Impact of Government Regulations and EU Policies on British Airways

The impact of various global factors, including economic, legal, and EU policies, plays a significant role in shaping the performance of British Airways. The airline is subject to government regulations, which influences its pricing policies and operations. Additionally, EU policies have a positive impact on British Airways, providing fare trade policies and setting standards for passenger safety, quality of services, and environmental protection. These factors collectively contribute to the airline's growth and expansion, with a focus on customer satisfaction and experience.

Business Environment

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
1.1Purpose of different types of organization and mission, vision & objectives of BA.............1
1.2 Objectives of different stakeholders and its challenging impacts........................................2
1.3 Responsibilities & strategies of British Airways to meet the stakeholders responsibilities. 3
2.1 Economic system to allocate the resources effectively ........................................................3
2.2 Challenges due to fiscal & monetary policies on business environment of BA...................4
2.3 Impact of regulations, competition policies and legal changes on British Airways.............5
TASK 2............................................................................................................................................5
3.1 Market structure and its impact on price and demand..........................................................5
3.2 Interpretation of the market forces to shape organizational response...................................6
3.3 Impact of working practices and culture of different countries on British airways ............6
4.1 Impact of the global changes in the trade regime.................................................................7
4.2 Impact of other global factors on British Airways................................................................7
4.3 Impact of EU policies on British Airways............................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment has different key entities in which the business operates. The
major and key function is to compile all the aspects and attain the goals and the objectives in an
effective and efficient manner. The environment strictly compile of the various policies which
determine the overall functioning of the organizations which are present in the business
environment. This report dictates the various objectives and which are essential to meet the
responsibilities towards the stakeholders. Various methods are adopted to understand the market
structure and logically develop the principles and concepts which depict the behaviour of the
organizations in the business environment. British airways have been chosen to design the report
and critically examine in order to conclude the various measures which led to attain the
competitive advantage.
TASK 1
1.1Purpose of different types of organization and mission, vision & objectives of BA
Different organizations are present in the business environment which operates in order
to attain the various purposes for which they have been framed in order to carry out the business
(Mitchell, 2008.). The different types of the organization are as follows:
Sole trader: They are the single entity which runs the business in the environment for the
purpose to earn profits and earn effective goodwill in the business environment. They are
operated and controlled by the single owner there is no other entity involved in to carry out the
business and has the unlimited liability. They have less rules and regulations as the power is
handled by the single person only.
Partnership: These are the firms which are operated by the group of the people which
include 2 and more persons to carry out the business. The purpose of the partnership firm is to
earn maximum profits out of the investment made by the different partners in order to carry out
the functioning.
Franchisee: They are the firms which are entitled under the name of the particular brand.
The main purpose is to expand the business area in order to attain the maximum profit out of
their investment under the brand name.
Cooperative: It is the private business organization which is established by the mutual
concern of its members in order to carry out the various operations. The main purpose of this
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organization is to adapt the changes and meet the needs of the members and generate the profit
by meeting the specific objectives which are related to the members.
Non-profit Organization: These are the organization which operates in the business
environment for the purpose to serve the people of the community who are not able to acquire
and attain their needs. The main purpose of this organization is to provide the service without
any profit generation.
British airways are the public limited company which operates in the business
environment to serve the customers who fly with them. They define the various mission and
vision statement in order to ascertain the planning to attain the goals (Tennis, 2006). Their vision
is to become the most responsible airline whose objective is to perform all the corporate
responsibilities together to ascertain the long term sustainability objectives of the British
Airways. They try to enhance the customer experience by upgrading the facilities which led to
effectively attainment of the mission objectives of British airways.
1.2 Objectives of different stakeholders and its challenging impacts
Stakeholders are the key aspects who function to accomplish the objectives of the
organization and can affect the accomplishment of the objectives (Gossy, 2008). Various
stakeholders are discussed below:
Customers: They are the essential entity which uses the services which are provided by
British Airways. The major challenge which is faced by British Airways is the customer needs
more facilities as they are not satisfied with the offerings which are made before them. British
Airways adopt the strategy to upgrade the experience of the customer in order to accomplish the
motto for which they operate in the business environment.
Employees: These personnel use their skills and knowledge to carry out the functioning
of the British Airways. As per the frequent changes in the airline industry there is high
termination and the switching cost among the employees which is impacting the performance
standards of British Airways. British Airways adopt the appraisal and reward techniques to meet
their standard value to retain them.
Government: They are the major elements who design the framework of the rules and
regulations to carry out the various operations. The major challenge which is faced by British
Airways is the formulation of the new policies by them. British Airways properly design their
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framework so that modifications are done as per the new policies which are formulated by the
government.
Shareholders: They are the key personnel who determine the operations of the
organization by making the investment to make the functioning of the various activities. The
major challenge which is encountered by the British airways on the shareholders hand as they are
not satisfied with the return on investment. British Airways need to adopt the effective tactics to
overcome this challenge.
1.3 Responsibilities & strategies of British Airways to meet the stakeholders responsibilities
The responsibilities and the strategies are the essential aspect which ensures the effective
planning to meet the responsibilities of the stakeholders (Capon, 2009). The marketplace in
which British airways operates has the various key stakeholders whose responsibilities are
attained to function in long run.
Customers: Customer is very important for the British Airways as they provide the
revenue generation by availing the services which are provided to them by British Airways. They
modify their services in order to upgrade the experience of the customers and effective handle all
the requirement to fulfil the responsibilities towards them.
Employees: British Airways ensure to develop the effective work environment by
understanding the behaviour of the employees as they perform the various activities. British
Airways provide various opportunities to the employees in effectively enhance their functional
area by availing the opportunities which are introduced to them.
Government: British Airways adopt the various frameworks which are implemented by
the government in order to carry out the various operations in the set framework. They follow the
adoption strategy in order to follow and fulfil the responsibilities.
Shareholders: British airways adopt the growth strategy in order to accomplish the
higher goals in order to generate maximum revenue for the services which is rendered by them.
British Airways provide the shareholders high rate return on the investment. They provide the all
the information related to the functioning in order to build up valuable relationship with the
shareholders.
2.1 Economic system to allocate the resources effectively
There are different kinds of economic system has been adopted in different countries. An
evaluation of this system is explained below:
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 Free market economy: It is termed as most commonly used economic system in which
government has not made any kind of interference in business related practices. For
example, in UK, the companies can sell the goods at high prices because the demand of
that service is high in the market and customer is ready to pay for it (Capon, 2009). In
this process, demand of different goods influences pricing decisions of different
companies. Transitional economy: According to this system, the central plan economy has
transformed into free market economy as per the current market requirement. The main
reason behind adopting the system is developing own industries through public is able to
increase strength of economy. Command economy: In this approach, the government takes various decisions in order to
control supply of goods and its pricing in market. It leads significant impact on business
environment within country (Gossy, 2008).
 Mixed economy: It is mixture of command and free market economic system where both
government and industry mutually control economy. In this system, government control
basic resources like coal, electricity and oil and etc. On the other hand, private players
manage supply of different products and services.
Economic system is the system which attempt to allocate the resources in order to meet
the needs of the various stakeholders. All the activities are designed by keeping in mind the
functioning of the economic system. British Airways has the vast functional area which is
determined to carry out the various operations by allocating the resources effectively (Nissim,
2007). They adopt the modification strategies in order to modify their functioning form and
ensure that the experience of the customer is upgraded and they are satisfied by the services
which are provided to them. British Airways properly adopt the growth strategies in order to tap
the various opportunities to enhance the performance of the employees as well of the airways.
This led to the greater returns on the investment which raises the economic standards of British
Airways. This also generates the high revenues by the purchase which is made by the customers
which helps to effectively accomplish the motto “To Fly to serve”. They also adopt the
promotional strategies to promote the various offers which are made by them to expand the
customer base. The carry out all the functions in an effective manner and to ensure that they meet
the needs.
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2.2 Challenges due to fiscal & monetary policies on business environment of BA
The fiscal and the monetary policies intervene the various aspects which are attempted to
maintain the business in the environment in which it operates. There are various expansion and
contraction in the economy of the country which have the greater impact on the performance of
the organization (Shaikh, 2010).
The fiscal policies reflect the government decisions which are regarding the investment
and the taxing. The demand and supply revolve around these policies and the decision which are
taken in respect to this policy. The government decide the growth of the organization in the
business environment. Government determine all the functioning of British Airways as it is the
public limited company in the airline industry. The trends are framed and formulated by the
government which consequently affect the performance of the British airways as the cycle of the
growth is determined as per the opinion of the government. If the government decreases the
spending it effects the growth as the return on investment will be lower down and it means
decline in the profit generation.
The monetary policies determine the supply of the money and the interest rate which is
applied to bring the changes. This policy determines the increase and decrease in the money
supply in the market economy. The monetary policy dictates the aggregate demand which is
related to the supply of the money in the economy is determined that both the policies formulates
the supply of money in the economy in which British airways operates effectively. It is very
essential to understand that the balance is to be maintained in order to deal with the inflation.
British airways properly adapt the various tactics which reflect the actual and the anticipated
changes which are made by implementing the changes. The impact of these policies regulated
the flow of the money in the economy (Gossy, 2008.). These policies determine the supply and
demand of the money in accordance to the government decision as British airways functioning is
regulated by the government. British airways has to meet up these challenges and effectively
adapt to the various strategy which will result in the long run functioning and accomplishing the
motto” To Fly To Serve”.
2.3 Impact of regulations, competition policies and legal changes on British Airways
British airways are the large dominant airways in the airline industry of UK. It is operated
by the government to carry out the various operations. It renders the services in order to
effectively implement the various aspects which ensure the effective service quality. As being
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the public limited airways, British airways are bounded with the certain rules and regulations
which are to be followed while carrying out the various operations (Ingulli, 2014).
As the competition is increasing at an intense speed the company adopt the various
policies to meet it. British airways cannot make major modification as they have to stick to the
same format which they follow over the period of time. There are many airways in the airline
industry with which British airways compete without much modification in the policies as they
are bounded by the legal obligations (Kourteli, 2000). As the airline industry is very large,
British airways has to stick to the same policies and strategies which are related to the
functioning of British airways. They have to adopt the effective pricing policies which determine
the cost structure according to which British airways frame their policies and determine their
growth structure in order to sustain in the long run to provide the services to the customers.
In this context, UK government has formulated wide range of competition policies for all
type of industries. In the context, Competition Act 1998 has ensured that there should be a fair
competition between the organizations in a particular market place. It plays important role to
ensure protection of consumer’s rights. In similar way, other regulatory authorities such as Civil
aviation authorities, international aviation controlling board etc (Fernando, 2011). Are playing
important role in order to control business operations of airline companies associated with the
overseas merger and acquisition through which fair competition can be managed among
companies.
TASK 2
3.1 Market structure and its impact on price and demand
Pricing and output decision within organization are greatly affected by market structure
in which an industry is managed different business operations: Perfect competition- In the perfect market competition, several companies is offering
similar kinds of products and services that are having direct impact on the pricing
different products and services (Kourteli, 2000). Therefore, pricing of different products
are scheduled as per the demand of particular product and prices of similar product. Monopoly market- In this context, only single organization controls supply of all kinds of
products within particular market place. Therefore, prices of different products are much
higher in comparison of other markets.
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 Oligopoly market- In this market structure, few companies is managing the supply of all
kinds of products and services to meet the demand of large number of buyers. In this
marketplace, companies are facing tough competition with other companies and the
management of BA has to consider market demand along with market position of other
companies while determining the pricing of airline services.
 Monopolistic market- In this type of market, limited number of organization is
manufacturing wide range of substitute products (Kew and Stredwick, 2005). In context,
there is huge business rivalry addressed as a result of limited number of companies.
Therefore, brand value of company plays important role.
British airways have the oligopoly market structure in which it operates. This market
structure constitute of the few firms of the similar industry as they are high entry barriers as the
major decision related to the functioning of the airline industry are framed by the government.
British airways are bounded with the legal obligation which determines the market
structure of it. They have to strictly follow all rules and regulations and cannot make any
modification as per their need (Guo and Wang, 2014). The pricing and the demand have the
greater impact due to the oligopolistic market structure as the cost structure cannot be formulated
as the market is monitored by the government. As the investment made by the shareholder is
very huge they have to strictly follow the actions and provide the best services to the customers
who are boarding with them. British airways cannot raise the fare prices as it will affect the
demand and will impact the performance. They have to consider each and every aspect in an
effective manner so that the effectively handle the competitive barriers which they encounters
while performing the various functions.
3.2 Interpretation of the market forces to shape organizational response
Various market forces operate in the airline industry in order to respond as per the needs
of the organization. British airways involve major forces which determine the overall functioning
in the market structure in which it operates (Fernando, 2011).
 Interest of consumers: They focus on providing best services to the customer in order to
upgrade their experience by availing the services which is offered by them. As the
demand of the customers get easily fluctuated if they are not satisfied by the service
offerings which are made by British airways. They modify their functional strategies as
per the needs of the customers.
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 Demand and supply: There is significant variation addressed in demand of airline
services as result seasonality along with pricing and offers of other companies. Therefore,
the management of BA has to take appropriate pricing as per the market demand. In
addition to that various offers of competitor's are also influencing BA in order to take
appropriate decisions related to marketing and promotion of different services. In this
context, price elasticity of supply and equilibrium point assists manager for taking wide
range of business decisions.
 Technological forces: British Airways properly analyse the market forces in order to
determine functioning of the airways. With the implementation of the various
technological forces they upgrade the service standards which they provide to the
customers (Kew and Stredwick, 2005). This led to attainment of the customer
satisfaction. British airways need to interpret ate the economic forces in order to
determine the pricing relate to the various service which they provide to the customer in
order to sustain in the long run.
3.3 Impact of working practices and culture of different countries on British airways
The working practices and the culture diversify across the boundaries as well as within
the boundaries. The market structure in which British airways operates is very intensive. The
work environment involves the various aspects which determine the overall functioning of
British airways (Brumfitt, 2001). The culture dimensions vary at a wider perspective and play a
very dominant role in order to accomplish the objectives. British airways are expanding its wings
within the different boundaries in which they predominantly operate. They adopt the various
policies which determine the effective functioning with the boundaries of the other nation. They
follow the policies and adopt the proper measure which does not impact the culture of the other
country in which they operates. British Airways enhances their working policies in order expand
the working perspective within the other country and ensuring sustainability in the long run to
serve the customers. In order to examine business environment, some important factors related to
PEST analysis are explained below:
 Political: BA is a UK based organization so as management has to follow all rules and
regulations related to employee safety, taxation, consumers safety etc. while managing
different business operations.
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 Economic factor: It includes several factors associated with UK economy such as GDP
growth, employment rate, market demand etc. that are having direct impact in economic
policies of public authorities (Yu and Ramanathan, 2012). It also influences business
operations of BA.
 Social factors: In this, management considers change in lifestyle, interest of people as a
result of alteration cultural element while designing of different products and services
along with tour packages. It also affects marketing practices of company.
 Technological: There have been several changes addressed in aviation or aircarft
technology. In the present era, management of BA has to adopt latest equipment tools and
tactics in order to ensure safety of passengers and their comfort. It also supports
managers for controlling the cost of operation by minimizing the consumption of fuel.
4.1 Impact of the global changes in the trade regime
Globalization is the major aspect which impact the performance of the organization. As
there are various organizations and industries which impact the performance of British Airways.
Globalization is inducing various changes in the work environment in which the various
organizations operate (Gani, 2011.). The World Trade organization effectively monitors the
various trade aspects in order to implement them in order to enhance the functioning of the
British Airways. They deal with the global issues which are related and enhance the working
perspective over the nation boundaries and leaving the impact on the economy of the other
countries. The international aviation industry focuses on generating the revenues by serving the
tourism industry which enhances the overall functioning of British Airways. They have to strictly
follow the framework which is designed by the government and they cannot make any
modification in it. The tourism bodies also emphasizes on huge revenue generation as British
airways serve the across the various nation boundaries on the larger perspective to grow and
expand internationally.
4.2 Impact of other global factors on British Airways.
There are various other global factors which impact the performance of the British
airways in the work environment in which it operates (Yu and Ramanathan, 2012.). The
economic factors influences the functioning of British airways as it is regulated by the
government due to which it cannot modify its pricing policies and have to stick to the same fare
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rates in order to sustain the customer which impact the expansion of British airways in order to
expand the customer share and upgrade their experience of flying with them.
The legal factors also impact the performance of British airways as they have the set of
rules and regulations which they have to strictly follow in order to operate in the business
environment. They cannot modify their legal policies due to which they are bounded by various
rules and regulations related to the various operations in which they function. The working
environment is quite extensive and in order to sustain they have to modify their various policies
to sustain in long run and serve the customer to accomplish various perspectives.
4.3 Impact of EU policies on British Airways
The European Union policies has a very positive impact on the functioning of British
Airways as it provide the fare trade policies for all the airways of the airline industry. They
effectively design the policies which meet the overall objectives of British airways (Nugent,
2006). They continuously adopt the various development tactics which ensure the positive and
effective growth of British airways. They effectively formulate the policies which influences the
overall functioning to meet the objectives of British Airways. EU policies are determined on the
specific criteria which help British airways to effectively and efficiently implement the changes
to ascertain the growth in the work environment.
In addition to that EU has formulated certain standards for airline company related to
passenger safety, quality of services, protection of environment etc. that influence several
decisions of company related to application of new system, advancement of aircraft. In addition
to that free trade agreement among EU countries provides an opportunity to management in
order to minimize the cost of services along with their pricing (Gani, 2011). Furthermore, EU has
determined certain rules and regulation to control unethical merger and acquisition that must be
followed by Airline Company during international expansion. It plays important role for
managing market competition level.
CONCLUSION
British airways can design their policies which reflect the overall objectives of it. They
can adopt the various methods which ascertain in the attainment of the customer satisfaction by
upgrading the experience. They can also formulate their business policies so that they can
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determine the effective functioning. The pricing policies can be determined by keeping in mind
the customer group to which they are rendering their services.
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