Business Strategy for British Airways: Impact of Macro Environment, Internal Analysis, and Strategic Planning

This report analyzes the impact of macro environment on British Airways and its strategies, evaluates the internal environment and capabilities using appropriate frameworks, and devises strategic planning using a range of theories, concepts, and models.

Business strategy

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
P1 Applying appropriate frameworks analyse the impact and influence of the macro
environment on a given organisation and its strategies..............................................................3
M1 Critically analyse the macro environment to determine and inform strategic management
decisions......................................................................................................................................6
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks..................................................................................................................................6
M2 Critically evaluate the internal environment to assess the strength and weaknesses of an
organisation internal capabilities.................................................................................................8
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation............................................................................................................9
M3 Devise the appropriate strategies to improve competitive edge and market position based
on outcome................................................................................................................................11
P4 Applying a range of theories,concepts and models, interpret and devise strategic planning
for a given organisation.............................................................................................................11
M4 Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives...................................................................................................................................13
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business strategy is the in the format of road map that is prepared by company with respect to
growth perspectives. Therefore a well formulated business strategy depicts the way in which a
particular company will compete in the market with its unique product or services. The level at
which business compete or the present market share does not remain same in the future that is it
varies. Therefore it is required for the companies to adopt flexible and up to dated business
strategy(Ashrafi and Zareravasan, 2022). In context to British Airways, which is a flag carrier
of UK headquartered in London, in order to adapt an appropriate business strategy, the report
will be prepared below that will be covering the aspects like the approach that will be utilised
for demonstrating the impact of macro environment. Also the report will cover the analysis of
internal environment by using appropriate strategies and also by applying Porter's five forces
model British Airways will get to know about the existence of competitive forces in the market
and the theories used for devising the strategic planning for the company mentioned.
TASK
P1 Applying appropriate frameworks analyse the impact and influence of the macro
environment on a given organisation and its strategies
Macro environment of any business is affected by enormous factors that can be studied by using
the PESTLE model in context to British Airways. This model is helpful for the company as it
provides detailed information with respect to direction in which company is moving, targets
related to growth, positioning of its brands and the risk associated with productivity. This model
therefore provide the British Airways with several benefits such as planning for the important
aspects of business such as workforce, marketing and changes occurring in the market.
Further the use of Ansoff growth vector matrix will help British Airways to identify the type of
strategy in the marketing activity(Banc and Messeghem, 2020). Also by this matrix company is
able to plan and evaluate the growth initiatives.
PESTLE Analysis
 Political factors- Businesses are affected by these factors due to the existence of political
instability and also the elements like trade policies, workforce regulations and other
governmental regulations. For British Airways to grow it is required to know the effect
of governmental policies. One of the recent political incident that after the capture of

Ukraine by Russia, Russia restrict the flights of UK that has impacted the operations of
British Airways to stop.
 Economic factors- these factors have a severe impact on the business especially the
finance business and include factors such as GDP, exchange rates and inflation rates.
British Airways utilise this factor for the purpose of making effective decision and
achieve the remarkable heights(Conz and Magnani, 2020). Because of the one of recent
incident of COVID-19, the measure took by government in implementing the lockdown
has faced major financial loss of around 6.5 billion pounds. The loss was also faced by
British Airways due to decrease in passenger revenue at that time.
 Social factors- these factors are related to society and culture and also depicts about
consumer spending and population. British Airways is affected by these factors with
respect to airfare. Thus the company tends to increase the seats in its plan in order to
provide the affordable prices for the seats to the consumer and can have competition with
carriers of low cost.
 Technological factors- this includes internet access and automation and also the
advancement in technologies. In order to collect post-flight feedback British Airways
make use of automated technology for the passengers. The overwhelming growth was
achieved by British Airways by implementing a fuel efficiency program. Also the
recent development as introduction of own website where bookings were made with no
complex process involved facilitated the passengers in a great way. This also enhanced
the customer loyalty and customer satisfaction level.
 Legal factors- this includes copyright laws, trade policies and consumer protection laws.
In order to sustain in the legal environment of business, company must follow the rules
and regulations(Enke and Borchers, 2021). British Airways is very well aware of the
fact that if company fails to obey laws related to aviation, country specific that is
discrimination, fairness and equity can expose it to serious fines and penalties that can
harm the reputation adversely. At the time of universal cause, most of the British

Airways flights got cancelled that made the company to refund the amount to its
passengers but company did not comply with the law and had to face the law suit. These
factors have that major impact that can ruin the years of hard work.
 Environmental factors- these factors relates to global warming like change in climate,
pollution and supply of natural resources. In order to achieve sustainable growth British
Airways does not neglect ecological factors. First position is secured by the British
Airways to use the sustainable fuel in the jets that has reduced the carbon emissions by
80%
Ansoff vector matrix
 Market penetration- this refers to the increased level of revenue by the sale of existing
products. British Airways use this strategy in order to offer the tickets at attractive
prices. Also the British Airways, with respect to promotes its existing user offered some
loyalty schemes that provides various benefits to its passengers.
 Market development- this is the sell of existing products by the business in the new
market(Ghobakhloo and Fathi, 2019). British Airways therefore developed its market by
making the routes for the new destination and offering of extra ordinary services. This
will help the company in generating more profits.
 Product development- this is associated with the introduction of new products in the
existing market. This strategy of matrix is adopted by British Airways by introducing a
new aircraft and operating them on varied routes in order to offer the passengers with
best services and comfort
 Diversification-This is the sell of new products in the new market and is considered as
very risky strategy. British Airways has vertically diversified its operations by
developing the airports at various locations in order to compensate the fees of airport that
company has to pay. The other option available with the British Airways is the

diversification in completely new field such as investment to hospitality business such as
hotels, resorts and so on.
M1 Critically analyse the macro environment to determine and inform strategic
management decisions.
By deeply analysing the macro environment of British Airways, company is able to evaluate its
influence on the conduct of operations. Understanding the factors like political, social, economic,
technological, legal and environmental has briefed about the impact of different fields that can
result negatively if neglected(Hanlon, 2019). This is of crucial importance in order to sustain and
retain for a longer period of time.
P2 Analyse the internal environment and capabilities of a given organisation using
appropriate frameworks.
The internal environment and capabilities of British Airways can be deeply understood by
involving the McKinsey model, VRIO model and value chain analysis.
McKinsey model- this model is depicted in the specified format build on the use of 7s
that showcase how effective the organisation is and comprised of internal factors. In context to
British Airways-
1. Strategy- as per this British Airways aims to provide its services differently from the
other airline industry. Thus it aims to differentiates via excessive dependency on the
digitalization and information technology and also the customization at very high level
2. Structure- this element describes the structure opted by the organisation that can be
functional, divisional and hierarchical. In context to British Airways, hierarchical form
of organisational structure is used that shows the large size of business.
3. Systems- British Airways with the involvement of systems like employee recruitment,
performance appraisal and quality control, it also includes industry specific system that
is passenger check in system and baggage handling system.
4. Style- this shows the way in which top level management supervises the company on
various matters. This will improve the competitive advantage of company(Harsch and
Festing, 2020). British Airways has a autocratic leadership style which has proven to be
effective for the company as the role of its leaders is to reduce the cost but this make the

company to face certain limitations as well like reduces creativity, motivation level and
commitments among the subordinates.
5. Skills- this depicts the abilities of company that shows that in which field it excel at.
British Airways is required to research on the strategy that would benefit in achieving
the competitive advantage.
6. Staff- it is the workforce that a company have along with their capabilities. The
requirements with respect to employees of British Airways has been substantially
reduced as company is more into the use of technology and in order to motivate its
current employees, it make use of growth and reward strategy so that performance can
also be influenced.
7. Shared values- this includes the principles that guides the company to obtain desired
destiny of organisation. British Airways is constantly facing the issue of change and to
manage the same company is required to make some improvements in order to enhance
the cultural values.
VRIO Model- the expanded form of this abbreviation include elements like value, rare,
imitation and organisation(Horrod, 2020). It is used by the companies for developing a
sustainable competitive advantage by gaining the in-depth knowledge of resources available-
 Value- British Airways consider some resources important to enhance its value such as
financial resources, marketing expertise and management of operations. In context to the
most important resource that is financial resources is used by the company in order to
invest into external opportunities and reducing the impact of threats existing externally.
Also the highly competent workforce can benefit the British Airways in giving more
productive output.
 Rare- Companies with strong financial resources are not easy to find thus in context to
British Airways it possess the speciality of having robust financial resources. Also the
patents are unique and the network of distribution.
 Imitable- the strong financial position is obtained by the British Airways through the
profit earned in earlier years therefore the capability that company has with the strong
financial resources is costly to be imitated by the competitors in the airline industry.
 Organisation- this depicts the structure of organisation and an internal view about its
operations. This also showcases the reliability of business that leads to the success. While

performing VRIO analysis it has been observed that patents are not in organised form of
British Airways which implies that it has not been used by the company to the full
potential.
Value chain analysis- this is the analysis of the activities of business and certain processes that
are to be mentioned in order to perform a service(Johnson, 2022). This includes multiple stages
and primary and secondary activities. Seeing this in context to British Airways-
Primary activities
This is directly associated with the introduction of product or performing the service
 Inbound logistics- these activities include receiving, storing and distributing the inputs
related to the products. With respect to this British Airways has outsourced most of its
activities.
 Operations- this is the conversion of raw material into finished products. British
Airways use the data of consumer feedback in order to serve the advertisements that is
based on the behaviour of clients.
 Outbound logistics- this helps the British Airways in distributing the final products to
the buyers and include activities like processing, warehousing and scheduling.
Support activities
This makes primary activity to perform more efficiently and effectively by creating the
competitive advantage
 Firm infrastructure- this serve as a basis for the value chain analysis of British Airways.
With respect to company it includes activities like planning, quality management and
legal services.
 Human resources management- the success of any organisation depends on the
performance level of this support activity which includes recruiting, training and
development and skill assessment. For British Airways it is an important source of
competitive advantage.
M2 Critically evaluate the internal environment to assess the strength and weaknesses of
an organisation internal capabilities.
For the purpose of evaluation of internal environment British Airways make use of certain
model and approaches in order to get an exhaustive overview of all aspects of company's

operations with the internal guidance and mission(Mahat, 2019). There is also provided other
benefits such as formulation of appropriate strategy.
Therefore the internal strength and weakness of British Airways can be understood by SWOT
analysis-
Strength
 A major comeback of government of
UK has made the British Airways a
strong player in the airline industry
 By having a strong Hub in the England
has given the access to Europe
 It enjoys the power of having more than
150 international destinations across 6
continents
Weakness
 Facing stringent competition from other
more developed airlines on the routes
 the high dependence of revenue of
British Airways on the local market
that is unstable form of money due to
the high impact of Brexit
Opportunities
 Due to the major presence of British
Airways in the Heathrow terminal
enjoys the opportunity as it is a major
hub across the world
 Expanding globally
 Alliance with the global airlines can
boost up the British Airways
Threats
 Increased fuel cost is reducing the
profit margins
 A major rise in cost of labour
 Intense competition in the European
market may adversely affect the market
of British Airways.
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation.
This model helps the business in identifying the areas that help in shaping it and also for
identifying strength and weakness of industry. This also provides the reason of profitability of
different business and how they are able to sustain themselves in the competitive market. With
respect to British Airways, understanding the five forces model of Porter which includes 5
segments-

 Threat of new entrants- new entrants in the market provide significant impact to the
potential of company in running its operations(Mullarkey and Hevner, 2019). Various
obstacles come in the way of airline industry which include huge investments, existence
of established airlines in huge quantity, little product differentiation and also the build up
of competitive advantage. There is minimal threat associate with this force to British
Airways due to wider customer base as it is not easy for every industry and ruin the
established base.
 Threat of substitutes- this can threaten the industry in major way as availability of very
close substitutes can weak the power of company. Moderate level of threat is associated
with the substitutes for British Airways as although there are other ways available for
the customer for transporting like train, car and bus but the value which company
provides have no comparison with the value provided by these modes.
 Bargaining power of buyers- it is associated with the availability of customer with the
company and also its significance and cost incurred in attracting the new customers.
Apart from the loyalty of customers, there is zero switching cost for the customers of
British Airways as they can opt for other airline if better price is available(Nunes,
Pinheiro and Brito, 2019). Therefore in case of British Airways there is high level of
bargaining power of buyers.
 Bargaining power of suppliers- this get influenced by the availability of suppliers in the
market and also the cost of switching from one supplier to other and also the
differentiated inputs provided by other suppliers. The suppliers of British Airways also
involves the supply of fuel and labourers. In order to get constant support from the
supplier, British Airways maintains good terms with the suppliers(Øverby and Audestad,
2021). Thus the bargaining power of supplier is high in case of British airways.
 Industry rivalry- the more the number of competitors available in the industry with the
similar products the low will be the power performed by the company. British Airways
not only have the stiff competition with the local airlines but also with the international
airlines. This competition is based on the prices, convenience and the services offered.
British Airways is required to maintain the quality and also the value to retain in
industry. Although the industry rivalry is High with respect to British Airways.

M3 Devise the appropriate strategies to improve competitive edge and market position
based on outcome.
Competitive edge is that point where it is proved that company pertains the advantage over its
competitors. Therefore British Airways can have competitive edge through becoming top in the
airline industry, by focusing on its area of expertise and also by making products to be stand
alone among others(Sharma and Sehrawat, 2020). This can also be achieved through solving
customer problems and constantly improving the products.
P4 Applying a range of theories,concepts and models, interpret and devise strategic
planning for a given organisation.
In order to assess the profitability level of British Airways, porter generic strategy model will be
used to create a sustainable competitive advantage through improving the growth and good
management. This model works on two factors that is market attractiveness and its position.
Porter generic strategy- Cost leadership strategy- company enjoys the power associated with this strategy
through the price sensitive customers. In order to enjoy this benefit British Airways is
required to operate at lower cost than its rivals for this it make use of three approaches
that is achieving the high asset utilization, achievement of low direct and indirect
operating cost and lastly by having a control over chain of value. Differentiation strategy- it is associated with making of products with some unique
features in order to improve or enhance the market share and value of company. This can
be opted by the industry whose customer section is not sensitive to price and the needs of
customer is very specific and market is restricted. Also the firm pursue certain distinct
capabilities that can be imitated.
 Focus strategies- this strategy mostly relates to the differentiation strategy as company
pursuing differentiation can have access to focus by selecting specific niches where
changes are to be made. In context to British Airways which has recently implemented
the system of short-haul point to point flights in comparison to spoke model of American
airlines carriers
It is advisable for the British Airways to opt for differentiation strategy as the company has
potential to upgrade its product and services of airlines in an enhanced way than the rival airline
company(Singh, Chhetri and Padhye, 2022).

Strategic management plan-
 Background- British Airways it is the transport company formed in April 1974 in the
fusion of British overseas Airways Corporation.
 Organisation structure- British Airways comprised of a team of 6 members which
includes commercial director, chief information officer, director of engineering and
director of investment and alliances and general counsel . These leaders have the
accountability for the making of executive decisions. Also the company has cross
functional organisation structure.
 Vision- “our corporate responsibility vision is to become the world's most responsible
airline”.
 Mission- the main aim of British Airways is to ensure that its customers fly confidently
that they together will be responsible for taking care of world in which we live.
 Marketing Mix- with the help of this framework British Airways make their brand
succeed in the market, therefore it helps the company to position itself in market and
achieve the desired objectives(Wan, Liu and Wang, 2020).
1. Product strategy- as a product strategy of marketing mix British Airways tends to offer
transport service to its customers from one place to another.
2. Pricing strategy- British Airways distinct the prices as per the destination and also one
differentiation pricing strategy is if people do early bookings that they made the flights
affordable for its customers
3. Place and distribution strategy- services of British Airways are distributed through the
websites and apps on phone. Therefore it serves more than 400 destinations with the fleet
of 273 aircraft.
4. Promotion and Advertising strategy- the mode used by British Airways to promote is
through the TV Advertisements, billboards and newspapers.
 Implementation- through the continuous parliamentary inspection of alleged
inefficiencies, government in this context decides to collaborate Imperial and British
Airways. Outcome of this collaboration came out as emergence of British overseas
Airways Corporation in 1939.
 Evaluation- British Airways is certified as 4-star Airline with respect to its quality of its
import and onboarding of its products and staff service.

M4 Produce a strategic management plan that has tangible and tactical strategic priorities
and objectives
Strategic management plan is the continuous planning process that also involves analysis,
monitoring and an in depth examination of necessities of organisation that is required to achieve
the goals and objectives. Tactical business plan for British Airways includes-
 Pay attention to vision- This is important for the company to make it understand their
employees about the vision and goal so that they contribute towards the achievement with
best efforts
 Create objectives and goals- objectives with complex nature require money, time and
resources in huge amount. So British Airways is required to consider its members
workload and then ranks thee objectives(Garg, 2021)
 Assign actions to objectives- British Airways in respect of achieving objectives requires
certain actions to be involved with the in order to avoid the confusion
 Determine KPI'S- they are the key performance indicators which help British Airways in
knowing that their employees are making progress along with the objectives
 Delegate work to specific people- by clear distribution of authority British Airways
exactly know the person responsible for the assigned task.
CONCLUSION
From the report prepared above it is clearly visible that any business to perform well and succeed
in the industry requires a robust business strategy. The report prepared above was in context to
British Airways which is an airline company and successfully operating on wider basis by
following an appropriate business strategy. The report also prescribed the external factors in the
environment that affect the operation of company and also the use of certain models like VRIO,
Ansoff vector matrix and much more helped in gaining the knowledge of different field of
British Airways.

REFERENCES
Books and Journals
Ashrafi, A. and Zareravasan, A., 2022. An ambidextrous approach on the business analytics-
competitive advantage relationship: Exploring the moderating role of business analytics
strategy. Technological Forecasting and Social Change, 179, p.121665.
Banc, C. and Messeghem, K., 2020. Discovering the entrepreneurial micro‐ecosystem: The case
of a corporate accelerator. Thunderbird International Business Review, 62(5), pp.593-
605.
Conz, E. and Magnani, G., 2020. A dynamic perspective on the resilience of firms: A systematic
literature review and a framework for future research. European Management
Journal, 38(3), pp.400-412.
Enke, N. and Borchers, N.S., 2021. Social media influencers in strategic communication: A
conceptual framework for strategic social media influencer communication. In Social
Media Influencers in Strategic Communication (pp. 7-23). Routledge.
Ghobakhloo, M. and Fathi, M., 2019. Corporate survival in Industry 4.0 era: the enabling role of
lean-digitized manufacturing. Journal of Manufacturing Technology Management.
Hanlon, A., 2019. Digital marketing: strategic planning & integration. Sage.
Harsch, K. and Festing, M., 2020. Dynamic talent management capabilities and organizational
agility—A qualitative exploration. Human Resource Management, 59(1), pp.43-61.
Horrod, S., 2020. ‘Embedded into the core’: The discursive construction of ‘policy’in higher
education learning and teaching documents and its recontextualisation in
practices. Discourse & Society, 31(5), pp.478-497.
Johnson, D.L., 2022. Strategies to Reverse Profit Declines at Exchanges (Doctoral dissertation,
Walden University).
Mahat, M., 2019. The competitive forces that shape Australian medical education: An industry
analysis using Porter’s five forces framework. International Journal of Educational
Management.
Mullarkey, M.T. and Hevner, A.R., 2019. An elaborated action design research process
model. European Journal of Information Systems, 28(1), pp.6-20.
Nunes, P., Pinheiro, F. and Brito, M.C., 2019. The effects of environmental transport policies on
the environment, economy and employment in Portugal. Journal of cleaner
production, 213, pp.428-439.
Øverby, H. and Audestad, J.A., 2021. Value Creation Models and Competitive Strategy.
In Introduction to Digital Economics (pp. 103-121). Springer, Cham.
Sharma, M. and Sehrawat, R., 2020. Quantifying SWOT analysis for cloud adoption using
FAHP-DEMATEL approach: Evidence from the manufacturing sector. Journal of
Enterprise Information Management.
Singh, A., Chhetri, P. and Padhye, R., 2022. Modelling inter-firm competitive rivalry in a port
logistics cluster: a case study of Melbourne, Australia. The International Journal of
Logistics Management.
Wan, W., Liu, L. and Wang, X., 2020. How user-driven innovation and employee
intrapreneurship promote platform enterprise performance. Management Decision.
Garg, C.P., 2021. Modeling the e-waste mitigation strategies using Grey-theory and DEMATEL
framework. Journal of Cleaner Production, 281, p.124035.