Business Environment Analysis of British Airways

The provided content discusses the factors that impact the business environment, with a focus on British Airways as a private organization. It highlights the importance of understanding the business environment, including various types of organizations and their stakeholders. The report also touches upon the role of fiscal and monetary policy in shaping business activities. Furthermore, it emphasizes the need for businesses to adapt to changes in the market and develop unique plans to attract customers.

BUSINESS ENVIRONMENT

TABLE OF CONTENTS
INRODUCTION........................................................................................................................3
LO 1 Organizational purposes of businesses.............................................................................3
1.1 Purposes of different types of organisation .....................................................................3
1.2 To meet the objectives of different stakeholders..............................................................4
1.3 The responsibilities of an organisation and strategies to meet them................................4
LO 2 Nature of national environment in which business operate..............................................5
2.1 Economic systems help to allocate resources effectively................................................5
2.2 Impact of fiscal and monetary policies on British Airways.............................................6
2.3 The impact of competition policy and other regulatory mechanisms .............................7
LO 3 Behaviour of organisation in their market environment...................................................7
3.1 market structures determine the pricing and output decisions of business......................7
3.2 The way in which market forces shape organisational responses....................................8
3.3 Business and cultural environments shape the behaviour of British Airways.................8
LO 4 The significance of global factors ....................................................................................9
4.1 Significance of international trade ..................................................................................9
4.2 The impact of global factors on British Airways.............................................................9
4.3 The impact of policies of the European Union...............................................................10
CONCLUSION.......................................................................................................................10
REFERENCES.........................................................................................................................11

INRODUCTION
Business environment refers to those internal and external factorswhich affects
business function. It means that what all factors any business possess to work efficiently in
order to achieve goals (Dave, 2012). The environment of business which includes both
internal and external factors which determines business to run efficiently. In this report,
British Airways analysis has been done to know the mission, vision, goals and objectives of
company. The organization fulfils all needs and responsibilities to meet the objectives of
different stakeholders. The impact of fiscal, monetary and competition policies on British
Airways. The importance of international trade to the business organisations and which
market forces helps in shaping the business.
LO 1 Organizational purposes of businesses
1.1 Purposes of different types of organisation
The purposes of different types of organization which includes public organisation,
private organisation and non- government organisations. These all organisations serve the
public for different purposes and help in different ways to maximise the needs and wants
(Miller and Cross, 2009). Public organisations play an important function in serving the
people and not earning profits. They serve general public to make them feel and utilise all the
necessities and don’t want to make profit out of it. In order to this private organisations serve
public for the main reason of making profits. Their main purpose is that to satisfy the people
and through that earn revenues and become leader in that segment by defeating all
competitors. The last type of organisation is non- government organisation whose main aim
or purpose is to do welfare of public and not with the motive of earning profit.
They serve people to do welfare and make them feel better. British Airways is an
organisation which is private organisation which serves people to make them satisfied and
earn profit. While satisfying the customers they earn profits so to have maximum revenues
and make people feel better (Johnson, 2010). The business environment of British Airways
should be best both internally and externally so that it makes their customers feel pleased.
The main purpose of private businesses is to make profits to sustain in such a competitive
environment and to become leader.
1.2 To meet the objectives of different stakeholders
The business helps in meeting the objectives of the stakeholders to make a good
relationship between both of them. If the company involves itself in understanding their
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stakeholders which ultimately make the business to raise their profits. Various types of
stakeholders include customers, shareholders, employees and competitors.
 Customers- In any company customers play an important role in earning profits and
have their impact to manage the company properly. Customers are the main source of
existence of any company (Lee, 2005). British Airways should make such strategies
to keep their existing stakeholders loyal to them and try to make such policies which
helps in attracting new customers as well.
 Employees- They has the best power to run any business successfully and make it a
growing and developing organisation. Any business can become successful only when
its employees are loyal towards the growth of business (Armstrong, 2005). British
Airways should satisfy their employees which will result in achieving overall goals of
company. All the set goals should be attained effectively by employees and earn
maximum returns. The staff of British Airways should be given proper remuneration
time to time for easy access of work.
 Competitors- British airways are the leader in UK airlines industry with the highest
turnover. But it should continuously adopt new and better strategies to compete with
competitors and become a market leader. It should make good decisions to remain at
top and do not get affected from low cost airlines which tries to capture their market.
 Shareholders- British Airways should have a strong bond with their shareholders who
help them in earning success of company (Charles and Smith, 2008). They should be
given good dividends when business is making profits. They should be asked to give
their opinion in making changes in company and deciding new strategies.
1.3 The responsibilities of an organisation and strategies to meet them
The organisation has the responsibility to meet different needs of stakeholders and try
to satisfy them by adopting various strategies. Customers of British Airways should be given
such facilities that they remain loyal to use their services which satisfy their needs. The
customers should be given better quality services to make them feel luxurious and
comfortable. Airways should try to fulfil all the requirements of their clients which will help
them in sustaining and remain the leader in the industry (Conner, 2010). They should be
given different schemes and offers so that customers get attracted and instantly use the
services of Airlines. They should be remained cost effective so that it helps in increase in
customers and defeat competitors. Through all such facilities customers should feel satisfied
and accordingly business will also expand.
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The employees of British Airways should remain satisfied to better serve the
organisation. They should be given proper rewards and benefits which satisfy them and helps
in increasing their morale. They should be given good working environment so that it helps in
low retrenchment and strike rate which will help in achieving objectives of British Airways.
They should be given flexibility in their working culture so that it will help in easy access of
targets and make them feel better (Wales, 2009). They should be given fair treatment and
good relationship with their management to understand their wants. Shareholders should be
given proper dividends whenever there is increase in profitability of company. They should
be informed about the financial success of company so to have more interest in company
which will help in growing Airlines business.
They should be given a chance to play their part in decision making process so to
have better quality workforce which can lead the business in easy availability of goals and
objectives (Henderson and Kelliher, 2010). Shareholders are the lifeline of the business so to
have them for a longer time and continuously increasing them which helps in increasing
profitability of business. Competitor’s objectives to be achieved by organisation should be
such that they should use fair practice towards each other. They should not cheat them by
charging different prices or change in policies which directly affect competition.
LO 2 Nature of national environment in which business operate
2.1 Economic systems help to allocate resources effectively
Economic systems is a way in which national environment allocates resources
effectively to use goods and services in the business (Telkamp, 2012). Different types of
economic systems are there like mixed economy, free economy and command or planned
economy. British Airways includes mixed economy to operate its business effectively in the
national environment which means that it manages its business according to market
conditions because market is very competitive and complex. There lay various other
competitors with different pricing strategies to compete in business environment. In mixed
economy system it allows private economic freedom which helps in deciding the prices or
other capital investments. But in accordance with it government also interferes in economic
activities of company.
Free market economy in which government do not involves itself in decision making.
Business can privately make their decisions to allocate their resources effectively. British
Airways can use different offers to attract their customers by providing better quality services
(Waikar and Nichols, 2007). They can operate their business and helps allocating their
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resources effectively to earn maximum profits. In command or planned economy business is
regulated by government rules and regulations. In this government makes all decisions and
helps in allocating resources effectively. British Airways operates in a mixed economy
market in which all the decisions are made by private owners according to the market
conditions. It helps in deciding competitive prices to sustain in market.
2.2 Impact of fiscal and monetary policies on British Airways
The businesses get affected by fiscal and monetary policies and involve various
changes in their policies. Fiscal policy means through which government adjusts its spending
and expenditures. Monetary policy explains the money supply in economy from various
businesses to increase the flow of money in economy. British Airways is negatively affected
by fiscal policies which increases it expenditures in the form of paying more taxes. The
conditions of the market should be controlled that it should not affect company fiscal policies
(Vendel, 2013). Company has to pay more taxes to government to properly run the airlines
and make business. It results in decrease in profits because of paying more taxes to
government. If they have to pay less tax to government they can save much amount and
spend that in increasing or expanding business like infrastructure and hiring more employees.
Monetary policy impacts British Airways by spending huge amount of money in
giving interest to banks in the form of short term loans. Company spend their money in
paying high bank interest otherwise they can invest that amount to achieve more customers
and satisfy them. Competition arises and due to that increase in fare rates will lead to low
demand by customers. It also negatively affects British Airways by spending their money in
the loans taken by them (Huettinger, 2006). This will impact the company by increasing their
expenditures and less saving. In this policy government decides various other rules and
regulations which companies haveto follow to safely run business.
2.3 The impact of competition policy and other regulatory mechanisms
The impact of competition policy on British Airways is negatively affected because it
has wide number of competition among them. Main competition of British Airways is with
Easy Jet and Virgin Airlines. There are various competitors present in market to compete
with each other (Pourdehnad and Smith, 2012). These issues in companies make them use
unfair practices and unfit methods to advertise their companies and adopt various other
strategies to increase their market share. The regulatory authority has to keep close watch on
the activities performed by companies. They have to see that companies use fair practice or
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strategies to achieve market share. To become the leader company should offer low pricing
strategy to its customers to get more customers from their competitors.
Government applies various rules and norms on these companies to meet the standard
of quality and service which affect companies by having negative impact (Horner and
Swarbrooke, 2006). British Airways compete in market with other companies in having low
prices and fulfilling other standards of quality and environmental issues to better serve their
customers. British Airways has to follow all the rules and regulations stated by government to
have a safety environment for their clients and they should use better competitive strategies to
lead the market. Regulatory mechanism should be strong enough to keep the records clear to
see the positive behaviour of companies in following the rules and policies.
LO 3 Behaviour of organisation in their market environment
3.1 market structures determine the pricing and output decisions of business
Market structures defines that there are various market present for the organisation to
operate their business. Market share defines the pricing strategy and other main features of
any company to decide it and run business (Pirttilä, 2008). The different types of markets are
Oligopoly market, duopoly market and perfect competition market. British Airways follows
perfect competition market which means that it has to decide its prices and other strategies
better from their competitors.. Company has to give low prices to their customers to attract
them and better facilities to grab more market share. British Airways has to follow perfect
competition in which there are many competitors present which gives tough fight in price and
other factors. In perfect competition company cannot increase in prices and other decisions to
compete in market.
They have to use such strategies to have more loyal customers and to use such
strategies through which it can defeat its competitors. Perfect competition is a market
structure in which companies have tough competition among each other and they have to
maintain their prices and other quality standards to fulfil the needs of clients (DeVries, 2011).
In the competitive market company uses such promotional tools to attract their customers and
give them good prices and services. Business has to adopt tactics to remain in the market and
treat their existing loyal customers with new customers as well.
3.2 The way in which market forces shape organisational responses
Organisational responses towards market forces should be positive to have technology
improvement, customer satisfaction and have good economic condition. Business should be
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able to invest a good amount in having innovative technology to serve their customers better.
It is very important for companies to have better technology products in this competitive
market. They should be able to give better quality services to their customers and proper
safety conditions to make them satisfy. British Airways has to make a plan to adopt better
quality technology which is different from their competitors (Quinn, 2010). It all depends on
perception of people which changes person to person. Some people think that it is costly to
travel from Airlines and accordingly it creates air pollution as well.
Companies have perception which is directly attached with the behaviour of consumer
which means that their purchase decision towards particular industry (Harrison, 2013). The
company has negative impact on financial soundness of company because people opt less to
travel from airlines. Business suffers from recession and financial crisis and which affects it
badly. At the time of recession in UK companies has to keep their fares low so that they can
have more customers who are willing to travel and use their services. Market forces play a
vital role in shaping the organisational responses to make their products best from other
competitors and give best quality services at competitive prices.
3.3 Business and cultural environments shape the behaviour of British Airways
The cultural environment helps British Airways in achieving its goals and objectives
easily. Because it affects the working environment and have good cultural practices to
achieve targets (Sloman, 2007). Culture of UK varies from other countries because it has
different culture which possesses uniqueness and friendly nature which understand each other
and helps them in achieving targets. Culture of any country helps as a promotional tool to
increase their business and perform their task effectively. People in UK works as a team to
achieve targets easily and have effectiveness in achieving targets. Working culture of
different countries is different from each other and they complete their work accordingly in
effective manner. People should possess good knowledge and skills to work efficiently and
performs the business operations. British Airways contribute maximum to improve their
working culture and achieve targets. The business and cultural environment of BA helps in
shaping the behaviour effectively and efficiently. It is essential for firm to assess the culture
of country and thus provide them effective services so that aet targets can be attained. There
are different people living in the country and with different culture background then it is
essential for firm to provide them services according to their culture. Also, it is significnat for
business to hire varied skilled employees so that they can serve the customers well.
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All the factors helps British Airways to include youth in their operations which can
achieve competitive targets easily and can help companies making profits (Klueber and
O’Keefe, 2013). They can use such unique strategies which can help companies follow their
work culture which can help them increase in earning. UK environment is well versed with
their culture so that companies can have high profitability while working with them. Through
understanding the UK culture effectively it helps in giving the competitive advantage to other
businesses and thus enhance the sales and profitability of firm.
LO 4 The significance of global factors
4.1 Significance of international trade
International trade play an effective role which has to be increased in the terms of
exchange of goods and services from one country to another. Through adopting such policies
British Airways can increase their customer base and can have high purchasing of tickets and
can earn more profits (Wessels, 2012). The businesses have more opportunities to grab and
become international leader in Airways industry. It helps in expansion of market with
increase in number of competitors. It helps them increase their brand image and goodwill in
the market to beat their competitors with having increased technology products. It is
benefited by the factor that it can expand its operations in new market and can experience
new strategies to new customers. It can benefit British Airways so that to expand its market
and have more growth opportunities to increase in better quality services and environment.
4.2 The impact of global factors on British Airways
British Airways can be affected from various global factors to have an impact in the
decision making of company. Political factors should be strong which helps the company
should not get affected by any terrorist attack and company should work according to
customers. Economic factors of British Airways help the company to have an impact of
recession. Company should decrease their prices to become more profitable. Social factors
involves that people has to get employment opportunities and customer should have sufficient
amount of money to buy the tickets (Kew and Stredwick, 2005). To become the leader in the
market they should satisfy their customers and earn more profits. Technological factors
should be innovative to compete in the market. British Airways should be efficient enough to
serve their customers better.
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4.3 The impact of policies of the European Union
European policies have an impact on British Airways. The company should adopt
such policies which makes fair practices while competing with its competitors. The two
European Union policies which affect British Airways are competition policy which means
that it ensures that company should adopt fair practice while competing with its competitors
(Johnson, 2009). Competition should not affect the company negatively and it has to maintain
its growth opportunities. Cultural policy means that it helps in improving the cultural policy
which has to be appropriate by legislation. The company should protect its employees which
help in achieving objectives effectively.
European Union has direct influence on BA as it takes into account the different laws,
rules and regulations etc. It directly influence the business operations as it is required to work
according to the guidelines issued. Also, there are certain policies like inflation, taxation,
environmental etc. so that it directly affects the operations of business. Moreover, European
Union provides financial helps in the form of subsidy and grant to BA. Government is
required to develop different policies and regulations that helps in operating the business in
special economic zone so that business can function effectively.
Impact of EU consists of certain rules and regulations that constraints its members
countries to maintain in regard to perform effectively in different countries. There are certain
major policies that are considered by the EU such as employment, educational, training,
taxation and inflation etc. British Airways is required to undertake all such policies that are
implemented by EU, if they are not able to follow such policies than they will be facing
issues regarding violation of policies (Harrison, 2013). Hence, it leads to decrease the sales of
air tickets and thus reduces the profitability and brand image of firm in market. Here, BA is
performing quite well through following all the stated policies and thus enhancing its loyal
customer base. With the help of this firm is able to satisfy the needs of its stakeholders and
thus organizational goals.
CONCLUSION
Business environment means that all the internal as well as external factors which
have an impact on the business environment. In this report various types of organisation has
been stated and British Airways comes under private organisation whose main motive is to
earn profits through satisfying its customers. It shows responsibilities of all stakeholders
towards their organisation to fulfil them. The role of fiscal and monetary policy on the
business activities which have direct impact on company. Business has to fight with its
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competitors to remain sustained in the business environment. British Airways should develop
its unique plan to grab more customers and satisfy loyal customers to remain with company.
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