British Airways Strategic Analysis

This assignment delves into a comprehensive strategic analysis of British Airways. It examines the airline's core competencies, competitive landscape, and key stakeholders. The analysis incorporates frameworks such as SWOT analysis and stakeholder mapping to evaluate British Airways' strengths, weaknesses, opportunities, and threats. The document also explores the impact of industry trends and regulations on the airline's strategy.

BUSINESS STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Assessing the business mission, vision, objectives and core competencies.....................1
1.2 Factors considered while formulating strategic plan........................................................2
1.3 Evaluating the techniques for developing the strategic business plan.............................3
TASK 2............................................................................................................................................4
2.1 Organizational audit of British Airways...........................................................................4
2.2 Pestle analysis of British Airways....................................................................................5
2.3 Significance of the Stakeholders......................................................................................6
2.4 Presenting a new strategy.................................................................................................7
TASK 3............................................................................................................................................8
3.1 Alternative Strategies.......................................................................................................8
3.2 Selecting a strategy...........................................................................................................9
TASK 4............................................................................................................................................9
4.1 The Roles and responsibilities of the personnel...............................................................9
4.2 Resources requirement to implement the new strategy..................................................10
4.3 Evaluating the contribution of SMART targets to the achievement of strategy
implementation.....................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business strategy is an art of managing functions like formulating, implementing and
evaluating cross decisions that are required by an organization to achieve its long term
objectives. It is also a process of specifying the mission, vision, goals, objectives and core
competencies of an organization. It helps in developing policies and plans for the projects and
programs which are designed to achieve the desired objectives. It also assists in allocating
resources required to implement the plans and projects. Along with this, business strategy
supports organization in finding out the best ways or solutions to overcome factors by reducing
their impacts (Teece, 2010). It comes under the top level of managerial activity. Business
strategy is generally stated by the Chief Executive Officer or the Board of directors of company
and then, implemented under the guidance high level management team. To explain the further
topics of the study, British Airways would be an appropriate organization for understanding the
report. British airways (BA) is a flag carrier airline of United Kingdom and the largest airline in
the UK. It deals in domestic and international carriage of freights and mails as well as accessory
services.
TASK 1
1.1 Assessing the business mission, vision, objectives and core competencies
In order to define a strategy, management of the business should assess its mission and
vision, its proposed/desired goals and objectives with their core competencies etc. Therefore, it is
necessary for the management of British Airways to attain appropriate information for shaping
its strategy.
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 Mission – It is used to declare the actions/functions of organization, explain its goals and
its working period for accomplishing its specified task etc. (Olson, Slater and Hult,
2005). BA’s mission statement is to focus hard on pulling itself through the international
crisis and to prepare business for the better economic times.
 Vision – It refers to the image of company in the future. It also works as a source of
inspiration and direction for the strategic plan. Generally, it is applicable for the entire
company or different sections. British Airways has a vision to being the first choice
airline for long-haul customers and to focus on the core business of moving people and
cargo.
 Objectives and goals – This is defined as the proposed result or position that a company
or a group would like to achieve (Peng, Wang and Jiang, 2008). Specific objectives to be
achieved work as a foundation for planning and directing the operations. British Airways
has many objectives but the specific ones are:
◦ Improving performance Develop excellence in its services Customer satisfaction
◦ Maintaining communication among the colleagues and customers
 Core competencies –It is the ability of organization to compete effectively in the
marketplace, deliver value to customers and enhance its profit margin (Augier and
Teece, 2009). British Airways has the ability to compete its competitors in the available
industry.
1.2 Factors considered while formulating strategic plan
Pestle analysis has been used to study various factors that are needed to be considered
while formulating strategic plan. Through study, some factors are identified and analyzed which
are required to be considered for formulating a business plan. These are as follows:
 Building a Time standard: British Airways should specify a certain time duration
required to achieve its targeted objectives.
 Acquire availability and requirement of resources: British Airways has to acquire
information about the resources available and required while achieving the tasks.
 Trade Barriers: Identify barriers to business plan could affect the company's business
(Montgomery, 2011). Barrier plays an influencing role in the operations of strategic plan.
 When to plan – A company should start planning where it suffers from the situations
like low production, reduction in earning or less market share etc it should identify the
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factors like reasons behind such result which may be old machinery, ineffective supply
chain, less responsive market, etc. British Airways should also emphasize its
management to generate plans for overcoming such situations.
 Influence on targets –Factors to be considered in order to maintain the level of
achieving targets are balancing the brand loyalty and its name, rising the customer
satisfaction, leading the market position, etc.(Langenberg, 2007)
 Persons to inquire and involve in the process –Stakeholders of the organization are
said to be the participants of planning process as they can provide better reviews and
statements to set the operations effectively.
 Striking the managers –It includes the factors like rising the efficiency, allocating more
resources, executing the operations, etc. that generally affect the working condition of
mangers (Fisher, Craig and Bentley, 2007).
1.3 Evaluating the techniques for developing the strategic business plan
Using Ansoff Matrix would make clear for business to grow either by marketing new or
existing products/services in active or new markets.
◦ Market Penetration – British Airways has faced a stiff competition for marking its
presence in the market. Due to the short haul market with a rapid saturating of
budgeted airlines, BA suffers a great financial loss in revenues. To overcome this,
available options in the current market are:
▪ Improving the operations of handling people luggage and belongings.
▪ Advancing the technology of booking tickets via internet and mobile application.
◦ Market development – Its aims are to attract the new clients present in the already
targeted market and motivate new customers (Oltra and Luisa Flor, 2010). BA is
trying to attract some high class clients from its competitors companies like Virgin
and Ryanair. BA's loyalty campaign was to promote small and medium sized
businesses by giving them some loyalty points at a starting point.
◦ Product development – It enhances the process used to bring new products into the
market. For example, BA innovated its flight system in the Boeing 777-300 Ers in
2010 and the first cabin, a sophisticated new cabin that offers customers the chance to
work, recreate, eat and sleep (Braithwaite, 2005).
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◦ New product development – It refers to the strategy of business that attempts to rise
the earnings by presenting new products in the new market. Emerging markets of
Middle East offer an opportunity for business to generate good revenue returns and
decrease the impact of low revenue from the other markets.
 By the use of BCG Matrix, business gets knowledge about its market position and other
factors which are as follows:
◦ Dogs –These are the products or services which have low growth rate and less market
share.
◦ Question mark – These are the products/services that have high growth rate in the
market with low market share (Robinson, Sherwood and DePaolo, 2010).
◦ Stars –It includes products/services which have high growth rate in its markets with
its high market share.
◦ Cash Cows – These are the goods or services which have low growth rate in the
market with high market share.
TASK 2
2.1 Organizational audit of British Airways
The best option for the organizational audit would be the Swot analysis of company
which covers all the sections like strengths, weaknesses, opportunities and threats in the context
of business.
Internal Factors of the organization
Strengths
 It has a strong brand image of providing
excellent services.
 Partnerships and alliances encourage its
strengths.
 It has five terminals in its premises.
Weaknesses
 Bad image due to poor bag handling
issues.
 Pathetic employee’s relation and
communication (Haley and Haley,
2013).
External factors of the organization
Opportunities Threats
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 Failure of competitors to provide good
services.
 Business expansion in Middle East as it
is a new emerging market for airline
sector.
 Effective quality system based on
SkyTrax can be used.
 Reduced cost of competitor’s prices.
 Global economic crisis and inflation in
exchange rate.
 Threat of working and concerning with
the environment.
2.2 Pestle analysis of British Airways
 Political – As per the political factor, government and political instability affect the routes
operated by many airline companies (Chow and Liu, 2007). Like, British Airways suffers
from heavy cancellation of flights running in Middle East and North Africa.
 Economic – From the result of economic recession, market share of BA has been
influence in a negative manner. Along with this, rising activities of terrorist eventually
raise the cost of insurance for BA. Fluctuation of fuel price forces companies to lower the
cost on traveling (Gershon, 2009).
 Social –Rising number of population in Europe is increasing the number of travelers that
generates the sources of earning more revenue. Also, growth of business can be attained
with the rise in capacity of spending by travelers for comfort and leisure flights.
 Technological – Increase in awareness of comparing the prices before booking tickets
from the internet encourages customer's bargaining power. In addition to this, online
booking and check-in services are increasingly, hence BA should adopt the options of
advancing its technologies.
 Legal – Legal concerns and framework of BA have to cover the areas like safety, security
legislation and legal restrictions. Along with this, BA has to cover the aspect of good
customer relationship and avoid the interruptions in operational and functional activities.
 Environment – British Airways has to make its business policies as per the environmental
laws and regulations for the purpose of controlling the waste disposal and atmospheric
pollution. However, they are focused to control the noise pollution as well. BA has to
properly utilize the natural resources and the land while expanding its boundaries in order
to avoid the scarcity and drawbacks.
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2.3 Significance of the Stakeholders
Stakeholders are the important elements of a business strategy so it is necessary for the
management of company to include all its stakeholders while formulating its strategy (Hsieh and
Chen, 2011). British Airways has many stakeholders in the current market. For example:
employees, customers, competitors, suppliers, etc. Description for the same is as follows: Customers –Customers are the essential stakeholders who help organization to make
product investment decisions and hence, they are necessary to be included for
formulating an effective business strategy (Frank and et.al., 2010). Although, BA
organizes an annual 'Customer Survey' to gather content about the customer’s views over
the organization. It implements changes recommended by the customers. Being as a main
indicator, they have a vital impact on the future earnings. Employees – For achieving the organizational goals and objectives along with willingness
to improve customer services, it is necessary for BA to be a progressive organization
which increasingly recognizes and motivates employees. However, BA tracks the
opinions of its employees via all-employee confidential 'Speak Up programme' and hosts
get together in the organization.
 Competitors –During the strategy formulation, it is necessary for the organization to
conduct a regular check on the actions of its competitors like Qatar airways and Emirates
are the competitors of British Airways. However, BA monitors the performance of its
rivalries through various techniques of analyzing the competitiveness.
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Illustration 1: Stakeholders of British Airways
(Source: British Airways, 2013)
2.4 Presenting a new strategy
The best options of building strategy based upon organizational audit and stakeholder
analysis are as follows:
 Improving human resource practices– As per the current situation, BA has drafted
policies to harmonize relations between management and union employees. There is
ongoing review of reward and incentive packages to induce high performance.
 Renovating the brand image – Although, BA possesses the advantage of having a
globally recognized brand name.
 Introducing some complimentary services – Diversifying the revenue by adding the
services for customers during their travel to make the flight more comfortable.
 Reduce the promotions –In order to attain new customers, BA expanded its premises and
ran several promotions offerings like discounted rates on tickets for the group of 10
people, free drinks on every flight, etc. which in turn reduced the profits of organization.
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 Other strategies could also be used to attain a positive result. They are like migrating or
diversifying the Supply chain, expanding in some other transport markets, broadening of
service base and advancing the strategies.
TASK 3
3.1 Alternative Strategies
◦ Market entering strategy – BA could acquire its market share and growth through
entering into emerging and new international market. Methods of growth in the
market are: Contracting with the aviation industry of that country and introducing
new flights to that destination (Haley, Haley and Tan, 2011).
◦ Expanding the boundaries of organization to cover market area by launching new
airports in new countries.
◦ Acquisition, Joint Ventures and merging with the existing airlines of different
owners.
 Substantive growth – BA could attain substantive growth through adopting the option of
diversifying its business in new sector where company can market new services to the
customers (Greenwald and Kahn, 2005). There are two types of diversification:
◦ Related – Such type of diversification exists when a company remains in a market or
industry with which it is familiar. Like, BA diversifies into aviation sports.
◦ Unrelated – Such diversification exists when business diversifies in a new market
without having any experience as BA invests in Food business.
 Limited Growth -
◦ Market development – In this, company introduces its existing product range in a
new market. BA promotes its services in emerging market to target new customers.
◦ Product development –In this, a new product is marketed to the existing customers of
the organization. BA often provides new services like charter planes for the top class
clients, VVIP seats in its cabin, etc.
 Retrenchment –In this, strategy implies to sell off its particular business operations from
the market. BA uses this strategy to cover the areas like:
◦ Excess lands which are of no use in the premises.
◦ Limited bookings of tickets and cargo from a particular place.
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◦ Less responsive destination.
3.2 Selecting a strategy
For BA, it is recommended that the best strategy would be ‘Entering into new emerging
market' for attaining the best market growth. It would enhance the company's operations and
profit earning capacity by targeting new customers. It would give a new option of traveling to the
public for attaining comfort and leisure time during their flight. It would rise the market share,
size and growth of British Airways in the international market (Cullen and Parboteeah, 2009).
Rise of population in Middle East and Asian countries as well as increase in their spending
towards airline sector drive as a big opportunity for BA. Positive response over the services of
BA in the international market shows that strategy of expanding business through entering into
new market is a perfect option. International market would also furnish as a new source of
resources for business. Company can grow its market through various methods of expanding in
the international market which are Contracting, Acquisition, Joint ventures and setting up a new
branch (Eshun Jr, 2009).
TASK 4
4.1 The Roles and responsibilities of the personnel
In order to implement the strategy and run business in a new emerging market, BA
should have the following personnel who are responsible for proper processing of the business
strategy. They should understand their duties and responsibilities in a manner to achieve the
desirable goals and objectives as per the strategy (Ross, Weill and Robertson, 2006). Roles and
the responsibilities of the personnel in implementing the strategy are:
 Airport manager –Duty of airport manager is to plan daily operations of the airport for
emergency situations and for long range expansion in response to demand from small
aircraft and changes in operation and direction of the regional Airport. Along with this,
he/she is responsible:
◦ to analyze the fuel sale volumes
◦ to request for hangers and proper landing activities
 Human Resource Manager –Responsibilities under him/her are mentoring the less
experienced employees, hiring the new staff, improving the skills and knowledge of staff
through training and development, maintaining the level of numbers of staff etc.
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Additionally, it also facilitates meetings with the top level management and stakeholders
in order to identify the resource’s requirements (Slack, 2015).
4.2 Resources requirement to implement the new strategy
The estimated resources required by BA for implementing a new strategy are:
 Human resource –HR management team of BA has to recruit new staff for the new
market that must be talented and familiar to jobs as they are essential element to
strengthen the team. They are responsible to maintain the quality and value by their
services would encourage the trust of the customers.
 Capital/Finance – Finance manager should focus on the new sources of capital that can be
used to formulate and implement the business strategy of BA. Along with this, they are
responsible for proper investing and utilizing the financial resources.
 Land – BA requires analyzing new market in the new country and allocates the best area
of land where it can set up its premises.
 Time – British Airways should manage the time as per its predefined strategic operations
and activities in order to overcome the values of innovation. They should divide the time
at each and every stage of operations and activities as planned in the strategy (Teece,
2010).
4.3 Evaluating the contribution of SMART targets to the achievement of strategy implementation
 Specific – Making a specific goal or objective would be profitable for BA and it should
be achieved by implementing an effective strategy (Augier and Teece, 2009). For
example, company has to state the particular market where they are planning to develop.
 Measurable – Organization should measure and compare the different levels and stages
during the strategy implementation (British Airways, 2013).
 Attainable – By attaining the situation of BA, company is able to innovate new ideas that
are more effective and efficient as compare to its competitor's ideas.
 Realistic – Innovating the new ideas is a simple task but to know idea would be reliable
or would it work to achieve the objectives is the main task. The reliability of the ideas
depends on the available resources and areas/points to be covered.
 Time Bound – It covers the process of achieving the task and specified goals of the
strategy within the time limit specified by the management. Work should be divided
according to the available time (Langenberg, 2007).
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CONCLUSION
As per the report, features of business strategy are discussed by analyzing the internal and
external environment of the British Airways. It has been generated from the report that there are
various strategic options exist for the organization to survive in its changing environment. British
Airways direction and intent for the future are the proof that airline can achieve its premium
service quality.
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