Strategic Analysis and Modeling for British Airways (BUS 301)

This report presents a strategic analysis of British Airways, examining its internal and external environments using various frameworks. It begins with an introduction and table of contents, followed by an organization audit utilizing the McKinsey 7S model to assess strategy, structure, systems, shared values, style, staff, and skills. The report then employs value chain analysis, PESTEL analysis, and Porter's Five Forces to evaluate the airline's competitive landscape, identifying strengths, weaknesses, opportunities, and threats through a SWOT analysis. The analysis covers key aspects such as political, economic, social, technological, legal, and environmental factors affecting the airline. The report also discusses the bargaining power of suppliers and consumers, along with an overview of the current market operations and strategic models to understand British Airways' market position and future challenges. Finally, the report includes a conclusion and a list of references.

Strategic Modeling

TABLE OF CONTENTS
Table of Contents.............................................................................................................................2
Introduction......................................................................................................................................3
1 ORGANIZATION' AUDIT IN DIFFERENT FRAMEWORK...................................................3
2 SMART objectives........................................................................................................................8
3 Strategic Models.......................................................................................................................9
Business Canvas Model for British Airways.............................................................................12
Steps for Creating Value Proposition for gaining competitive advantage.................................14
Effectiveness of decisions..........................................................................................................16
Conclusion.....................................................................................................................................18
REFERENCES..............................................................................................................................19
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INTRODUCTION
Effective internal control on management activities alone can notcannot help the a
company to in its grow but it requires proper support of employees who will be able contribute
for the growth of the organizationgrowth. The business environment is dynamics in nature which
not only gets affected It does not only by the affect internal management but also by the external
environment as well. To set a clear strategy, a company needa company needs to ananalyzealysis
all the factors which affect the business activities. In this present report, British Airways is taken
in to consideration which is a UK based company that offers good services to its customers. In
this report, we will analyseanalyze different frameworks which helps to us find the internal and
external environment of company and their objectives.ze different frameworks to audit the
internal and external environment of the company and their SMART objectives These objectives
and models will help to identify the help to us to find correct market positions of the company in
the industry and their future futures strategystrategy upcoming challenges.and related challenges
and opportunit From thesesthese models, the report will describe about the we able to describe
company's strength, weakness, opportunities and threats in their internal and external
environment.
Assignment-1
1 ORGANIZATION' AUDIT IN DIFFERENT FRAMEWORK
Mckinsey 7s model: This model is used to analyseanalyze and monitor changes in the
internal situation of the situations in organisationsorganizations. Further, it is based on the This
model is based on the theory that enables to perform well in the company but management needs
to align with the seven elements so that situation can be analyzed. The British Airways use
Mckinsey 7s elements to increase the overall effectiveness of the business. The following are the
McKinney's 7s framework for British Airways.
Strategy: According to organization strategy, it focuses on digitalizationa Business
strategy of the company is to focus on digitisation, information technology and provideprovides
a high level of customization in their service provision. In 2016, the company is expected to
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make more profit from business by offers more flights on same route so that they can gain more
customers. fly to more regarding growth by using aggressive market expansion in its company.
Structure: The company structure used by BA is hierarchical which reflect the large size
of its business. Company's top level management introduces DE-layering initiatives into
organization’s company's structure as part of cost-cutting measures.
Systems: Apart from the set standard systems such as employee’s selection and
performance appraisals, (Ginglinger and et.al., 2013.). British Airways also maintains some
specific systems including baggage, handling systems; check in systems and flight entertainment
system (Ginglinger and et.al., 2013).
Shared values: Company's shared value are depended on the principles, norms, and
values. Organization offers unique premium services to every customer so they use more
company tservices and o develop this company invest in customers services maintain long term
relations with their customers. .
Style: The leadership style of the organization company focuses on the high performance
of its staff. To increase its staff performance, they provide different case study situations which
include interactive forum workshop and table or group discussion for their staff members.
Staff: British Airways gives comprehensive training and re-educative programs to their
staff (Wu, and, and Lin, 2014. ). The company emphasisesemphasizes not only on their
development but also on their staff development and move towards flexible structures.ures to
their employee
Skills: Skills refers to the capabilities of personal and organisationorganization as a
whole. The company provides the best global connectivity to their customers. Long-haul
premium customers are key skills to make profits and provide excellent services by
understanding what their customers want are.
Value chain analysis: It is a process where a firm identifies its primary and support
activities which that adds add value to its final products (Farag and et.al., 2014). British Airways
value chain analysis involves the adoption of a systematic approach in their business activities.
Primary activities: Pprimary activities include the following points. Inbound Logistics: In this, the company includes timely delivery of the fleet of planes,
catering products and other wide range of board products.
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 Operations: In operations part of the business, the company offers thesecurity of luggage
to of their customers, provides quick check-in services and digital technologies in the
business process. Outbound logistics: The airlines derive value in outbound logistics via handling baggage
at the point of destination. Marketing and sales: Company's marketing message is communicated to the target
customers via marketing communication mixes such as media advertising, Sales
Promotions, Events and public relations. Services: The airline introduced about 136 new scanners at check-in desks across the
airport terminals. Further, the digital boarding pass is used by 28000 customers every
day. The company invests money to enhance its service provision.
Secondary activities: Firm infrastructure: In British airline, structure used is hierarchical that which help the
company to develop more knowledge company to gain competitive advantage. Human resource management: Airlines has invested in the development of customer
service training and "speak up" opinion survey to encourage employees to provide
feedback. Technology development: Organization Company introduce individual LCD screens to
make services more innovative. Procurement: Due to the large size of the company and strong business relationships
they can leverage suppliers to maintain the efficiencies in its business.

PESTEL analysis: To become more successful in the airline's industry, an awareness of
the external environment is essential (Prabavathy, 2013).2013. ). In this analysis, the
company can identify the find competitors and their capabilities to meet the current and
future challenges. Political factors: Political stability and safety have the great impact on the airlines
business. Effective illustration of this claim is terrorist attacks at Brussels airport, which
is the main cause of caused on declining shares prices of company and organization
company also had a debate with UK government of their regulations on airlines' industry
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(van der Veen. and de Boer, 2012). Apart from this, a lot of regulations such as like a
lesafety regulations are followed. vel of bureaucracy, corruptions, home market lobbying
proved a major factor affecting the airline. Economic factors: Certain economic factors such as inflation rate, currency rates, and
overall economic climate in the UK directly affect the has directly affected on company's
performance. The cost of fuel is another significant factor Factor for British Airways that
has negative impact over the business. Social factors: Ageing population is more in happening in the UK, it meanshere is older
generation, which they have more leisure time to go travel (Owus-Ware AndWare And
et.al., 2013). This is the opportunity for a company because travelling is increasing day
by day and people spend a lot of money on airlines for different purposes. Technology factors: Innovation of technology may affect the operations of organization
the company (Ebony. DM. and Liu 2013.). The company companies are using
technology as the tool to expand their business activities such as online internet services,
self-service check-in as it builds good image of the gives the good image of a company. Legal factors: The European Union restricts air carriers based on safety reasons. Apart,
from this, the power of union is also very strong which affect the business of that can
affect the business of airlines. The staff is important to the company, and good
employeesemployee’s relations need to avoid industrial action. Environmental factors: Flying in flight could affect a lot on the environment, as tflights
contains great amount ofhey many carbon emissionsand waste, this could affect air
quality and also increases noise pollution (Chang, and, and Liao, 2013, 2013.).
Environmental regulations may increase operational costs. However, airlines goals have
set to reducedreduce the carbon emissions.
Porter's Five AnalysisAnalyses: Porter's five analysisanalyses is the analytical
framework that distinguishes between the five individual forces which that shape the overall
strategy of a company.extent of competitions in industry.
The threat of substitute services: For an airline, there is no significant of the substitute.
But in future in development of more advance technology can affect business of company. At
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the same time, developing internet based services information and communication represent
indirect relationship on the company.
The threat of new entrance: A new entry of a competitor into the market also weakens
company powers. However, cost of running airlinesrunning airlines company is very high, so
there is no such threat of new entrance uch significant. Ofin new airlines, but the growing new
economics can affect company business by providing less low prices traveling facilities avelling
in UK market where people are facing economic the economy is facing crises which affect the
company as well.
Rivalry among existing powers: Competitions are were increasing between British
Airlines and other airlines. Low-cost airlines have reduced the market share of the company and
it has its become complicated for a company to maintain its large size operations.
Bargaining power of suppliers: Boeing and Airbus are the main suppliers of airlines
industry. Company is more by effect the oil prices. Airlines industry mainly based on oil
suppliers so it can affect profits of company due to Companion is heavily depended on the price
of oil for its profit margins which impliehigh the number power of oil suppliers (Yuan, 2013.).
Due to a limited number of air craft suppliers and continued need for fuel, it can affect
operations. if fuel market prices are increases then services of the company is also affected.
Bargaining power of consumers: Consumers have high bargaining power with the
company and it is , which is mainly based on price preferences. Consumers will select only that
airlinesthose airlines which offer them the best services value for their money. Due to widely
available of information technology, consumers have the ability to compare flight services before
making their final decisions.
SWOT analysis: This analysis helps the company to find its strengths, weakness,
opportunity, opportunity, and threats. From this analysis, the company can make find the right
strategy to meets its business operations and can predict the futures risks as well as opportunities
for their business.
Strengths: Company has an international network of its joint business agreements, code
share, and partners including more than 400 destinations. It uses modern technologies to not only
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improve its performance but also to improve services and customers experiences by operating
more environmentally friendly way.
Weakness: The biggest risk in airlines industry is the high dependency on technology.
Another weakness is that airlines are highly capital intensive. The, thereforeTherefore, it the
company faces financial risks, including market risk, credit risk and liquidity risk (Machmud and
Sidharta, 2014, 2014). Fuel factors also affect the are also affected the business of the
organizationcompany.
Opportunities: High competitions in airline air lines Help Company to capture new
market company can merger with small airlines so they can attain more market growth.industry
there might be airlines consolidation which leads to opportunities for the company to capture
market share. New mergers and acquisitions help to expand company's business. Further
opportunity is to maintain can be achieved by giving alliance performs as expected by customers.
Members.
Threats: The major threats to the company isthreats to the company are from government
regulations and restrictions. The company also faces risks concerning international trade, tax
policy and terrorism. Competition Competitions in airlines industry is intense are very high
because off barriers and rules imposed by different countryside’s different.low-cost segments by
offering low prices with no frills.
Current market operations: Appropriate market strategy and attractive positions are
important factors for any business. To achieve long-term growth and enhance the enhancing
value perception in its services in present and future target market is important to develop market
in other areas too. At present, company is focusing more on domestic flights in UK, and Europe
and internationals flights. The target market of a company in the urban and rural market in in UK
and Europedomestic airlines for international lights company is focusing more on urban areas.
Raising population of the populations of aged people in a country also benefit the are also
benefited for the company because they want more luxury in air travelling (Brauers and
Zavadskas, 2014). By offering different flights in the different country by mergers and partners,
the organization can expand its company is gaining more expanding in their business. By
development of In the development of technology company has also used is also allow using
technology by online toicket booking and self-check-in facility isin increases Customers of a
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company in domestic levehelp. to attract more customers at a domestic level, they offer some
discounts on the special occasion. The organization in the competitive market Company to
competitive in the market uses aggressive market strategy in the domestic market by offering
offers a dozen of flights in the same route in the UK.
2 SMART OBJECTIVES
SMART format: SMART format is that which help company to measure its objectives
for can be said as that help to an organisation to attend its goals and make enable to it be
successful. From SMART framework format company can identify its find its goals and make it
more specific. This format stands for specific, measurable, agreed upon, realistic, and time-
based. On the basis of SWOT analysis we can draw SMART frameworks of company. From
SWOT analysis of British Airways, we conclude the SMART formats of a company.
Specific: Company’s Company has the specific goal is to increase its services in and
expand its planning to expand its activities in another country. The company has specific goal
specifics goals to gain is gain more customers in a market oso they can expand their business. n
they can provide more services to in airlines industry.
Measurable: Company has the clear objective to introducedintroduce more new flights in
2016. The company is planning to introduce a dozen of new flight in the UK and Europe British
market for the same route. Further, And introduce LCD scanner and self-check in the facility on
the airport.
Attainable: British Airways makes their goals more attainable by using market research
Companyresearch. Company uses in-house researcher soresearcher so to make their goals more
attainable.they can their goals in which they achieve their goals in time limi (Park andPark and
et.al., 2013.) This help company to gain The attainable goals for the company are more using
information technology in their database and provide premium services to its customers.
Realistic: At the time of recession In UK recession when household incomes are
decreases at that time company make changes in their prices so they make their goals more
realistic.
Time-based: For achieving goals on time company make their goals on time basis and
set time for everyone. They also classify their goals in such manner so they can achieve in
specific time.For achieving goals in time, company sets their targets in the short term and long
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term targets. For short term, company offers daily activities such as time-bound flights, systems
checks. For long term goals, company sets time limits such as expanding airlines activities in
Europe and another country.
3 Strategic Models
Ansoff's matrix for developing strategies
British Airways can develop a perspective on various options at the time of designing its
strategies in a particular direction and purpose. Growth and prosperity can only be achieved if
strategies are changed and effectively managed. Ansoff's matrix is one such strategic tool that
helps in developing strategies in such a way so that the risks and benefits both are evaluated for
the company (Hussain and et. al., 2013).
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As it is depicted, matrix consists of four quadrants scaled on relative markets and
company products. This helps in getting a vision whether a company wants to develop its market
or products or both. These four quadrants are described below:
1. Market penetration: British Airways compels its strategies in such a way that they are
applicable for the existing products and existing market. Better modes of marketing and
sales fall in this category. Developing existing market share with same products does not
involve risks and failures. For example, if the company introduces some extra benefits on
the same flight for regular customers, then people will assess this option rather than going
for another flight.
2. Market development: Evaluation is necessary for strengthening the base of a product.
Market development involves designing strategies in such a way that the existing
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Illustration 1: Ansoff's matrix

products are introduced in the alien markets. This strategy helps in acquiring better
market share and also company gains recognition in the foreign lands. British Airways
has expertise in all its international operations. It can develop strategies for connecting
UK and Maldives or any other destination where it has not worked previously. This will
increase company's market share globally.
3. Product Development: This quadrant is a transition of the company from safe to a bit
risky zone. A new product will be matured and launched in the existing markets. Product
development comes with a wide set of advantages for the organisation. Current market
structure helps in saving resources up to a great extent. These resources can be utilized
utilised in developing the new product. Aforementioned strategy helps in refreshing
brand recognition in the minds of people. Markets changes every instance, hence
company has to adopt certain measures so that it does not lose its customer (Vignali,
2015).
4. Diversification: Involved with highest risks and efforts, this quadrant is completely new
for the British Airways. It engages the company in developing new products and
strategies for the completely new environment or market. Unproven products have a
probability of success as well as failure. They have to be examined and developed with
micro screening and proper analysis.
British Airways can use this strategic tool for developing any of the four strategies. The
objectives and strategies of British Airways are stakeholder-oriented and focused on providing
customers with maximum comfort through their services (Our strategies and objectives, 2010).
The company can adapt market development and product development strategy so that
consumers and other stakeholders will develop better links with the organisation. For British
Airways, the products are in the form of services which that are given to customers during their
transit time.
BCG matrix options for matching suggestions
From the results of growth share matrix, it was realised that British Airways could
increase its growth share by adopting market enhancement and product development strategies.
The effectiveness of proposed strategies can be visualised by using BCG (Boston Consulting
group) matrix. Similar to Ansoff, this matrix also consists of a 2*2 matrix which is categorised as
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