British Airways Business Environment Analysis

This assignment analyzes the business environment facing British Airways. It examines how the airline conducts market research to understand customer needs, explores its position within an oligopolistic market structure, and highlights the key challenges and opportunities presented by the global aviation industry.

BUSINESS ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
1.1 Purpose of different types of organization............................................................................1
1.2 The objectives of different stakeholders in British Airways.................................................2
1.3 Responsibilities of British Airways and strategies employed to meet them.........................3
2.1 Economic systems attempt to allocate the resources effectively..........................................4
2.2 Impact of fiscal and monitory policies on British Airways..................................................4
2.3 Impact of competition policy and other regulatory mechanisms on the activities of British
Airways.......................................................................................................................................5
TASK 2............................................................................................................................................5
3.1 Market structures determine the pricing and output decisions of businesses ......................5
3.2 Ways in which market forces influence the organizational response...................................6
3.3 Effect of business and cultural environment in shaping the behaviour of British Airways..6
4.1 Significance of international trade to UK business organizations........................................7
4.2 Impact of global factors on British Airways.........................................................................7
4.3 Impact of EU on the policy of BA........................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment is a sum total of internal and external factors that impact the
overall business activities of organization. These include factors which affect the organization
internally are customers, employees, shareholders, etc. All the internal factors can be controlled
by the firm (Shaikh, 2010). On the other hand, external factors include changes in technology,
law, government, etc. These factors are not controllable by firms. The present report has been
made on British airways which are among the top airlines of UK. The report has covered varied
purposes of company followed by understanding the respective business environment. Emphasis
has further been given on the global factors that may aid or inhibit in shaping the business
operations of company.
1.1 Purpose of different types of organization
Following are the purposes of each of the organization:
different types of organization Purpose
Private organization The main aim of these organizations is to
understand the needs and wants of customers
and accordingly come up with the product or
service which will be helpful to satisfy them
(Cram, 2010). These firms mainly focus on
earning maximum profit. For example: Tesco
which is a retail firm is focused on
understanding the needs of customers and
providing proper satisfaction to them as per
their needs.
Public organization These organizations conduct different types of
activities which are done for the welfare of the
people. They develop employment
opportunities and work in order to support
people. For example: NHS is a public health
group which works for the betterment of
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people.
Charitable organization These organizations help people who are
mental and suffering from the physical
problems. They help these people so that they
can live a normal life (Suder, 2004). For
example: Rainbow trust which is a charitable
organization of UK, supports families who
have children's with disabilities.
Mission of British Airways
Mission of British Airways is to become the most preferred airline globally and this will be
fulfilled by providing high quality services to its customers (British airways, 2015).
Vision of British Airways
Vision is to use the resource carefully and creating environment friendly image globally (British
Airways Overview, 2016).
1.2 The objectives of different stakeholders in British Airways
Stakeholders of British airways
Stakeholders are the individual or groups that are interested in working of company and
may also contribute to enhance the overall growth and profit figures. In accordance to the case,
there are many stakeholders in British Airways like employees, consumers, suppliers and
investors.
How BA meets the objectives of different stakeholders and challenges faced?
There are objectives of different stakeholder in British Airways that are met by the
company in the following manner.
Employees: They are the most important stakeholders. They are the face of the
organization. Through employees, firm delivers their services to their customers (c). Main
objective of employees is to provide all the services to the customers effectively. Further, firm
should focus on understanding customer’s needs, wants and accordingly services should be
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provided which would satisfy them (Keillor, 2013). In order to meet their objectives, BA should
provide healthy environment to them in which they could work effectively. One of the
challenges faced by firm in respect with employees is lack of motivation. In this context, firm
should adopt motivational theories which will help in encouraging and motivating employees
(On-Board British Airways, 2015).
Customers: They are the people who use the services and focus on getting quality
services. In order fulfil their objective; BA should train their employees in an effective manner
so that they could satisfy customers effectively (Morrisson, 2011). In addition to this,
organization should develop attractive offers through which customers can enjoy high quality
services in low prices. In this context, challenges faced by firm are related to provide information
regarding the offers or the schemes effectively. Firm needs to use different types of promotional
tools which would enable them to provide information to their customers easily.
Suppliers: They are the ones who regularly fulfill and supply all the requirements of the
organization. British Airways should maintain healthy relationship with their suppliers so that
they can get all the required material on time (Kang, 2005). One of the challenge faced by firms
with respect to suppliers is that firm does not get their required materials on time. This happens
due lack of proper communication with suppliers.
Investors: They are the people who contribute their funds for the growth and success of
organization. British Airways has multiple investors and trustees for the same as organization is
mostly focused on fulfilling and observing their needs in order to satisfy them. Challenge faced
by firm with respect to investors is that organization fails in fulfilling all the demands of their
investors (Needle, 2004). In this context, the requirement is that the investors should have access
to required information to their investors so that they can understand the problems of the
organization.
1.3 Responsibilities of British Airways and strategies employed to meet them
There are many responsibilities towards stakeholder which British Airways has to follow.
Most important responsibilities which BA should focus on are the as follows:
Employees: Financial and non-financial intensives should be provided British Airways to
its employees. Further, employees should be given training and development programs on
regular basis so that they can enhance and develop their skills (Kandula, 2005). With the help of
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training and development programs employees will be able to understand improvement areas. In
addition to this, they can also plan strategies which would help them to overcome their barriers.
Customers: For meeting the consumer needs, British Airways has focussed on developing new
products which will be helpful in meeting up the needs and wants of the customers. The
company has been able to make a strong presence in cargo business as they have identified as
well as satisfied the overall business needs (Iskanius, Page and Anbuudayasankar, 2010).
Investors: In order to enhance the scope of business British Airways is consistently taking efforts
so that good returns can be given to investors. Further, firm is also focusing on their products
according to their needs and choice of its premium customers.
2.1 Economic systems attempt to allocate the resources effectively
Economic system attempts in order to meet the needs and wants of the customers by
satisfying them. Following are the economic system which a country can follow:
Traditional economy: This economic system is commonly followed by rural areas. In
order to shape the services and goods, this economic system follows tradition, customs and
beliefs (Oh, 2010). Asia, Africa and South America are few countries which support this type of
economy system.
Market economic system: According to this economy, firms can take decisions with
respect to how the products or services are to be offered to the consumers. Further, government
does not interfere much with the working of business. Mostly decisions are made in accordance
with the buying pattern of customers (Porter and Rivkin, 2012). In this economy, large firms get
more benefits compared to small organizations. In accordance with the case, British Airways will
get highly benefited with this economy as they will be able to use resources according to their
need.
Command economic system: According to this system, government takes decision
regarding the production. Organizations need to make changes according to the changes made by
the government. Here, government has got the power to carry out decision making in the area of
production (Shaikh, 2010). In accordance with this economy, British Airways need to follow all
the decisions made by the government.
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2.2 Impact of fiscal and monitory policies on British Airways
Fiscal policy is an action in which government adjusts the level of spending order to
monitor the economy of nation. On the other hand, monitory policy which is made by Federal
Reserve ensures the cost of money. Following are the impact of monitory and fiscal policies on
BA:
Rate of Interest: Organizations have great impact on their operations because of this
monitory policy. In case government raises its interest rate, then British Airways will face huge
difficulty. This will have inverse effect on the profit and growth of BA (Oh, 2010). The given
situation can only be overcome if the company gets finance at a relatively low cost of interest.
Rate of Tax: According to this policy government highly affects the activities of
organization from various aspects. Growth of British Airways will inversely affect if government
increases the tax rates. In case the tax rate is reduced, then company has got a choice to provide
better services to the clients which is also at lower price (Keillor, 2013). In addition to this,
organization will be able to expand their business and they will be able to reach their customers
more effectively.
2.3 Impact of competition policy and other regulatory mechanisms on the activities of British
Airways
There are many policies followed in UK and which has to be followed by organizations. In
context with competition, Competition Act 1998 is one of the most effective regulations which
focus on providing betterment of services given to customers. The quality offered to customers
with respect to product or services should be high (Morrisson, 2011). It also makes sure that
organization does not carry out any unethical activities so as to derogate its competitors being
United airlines, Thomson airlines etc.
As per the fair trade policy followed by UK government, the need is to give emphasis on
ensuring that there exists a fair competition among at all airline companies. Further, it should
also be able to protect the overall rights of consumers (Porter and Rivkin, 2012).
Moreover, with respect to Competition Act 1998 the need on part of firms is to fulfil all the
requirements as mentioned in the advertisement. In a crux it can be said that British airways is
required to adhere with the rules, regulations, policies and procedures so as to provide for quality
services to the consumers (Shaikh, 2010).
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TASK 2
3.1 Market structures determine the pricing and output decisions of businesses
Market is a place where firms offers and operates uniform services and products.
Following are few market structures:
Perfect competition: It is a market structure in which large buyers and sellers are
involved. They have vast knowledge regarding their services and products offered by them.
Firms apply different strategies through which they attract customers (Kang, 2005). British
airways do not come under this structure as it has a limited number of competitors.
As BA has few competitors, it does not come under this structure.
Monopoly competition: According to the given market structure there is only one seller
and large audience to buy. Product or services provided by these firms are highly expensive as
they are the only one who provides these types of products or services (Shaikh, 2010).
Oligopoly competition: In case of oligopoly market, there is a presence of very few firms
who provide similar services or products. Firm in this structure are highly affected by change in
price. British airways can be regarded as to having this market structure. It further has got a
presence of competitors like Thomson airlines, Virgin Atlantic etc. If any of the firm in this
structure changes the price, then all the customers will shift on to that firm. In accordance with
the case, if British Airways reduces its price, then customers of other firms will shift to BA.
3.2 Ways in which market forces influence the organizational response
Organizations can adopt different strategies through which more and more customers can
be attracted. In this regard, there is a presence of many market forces that has a tendency to
influence the response given by organization.
Supply and Demand: Organization is required to make modifications in the strategies as
per the demand of consumers and supply conditions of company (Porter and Rivkin, 2012). In
relation with the case British Airways should be able to provide high quality services even after
fluctuations.
Improvement in technology: Customer should be provided improved services and it is
possible only when organizations adopt new technology. In satisfying needs and requirement of
customers, improvement in technology will be helpful. BA should update and adopts the latest
technologies which would be helpful in understanding and in satisfying travellers so that they
could enjoy their journey.
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Customer’s perception: Firm should make changes according to their customer’s needs
and requirements. In order to know the customer’s needs and preferences, research and surveys
should be conducted (Shaikh, 2010). In addition to this, trends should be considered in making
changes as it will highly affect customer’s perception towards the organization.
3.3 Effect of business and cultural environment in shaping the behaviour of British Airways
In making decision for expansion of business, cultural and environmental factors directly
affects the organization. These are as follows;
Economic factors: These include rate of inflation, employment as well as interest that
contributes to overall GDP of country. In this context, the need is to scan the business
environment properly so that negative impacts of the factors can be avoided (Cram, 2010).
Social factors: Customers behaviour, expectation and perception is highly affected by
social factors. New technologies should be adopted in order to satisfy the needs and wants of the
customers. Human resource management is very important in order to provide services
effectively. British Airways will be affected highly it does not make changes according to the
needs and wants of the customers.
Political factor: In order to develop friendly environment in the country this factor is
very helpful. Government of UK is further required to adopt these policies that are adopts
favourable for the aviation industry. This will aid in increasing the consumer base there leading
to generation of foreign exchange. According to the culture which UK follows, it has developed
many laws, acts and policies which are very helpful for the organizations.
Technological factor: Organizations should adopt improved and updated technologies in
attracting new customer. Efficiency of the organization can also be improved with the help of
improved technology (Suder, 2004).
4.1 Significance of international trade to UK business organizations
International trade is all about the process of exchanging products and services in
overseas areas and terror tries.
Benefits Negatives
 Price of the product and services is
reduced.
 Increasing market share globally.
 International trade requires licensing
which can be costly for the company.
 It requires lot of market research which
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 Helpful in expansion of business.
 Helpful in resource allocation.
 Encourages effective competition
leads to too much of time consumption
(Keillor, 2013).
Through international trade, UK is highly benefited as this nation will be able to provide
employment opportunities to the people. In this context, this will be helpful in decreasing the
unemployment rate in country.
On the other hand, one of the main disadvantages due to international trade is high
competition. It is very essential for the organization to adopt different marketing strategies with
the help of which they will be able to attract new customers in the new market.
Further, the tax rate at different markets will be different and this will be beneficial for the
organization as they will be able to deliver their products or services at low price.
4.2 Impact of global factors on British Airways
There is a presence of many other global factors like changes in pollution control norms,
focusing on consumer safety that can impact the overall working of British Airways. This
happens as the company will have to adhere strictly with pollution norm (Cram, 2010). It will
have to adhere with using less polluting oil and carry out a constant check of its aero planes. In
the same way to adhere with consumer safety it will have to make security checks at airport and
within aero planes stricter.
4.3 Can EU impact policy of BA?
Yes, the policies of European Union have a tendency to impact British Airways. This is
on account of the fact that the company has been serving many European Union nations since a
long time. Whence any change in policy of EU is likely to impact working of British airways.
CONCLUSION
The report has concluded that BA has been adhering with rules and regulations maid by
varied governments. It is required to conduct surveys and research in order to understand the
needs and wants of the customers and to compete effectively with its competitors. Further, BA
falls under oligopoly competition where few competitors compete with each other.
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REFERENCES
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