Impact of International Trade and EU Policies on British Airways Operations

It is beneficial for two countries to interact with each other and can support in enhancing their overall relationship. This interaction can also lead to an increase in the living standard of both countries, which can benefit businesses like British Airways as they will prefer to purchase more services from the airline industry. International trade can help enhance the quality of services provided by British Airways. At a global level, there are various factors that affect British Airways' operations, including government laws and regulations, competition, technology, and cultural differences. The European Union's policies on travel also have a direct impact on British Airways' operations. Overall, the business environment has a significant impact on an organization's functions.

BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Purpose of different type of organization..............................................................................1
1.2 Key stakeholders of British airways and objectives of different stakeholders......................2
1.3 Responsibilities of organization towards stakeholders..........................................................3
2.1 Discuss how economic system allocate resources.................................................................4
2.2 Challenges faced due to fiscal and monetary policies...........................................................4
2.3 Impact of regulatory, competition and legal changes in airline industry..............................5
TASK 2............................................................................................................................................5
3.1 How market structure has impacted pricing and demand for airline seats............................5
3.2 How market forces shape organizational responses..............................................................6
3.3 How British airways is impacted by culture of the countries................................................7
4.1 Impact of global changes in trade regime caused by organization........................................7
4.2 Factors affecting British airways at global level...................................................................7
4.3 Impact of EU policies on travel on British airways...............................................................8
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

LIST OF FIGURES
Figure 1: Stakeholders of company.................................................................................................3
Figure 2: Market structures..............................................................................................................6

INTRODUCTION
Business environment refers to the overall surroundings where business carried out its
operations in the market. In the modern era, large numbers of challenges are present in the
market which prevents enterprise from accomplishing its overall aims and objectives. Such type
of issues involves competition, regulatory laws and regulations which business has to comply
with. Further, to deal with the challenges business has to develop effective strategies so that
overall performance in the market can be enhanced easily (Capon, 2009). Apart from this, every
stakeholder associated with the business has some sort of expectations from management which
business has to meet so as to focus on its long term goals along with objectives. Stakeholders of
company are suppliers, banks, government etc which are directly influenced by the operations of
company. For conducting the present study organization chosen is British airways which
operates in aviation sector and well known in the market for range of services it delivers to target
market. On the basis of fleet size firm is regarded as leader in the market. Various tasks have
been covered in the study which are market structure of airline industry, key stakeholders of
company etc,
TASK 1
1.1 Purpose of different type of organization
Every business enterprise operating in the market differs from each other in the form of
their objectives, long term goals etc. Different type of organizations are public, private, voluntary
etc. Public sector companies are owned and run by state government and taxes are paid by
people to finance most of the public sector. Further, main aim is to render public services and use
resources for welfare of society (Cheng and et .al., 2007). Main purpose of private organization
is to earn profits by carrying out operations in the market. Moreover, main aim of voluntary
companies is to work for the public welfare and supporting different type of individuals.
Company like British airways is a public limited enterprise where mission of enterprise is
to deliver best services to the customers in the field of aviation. Main stress of firm is on
delivering better inflight services along with full experience so as to strengthen its customer
base. Moreover, mission of enterprise is to decrease its environmental burden for which targets
have been set with the motive to reduce carbon emission by year 2020. Short term objective of
business is to strengthen its customer base and long term goal is to enhance market share along
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with profitability of the business (Fernando, 2011). By setting overall goals along with objectives
British airways is able to operate efficiently in the market.
1.2 Key stakeholders of British airways and objectives of different stakeholders
Stakeholders are the individuals along with groups who are interested in knowing about
overall affairs carried out by business. Key stakeholders of British airways are customers,
suppliers, government, financial institutions etc. In order to meet objectives of different
stakeholders different strategies have been employed by business where objective of customer is
satisfied by delivering them appropriate services as per their expectations (Freeman,2010).
Objectives of supplier is satisfied by providing them payment for the goods purchased by
company on time, aim of government is satisfied by complying with all the laws along with
regulations linked with the aviation industry. Therefore, these are some of the effective ways
employed by British airways in order to meet with the objectives of different stakeholders
associated with the firm.
On the other hand different types of challenges are present which British airways has to
face at the time of carrying out operations in the market. One of the main issues is to understand
actual need and requirement of stakeholders and this act as hurdle while meeting with their
objectives (Klapper, Laeven and Rajan, 2004). Further, time to time expectations of different
stakeholders changes and due to this basic reason business has to search for new ways through
which each and every party associated with business can be satisfied.
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Figure 1: Stakeholders of company
(Source: Manas and Graham, 2003)
1.3 Responsibilities of organization towards stakeholders
British airways have responsibilities towards different stakeholders and it is necessary for
business to carry out such duties in appropriate manner. Towards customers firm is having
responsibility to deliver effective services as per their need and requirement. In short services
delivered must provide them value for money experience (Ahmed, 2012). In favor of
government business enterprise is having duty to comply with all the regulations introduced for
the entire aviation industry. Therefore, British airways comply with all the guidelines introduced
by firm and this supports in satisfying need of government. Towards employees firm is having
responsibility to provide them personal growth opportunities and the same is satisfied by
business through benefits delivered such as in the form of appraisal or other methods undertaken.
Company is having responsibility towards its supplier where payment has to be provided to them
on time for the goods purchase and this need is satisfied by company through timely payment.
Further, company is having responsibility towards society in the form of reducing environmental
burden and same is satisfied by setting objective of reducing carbon emission. Therefore, in this
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way British airway is efficient enough in satisfying need of its stakeholders and this has assisted
in enhancing overall performance of company in the competitive market (Baer, 2001).
2.1 Discuss how economic system allocate resources
Economic system is regarded as the system of distribution of different type of resources
and is linked with how production process is carried out along with distribution. It involves
mixed, command and free market on the basis of which any economy operates. Further,
economic system takes into consideration land, labor, capital etc. In mixed economy both
government and private players play key role and they take active participation in taking
effective decisions for the welfare of economy. British airways operate in mixed economy where
majority of the decisions are taken on the basis of market mechanism (Camacho, 2012). This
assist enterprise in satisfying need of its target market in appropriate manner. Further, command
economy is another one where main role is played by government in allocation of resources and
private players are not allowed to interfere in the major operations. Further, in free market
economy private players play major role in the functioning of the economy where main stress is
on profit maximization with effective utilization of resources and government has no
participation. Therefore, in this way different economic systems are present in which resources
are allocated in different ways
2.2 Challenges faced due to fiscal and monetary policies
Fiscal and monetary policy introduced by government has direct impact on overall
operations carried out by business. Fiscal policy is associated with expenditure level of
government on various aspects of the society and this type of spending is must for the
development of nation. It takes into consideration tax rates which are observed by regulatory
authorities for the development of economy (Crowther and Aras, 2010). Tax rates along with
spending of government is changed regularly and due to rise in level of tax expenditure level of
organization increases. Therefore, fiscal policy affects overall expenditure level of British
airways as when tax rates are increased then firm has to pay more amount to government in the
form of tax and vice versa.
On the other hand monetary policy is associated with interest rate which is being adopted
by business so as to control flow money in the economy. In case when interest rates are increased
then British airways has to pay more funds to the bank in the form of interest and it becomes
costly for enterprise to obtain loan. Therefore, due to variation in interest rate overall operations
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carried out by British airways are affected directly and firm has to deal with change in such
policies in appropriate manner.
2.3 Impact of regulatory, competition and legal changes in airline industry
Laws along with regulations developed by government have direct impact on operations
carried out by British airways. Further, competition policy is associated with rules regarding how
company can compete with each other for surviving in the market. Due to presence of perfect
competition in the market firms try to indulge into unethical practices so as to enhance
profitability along with sales level (Ghosh, 2004). Therefore, British airways strictly comply
with the competition policy and it is ensured that marketing along with promotion of products is
done in appropriate manner. Further, any form of advertisement is not done which harms market
share of major competitors.
On the other hand different type of changes takes place in the form of regulatory and
legal which also affects overall operations carried out by British airways. Environmental policy
is one of them where new policies are introduced by government for protecting environment, tax
and payment of other duties are modified which company has to comply with. Apart from this,
safety standards are modified through which it is ensured that customers are provided proper
environment of safety and no such issues are present. Therefore, in this way the overall changes
taking place in the form of regulatory, competition and legal has direct impact on operations
carried out by British airways (Halbert and Ungulli, 2011).
TASK 2
3.1 How market structure has impacted pricing and demand for airline seats
Market structure refers to number of firms producing identical commodities which are
homogeneous in nature. Different type of market structure exist which are perfect competition,
monopoly and monopolistic competition. British airways carry out operations in the market
where competition level is high and due to this reason prices have to be kept moderate by firm so
as to attract large number of customers. Market structure has impact on pricing along with
demand for airline seats as in case of perfect competition where demand is high then prices have
to be kept moderate or low as many options are present with customers and they can choose one
which is cheap (Johnston, Bringall and Fitzgerald, 2002). Monopoly is another type of market
structure where there is only single seller and in case if rise in demand company can charge high
price. In monopolistic structure competition level is moderate and in case of high demand for
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seats prices are not charged very high as other companies is also present. Therefore, in this way
market structure has directly impacted the pricing along with demand for airline seats in the
market where pricing decisions are taken by British airways keeping in view its competitors and
overall demand in the market.
Figure 2: Market structures
(Source: Tamo., 2015)
3.2 How market forces shape organizational responses
British airways carry out operations in the market where large numbers of forces are
present and it affects overall activities of enterprise. As per view of Kárpáti (2001) competition
is one of the major force affecting British airways where due to presence of high level of
competition firm has to modify its response such as understanding about taste and requirement of
target market, marketing of products and understanding other ways of satisfying its key
stakeholders (Kárpáti, 2001). Change in political laws along with regulations is another force
which shapes organizational response as when new laws are introduced by government then
company has to carry out its operations accordingly such as environmental law which firm has to
comply with in order to reduce environmental burden. However Manas and Graham (2003)
argued that changes in taste and preference of target market is another market force when need
of customers requires modification in services and in turn British airways has to respond
accordingly. Changes in economic condition is also one of the most crucial market force as in
condition of economic downturn purchasing power of customers reduces and they do not prefer
to purchase airline services which are costly. Therefore, firm has to reduce its price at an extent
so that customers can be easily targeted. So, these are some of the market forces which shape
organizational responses (Manas and Graham, 2003).
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3.3 How British airways is impacted by culture of the countries
In country like UK, large number of individuals live who are from different nations,
culture, religion etc. Further, it is well known fact that when culture and religion of one
individual differs from other then working style is affected. Therefore, company like British
airways is also affected as company has employed multicultural workforce and to work with
them is quite difficult. Organization has built its internal policies and regulations which are in
accordance with the policies of the country (Fernando, 2011). Each individual living in the
society works as per culture of the country and British airways has to modify its operations
accordingly. Further, language barrier is also present as due to change in culture every individual
speaks different language. Therefore, firm has to adopt one common channel of communication
where every employee can work with each other easily. Further, British airways operate in
different countries where working practice is different such as in the form of working hour etc.
Therefore, business has to consider such change in working practice. Moreover, due to variation
in culture different ways are adopted by firm for managing its workforce and dealing with them.
4.1 Impact of global changes in trade regime caused by organization
Entire aviation industry is highly regulated and many bodies along with authorities are
working for bringing changes at global level and this has direct on operations of British airways.
Associations and bodies such as WTO has introduced different type of laws with the help of
which companies have to search for effective ways through which their adverse impact on
environment can be reduced. Trade is considered as another aspect which is conducted in
designated marketplace such as between buyers and sellers (Ahmed, 2012). Trading at
international level can be beneficial for the business as through this it is beneficial for two
countries to interact with each other and it can support in enhancing their overall relationship.
Apart from this, rising living standard of two countries can be beneficial for business as they will
prefer to purchase more services of airline industry. One of the main advantages of international
trade is that through this business can easily enhance quality of its services. Therefore in this way
trade regime caused by organizations such as WTO and others has direct impact on overall
operations carried out by British airways.
4.2 Factors affecting British airways at global level
Their exist large number of factors which affects overall operations carried out by British
airways. Laws introduced by government at global level affects overall operations of firm for
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example at present regulatory authorities have introduced guidelines so that aviation companies
can reduce environmental burden. So, British airways have to bring change in its range of
activities where by using efficient engines company can reduce its carbon emission. Further,
safety standards are regularly introduced at global level where company has to comply with such
standards so that it can operate efficiently in the market (Capon, 2009). Apart from this, large
number of companies are entering into this market which is acting as hurdle for British airways
as firm has to modify its market strategy along with pricing etc. This allows business to operate
easily in the market where competition level is high. Moreover, at global level culture and
religion of customers differs and their requirement varies from one another accordingly.
Therefore, this factor is also crucial at global level which influences overall operations carried
out by British airways. So, in this way factors at global level influences overall activities carried
out by company.
4.3 Impact of EU policies on travel on British airways
European Union is regarded as foremost body whose main purpose is to govern working
of business enterprise and it has direct impact on business. Further, different type of laws has
been introduced such as competition and others associated with aviation industry. Such rules
have direct impact on business functioning (Camacho, 2012). Further, some policies are also
present which are linked with rights of people living in EU along with the safety of the
customers. In short policies introduced by European Union has direct impact on business
functioning as it directly affects the way management builds different kind of strategies with the
help of which enterprise carries out operations in the market for accomplishment of desired aims
and objectives. In case if British airways does not complies with the guidelines issued by EU
then it has adverse impact on business operations. Therefore, in this way EU policies on travel
have direct on overall operations carried out by British airways.
CONCLUSION
From the entire study it has been found that business environment has direct impact on
overall functions carried out by organization. Further, British airway operates in the market
where competition level is high and due to this reason firm has to develop all the strategies
keeping in view its major competitors. Moreover, at global level different factors are present
which affects operations of firm such as competition, political laws, technological etc and it has
to be considered by firm for its survival in the market. Apart from this, due to monopolistic
8

market structure firm has to set moderate prices even in case of high demand and this supports in
accomplishment of overall aims along with objectives of company.
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