Business and Strategic Management - Doc

Running head: BUSINESS AND STRATEGIC MANAGEMENT
Business and strategic management
Name of the student
University name
Author’s note

1
BUSINESS AND STRATEGIC MANAGEMENT
Table of Contents
Analysis of PESTLE..............................................................................................................2
Political trend-............................................................................................................................2
Economic trend- oil price fluctuations.......................................................................................3
Social trend- attitude towards quality and customer service.....................................................4
PORTER’s five forces............................................................................................................5
Supplier power:..........................................................................................................................5
Threat of substitution.................................................................................................................6
References..............................................................................................................................8

2
BUSINESS AND STRATEGIC MANAGEMENT
Analysis of PESTLE
The exit of Britain from the European economy is termed as BREXIT and has
resulted in huge amount of political and economic fluctuation. Some of these have been
discussed in the present context in terms of scope, basic and alternate scenario.
Political trend-
Scope of the scenario
In a nationwide referendum held in June 2016, majority of the British citizens had
voted in favour of leaving the European Union (EU). This move was supported with a view
to gain more autonomy in their decision making powers. Under the basic move majority of
the UK base banks had been shifted from London to Germany. Therefore, the government
was concerned regarding loosing the monopoly over the banks. Hence, the move was
supported amidst a nationwide agitation. Through a number of settlements, it was decided
that Britain would exist independent of the EU and operate on its own. However, it would
still maintain cordial ties with EU in terms of business negotiation and advice. The move
spread to the greater parts of Europe and up to Germany and continued till the latter half
of the year of 2017, by which a peaceful settlement was done by signing a memorandum of
understanding. However, such a disturbed political scenario affected the growth prospects of
the aviation industry along with many others.
Basic scenario
The implementation of had affected the ownership structure of the airlines as a
whole. The BREXIT has also changed the rules and regulations pertaining to imposition of
taxes, which had further made the airlines manufacturing process costly.

3
BUSINESS AND STRATEGIC MANAGEMENT
The unsettled disputes between nations lead to incidents of grounded planes which
lead to huge economic loss for the aviation company. On a whole, the divided airlines could
result in random flight cancellations, administration disruptions affecting the quality of the
travel (Lohmann and Spasojevic 2018). The limited revenue generated could affect the
aerospace manufacturing process of Airbus UK Limited.
Alternate scenario
In the light of the BREXIT, the partners of Airbus may change their stakeholder
policies exerting monopoly (O'Connell and Williams 2016). This could reduce the exposure of
airbus to international aviation technologies in the form of joint ventures. Hence, the divided
territories ensure that the airlines ties are affected.
Economic trend- oil price fluctuations
Scope of the scenario
There was a great recession which set off in December 2007 and continued till early
2010. During this period of recession there had been huge fluctuations in the price of some
essential commodities such as gold, petrol, diesel etc. Some of these changes had widespread
effect upon the automobile and aviation industry.
Basic scenario
The oil price fluctuations raised the fare prices of the flights, which further made air
travel costly for the customers resulting in less revenue generated for aircraft maintenance.
This further affected the quality and performance of the aviation industry as a whole.
The airbus was hugely dependent on the revenue garnered from the airlines industry
for providing its services in the repairing and manufacturing segment. However, the increase

4
BUSINESS AND STRATEGIC MANAGEMENT
in oil prices also raised the price of the aircraft maintenance services. This further resulted in
loss of a number of partnerships signed by the Airbus UK limited, as some of them were not
ready to pay higher prices.
The rising oil prices could result in the aircraft maintenance sectors to increase the
prices associated with the spare parts (Daft and Albers 2015). In order to operate under low
cost, high friction oils the aircraft manufacturers were required to increase the investment on
some of its basic maintenance equipments which could possess a threat to their market
growth (Flouris and Oswald 2016).
Alternate scenario
The oil price fluctuations may result in the government increasing additional taxes on
the aircraft services and technologies, which may affect the annual revenue generated from
the businesses.
Social trend- attitude towards quality and customer service
Scope
With rise in disposable income of the people there has been rise in the number of
people using airline services. There has been a recent growth in the use of airline services
from 2009 onwards and it has received equitable high all throughout.
Basic scenario
The changing customer preferences as well as the increased awareness for quality
had made the airline services, experience a gradual demand for premium services.
The growth in demand of the airline services can put much pressure upon Airbus UK
limited, which causes a rise in the business development activities. The increased demand

5
BUSINESS AND STRATEGIC MANAGEMENT
creates ample opportunities for the airlines and aircraft services to double their revenue
(O'Connell and Williams 2016).
Alternate scenario
The changing attitude of the customers towards quality can also affect patterns such
as customer loyalty towards particular brands or services.
PORTER’s five forces
The porter’s five forces theory helps in conducting a competitor analysis for a brand.
It could be divided into a number of sub factors such as - buyer power, supplier power, threat
of substitution and threat of new entry.
A number of differences exist between the buyers of the industry and the firm’s
buyers. Depending upon the population senses of a country and the amount of pressure put
upon the air mode of travel, the aircraft manufacturing industries can pitch their products
within the competitive market using effective marketing strategies to achieve high targets.
For example, in developing nations like India with rise in the amount of disposable income of
people air travel has become indispensable which makes India the third largest buyer of
passenger planes with an order placed worth 1,080 new aircrafts. Hence, the buyers for an
industry could be as vast as an entire nation, whereas for a firm the target customer segment
is much more specified; for example a single airline company such as JET airways, Fly
emirates. While designing the airbuses they would also need to take into consideration the
cultural diction of comfort, which would help in appealing to that particular target group of
customers. For example, when designing aircrafts for fly emirates which mainly caters to the
Dubai and UAE based target customer groups, comfort and luxury have been given prime
importance ; where aged from 65-80 and women age group 25-40 working and travelling
alone are given privately enclosed suits with comfort seating sofas and high control panels.

6
BUSINESS AND STRATEGIC MANAGEMENT
The impact level had been further analysed with the help of a table as below:
Competitive Rivalry Medium to high
Supplier Power High
Buyer Power Low
Threat of Substitution High
Threat of New Entry Low
Supplier power:
Impact on the industry
The airbus is a UK based aircraft maintenance service and is responsible for design
and manufacture of high technology wings for airbus model. Hence, it is dependent upon a
number of distributor channels such as private jet companies, government defence agencies
for the provision of spare parts, which are used for designing of the complete aircraft. The
aviation industries are often supported by a huge number of supplier bases. As mentioned by
Hartman and Boscoianu (2015), dependence upon a single supplier base can result in huge
losses on the part of the company, as the suppliers may excise autonomy and increased
monopoly which may limit access to the aircraft maintenance equipments .
Impact on the firm
In this respect, Airbus is associated with a large number of supplier bases. Hence, it
has a market advantage, where it is not dominated by a single supplier base and has larger
control over its operations.
Analysing the force in terms of opportunity or threat

7
BUSINESS AND STRATEGIC MANAGEMENT
Therefore, dependence upon a single supplier base may act as a threat for the aircraft
manufacturing industry (Daft and Albers 2015).
Threat of substitution
The threat of substitution is another factor, which may endanger the existence of
aircraft manufacturing industry. The changing prices of the commodities along with chaging
customer loyalties often possess risk for substitution for brand, products and services.
Impact on industry
With increase in the demand for airline services, a number of airline manufacturers
and maintenance services are on the rise. As mentioned by Moreno-Izquierdo et al. (2016), the
entry of large number of similar market players can develop additional level of competition
for the aircraft manufacturing industry.
Impact on the firm
The emergence of similar market players can result in risk of substitution for the
Airbus UK limited. Additionally, the changing customer preferences can further affect the
market growth objectives of the Airbus UK Limited (airbus.com 2018).
Analysing the opportunities and threats
In order to reduce the threats from similar market players in the aviation industry the
aircraft manufacturing industry needs to use effective marketing strategies. Some of these
could be pitched across in the form of recommendations from past business partners, which
can help the aircraft manufacturing services receive a brand recognition.

8
BUSINESS AND STRATEGIC MANAGEMENT

9
BUSINESS AND STRATEGIC MANAGEMENT
References
airbus.com 2018, airbus.com , Available at :
http://www.airbus.com/company/worldwide-presence/uk.html [Accessed on 29 April 2018]
Daft, J. and Albers, S., 2015. An empirical analysis of airline business model convergence. Journal of
Air Transport Management, 46, pp.3-11.
Flouris, T.G. and Oswald, S.L., 2016. Designing and executing strategy in aviation management.
Abingdon: Routledge, pp.105-212.
Hartman, N. and Boscoianu, M., 2015. Single European Sky-the transformation of the aviation
industry based on the dynamic capabilities. INCAS Bulletin, 7(1), p.97.
Lohmann, G. and Spasojevic, B., 2018. Airline business strategy. The Routledge Companion to Air
Transport Management, p.139.
Mikulić, J., Sprčić, D.M., Holiček, H. and Prebežac, D., 2016. Strategic crisis management in tourism:
an application of integrated risk management principles to the Croatian tourism industry. Journal of
Destination Marketing & Management, pp.87-94.
Moreno-Izquierdo, L., Ramón-Rodríguez, A.B. and Perles-Ribes, J.F., 2016. Pricing strategies of the
European low-cost carriers explained using Porter's Five Forces Model. Tourism Economics, 22(2),
pp.293-310.
O'Connell, J.F. and Williams, G., 2016. Airline Strategy: Keeping the Legacy Carrier Competitive.
How Can Mature Airlines Stay Ahead in the Low-fare Airline Era?. In Air Transport in the 21st
Century (pp. 179-194). Abingdon: Routledge.

10
BUSINESS AND STRATEGIC MANAGEMENT