Analyzing the Impact of Macro Environment on Business Strategy: A Case Study of British Airways

This report analyzes the impact of macro environment on the business strategy of British Airways, including the political, economic, social, technological, environmental, and legal factors. It also evaluates the internal environment and capabilities of the organization and applies Porter's five force model to assess competitive forces in the market.

Business Strategy

Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Analyse of the impact and influence of macro environment on organisation and their
strategy...................................................................................................................................3
TASK 2............................................................................................................................................7
P2 Internal environment and capabilities of the organisation................................................7
TASK 3............................................................................................................................................9
P3 Apply of Porter’s five force model to evaluate competitive forces in market..................9
TASK 4..........................................................................................................................................10
P4 Different range of concepts, theories, model that devise strategic planning for organisation
..............................................................................................................................................10
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business strategy is understand as a course of action, rules and strategy for the
development of an effective set of decisions that assist entrepreneurs for accomplish of business
objectives with less waste of resources. In simple terms, business strategy is explicated as a
master plan that is developed with the aim of formulating a competitive position in market for
accomplishing competitive-edge in market through creation of long-range sketch for desired
image, destination and direction. This report is written from the perspective of British Airways
(BA) and it is a flag carrier airline that is locally registered under government rules for
performing operations at international level (Abohalaka and et. al., 2020). The respective airline
is the second largest UK based carrier which operate business from it headquarter situated in
London. Further, this report highlights on PESTLE and SWOT to understand micro as well as
macro environment of organisation. Analyse of competitive forces with use of Porter’s five force
will also be focused in the upcoming report.
TASK 1
P1 Analyse of the impact and influence of macro environment on organisation and their strategy
British airways is one of leading airline organisation situated in UK and this is owned by
International airline group and operate a fleet that is considered with more than 300 aircrafts.
Different business perform their work for accomplish of some specific goals and objectives with
formulation of effective routes. Methods, ways or path are considered as the part of business
strategy. Organisation such as British airways performs their work at global level so it is complex
to select a particular strategy for business. In the present scenario, business strategy work as a

backbone for business because it aids the management to take all action and decisions with
develop of a roadmap and this map is directed towards goals and objectives of respective airlines.
In the context of British airways business objective and strategy with understand of PESTLE
Model which is mention as below:
 Political- Political factor perform an important role in each industry specifically aviation
industry is additionally managed and controlled by the UK government (Ahuja and
Novelli, 2016). It is because government plays an important role in terms of formulation
policy that is used to generate market attractiveness. Moreover, business friendly
environment is created through controlling the oversight and regulation of aviation
market for a particular region. So the impact of government policy on strategy of British
airways is positive that support management to perform functions with more efficiency.
So apart of regulation civil aviation authority and safety standards, security issue and
environment pollution also controlled by British airways for protecting oversee market to
improve airline goodwill in international market.
 Economical- Changes in the economic conditions of a country directly impacts on airline
industry situated in United Kingdom. Moreover, economic situation of UK also impact on
the business of British airways. Whether, the level of unemployment, gross domestic
production and economic stability are some factors that impact on air travel and aviation
industry (Amankwah‐Amoah, 2016). Brexit create challenges for air travel and flight
operators as when decision in implemented economic slowdown is monitored in the
market of UK. So economical perspective create a disadvantage for the strategy of British
airways. This is also because after the economic slowdown major business moves their
headquarters from United Kingdom to European Union because of low confidence in
economic growth. Like, unemployment rate in UK is still low. So British airways
influence market through formulating strategic decisions for business such as adoption of
business model according to economic situation.
 Social- The term social factor undertakes demographic change that plays an important
role for aviation industry and business. One of the main target markets for the British
airways is millennial who travel habits is changed and now they spend more for consume
luxury air services. Western market is one of the examples that leads changes in business
of British airways because now consumer purchase ticket after analyse of organisation

image in market. From the recent years, British airways involve aspects that leads to
enhance improve customer experience for accomplish competitive edge in market
through improving social image in market. So the strategy of business in market is
automatically is increased (Chu, KrishnaKumar and Khosla, 2014). Moreover, strategy of
business is implemented by management for performing their role in the positive manner.
 Technological- Innovation is a focal factor driving the development of the carrier
business and separated from more eco-friendly and more secure airplane models, the
advancement of better deals and administration advances has likewise supported the
quicker development of the aircraft business around the world. Advanced innovation has
likewise helped the carrier organizations develop their client base and market themselves
all the more effectively. English Airways is putting resources into innovation to make its
armada more eco-friendly and to offer a better client experience than its travelers. So
technology impact positive on Business strategy as it plays an important role for
completion of work according to decided and existing market conditions. Also, as a piece
of its key designs for the future, British Airways has chosen to put more in innovation to
guarantee higher effectiveness, better administrations, and higher benefit. The
organization is likewise wanting to embrace an advanced change to get the full bit of
leeway of consolidating innovation in its every-day activities around the world(Habib and
Hasan, 2017).
 Environmental- Natural variables are currently a focal worry for the carrier
administrators just as the flight specialists. The natural effect of the carrier business is a
focal worry for administrative specialists around the globe. Nonetheless, British Airways
has made some firm strides toward this path to limit its natural effect on making its plan
of action more feasible. So environment factors impacts on society with positive aspects.
This leads management in completion of task with more efficiency. Manageability is
currently one of the center zones of vital significance for the brand which is constantly
putting resources into developing the eco-friendliness of its armada and diminishing its
carbon impression. The parent organization of British Airways, the IAG has focused on
carrying its carbon impression to net zero (Holotiuk and Beimborn, 2017). As a piece of
its arrangement, which is called Flight Path Net Zero, the organization has wanted to
accomplish net zero CO2 discharges continuously 2050.

 Legal- Legitimate elements are one of the main worries in the whole flying industry
including the UK market. Consistence is basic for all avionics players including the
British aviation routes since resistance can bring about significant fines and furthermore
hurt the standing of the brand. Legal factors of UK generate favourable aspects for
business and it leads management to take action positively as compare to competitive
organisation. Aside from client comfort and traveler security and ecological effect, there
are laws identified with work and a few more operational territories that the British
Airways is needed to stay consistent inside its homegrown market just as abroad
(Klettner, Clarke and Boersma, 2014). There are a few laws that administer the UK
aircraft industry which has until Brexit stayed directed under the EU guidelines primarily.
While CAA is the primary controlling expert in the UK, there are extra worldwide
administrative specialists that direct the activities of global carrier brands. Aside from the
laws identified with activities, work laws are additionally a huge zone influencing British
Airways.
Figure 1Source (https://www.polemicdigital.com/pestle-strategic-vision-future-seo/)
Analyse of macro environment to determine and inform strategic management decision

With understand of all factors that is related with macro environment of business define
different task and it is used for completion of all work with more efficiency. Along with this it is
also identified by management that persons accomplish better results through compiling business
strategy according to business perspective. Moreover, with analyse of macro environment
political conditions it is identified by management that management make longer results by
performing all work in an organised manner (Koopmans and et. al., 2016). Economic aspects
define rules and regulations through which person make perspective which management leads in
completion of task with strategic decision to remain untouched from impact of economic
slowdown. Social and technological also impact on the organisation because it create challenges
for aviation industry to manage and complete their work as per current trends which decrease
profits and enhance operational cost of business. In the last, environmental and legal aspects both
aids management in enhancing and improving goodwill of organisation by completing task with
managing concern of the aviation industry and market.
TASK 2
P2 Internal environment and capabilities of the organisation
A British airway is one of the leading UK based airline organisation and it fleets more than
300 aircraft that operate flights among the international destination. This also refers that airline
brand carriers more than 40 million passenger on yearly basis. Moreover, recent years market
environment generate different challenges and also opportunity for British airways. SWOT is an
effective model for British airways and it helps organisation to improve strategy which leads
organisation to complete their work by analyse of current market conditions (Leonidou and et.
al., 2017).
Strength
 Establish brand- The major strength of
British airways is the strong and well-
establishment of airline brand that aids
to hold a strong position in UK market.
Brand is established by British airways
through improving customer
experience.
Weakness
 HR Issue- Organisation is constantly
growing business in the strategic
market area. The HR department of the
British area is still challenging because
engaged staff is not totally satisfied by
company rules.
 Dependent on the domestic market-

 Strong technological capabilities-
Apart from other strength technological
aspects are highly controlled by
organisation. So management start
focusing on operational efficiency to
make better investment which leads in
improving operational areas of
organisation (Mills and Mills, 2017).
 International route network- The
origin or core market of British airways
is stated in United Kingdom. But the
flight operator serve in more than 70
market so systematic route network is
another strength of organisation.
British Airways is one of the largest
airline portfolio that manage
International airline group. Overall 50%
of revenue is earned by United
Kingdom market. So the penetration of
foreign market is a weak point for
British airways.
 Problems with engine- Another
leading issue or weak point during
British airways was caused by engine
use respective organisation. Large
number of aircraft is taken out due to
technical issue in aircraft. It is a weak
point because availability of aircraft is
decreases.
Opportunities
 International expansion- Airline
industry faces different challenges.
British Airways increase business by
performing marketing activities in
foreign market. It aids management to
grow its customer’s base and revenues.
 Digitalisation and technological
innovation- With the increase in
different activities specifically that
relates with market share and faster
growth leads management to enhance
value in company services.
Threats
 Increase in competition- Competitors
are one of the major threat both in UK
and international airline industry. Apart
from the growing number of carrier
organisation loss their market shares in
niche segment. So reduce of market
share due to competition is a threat for
business.
 Threat of Brexit- Due to decision of
Brexit a set of new challenges is
increased in the airline business
(MILLS, 2016). So economic
uncertainty and dampening investor
confidence are the major threats related
with Brexit.

Evaluate and interpret information based on internal environment to assess strength and
weakness of airline strategic management decision
With the analyse of existing market conditions it is identified by management that
strategic must be focused to complete their work with establishing themselves as an airline brand
that aids management to use company goodwill in business strategy. Use of technology to
manage and operate time of strategic management decisions is other strength for business
strategy. So decision related with increase in market share work as a positive aspect for British
airways, Moreover, strength aspects also enhance and accomplish business opportunity to enter
into foreign market (Moktadir and et. al., 2020). On the other side, weak aspects define low-
motivation of staff and high dependent of organisation business on domestic market. Therefore,
British airways face challenges and it decrease profits of organisation. Thus, market strategy also
focused towards the improvement of factors in order to improve strategy of business with
organised manner.
TASK 3
P3 Apply of Porter’s five force model to evaluate competitive forces in market
By conducting Porter’s five force analysis that is based on British Airways model leads
management to understand organisation position in market. Five forces in context of British
airways is discussed as below:
 Threat of new entrants- There are different barrier exists in market and it is related with
airline industry such as high investment which is required for becoming a part of aviation
business. So the force of threat of new entrants is low in market along with this already
established airlines capture high market share (Pereira and Caetano, 2015). Therefore,
new organisation also face challenges to formulate competitive edge for business so the
threat of new business is too low.
 Threat of substitutes- With determining the threat related with substituted products of
airline organisation train, bus, car, ship and all other modes of transport is conducted as a
part of substitutes. All this create difficulties to analyse a threat related with British
airways customer base. Similarly, British airways also offer high value to improve
customer experience and if customer find convenience and time saving at travel time than

British airways is appropriate for business (Sengur and Sengur, 2017). Therefore, the
threat of substitute is at moderate level for managing position in market.
 Bargaining power of buyer- Most customers are the price sensitive and as per current
market conditions now-days person are more focused to manage and complete work
according to decided rights. When the option to buy airline service exists than there are
various choices exists in market. This aids management for identify of areas that prefer
market to complete their work that increase loyalty aspect of customers for British
airways. Therefore, this is identified by management that the bargaining power of buyers
is high and it reduced the number of buyers of British airways.
 Bargaining power of supplier- In context of the British airways the term supplier
includes airplanes fuel supplier and the number of labourers. There is few and less
number of supplier of airplanes exists so it is difficult for management to manage task
which include and involve in aviation industry that make perspective for business. So the
threat related with supplier power is high (Yuliansyah, Gurd and Mohamed, 2017).
Moreover, British airways also find it complex for managing work without supplier of
fuel so good relationship is required to be managed with suppliers.
 Competition in industry- British airways identifies high and huge competition on the
different levels. It includes competition from local competitors and competition from
international airlines. This also analysed by management that global level competitors
generate threat related with price, services and convenience. So it is mandatory for British
airways to provide services that are high in quality it refers that competition level is
intense. This also state British airways face high level of competition due to which it is
complex for management to market its activities in proper manner.
TASK 4
P4 Different range of concepts, theories, model that devise strategic planning for organisation
Strategic planning process is defined as the physical destination that is used to develop the
decision making power of organisation. With decision making and allocating resources it is easy
to complete all task which leads to accomplish final goals. In the present scenario, there are
various task performed by management and it relates with perspective that is used in managing
work according to decided locations. Model plays an important role for the large organisation

specifically British airways that leads in completion of task with motive of managing industry
rivals among the organisation (Leonidou and et. al., 2017). This define current market strategy is
impacted due to difference in models of business. Some objectives, tactics and strategy of
organisation are mention as follow:
Goals
 To become one of the best airlines at global level by brought corporate responsibility
together to accomplish business goals.
 To manage carbon emission for reducing and recycling the challenges to minimise
pollution from environment.
Mission
British airways mission statement as “one destination that seek and ensure that our
customers travel with us in confident manner, together and management act responsibly for
taking care of world.
Objective
The objective of British airways is to create the mind-set through which individual feel
safe and comfortable within ground and air.
Vision
The vision statement of organisation is to generate all activities and action at a one place
that is used to work according to one destination. Main vision of organisation is to develop
challenges and this is used for reducing the activities which enhance air as well as noise pollution
for the country.
Suitable Strategy for British Airways
With understand of Bowman’s strategic clock management explore different options for
managing strategic positioning in the market. This is used by British airways and it leads
management to analyse position of market that work as a competitive action for market. In
simple terms Bowman’ strategic clock work as an effective model and it is used to explore
strategic value to analyse all variety options. Price and perceived value is two different
dimensions for determining better position of business. Some methods to understand market will
mention as follow:
Hybrid strategy

A hybrid strategy seek and understand perspective that aids British airways to accomplish
differentiation and low-price methods to achieve better value as compare to competitors. The
success of Hybrid strategy include the methods through which individual enhance areas which
provide benefits to customers such as offering high value services at low prices. Moreover,
management also consider that sufficient margin will remain in hands of British airways to
arrange and develop resources which provide bases for differentiation. This also define
management obtain high position in market through understand of different bases that relates
with differentiation.
Diversification strategy
Diversification is defined as a corporate strategy that is used for entering into the new
products and services within a new market. From the British airways diversification strategy
plays an important role for the management because it leads person to enter into the foreign
market. But the risk related with diversity strategy is too high and it impacts on goals and
objectives of business. This defines person make perspective that leads in selection of market to
obtain high position in market. There are various task performed by management and it is used
for managing and performing task by focus on all markets where the number of potential buyers
exists in market.
Vertical/horizontal integration
The term horizontal as well as vertical integration refers to the strategies that are used by
organisation within same industry and production process. But both aspects are different from
each other. In context of horizontal integration an organisation take or purchase another business
which is operating at the same level. British airways perform their work at a large level so it is
easy for management to purchase local based airlines. In the context of vertical perspective this is
analysed by business organisation make partnership agreement that work as a motive for
performing business action with other areas. It leads persons in managing and completing task as
per scheme that leads respective organisation to gain competitive-edge in market.
With analyse of business environment either internal or external it is analysed by
management that organisation strategy perform an important role for management. Along with
this there are different methods and paths that are used in performing task as per value chain
business. By the use of vertical integration management involve the acquisition by which all task
are completed with production of services that add more value in market. This also define

organisation is considering values that boost profits of company. By analysing market conditions
it is identified by management with understand of market model it is easy to complete work by
use of environmental aspects. All information that is collected by management consider
environment areas in order to select manage task according to purchase of organisation activities
in an accurate manner. So Hybrid strategy is recommended to British airways because
management already enables as it a brand. Therefore, with low prices customers are attracted to
accomplish and purchase services at low prices.
CONCLUSION
From the discussion of above report it is concluded by management that business strategy
plays an important role for organisation. With development of effective strategy it is easy for
management to complete all task according to planned steps and actions. Strategic management
plan aids an organisation for completion of task according to decided objectives into new and
specific areas. By understand of information it is identified by management that to complete all
work micro and macro environment is easy to decide strategy for business. In the last, Porter’s
five forces is also understand to analyse business position among market.

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