Impact of Business Environment on Recruitment and Selection

The provided content highlights the impact of a business-friendly environment on company operations, resulting in effective growth measures within the economy. The analysis suggests that British Airways (BA) has developed an efficient measure for working within its organization, leading to enhanced growth measures within the economy.

BUSINESS
ENVIRONEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Business type and its mission, vision and objectives.......................................................1
1.2 Key stakeholders of BA....................................................................................................2
1.3 BA respond to fulfill its responsibilities to stakeholders..................................................3
2.1 the impact of economic systems of UK on allocation of resources.................................4
2.2 Assessing the impact of fiscal and monetary policies on British airways........................5
2.3 Analyzing the impact of competition policies on BA......................................................6
TASK 2............................................................................................................................................7
3.1 Analyzing the market structures and its impact on pricing and demand of BA for airline
seats........................................................................................................................................7
3.2 Impact of market forces on the decision of British airways............................................8
3.3 Analyzing the impact of cultural factors on working of BA............................................8
4.1 Significance of international trade to BA.........................................................................9
4.2 Impact of international business policies on BA.............................................................9
4.3 Impact of EU policies on working of BA.......................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment means combination of all internal and external elements that affect
the functions of organization. It includes elements like customers, clients, rivals, government
agencies, rivals, laws, etc. Both external and internal elements determine the organization's
operational actions (Malmi and Brown, 2008). These elements are not in the control of firm but
they can directly affect the functions of it. The nature of business environment is dynamic or
impulsive because it keeps on changing which are unpredictable. So, it is difficult to find the
exact nature of business environment and thus, firm needs to continuously analyze it.
In this report, business environment of British Airways has been discussed to understand
its purpose, mission, vision, objectives and the assessment of organization. This report contains
various concepts of firm's stakeholders and culture with including policies/regulations of
government players which impact BA.
TASK 1
1.1 Business type and its mission, vision and objectives
There are different types of firms like private, public, partnership, sole proprietorship, etc.
who have their own purposes for which they are running. They are explained as follows:
 Private Companies: Private firm is owned by the group of some private investors or by
the founder of it and the firm’s shares are not traded publicly (Freeman and Whish,
2007). Main aim of private company is to boost the sales so that overall profit margin can
be enhanced.
 Public Companies: It is owned by the government and also, it operates for the welfare of
society. Its key purpose is to boost economy and generate employment opportunity.
Further, it operates to earn profit so that development of society can be done.
 Partnership: In this, two or more number of individuals unites with a motive to run
business activities. They share profit and loss in pre-decided ratio and work to gain profit
from mutual resources.
 Sole Proprietorship: In this, there is only one entrepreneur that runs business to support
the livelihood of their family.
British Airways is a privatized company. Main purpose of privatization is to boost the
productivity and profits of organization. In public company, ownership is shared by the
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management, members of board and shareholders. In this, firm's shares are openly traded and
distributed. The purpose of public company is to enhance the employment opportunities for the
welfare of society.
Mission, Vision and Objectives of British Airways Vision- BA's vision is to become the most reliable and responsible airline of the world
and their long term vision is to be the world's first leading global premium airline. Mission- Mission of BA is to be the undisputed leader in the world for the next
millennium as well as to be the first choice airline for all customers.
 Objectives- Main objective of BA is to fulfill all requirements of travelers and to make
them feel homely and comfortable. Company focusses on both short and long term
objectives.
Short term objectives:-
 To increase the market share and to boost the value of shares.
 To build the leading position in world.
 To deliver the healthy return to shareholders.
 To develop guiding principles and rules to achieve the goals.
Long term objectives:-
 To expand the business to lead the position.
 To become the airline of first choice of customers.
 To upgrade the customer service and experience.
 To improve the margins and achieve customer satisfaction.
1.2 Key stakeholders of BA
Being a global business firm, BA has a broad variety of stakeholders and company's
actions, policies and goals directly affect these stakeholders. They are like creditors, directors,
employees, suppliers, shareholders, etc (Besley, Persson and Sturm, 2010). They are also
involved in managing, directing and development of company's operations. These stakeholders
are like:
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 Customers- They are concerned with the services and time punctuality as well. BA
always focuses on their needs and requirements because they are the end users of their
services. Suppliers- They supply raw materials, goods and services to firm and their main concern
is to get satisfactory payment on time. Government- It expects from company to obey all the rules and regulations, pays taxes
on time and abides to the policies and framework. Shareholders- They are the owners of firm as they hold the shares of company. If
company will not perform well, the value of shares will get down and shareholders will
not invest in company's share. They concern on income or return on their investment
(Avlonitis and Indounas, 2004).
 Employees- They are the internal factors and assets of organization. The main concern of
employees is to have job security, truthful communication and compensation.
1.3 BA respond to fulfill its responsibilities to stakeholders
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Stakeholders expect from British Airways to do well because they invest and own the
company and they also want that their investment value should get increased. BA fulfills the
requirements and responsibilities of stakeholders. To understand the power and interest of
stakeholders, power index matrix is used. Monitor- Their interest and power levels are low. So, they are least important and to
inform these type of stakeholders firm takes minimum effort to inform them by
presenting annual report by via newsletters, website or mail shots (Smale and et.al.,
2006). Stakeholders like general public, unrelated business firms, and administrative
employees come in this category. ex- receptionist
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Illustration 1: Power interest matrix
(Source: Smale and et.al., 2006)

 Keep informed- They should be considered, kept informed and consult on interest area
because their level of interest is high but power level is low. In this category stakeholders
like competitors and customers are involved (Beugelsdijk and Eijffinger, 2005). Keep satisfied- Their level of power is high but interest level is low. In this category
stakeholders like government, regulatory bodies and suppliers are considered.
 Manage closely- They are the key players because their power and interest levels are
high. So, these types of stakeholders should be kept satisfied. Stakeholders like investors
and top management employees are involved in this category.
2.1 the impact of economic systems of UK on allocation of resources
The economic system controls the resource allocation within the company by developing
a control on production system and exchange of goods and services within the market. The
system helps in defining the power, control and role of various authorities and business units as
well (Yu and Ramanathan, 2012). The impact of economic system of the organizational
functions can be understood by analyzing type of systems and role of different authorities within
the system as well. Command economy: It is a system where the sole power and control of making decisions
regarding allocation of resources and distribution strategies for the same lies in the hands
of government. Market forces such as demand,supply, cost and output decisions etc have
insignificant role in business decisions (Zhu and et.al., 2012). The economy is slow and
has low impact on the organizational growth and development. Countries such as Japan,
China and Korea, etc. has adopted this system. Market economy: These are the economies where the government has minimum control
in business decisions. The overall economy is governed and operated by the market
forces such as demand, supply, economies of scale, cost and output decisions etc.
Consumers are the kings/queens within market. All the production and manufacture
related decisions are taken by the producers (Jain and et.al., 2014). They are the ones who
decide, what is to be produced, how it is to be done and what process and resources are to
be allocated for production.
 Mixed economy: This economic system is the one where the both government and
business units has considerable participation in the organizational decisions. The
organizations develop effective measures of working thus working as per the regulatory
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framework of the company. Majority of the countries have adopted this economic system
to develop an effective system of working.
British Airways focuses on delivering effective aviation services within the global
economy. The impact of economic system is significant on the organizational working as this
UK based business units has to develop policies and measures as per government regulations.
However market forces operating within the economy helps in shaping the company operations
effectively.
2.2 Assessing the impact of fiscal and monetary policies on British airways
The economic policies of the government have significant on the development and
growth of the companies. These policies help in shaping the business operations and effective the
profit margins for the firms (Capon, 2009). Monetary and fiscal policies are significant economic
policies which has the power to make develop the infrastructural base of the organization.
Fiscal policies are the effective tools used by the government to stabilize the market by
various measures such as tax rates, government spending etc. which has a direct impact on the
growth rate and profitability of the companies. The business operations of BA have a direct
impact of fiscal policies. The increase in tax rates enhances the cost of company which results in
increasing prices for the business. If taxes and expenses are lower than it directly affects the
profitability of BA (Block, 2004). Taxes and expenses are high than the value of money will also
increase, it directly affect the organization because many customers can switch to the other
substitute like train.
The policy by which monetary authorities and regulatory committees control money
supply is called monetary policies. It helps to ensure the price stability as they focus on inflation
rate or interest rate. If the interest rate is low, it benefits the economy by increasing the
investments. Through this, more employment and people have more freedom to travel through
the airline. Higher interest rates have the opposite impact: lower sales and profit. BA keeps a
close check of these measures on the growth of the company. This policy helps the company in
determining the spending rate of the people thus support in forecasting the demand efficiently.
2.3 Analyzing the impact of competition policies on BA
Competition policy has an impact on business working measures within the economies.
These policies are developed and formed in order to create an effective growth measures for the
business. Competition policy 1998 is a framework which has been developed in order to create
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an effective impact on the organizational growth (Freeman and Whish, 2007). This policy helps
in enhancing the fair working of the company and ethical working measures as well. British
Airways is working in a highly competitive market and due to this; it faces issues of sustaining in
the market. Competition policies helps the company in developing am effective system of
working for the company in a well regulated measure.
The policies regarding advertisement have helped the organization in developing ethical
practices for advertisement minimizing any kind of manipulative information. Moreover fair
trade practices restricts the company in using unauthoritative power to disrupt effective working
practices of other business units (Why is competition policy important for consumers, 2012). This
has helped in developing effective measures of working within the organization to enhance the
ethical working of the businesses. In addition to it, BA has to adhere with Fair Trading Act 1973
which ensures that interest of consumers is not hampered by the activity of company. Also, BA
needs to offer refund and necessary services to customers when flight gets delayed more than 5
hours. Additionally, as per Enterprise Act 2002, BA cannot take unfair benefit of its dominant
position in the market and also, it cannot develop the position of monopoly in market. Strategies
of mentioned company are highly governed by the regulators in order to establish healthy
competition.
TASK 2
3.1 Analyzing the market structures and its impact on pricing and demand of BA for airline seats
In market structure, there are number of buyers, agents, sellers and they determine the
prices of goods. There are level of confidence and the differentiation of the products.
Market structure is categorized in 4 types: Perfect competition- Market where many buyers and sellers are present but none being
able to determine the prices of goods. In this sellers are free to sell the goods to any buyer
and buyers are also free to purchase to any seller. In this market homogeneous products
are available. If airline industry shapes perfect competition then prices of BA will be
charged competitively (Ekins and Lees, 2008). Here, prices are decided based on the
competitors prices such as Etihad Airways, Lufthansa and other related. With the help of
it, company can able to attract large number of buyer towards it. There will be many
airlines in industry and large number of customers as well. So, customers are free to
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travel from any airline and the demand of airline seats directly depend on the prices and
services quality. Monopolistic- Market where large no. of sellers and firms but the products are not
homogeneous because each firm has a specific characteristics, brand and quality services
so, the firms have freedom to set the prices. This structure falls between both monopoly
and perfect competition. If BA shapes in monopolistic then BA has to provide good and
quality services and other facilities to the customers as compare to other competitors so,
customers will attract towards it. Oligopoly- Market dominates by the small no. of sellers or firms because competition is
low so, they have the power to change and control over the prices. If airline industry
shapes oligopoly then BA has the power to change or raise the prices according to the
demand (De Vries, 2009). Company focus on the needs and the requirements of the
customers. To attract the customers company can offer some offers.
 Monopoly- Market where many buyers are available but only one seller is present to sell
the goods and the services. Single seller has the power or control over the supply and the
prices. If BA lies under monopoly structure then prices are decides on the demands of the
customers. The main goal is profit maximization. So, when the demand is high BA
increases its prices and earns the profit (Xahir, 2012).
3.2 Impact of market forces on the decision of British airways
Market forces- This can be defined by the relation between demand, supply and the prices.
In airline industry, when the demand is high and the supply is low then the prices of tickets
would be high but if the demand is low and the supply is high then the prices of tickets would be
low. At the time of London Olympics, BA has painted the plane with dove design. On that time
the demand was high and the supply was low so, the company sets the high prices for London
tickets (Snyman, Kourie and Botha, 2014). After completion of the Olympics, prices of return
tickets were higher. Same condition is with festive season, sports activities and vacations time
period, tourism and weather disruptions.
Different players- In airline industry the increased competition directly affect the market
forces. At the time of special occasion like cricket matches or carnivals the competitors gives
special offers or discounts on air tickets to attract the customers towards them. So, BA also
introduce some low price tickets where travelers can enjoy their quality product in low and
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affordable prices and in the vacation time period they attract customer through the special
packages of different countries with the discounted prices (Sun and Yannelis, 2007). Company
introduces some new schemes to gain the attention of travelers.
3.3 Analyzing the impact of cultural factors on working of BA
BA’s main objective is to deliver the world’s best aviation services in terms of cost
quality and comfort. Employees want secure and fulfilling jobs with good, friendly and flexible
working environment along with the personal development and the rewards. To assess the
requirements of consumers efficiently BA closely analyze the cultural factors of different
countries. This helps the company in analyzing the needs and requirements of the consumers to
develop a competitive edge within the market.
Company provides different facilities for both short and long route flights. For the longer
routes organization provides facility of lunch & dinner, private cabins, entertainment screen,
pillows and blankets are also available (Trehan, Trehan and Jain, 2013). Assessing the cultural
needs the services are planned and developed to generate effective demand. For example Indian
residents prefer vegetarian food thus the food and beverages are developed to attain those needs
for Asian routes. Moreover, cultural factors also help in developing demand as companies adopt
these measures and develop high market demand as well.
4.1 Significance of international trade to BA
International trade is exchange of goods, capital and services to different countries and it
involves the government activities. This helps in business expansion because it gives the
opportunity to be exposed in new market. The benefits of global trading play the major role in
growth for the company which is discussed as below: Expansion- Global trading gives the opportunity to expand the business in new market.
In new market there would be new competitors and demand. If the demand is high than
prices of air tickets will be high, it will be beneficial to company (Oakland and Tanner,
2007). Competition- BA's business is directly affected by the competition because in market
more competitors are available and due to new market the demand also increases and
market share of BA also increases.
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 Unemployment- if BA starts its business in new market than it would be great
opportunity for that country because it will decrease the unemployment.
 Tax rates- Tax rates differ from country to country. This is the major factor which affects
BA's profits and revenue. If the tax rates are high than BA finds some difficulty to
expand their business in another country. Company takes the benefits form the low tax
rates.
4.2 Impact of international business policies on BA
PEST analysis on BA- Political- The airline business is highly influenced and governed by the regulatory
bodies. The business decisions and operations are influenced by regulations and policies.
To lend the flight in another country first company have to take the permission from the
country's government and they have to also follow the laws, regulations and policies
(Oatley, 2012). For the convenience and safety of customers government have introduced
security policies. Economic- The changes in growth rate, inflation rate and fuel price affects business
because if prices of fuel increases than company will also increase their ticket prices.
According to this the price changes the spending of customer will be decreases and many
user will switch to other like train etc. The main motive of company would be cost
reduction. Social- Changes in customer’s behavior and demand directly affects the growth of the
company. Due to the recession many customers have cut back their spending on air travel
expenses.
 Technological- In airline industry technology plays an important role. Like internet and
mobile phones etc are used for checking-in process. BA also maintains a corporate
website which handles the queries and reservations of customers (Xahir, 2012). Company
has managed to increase its customer satisfaction with the help of technology. With the
help of advanced technology they have developed their services and airports.
4.3 Impact of EU policies on working of BA
European Union has effective role in developing the business prospers in the continent to
enhance trade relations within the country and develop regulatory measures to carry out business
operations. These policies help the company in creating wide growth impact. The policies
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regarding employment help the business in analyzing the impact of employee policies within the
regions. These policies enhance the ethical working practices for the business. Competition
policies of EU help in developing effective and fair measures of competition within the
economy. It has helped BA in creating an effective growth prospects as undue competitive
pressure and unfair working practices are controlled by the regulations. Moreover, the company
closely checks and relates to the aviation policies of EU to analyze the demands of the company
and abide those to minimize the risk of legal implication of the company's working. In addition
to this, as per Working Hour Directives, company in EU is not allowed to make their employees
work for more than 48 hours a week. This affects the work management of BA and hence, it
needs to make shift accordingly so that complete work can be divided accordingly. However, EU
permits for free movement of labor among EU states and this certainly help BA in transferring
employees in different countries. With the help of it, company is able to make better utilization
of employees along with incurring less cost on recruitment and selection.
CONCLUSION
The above report provides a deep insight about the impact on business environment on
the business operation of the company. This has helped the company in creating effective impact
of growth and development on the organization. On the basis of report, it can be analyzed that
BA has developed an effective measure of working within company and thus, it has helped the
business in enhancing growth measures within economy.
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Online
Our Strategies and Objectives. 2010. [PDF]. Available through:
<http://www.britishairways.com/cms/global/microsites/ba_reports0910/pdfs/
Strategy.pd>. [Accessed on 26th November 2015].
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http://ec.europa.eu/competition/consumers/why_en.html >. [Accessed on 26th November
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Xahir, A., 2012. Market structures- price and output determination in perfect competition.
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[Accessed on 26th November 2015].
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