British Airways: Business Environment Analysis, Policies and Practices

This report provides a comprehensive analysis of the business environment of British Airways. It begins by exploring the different types of organizations, focusing on the mission, vision, and objectives of British Airways. The report then examines the impact of various stakeholders, including custom...Read More

Business environment
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TABLE OF CONTENTS
Table of Contents.............................................................................................................................2
Introduction......................................................................................................................................4
Task 1...............................................................................................................................................4
1.1 Purposes of different types of organizations as well as mission, vision and objectives of
British Airways............................................................................................................................4
1.2 Impact of different stakeholders on the business of British Airways....................................6
1.3 Policies and practices followed by British Airways to fulfill its responsibilities towards
stakeholders.................................................................................................................................7
Task 2...............................................................................................................................................8
2.1 The way in which economic system helps in allocating resources in an effectual manner...8
2.2 Challenges faced by British Airways due to fiscal and monetary policies..........................10
2.3 Impact of legal, regulatory and competition policies on British Airways...........................10
Task 3.............................................................................................................................................11
3.1 Evaluating the impact of market structure on pricing strategy of British Airways as well as
on the demand of customers......................................................................................................11
3.2 Describing the impact of various players and market forces on shaping the organizational
responses....................................................................................................................................12
3.3 Explaining the impact of cultures and working practices of countries on British Airways 14
Task 4.............................................................................................................................................15
4.1 Significance of international trade in the context of British Airways.................................15
4.2 Global factors that influence the development and growth of British Airways..................16
4.3 Impact of policies of European Union on British Airways.................................................18
Conclusion.....................................................................................................................................18
references.......................................................................................................................................19
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ILLUSTRATION INDEX
Illustration 1: Mission and vision of British Airways......................................................................6
Illustration 2: Stakeholders of British Airways...............................................................................7
Illustration 3: Practices followed by BA related to stakeholder engagement..................................8
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INTRODUCTION
In order to gain success in this competitive world, it is essential for the organization to
analyze their internal and external environment of business. Analysis of business environment is
beneficial for business entity to identify internal and external factors that may have positive and
negative impact on its development and growth (Cini and McGowan, 2008). With the help of
these factors, management will be able to make better strategies and policies for getting
competitive advantage. Further, identification of business environment is also helpful for
commercial entity to expand its business in the international market. In this manner, this report is
focused on describing the impact of business environment on the policies and practices of British
Airways which operates its business at the international level.
TASK 1
1.1 Purposes of different types of organizations as well as mission, vision and objectives of
British Airways
There are different types of organizations which conduct business for fulfilling their
various purposes. These firms are as follows:
Partnership
Partnership includes the procedure of combining two or more commercial entities in
order to enhance their profitability and revenue (Balmer, 2006). Partnership is focused on
dividing the authorities and responsibilities among different partners of business.
Company
Company can have one owner or board of directors who are responsible for assigning
responsibilities and authorities to different departments. According to law, there must be at least
one employee in a company (Grundy and Moxon, 2013). Main purpose of firm is to gain profit
by performing their business activities in an effective manner.
Sole trade
Sole trade is a cheaper way to conduct business in which owner and manager is
responsible for dealing with customers (Upchurch, 2010). It is not necessary to have employees
in this business. In sole trade, individual’s tax rate is followed to pay the income tax.
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British Airways is one of the reputed and leading airline companies in United Kingdom
which is focused on providing better quality of air services to its customers (Hummels, 2007).
Main aim of firm is to satisfy its business class and economy class customers for getting better
opportunity to create it more popular in the market.
Mission of British Airways
Mission of British Airways is to fulfill their responsibilities towards customers,
employees and environment by rendering them sustainable and high quality of services.
Vision
 Vision of British Airways is to create a leading position in the market for gaining
competitive advantage.
 To enhance the profitability and revenue of business by improving the quality of its
practices and performance (Trebilcock and Howse, 2005).
 To create a positive brand image among customers and general public.
Short term and long term objectives
Short term objectives Long term objectives
 To adopt new and innovative
technology for performing their
practices in an effective manner
(Upchurch, 2010).
 To manage their human resources
effectively for enhancing their
productivity.
 To maintain a strong relationship with
its stakeholders.
 To improve their quality of services for
rendering outstanding and memorable
experience (Useem, 2014).
 To ensure the standards of safety and
security for enhancing the level of
customer welfare.
 To enhance its profitability and revenue
for satisfying its partners and
shareholders.
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1.2 Impact of different stakeholders on the business of British Airways
It is also one of the objectives of British Airways to ensure the rights of its stakeholders
with maintaining their growth and development. There are various stakeholders in case of this
airline firm:
Customers
In case of British Airways, there are two types of customers including business class
clients and economy class passengers (Stakeholders of British Airways, 2013). For satisfying
their both types of customers, management of company is focused on rendering better quality of
air services at competitive and reasonable price.
Partners
In today's competitive world, it is essential for British Airways to maintain the
relationship with their partners such as communities, colleges, suppliers and non-governmental
organizations. In order to develop a strong relationship with them, it is required for the
management to ensure profit of them in a proper way (Balmer, 2006).
Employees
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Illustration 1: Mission and vision of British Airways
(Source: Upchurch, 2010)

Managing their human resources in an effectual manner is one of the main objectives of
company. For that, British Airways always try to understand the needs and expectations of their
employees in order to encourage them effectively (Chaney, 2008). Availability of proper
motivation and encouragement is beneficial for business to satisfy their workforce along with
increasing the level of customer satisfaction by providing them better facilities.
Government
In order to perform their business practices in a legal manner, it is essential for the
management of company to follow policies and rules that are developed by the governance of
different countries. Performing their activities according to legislation supports British Airways
to get the help of government in an effective manner (Balmer, 2006).
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Illustration 2: Stakeholders of British Airways
(Source: Stakeholders of British Airways, 2013)

1.3 Policies and practices followed by British Airways to fulfill its responsibilities towards
stakeholders
In order to develop better relationship with stakeholders, British Airways needs to carry
out its responsibilities towards customers, suppliers, human resources, shareholders, investors,
partners as well as environment and society. Focusing on fulfilling their responsibility is the
most effective for management to develop its brand image among population. In accordance with
this, it is required for company to maintain the quality of its services along with setting prices of
its services in a competitive manner. British Airways is a multinational company which is
focused on supporting all types of people of different cultures, religions and languages (Chaney,
2008). Therefore, there is a committee which is developed by the management of business that is
responsible for making policies and strategies related to corporate responsibility. Main aim of
this committee is to identify the issues such as economical, social, technological and
environmental that put their negative impact on the rights of stakeholders. Further, this
committee assists the management to make better decisions for resolving these problems.
Moreover, there is also a leadership team in British Airways which guides management
to perform their practices with sustainability and ethically (Balmer, 2006). Along with this, it
helps company in proper decision making, setting agenda and developing strategies. Further,
British Airways adopt the methods of survey, feedback, meeting along with complaint procedure
and group discussion for involving stakeholders in the decision making process. Involvement of
stakeholders at the time of taking decisions supports the organization to get advantage of
stakeholder's loyalty and satisfaction.
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TASK 2
2.1 The way in which economic system helps in allocating resources in an effectual manner
British Airways is a private-public firm in which there is restriction for company to
follow the rules and regulation of government. These regulations influence management at the
time of setting their prices and in terms of taxation as well (Hill, 2008). In this economy,
recession put their huge impact in the development of business by reducing the amount of
investment that is rendered by government. Further, recession influences the organization by
minimizing their number of sales, revenue and profitability. As per the recent scenario, there are
also various types of economic systems that can be considered by the business entity to allocate
its resources in an efficient manner. These are as follows:
Planned Economy
This type of economy is fully controlled by the central government of country. Main aim
of this economy is to ensure the welfare of society and human beings by rendering them the best
quality of services in better prices (Balmer, 2006). In this economic system, government has all
rights to make decisions, strategies, plans and policies regarding business activities. In such
economy, it is the responsibility of government to decide what type of product is going to be
introduced in the market and who will be the target market for the same. Further, nature of
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Illustration 3: Practices followed by BA related to stakeholder engagement
(Source: Balmer, Stuart and Greyser, 2009)

product, type of service, quantity for production, budget for the activities such as marketing,
promotion, production and distribution are also decided by the government.
Free enterprise Economy
In accordance to this economy, the owner of business has right to make their policies and
strategies as per the demand of customers without involving any government restriction. In this
economy, there is flexibility for human resources to change their career or starting a new
business. Here, management of company has full rights to utilize and allocate resources such as
human, technical and financial without any intervention of government. Further, products and
services are freely introduced by business organization in the market as per the needs and
requirements of customers (Grundy and Moxon, 2013). In this economy, organization’s main
objectives is to enhance its finance by performing business functions effectively.
Mixed Economy
In this economy, government and company both perform their equal roles in the
development of business (Upchurch, 2010). On the other hand, they both have equal rights to
take decisions for performing business activities in an effective manner. British Airways come
under this category so it is necessary for the management of company to involve government
while taking decisions at the time of setting strategies, policies and rules. In comparison of
planned economy, there is less intervention of UK government while allocating resources,
making strategies and following fiscal as well as monitory policies.
2.2 Challenges faced by British Airways due to fiscal and monetary policies
Fiscal policies
Fiscal policies include the terms and conditions that are developed by government related
to its tax policies and spending that revenue for further improvement (Hill, 2008). Fiscal policy
of government influences British Airways to pay proper tax as per the profitability and revenue
of business. Changes in rate of taxation put their huge impact on the cost of company which
influences it by increasing the charges of its services. Increment in prices leads to decrease the
satisfaction level of customers.
Monitory policies
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It includes the macroeconomic policies of government that are related to interest rate and
money supply. These policies are created by the central bank of country to fulfill their objectives
such as consumption, inflation, liquidity and growth. In recession times, government is focused
on modifying their monitory policies by increasing the interest rate and exchange rate.
Enhancement in the following rate put their huge impact on the strategies and policies of British
Airways by maximizing the amount of its expenses. Further, increment in tax rate leads to
enhance the cost of company and influence it to increase the prices of its services in order to
maintain its probability (Reuter, Goebel and Foerstl, 2012). This in turn can lead minimize the
satisfaction level of its customers and increment in price also influences customers to switch to
another company. While, decrement in interest rate helps management to save its cost that can be
used for technological advancement and further development.
2.3 Impact of legal, regulatory and competition policies on British Airways
Impact of legal, regulatory and competition policies are as follows:
Impact of legal policies
According to the legal policy, it is important for British Airways to focus on the quality
of its services in order to ensure the safety and security of passengers. Legal policies are related
to employment policy, labor policy etc. which are needed to be followed by company while
performing its HR functions. Further, organization should provide better salary, effective
working hours and proper incentives to their employees by considering industry standards.
Impact of competition policies
In the UK’s airline industry, competition among customers is very high. Due to this,
providing services with fair prices is very necessary. Further, in this aspect, Competition act
1998 and Enterprise Act 2002 has developed by the government which influence company to
follow legal standards while rendering services and recording all its business transactions.
Further, European Union also influences company to adopt sustainable methods and perform fair
practices in order to gain competitive advantage (Grundy and Moxon, 2013). In UK, Virgin
Atlantic, Air France and Lufthansa are the main competitors of British Airways. In order to beat
all these rivals, management needs to focus on staying competitive in the market.
Impact of regulatory mechanism
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In terms of regulatory mechanism, there are various legislations that are imposed by the
government of UK and European Union. These are related to equality act, anti-discrimination
act, human right act, data protection act etc. and it also includes environment friendly policies.
These all policies and rules are needed to be followed by British Airways while providing
services in the marketplace. Along with this, it is needed to focus on the issues of CO2
emissions, air pollution and greenhouse effect in order to maintain sustainable environment and
create its good image towards customers and government (Reuter, Goebel and Foerstl, 2012).
TASK 3
3.1 Evaluating the impact of market structure on pricing strategy of British Airways as well as on
the demand of customers
Monopoly and oligopoly are the major market structures that put their positive and
negative impact on the strategies and practices of British Airways. These two types of markets
are explained as follows:
Oligopoly market
As per the recent scenario, conducting business in oligopoly market is the best
opportunity for British Airways to enhance their profitability by rendering high quality of
services to its customers (Types of market structure, 2015). This market structure is also
beneficial for company to gain higher market share. Merger between British Airways and Liberia
in 2000 is the best example for proving that oligopoly market is suitable in case of BA. In this
market, same types of products and services are sold by the number of organizations. So, in this
case, bargaining power of customers is very high. Due to this, there is essential for business
organization to maintain high quality of services along with providing those services in
affordable prices so that they can gain customer satisfaction as well as attract them towards
services.
Monopoly market
Monopoly market is owned and managed by a single organization with having no
competition. Availability of no competitors is beneficial for British Airways to enjoy the
advantage of charging high prices from customers because there is no alternative for them (Hill,
2008). But, they can also select the other modes of traveling due to non-availability of reasonable
prices. In this market, bargaining power of customers is very low as single seller is available in
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the market. Here, management of organization has full rights to take decisions related to
production, distribution, marketing, selling and pricing of the products and services. Further, in
the following market, organization influences customers to pay money as per the quality of
products.
3.2 Describing the impact of various players and market forces on shaping the organizational
responses
Impacts of various market forces and players on shaping the organizational responses of
British Airways are as follows:
Market forces
In case of British Airways, there are mainly two market sources. These are as follows:
Demand
Demand is one of the important market forces which leads to increase or decrease the
sales and profitability of company. For example: in season time such as at Christmas occasion,
demand of British Airway’s customers gets high so at that time, company can increase the prices
of its products as customers are more willing to pay anything for services (Upchurch, 2010). On
the other hand, at the time of season off, demand gets reduced that influences company to
minimize the prices of its services in order to render affordable trips to their customers. There are
two types of demand including elastic and inelastic. For British Airways, elastic demand relates
to economy class passengers, while business class clients are the example of inelastic demand.
Supply
Like demand, supply is also a crucial market force that influences company to shape its
organizational responses in such a manner in which it can effectively maintain balance between
demand and supply. In order to fulfill the demand of customers, it is essential to focus on the
factors of supply (Grundy and Moxon, 2013). In terms of achieving inelastic demand which is
related to business class passengers, it is essential for business to set shorter routes for satisfying
them in an effective manner. Satisfaction of them is beneficial for organization to gain higher
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revenue and profitability. In case of elastic demand which is related to economy passengers, it is
required for commercial entity to charge reasonable price as company can also set long routes for
them.
Market players
There are following market players that affect the business practices of British Airways:
Customers
Customers are the main players of every business as success of business mostly depends
on the purchasing behavior of them. In order to satisfy its customers, it is needed for organization
to maintain its quality of services.
Suppliers
Suppliers are the businesses that provide foods, machinery and other equipment to British
Airways in order to better services to the customers (Grundy and Moxon, 2013). In order to get
timely and quality based delivery from suppliers, company needs to maintain strong relationship
with them by rendering timely payment as well as other benefits such as discounts on air tickets.
Government
The most important need of government is that company should follow legal and ethical
consideration at the time of rendering services to the customers. Due to this aspect, management
of British Airways must follow all the rules and regulations of government while performing its
business practices.
3.3 Explaining the impact of cultures and working practices of countries on British Airways
Culture includes a range of believes, values and attitudes of individuals which are
focused on influencing the behavior of them. In case of British Airways, culture of different
countries put huge impact on its business practices and policies as employees feel motivated
when organizational culture is as same as their own culture. In British Airways, there are
thousands of employees who have different cultures, nationalities, religions, principles, needs
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and wants (Upchurch, 2010). Diversity of such factors can lead to enhance the chances of
conflicts at workplace. So, in order to eliminate such chances, single culture should be adopted
by the management of company. Along with this, equal opportunity should be provided to every
employee without discriminating in terms of religion, nation and language. Further, employees
should be recruited on the basis of their skills, knowledge and qualification instead of their
religion and culture
On the other hand, working practices include different policies, organization structure,
working standards and coordination between people that decide that organization environment is
safe, healthy and effective or not (Reuter, Goebel and Foerstl, 2012). Working practices should
be appropriate at the workplace, otherwise it can create demotivation among employees of
British Airways. In order to maintain appropriate working environment, proper working hours
should be available with better salary, equal opportunity, proper health and safety, effective
remuneration as well as better coordination at each of the levels of management.
TASK 4
4.1 Significance of international trade in the context of British Airways
Global changes caused by different organizations such as World trade organization,
International Civil Aviation Organization and other regulatory bodies have influenced British
Airways by different aspects. These are as follows:
Price
British Airways operate in more than 200 countries. Different nation has its different
economical and financial condition (Baldwin and Scott, 2013). As per their economic situation,
company needs to set the prices of its air ticket. As organization is dealing in the international
market, so it can charge high prices from the customers as per the quality of services. This in turn
leads to enhance the profitability of British Airways to a great extent.
Customers
There are two types of customers such as business class and economy class. Therefore,
BA needs to set their offers as per the needs of service users. In the international market, there is
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a big opportunity for British Airways in terms of customers as it can attract huge number of
customers towards its services that may lead to increase the sales revenue of it.
Cultures
It is required for the management to have thorough knowledge about the cultures of
different countries at the time of setting their policies (Chaney, 2008). In terms of culture, it has
availability of different types of employees that have recruited from the different countries.
Availability of such diversity in the international market will help company to deal with every
type of customers that can be related to any country, region and language.
Origin
Location of business where company is planning to operate is also influences its vision,
mission and objectives. As it is operating in the global market, they have ability of establishing
and expanding business in different-different market so it will aid company to generate more
profit and enhance its reputation in the market.
Moreover, there is too much significance for British Airways to follow the policies that
are made by regulatory bodies. Some of them are as follows:
World trade organization
It is an international organization whose work is to manage and make trade rules between
two or more countries for developing the professional relationship among all (Wright,
Groenevelt and Shumsky, 2010). Main aim of this organization is to assist countries and
companies to enhance its economic development and financial health. Along with this, there are
also some objectives of this organization which are as follows:
 To enhance the standard of living
 To eliminate the chances of conflict among companies
 To reduce the international cost. To maximize the effectiveness of business growth and employment.
International Civil Aviation Organization
Main aim of this organization is to expand and promote the services of firm in national
and international level along with suggesting better standards for improving performance
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(Greenlee and Reitman, 2005). Being the member company of this organization, British Airways
can enjoy the following rights and freedoms. These are mentioned below as:
 British Airways has freedom to cross one and more countries without landing there.
 Freedom for lending their flights to carriage customers as well as to refuel the fleet.
 Freedom for loading and off loading passengers, frights and mails.
4.2 Global factors that influence the development and growth of British Airways
There are various global factors which may have impact on the growth of business of
British Airways. These factors are as follows:
Economic factors
It includes the factors such as recession, economic crisis as well as increment in tax rate,
exchange rate and interest rate that put their negative impact on British Airways by reducing its
revenue and enhancing its expenditure (Balmer, Stuart and Greyser, 2009). Recession time leads
to minimize the sales of company as it decreases the income level of citizens in the country so
that they do not prefer to invest on unnecessary expanses. On the other hand, increase in interest
rate focuses on enhancing the cost of British Airways which influences management to
maximize prices of its air services.
Political factors
Political factor includes rules and regulations that are made by the government of UK in
terms of environment safety, international trade and fight against terrorism. In order to perform
business in a legal manner, it is necessary for British Airways to follow all the rules and policies
made by government while performing its business practices (Greenlee, and Reitman, 2005).
Along with this, it is needed for the management of company to consider legislations of different
countries in terms of anti- discrimination, data protection, transportation as well as health and
safety.
Legal factors
It includes the policies of European Union that are related to labor policy, employment
policy and equality policy that need to be considered by the management of company. According
to the above policies, it is essential for British Airways to provide better salary, proper incentives
and appropriate working hours to its employees in order to satisfy them in an effective manner.
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Social factors
It includes the factors such as social class, loyalty status, attitude and lifestyles of
individuals that put their impact on the perception of customers while selecting services (Factors
influencing international trade, 2015). As per the social class, British Airways needs to set their
prices in such a manner that it should be affordable for economy class and in case of business
class, it can be of high with the better quality.
Technology factors
Technology factor includes availability of new machinery and systems in the market that
leads to enhance the quality of services provided by company and focus on reducing the impact
of business on environment (Baldwin and Scott, 2013). Due to this aspect, it is required for
British Airways to adopt new and innovative technology for improving the quality of its services
as well as business practices. Availability of new techniques will be beneficial for business to
gain competitive advantage.
Environmental factors
Environment factor includes climate changes, terrorism attacks etc. that put its huge
impact on the business practices of British Airways as well as on the sales of business. Along
with this, it also includes environment friendly policies related to air pollution, CO2 emission
etc. made by the government of UK that are necessary to be followed by the management of
company in order to perform its business activities in a legal manner and maintaining its
reputation among people (Meyer and et.al., 2007).
4.3 Impact of policies of European Union on British Airways
European Union is focused on making various types of policies and rules for the purpose
of maintaining business practices of different airline companies in a legal and ethical manner. In
order to get the right of taking off, lending and stopping flights in any country for the daily
routine and for any emergency, it is essential for British Airways to being a member airline of
European Union (Baldwin and Scott, 2013). As a member of European Union, it is needed for
company to follow all the rules and regulations made by this union in terms of air pollution, CO2
emission and greenhouse effect. Further, it is necessary for management to use sustainable fuel
in order to ensure the safety of environment.
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Furthermore, By considering UK Civil Aviation Act, British Airways needs to render
better quality of air services at the lowest price to its customers. Along with this, this act also
influences company to ensure the safety of passengers, focus on the development of air transport
industry in United Kingdom, properly identify the needs of services and maintain competition
with the ethical consideration (Reuter, Goebel and Foerstl, 2012).
CONCLUSION
As per the above description, it can be concluded that business environment put their
huge impact on the development of company. It includes several internal and external factors
that must be considered by the management of business at the time of making their strategy. In
today's competitive world, it is essential for commercial entities to analyze its business
environment before expanding its business in the new market.
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