environment. 5.British Airways adopts cultural norms and ethical standards that are supported in the business considerations. (Symeonidis, 2014) Types of business environment internal and external Business environment indicates two types internal and external which influencea firm's activities and decisions. InternalEnvironment Conditions and actions are taken within the company such as human resources, physical facilities, financial activities, communication, and tasks. Based on these elements' organizations seek goals and objectives. External Environment
The environmental factors which are outside the organization are created in the external environment. It affects the organization's performance and operations; it is controlled by the organization to bring sustainability. These factors bring opportunities and threats in the market and change the firm's position. It is further divided into 2 levels: Micro and Macro environment The Microenvironment consists of those elements that indirectly affect the business process. The Macro factors include politics, economical conditions, social, technological, legal, and environmental factors that exist in the country. (iEduNote, 2017) The internal environment of British airways (Source: Research Methodology by John Dudovskiy) External environment of British airways Micro Porter 5 forces
Threats of New Entrants British airways face low threats due to the following facts: 1)Large capital investment is needed to enter the market 2)The market is saturated by other competing partners like Ryan air and Easy jet. 3)High power is needed in the airline hub for setting up routes 4)Many of the other entrants are already failed. The threat of substitute products The threat of substitute products/services is low as they offer low prices in the transportation industry, also their brand image is very strong in the market. Power of Buyers There is high power of buyers due to the cheaper rates of airlines in the UK, customers switch to the other airlines if high rates are provided by the British airline. Most of the tickets are booked online so customers have the power to choose the alternatives. Bargaining power of suppliers British Airways obtains high power of suppliers. They have the risk from24 suppliers as they’re working with all of them to get the airline supplies. Competitive rivalry Competition is not so high for British airways as they offer various packages for long flights, but still, there is competition in the market as they use various marketing tactics. Macro Pestle Political: There are strict restrictions and laws applied from the political environment for British Airways which leads to stopping the flights in some destinations and they lose huge amount of profits. Economical: Revenue is negatively affected due to the restrictions and the global economy faces a downturn due to the low traveling demand.
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