Export Pricing Behavior and Research Suggestions in the Field

According to the BBC research (2013), British Airways (BA) acknowledges a major risk that could affect them at any time, which is based on consumers' feedback. BA's reputation is built on consumer feedback and one-time event generated by serious compliance issue can have negative impact on their reputation. To mitigate this risk, BA should expand the advertising persuasion model to encompass cultural processes of representation, considering who is excluded from imagery and understanding ethical issues surrounding representations of identity.

CONTEST
I. Introduction
II. Assessment of the company
III. Critical evaluation
IV. Relate from journal article
V. Conclusion
VI. References
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 Introduction
In this essay we are required to analyse main issues about a company of our choice,
by researching information useful that mention the company problems. Consequently
we are required to apply relevant theories and modules to evaluate the problem and
to conclude by using articles from an academic journal were we will be able to
identify the issue and improve the performance of the chosen company.
Researching on companies who are having difficulties it was found very interesting
what British Airways (BA) is going through; and even though is having dramat ic loss
BA it is still able to save some money.
British Airways is the flag mover airline of the United Kingdom. It is the largest airline
in the UK, international flights and international destinations. British Airways was
considered the largest UK airline by passenger, from its creation in 1974 until 2008,
when it was displaced by low-cost competitor EasyJet. Since its beginning, British
Airways has been centred at its main nucleus at London Heathrow Airport, with a
second major centre at London Gatwick Airport. It has also assumed exclusive
operation of international flights to North America and Southeast Asia from
contending British Caledonian. The creation of Virgin Atlantic Airways in 1984 began
a tense challenge, which led to "one of the most bitter and protracted libel actions in
aviation history". BA faced with increased competition and higher costs in the mid-
1990s. In the early 2000s, CEO Rod Eddington implemented added cost cuts. British
Airways faced a price-fixing scandal that moved its primary centre to Heathrow
Terminal 5, and experienced threats of industrial action, leading to a strike in March
2010. On 8 April 2010, it was confirmed that British Airways and Iberia Airlines had
agreed to unification, forming the International Airlines Group, although BA would
continue to operate under its current brand. The combined airline will become the
world's third-largest carrier (after Delta Air Lines and American Airlines) in terms of
annual revenue.
 Assessment of British Airways
In the beginning of August 2008, American Airlines announced an alliance with BA
and Iberia, allowing the two carriers to fix fares, routes, and schedules together. In
addition to blend talks with Iberia, it was announced on 2 December 2008 that British
Airways was discussing unification with Qantas. If British Airways, Iberia and Qantas
were to combine as one company it would be the largest airline in the world.
However, on 18 December 2008, the talks with Qantas ended due to issues over
ownership. The union between them is believed to be worth approximately £5 billion;
the new group has over 400 aircraft and flies to over 200 destinations across the
world. As part of the deal, British Airways shareholders took a 55% stake in the
company, headquartered in London, with the remainder owned by Iberia.
Willie Walsh, CEO of British Airways and Iberia announced their unification in April
2010, creating the International Airlines Group, in June 2009, British Airways
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contacted some 30,000 employees in the United Kingdom, including Walsh, asking
them to work without pay over a period of between one week and one month to save
money. On 6 November 2009 the worst ever half-year loss in British Airways' history
was reported to the public, where a High Court decision sided with BA to
restructuring plans, including a reduction in cabin crew, and the 14 December 2009
cabin crew at British Airways voted in favour of strike action over the Christmas
period over job cuts and contract changes. On 17 December the ballot was ruled
invalid by the High Court due to voting irregularities; the strike did not take place.
Consequently Unite announced further strike action, and over there more than 80
planes were grounded at Heathrow Airport on the first day.
Across April and May 2010, much of Western and Northern Europe had their territory
closed due to huge density residue clouds from the erupting volcano in Iceland. It
was feared that aircraft could be damaged or could even crash due to engine
ingestion of volcanic residue. This affected all airlines operating within British
airspace, leading to strong objections from companies such as Ryanair. Flights
progressively restarted as the ash levels declined.
British Airways has reported its biggest annual loss due to lower passenger
numbers, higher costs and the impact of strike action. They lost £531m in the 12
months to March, and it is BA's biggest loss since it was privatised in 1987; that adds
to the £401m it lost in the 2008-9 financial year, but as it was less than expected, BA
shares rose.
Revenues at the airline were down £1bn on last year, BA said, though it managed to
cut costs by nearly £990m - a £600m saving coming from lower fuel costs over the
year. BA's chief executive Willie Walsh said that despite the huge losses, the
company's efforts to cut costs were a cause for optimism. It is estimated that strikes
by cabin crew in March cost BA £43m. Further strikes are likely to hit the airline's
finances even further. The disruption caused by volcanic residue from Iceland is also
likely to have added to BA's losses. Douglas McNeill, transport expert at Charles
Stanley, said the ash-related disruption could cost BA an extra £100m.
But despite the problems caused by ash and strikes, the underlying problems of
high costs and a fall in passenger numbers were still the major concern. As well
as fewer passengers, those business passengers who were flying were downgrading
to cheaper seats. However, a cause for optimism was that there had been
"something of an uptick in demand" from business travel in recent months.
British Airways has topped the latest Super brands survey for the first time as Apple
plummeted to 14th place below Kellogg's and Andrex. Mr Cheliotis said: "British
Airways has always performed well in the survey but over the last two years its
reputation has climbed to new heights, partly through the cementing of its successful
'To Fly, To Serve' positioning and the residual goodwill from its effective 2012
Olympic and Paralympic Games association.
There is a survey that said that overall 29% of UK air passengers had experienced a
baggage problem during the last five years. "There is absolutely no evidence to
suggest that a quarter of BA passengers have experienced lost or delayed baggage
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over the last five years," said a BA spokeswoman. She added that the airline's
baggage performance had "dramatically" improved since Heathrow Terminal Five
opened in 2008. BA was tormented with baggage problems at the terminal in its first
days of operation.
 Critical evaluation
One of the issue which is underlined it is about the problem of “high cost” and here it
is evident that Price escalation is applicable with this were British Airways has yet
again increased the costs of its tickets, charging the high cost of fuel. They have
climbed the charges for a third time and BA now dependent on high cost fares, in
addition some say it has been slow to respond to changing consumer demand. More
and more air travellers want low-cost fares, especially business travellers,
traditionally BA's core customers, but now these customers are the ones who are
taking advantage of the new routes to Europe offered by the low-cost airlines such
as Ryanair and EasyJet. The loss of business passengers is potentially fatal to the
future of BA, according to market analyst. British Airways seems to be experimenting
with cost-cutting and surplus charges, such as not serving food on all flights - those
that last less than two-and-half hours after 10am - and charging passengers who
want to place a second bag in the hold. BA has not gone as far as charging for food,
which some budget airlines have done, but expert argue that these measures will
possibly not be the airline's last. British Airways has also decided not to start two
new services from Gatwick to Valencia and Porto; other routes frequencies have
been cut, including one of BA's daily services to New York and weekend services to
"business" destinations like Frankfurt. This has left the airline in the difficult position
of having to push fares up to cover costs. At this point for Price escalation is
intended as an expense or a final project cost caused by the summation of all cost
factors in the distribution channel including shipping costs, tariffs, and distributor
mark-up. The broad that approaches to deal with the price escalation, should find
ways to cut the export price, trying to position the product as the best brand. Current
practices in the industry suggest that there is a lack of structured methodologies to
assess risk and cost escalation of construction projects.
Another important issue that follow the previous one it is about the “falls of
passengers” in which looking at the fourth models of public relation the first one can
be applicable on this issue with BA. A total of 10.6 million passengers passed
through the seven UK airports run by the BA Company and in March 2009 an 11.3 %
incline on the March 2008 figure. BA has recognised around 2.3 % of the reduction
to the fact that Easter busy period at airports was March last year. This particularly
affected holiday airline traffic, which contributed to Heathrow passenger numbers
falling 7.5 % in March, Gatwick falling 17.7 %, and Stansted going down 15.9 %.
Earlier this year the Civil Aviation Authority reported the first annual drop in air
passengers in 17 years. Unfortunately British Airways has reported a slow start to
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the peak holiday season, Europe's largest airline saying that last June passenger
traffic remained weak. On flights to the Americas, BA said its passenger traffic was
down 12.4 % in June year-on-year but there was some improvement in the number
of passengers on Asian routes.
As said previously Press Agentry/Publicity model can be evaluate on this issue. This
model is also called P.T Barnum, and it follows one way communication where the
flow of information is only from the sender to the receiver, and where the sender is
not much concerned about the second party’s feedback. In Press Agentry publicity
model, public relations experts develop the reputation of the organization among the
target audiences, employees, partners, investors and all others associated with it
manipulation, and according to this model, organizations hire public relations experts
that can create a positive image of their brand in the minds of target audiences
through arguments and reasoning. They influence their potential customers by
simply imposing their ideas, thoughts, and creative stories of their brand. (One way
communication) .
On the other hand when talking about “falling of passengers” as a BA issue it can
also bring up the Ethical issues that they are facing. One of it icould be
 Supplier/Customer Relations where employees and business owners must
consider the ethical issues involved with their relationships between suppliers
and customers. Here BA must ensure that they use their information correctly.
 Values were those who investigate and attempt to resolve ethical dilemmas
within the business world must be very clear about their own values and
motivations. Here BA needs to be guided by a strong reciprocally agreement
of value.
 Know your values it is about applying your values. Before BA can apply them
they have to know what they are. If they haven’t formally contemplated their
values, at present BA has to check out.
Moral Issues in Business, ethical theories can be divided into two classifications:
consequential theories and non-consequential theories. The following covers the
most significant ones for business people.
Consequential theories in where actions are judged by outcomes. If an action
results in a positive result, it is morally right. If not, it is wrong.
Non-consequential theories According to it a factor (single rule non-consequential
theories) or factors (multiple rule non-consequential theories) should be considered
when faced with an ethical dilemma.
Stage 1: Domestic-market establishment, the domestic market is often an
appropriate place to test products and fine-tune performance before tackling the
complexities of international trade. It’s important to ensure that a strong foundation
has been built in the domestic market upon which to base future export-market-
expansion activities, so that international activities do not compromise the company’s
core business.
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Stage 2: Export research and planning When companies begin trading abroad, they
often target a country similar to their own in language, financial structures, legal and
economic systems or culture.
Stage 3: Initial export sales when implementing an export plan, it’s advisable to
begin modestly by testing the market. A graduated strategy enables the novice
exporter to acquire practical experience in a market without incurring unnecessary or
unmanageable risk.
Stage 4: Expansion of international sales If initial sales have been good, planning for
larger orders and expanded activity should follow. This stage is usually accompanied
by intensified market research, more aggressive participation in international trade
shows and other marketing activities and greater emphasis on strengthening
networks and contacts in the target market.
Stage 5: Investment abroad If sales it’s at risk. This final stage carries additional
responsibilities, beyond those of a company that is based elsewhere simply
operating remotely in a foreign market. New issues come into play because the
scope of a company’s presence broadens when it takes on a permanent physical
presence in the market.
 Relate from journal article
To begin, we critically evaluate the export pricing behaviour of our sample firms
along behavioural and managerial dimensions and classify them; then on the basis
of this classification, we offer propositions that might be empirically tested in the
future; then we also propose avenues for further research in international pricing;
and at the end on the basis of our findings, we provide meaningful insights for
managers. In this case a very good example for BA could became Pricing Practices
of exporting firms by Australia Norway and the United State where they offer
propositions about export pricing behaviour and suggestions for realistic research in
the field.
According to the BBC research (2013) BA acknowledges a major risk that could
affect them at any time. BA’s reputation is based on consumers’ feedback. Any
major event generated by a serious compliance issue could have a negative effect
on BA reputation or the image itself. What BA could do it is to expand the
advertising persuasion model to encompass cultural processes of representation, by
thinking of how identity is represented in marketing communications, consider who is
excluded from the imagery, also understand the ethical issues surrounding
representations of identity, for both social and strategic reasons, recognize the
potential damage that marketing representation can cause; and finally be willing to
analyse marketing communication from ethical perspectives like in the case of
International marketing communication by Jonathan E. Schroeder;
Where they express something true or essential about those represented, with a
beautiful and ethical questions intersect, and allow certain assumptions to emerge.
In addition they try to damaging the reputation of members of represented groups,
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some forms of representation that are manipulate others were avoided by cutting
access to mass media forms of representation, and oppressed. They didn’t suggest
that marketing communication causes these cultural prejudices, rather they stable
problematic representational conventions that might be avoided through close ethical
analysis of marketing campaigns. At the end BA could gain what they are expecting
for, for such a behaviour, also because they also has significant cash reserves that
mean it can continue operating for some time despite losses. The airline said it
currently had £1.7bn in the bank. With the BBC, Mr Walsh said BA would be "doing
everything we can" to reach an agreement with Unite - the union representing
striking cabin crew - in order to prevent strikes from going ahead.
This century is innovative time with easy access to almost any informational source.
Media, internet, newspapers deliver information quickly and clear. This aspect could
play a good and bad role in delivering the information to public. However companies
must learn how to use this as an advantage and release the best news on time. BA
is a strong and experienced company that still has issues to work on. The reputation
can be solved if BA will make ethical decisions and show care to the damages and
losses they have caused. BP could also try to rearrange and return the tourism to
cities that suffered losses and lost businesses. At the end the communication which
has been transfer inside and outside is one huge step they need to make.
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 References
 BBC [Online] available at
http://www.irishtimes.com/business/ba-figures-reveal-the-high-cost-of-
industrial-action(High cost)
 BA Debate [Online] available at
http://www.telegraph.co.uk/travel/2484663/British-Airways-Passengers-face-
inevitable-price-rises-and-flight-cuts.html
 BBC [Online] available at
http://www.irishtimes.com/news/ba-passenger-traffic-falls-in-june (falls
passengers )
 BA Article[Online] available at
http://www.dailymail.co.uk/travel/article-1170259/Recession-hits-air-travel-
BAA-reports-falling-passenger-numbers.html
 Bates, W., and Dawood, N.N. (1998) Development of a risk allocation strategy
forconstruction in the process industry. Hughes, W.P. (ed) Procs 14t Annual
ARCOM Conference, University of Reading, September 1999. Reading:
ARCOM. (Price escaliation)
 Business ethics 2014 [Online]. Available at:
https://www.princeton.edu/~achaney/tmve/wiki100k/docs/Business_ethics.htm
l (Accessed: 02.04.2015)
 Diller, H. and I. Bukhari (1994), “Pricing Conditions in the European Common
Market,” European Management Journal, 12 (2), 163–70.
 Eisenhardt, Kathleen M. (1989), “Building Theories from Case Study
Research,” Academy of Management Review, 14 (4), 532–50.
 George, R. (1994). International Business Ethics. Business Ethics Quarterly,
4(1), p.1.
 McQuarrie, E.F. and Mick, D.G. (1999), “Visual rhetoric in advertising: text-
interpretive, experimental, and reader-response analyses”, Journal of
Consumer Research, Vol. 26, pp. 37-54.
 Maheswaran, D. (1994), “Country of origin as a stereotype: effects of
consumer expertise and attitude strength on product evaluations”, Journal of
Consumer Research, Vol. 21 No. 2, pp. 354-61.
 (1996), “Pricing for Global Markets,” The Columbia Journal of World Business,
31 (4), 66–78.
 Original article: http://www.tradeready.ca/2015/fittskills-refresher/5-stages-
international-market-development
 Svend Hollensen (2014) Global Marketing, Sixth Edition, United Kingdom,
Pearson Education Limited.
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 The Economic Times (2015) Crisis management: Key questions companies
need to consider 2010 [Online]. Available at:
http://articles.economictimes.indiatimes.com/2010-03-03/news/27612172_1_c
risis-management-social-media-traditional-media (Accessed: 23.04.2015)
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