Impact and Influence of Macro Environment on British Airways and its Strategies

Business Strategy
(Unit 32)
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Table of Contents
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
Impact and influence of Macro environment on British Airways and its strategies...................3
Pestle Analysis.........................................................................................................................3
Stakeholder Analysis...............................................................................................................5
LO2..................................................................................................................................................5
Internal Environment and capabilities of British Airways..........................................................5
VRIO Analysis.........................................................................................................................6
McKinsey’s 7S Model.............................................................................................................6
LO3..................................................................................................................................................8
Porters Five Forces Model...........................................................................................................8
LO4................................................................................................................................................10
Strategic Plan.............................................................................................................................10
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15
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INTRODUCTION
Business strategy can be defined as continuous planning of organisation to achieve goals
and objectives of organisation. Strategies are developed so that they can directly link actions and
practices of organisation to strategic goals and objectives of organisation. Strategies are
developed on the basis of analysis of internal and external analysis of organisation to understand
different factors affecting and influencing organisation strategy. This report aims at discussing
external analysis and internal analysis through Pestle Analysis and models like VRIO and
McKinsey’s 7S model. Report will also involve analysis of competitive analysis and on the basis
of analysis will involve developing plan for organisation. Organisation contextualised for report
is British Airways, flag carrier airline of UK. Founded in 1974 British Airways is headquartered
at London, England, UK. British Airways with its fleet size of 254 operates at 183 destinations
(Airways, 2017). Parent company of British Airways is International Airlines Group and its main
hubs are London-Heathrow and London-Gatwick airports.
LO1
Impact and influence of Macro environment on British Airways and its strategies
Pestle Analysis
Political- This is concerned with impact of political and government decisions on British
airways and its operations. British airways operate in England and overseas and this is why
political decisions and stability of different countries have effect on strategies and operations of
British Airways (Gupta, Gupt and Gupta, 2019). Brexit is an example of such elements and
political stability and this also involve relations of England home country of British Airways
with other countries where it has its operations. In addition to this, different government impose
different protocols on operations of airlines and British Airways gets significantly affected by
those protocols. Politicians in UK make laws and British Airways is required to comply with
laws and this is why political stability is favourable state for British Airways.
Economical- This is another important macro factor that has impact on strategies and operations
of British Airways. This involves elements like economic condition of country, GDP, per capita
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income, employment rate and cost of operations. These are some of the factors that has impact
on financial performance and wellbeing of organisation. In addition to this fuel prices and
maintenance cost also affect British Airways and increasing fuel prices and operational cost have
considerable effect on British Airways and its strategies (Perera, 2017). This mainly affects
pricing and financial strategies of the organisation.
Social- This factor of macro environment relates with customers and perception of customers,
their purchasing preference and their buying behaviour also has significant impact on British
Airways. Increasing number of travellers and increasing number of people travelling through
airlines have a big opportunity for British Airways. In addition to this customers have become
more conscious towards safety and this requires that airline organisations provide adequate
attention so that they can ensure customers and passengers regarding their safety while
travelling. In addition to this developing perception of British Airline as low-cost airline is both
opportunity as well as threat. This will attract customers on the basis of low cost however its low
cost might be associated with low quality and this will restrain people concerned about quality.
Technological- Technological factor has become centre of success for organisation and airline
organisations are increasing focusing on developing technology (Irawanto, 2017). Airlines are
using technology for enhancing customer experience and along with that reducing cost of airline
operations. Digital disruption has a threat for British Airways but it is also investing and using
technology effectively and this has a opportunity for British Airways.
Legal- This is concerned with rules and regulations that govern organisational operations and its
activities. This involves several laws and regulations for British Airways including laws and
regulations for business organisation and in addition to this also involve laws and regulations for
airline organisations. Some of the laws that British Airways becomes subject to includes safety
regulations, customer services, employment regulations, employee payment regulations. In UK
Civil Aviation Authority (CAA) is responsible for regulation of aviation and safety in UK and
for determination of policy of use of airspace.
Environmental- Environmental factor has become prime consideration for several country
governments as well as some of the organisation. In addition to this customers are also getting
more conscious towards environmental sustainability (Shatskaya, Komaristaya and Kafian,
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