Strategic Business Planning | British Airways

Business Strategy for BA (British Airways company)please follow the assignment brief.

Running head: STRATEGIC BUSINESS PLANNING
Strategic Business Planning
Name of the Student:
Name of University:
Author Note

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Table of Contents
Introduction......................................................................................................................................3
Company Overview.....................................................................................................................3
PESTLE Framework....................................................................................................................4
Porter’s Five forces......................................................................................................................8
VRIO Analysis...........................................................................................................................10
SWOT Analysis.........................................................................................................................12
Results from the Evaluations:....................................................................................................15
Objectives..................................................................................................................................15
Recommendation.......................................................................................................................16
Conclusion.....................................................................................................................................17
References......................................................................................................................................19

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Introduction
Business environment refers to the set of conditions in which a business or organization
operate in. These forces influence businesses and business conditions to a great extent. These
influences may yield to negative as well as positive outcomes, for which, it is important to pay
attention to the environment. The business environments in the fast growing, globalizing world,
change very rapidly or be subjected to rapid change, due to development and market shifts. It is
therefore, very important to have a business perspective which can affect the business in a
positive way to adjust as well as adapt to the changing scenario. The idea about the same will
help in the process of analyzing the competencies and the areas which can be worked on to be
ahead of other competing forces in the market. The business capability of a company can also be
enhanced by employing proper understanding of the macro and the micro setting in which a
company operates within (Morschett, Schramm-Klein and Zentes 2015). Based on the analyses
conducted, strategic management plan can be developed according to which the future courses of
action for the company can be devised (Itani and Mason 2014). The company which is chosen
for the analysis in this report is British Airways. The Airlines Industry is sensitive and fast
growing, in which British Airways is one of the pioneer companies.
Company Overview
British Airways is the largest carrier which is operating internationally in United
Kingdom. The company has its base located in Heathrow, which is considered to be among the
busiest international Airports in the world with over 280 aircrafts constituting of the fleet. Over
40 million passengers avail services and are provided services to, by British Airways directly.
The company is part of the parent group International Airlines Group. British Airways has flight
networks spread across the globe with the help of partnerships shared by USAir, Qantas, TAT

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and so on (Britishairways.com 2020). The Airlines Company offers services in over 441 Airports
which are located in over 86 countries across the globe, with over 1000 aircrafts. IAG, which is
the parent company of British Airways, is considered to be the world’s third largest Airlines
group as per their revenue collection annually. The company, in Europe ranks second. British
Airways was established in 1974, after the government in Britain decided to manage operations
of the two airlines corporations which were nationalized which include British European
Airways and British Overseas Airways Corporation alongside two comparatively smaller airlines
which include Northeast Airlines Newcastle and Cambrian Airways Cardiff (Britishairways.com
2020). British Airways is considered to be the most commercial Airlines in the world which
operate with the slogan ‘The World’s Favorite Airline’.
Step 1:
PESTLE Framework
The PESTLE model allows analysis of the Macro Environment in which a company
operates within (Abbott 2015). These factors directly affect and influence the company and its
operations which will the analyzed further with the help of the framework.
Political Factors  Airlines companies operate within strict regulations and
laws in a specific region of a country. Different regions
have different operating restrictions (Gupta, Gupta and
Gupta 2019). The same gets faced by British Airlines, in
the countries it operates.
 British Airways operate in many regions where there are
political tensions as well as records of terrorist attacks.
 British Airways have operated even during the political

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turmoil of BREXIT, due to which they also faced
instabilities and economic crises.
 Strict safety laws and regulations were imposed as they
faced low customer confidence during the tensions and
turmoil.
Economic Factors  The BREXIT has been one of the primary reasons behind
the economic crisis and tensions which sprung up and the
companies had to face consequences (Gupta, Gupta and
Gupta 2019).
 The profits were negatively impacted due to low
confidence of the customers while they chose less to fly
during the period.
 The government interventions directly affect the
depreciation of pound which affect revenue collection
negatively (Gupta, Gupta and Gupta 2019).
 Even though the company benefits due to low fuel prices,
natural factors are often the reason behind adverse
outcomes economically.
 The global turndown of the economy has impacted the
company in the last few years as Air Travel demands have
gone down in several regions where British Airways
operate in (Rastogi and Trivedi 2016).
Social Factors  British Airways has to develop strategies to target their

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audience affectively due to societal factors and trends
which reign (Gupta, Gupta and Gupta 2019).
 It has been found out that low cost travel has been
preferred by the customers heavily.
 The company had to face adverse outcomes and
negatively impacted their brand image in France due to
ATC strikes. ATC Union strikes was the reason behind
cancellation fo flights.
 Lifestyle and social and cultural factors are very important
for consideration in order to offer products which meet
the demand and expectations of the customers. These
factors are to be paid attention to, in they are important in
the macro environment (Perera 2017).
 The brand image can be enhanced while the shortcomings
of the company can be overcome by offering products and
services which are precisely curated to meet the social
demands (Gupta, Gupta and Gupta 2019).
Technological Factors  The 9/11 terrorist attacks have been the reason behind
disruption in the Airlines Industry. The digitalization and
stability have been questioned.
 The role of internet have been emphasized upon which
has taken shape of a revolution globally.
 British Airways have strived continually to introduce

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technologically advanced amenities and services to
provide customers with the best experience.
 Quality and support for the passengers owing to risks and
insecurities have been enhanced with time.
Legal Factors  The business of The British Airways is mostly affected
and influenced is by the trade unions. Various strike
actions have been the reason behind negative impact over
the company (Gupta, Gupta and Gupta 2019).
 The Airline companies operate within strict rules and
regulations in various regions, due to safety and security
of the passengers. This often makes operation challenging
and bring down profits of the companies (Gupta, Gupta
and Gupta 2019).
 Laws on labor and trade unions often restrict the
companies from taking strict action against strikes and
walkouts of employees which disrupt operations.
Environmental Factors  Environmental factors are very crucial for flight
operations as bad weather conditions can directly affect
flight operations. Cancellation of flights often cause
customer dissatisfaction and negative effect on brand
image even though providing services amid those
situations are risky.
 Flight operations directly impact the environment and

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nature due to which there are strict environmental laws
and regulations.
 British Airways should make sure that they maintain
environmental positive services and encourage
ecofriendly initiatives which will benefit them to grow
better brand image and customer awareness.
Porter’s Five forces
The model of Porter’s five Forces is very helpful to understand the micro environment of
in which the company operates within. The framework helps to determine the competition within
the market in which the company offers its products and services (Ural 2014). The model is used
to develop strategies and evaluate the forces which are dominant and are to be paid attention to
in order to enhance the business. The five factors, according to the model of Porters Five Forces
are Threat of New Entrants, Threat of Substitutes, Bargaining Power of Buyers, Bargaining
Power of Suppliers and Competitive Rivalry in the market.
Threat of New Entrants
There are several barriers which companies face while entering the Airlines Industry. The
industry requires a company to make huge investments to enter the market and provide products
and services alongside dominant forces. There are several companies which are already well
established and have great market shares. Therefore, for a company which intends to enter the
Airlines Industry, will have to develop immense competitive advantage and edge to establish
themselves as a recognized company (Grant 2015). These market conditions make the threat of
new entrants in the market comparatively low.
Threat of Substitutes

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The customers who are willing to avail air travel also have ways available which include
transportation such as bus, train, ship and so on. These are used and preferred by passengers to a
considerable degree However, air travel has its own edge as people can travel long distances over
a short period of time. The people who need to travel across borders and abroad, the best option
available is by air travel. On the other hand, if people need to travel within the country and have
budget constraints, it is most likely for them to choose other modes of transportation rather than
air travel. Therefore, it can be said that the Threat of Substitutes is moderate and people will
choose British Airways for their air travel options if they wish to travel while saving money and
have convenience at the same time.
Bargaining Power of Buyers
The dominant customer base in the Airlines industry is price sensitive and they look for
affordable and cheap options for travel. Customers are aware about the rights which they
possess, especially when they have array of options to choose from. The customers usually have
many options to choose from until and unless they are extremely satisfied with British Airways
and is a loyal customer. The customers usually look for the best deal and the cheapest option to
choose from, when they travel. The company which offers the most relevant options are usually
the chosen one. The cost of switching is zero if the prices at which the services are offered do not
match what is expected by the buyer. Therefore, the bargaining power of the buyers is quite high.
Bargaining Power of Suppliers
The suppliers of British Airways include the ones who supply fuels, parts as well as the
laborers who contribute their effort. The work require expertise, when it comes to the laborers
and the other suppliers which are made to the Airlines Company require high investments and

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specialized items, which require licensing. There are less suppliers who are authorized and aere3
skilled enough to provide products and services to British Airways. The company therefor, needs
to maintain proper relationships in order to ensure that they receive the resources and amenities
which are required to run the business and offer services to the customers (Dälken 2014). Thus,
the bargaining power of the suppliers are quite high, as British Airways will not be able to run
their operations without their supplies. Which include fuel, labor as well as other resources.
Competitive Rivalry
The competition in the industry is quite high as there are numerous options to choose
from. The prices at which the services are offered by the companies in the market are neck to
neck, which makes the competition rise. There are local as well as international competitors in
the market. The competition ranges on the basis of prices, convenience, as well as service
qualities, which are of great importance to the buyers. Therefore, it is very important for the
customers to maintain quality and standards of the services which are offered by them in the
market. It can thus be stated that the competitive rivalry which is faced by British Airways in the
market is very high.
VRIO Analysis
VRIO analysis is very effective to analyze the internal resources which are possessed by
the company (Knott 2015). This analysis can be made use of to enhance the competitive
advantage in the market.
Resources
and
Capabilities
Valuable Rare Imitable Organization Competitive
Advantage

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Positive
Market
Reputation
Yes Yes Yes Yes Have
acquired
Long term
Competitive
Advantage
Brand
Awareness
Yes Yes No Yes The
competitive
Advantage is
sustainable
for brand
awareness
Leadership
in the
company
Yes Yes No Yes The company
has built
strong
competitive
edge
Customer
Satisfaction
Yes Yes Yes Yes The
competitive
advantage is
realized as
well as
sustainable.

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It can be understood that British Airways have gained long term sustainable competitive
advantage in terms of resources and capabilities (Cardeal and Antonio 2012). Brand awareness
of British Airlines is sustainable for the business. They have strong competitive advantage in
terms of leadership which is followed in the company and customer satisfaction is realized as
well as sustainable for the company in the market.
SWOT Analysis
Strengths of British Airways
1. British Airways have great experience in the industry which makes them one of the
pioneer in the industry. The company is regarded as one of the giants in the UK’s
international scheduled industry. It is ranked as one of the premium airlines across the
globe which leads in the market. The company has its most recognition and awareness in
London and Heathrow as well as they fly in 170 other countries across the globe, through
several subsidiaries too.
2. The parent company of British Airways is IAG which is considered to be the third largest
globally when it comes to revenue collection. British Airways is associated with IAC
which has helped it emerge as one of the biggest airlines based in UK according to
stability and financial capability.
3. The company has strong brand awareness which it can use for its commercial value. The
company has association with Saatchi &Saatchi which has made several of its
advertisements which also includes its famous Face Campaign (Britishairways.com
2020). The advertising agency which is responsible for making British Airways’
advertisements in Bartle Bogle Hegarty since 2007 which has been very significant for
creating trust and recognition among the customers.

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4. The company has its own engineering branches which maintains the fleet. It provides
maintenance to aircrafts which operate in over 70 airports across the globe. The two
airports where Hangar facilities are provided include Gatwick and Heathrow and the
major centers for maintenance is Cardiff and Glasgow.
Weaknesses of British Airways
1. British Airways have grown up to be dependent on the market in United Kingdom. The
revenue collection which is made by British Airways is more than 50% from the market
in UK. The prospects which they have grown in the UK’s market is commendable,
however, there are risks associated with such dependence, such as the political instability
which British Airways had to face during BREXIT.
2. The workforce in British Airways is highly unionized. The power of unions are high
which makes their power to bargain about their demands and expectations are quite high.
These weaknesses can affect the performance of the company (Gürel and Tat 2017). The
process of negotiation and bargaining between management and union may disrupt
operations of the company. This can impact the performance of British Airways in a
negative manner.
3. The penetration of British Airways in the globalized market is not adequate due to which
the sales and revenue collection is poor. The presence and recognition of British Airways,
globally has happened through subsidiaries. The presence of British Airways is still to be
worked on by developing effective strategies to penetrate growing markets.
4. The bankruptcies in the US banking sector has affected British Airways as bookings
which were received from the premium class faced a slowdown. The bookings made for
premium travel decreased heavily which has affected the sales of the company.

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Opportunities for British Airways
1. There is growing demand for connectivity and travel options in several parts of the world,
especially in developing countries. The developing economies are emphasizing on the
need for travel infrastructure and foreign tourism which the company can identify to
strategize and cater to (Salar and Salar 2014).
2. The expansion of middle class in several countries has opened new opportunities for
British Airways. The company can develop newer routes and provide affordable travel
options in these regions. The pioneer brand will make good market presence in these
regions and market. There will be increase of demand for travel options which are budget
friendly and are developed while taking into consideration customer segmentation and
trends.
3. Many companies are affected due to the high governmental regulations and interventions.
Several companies are often compelled to make exit from the market. British Airways
have great experience in the market which they can utilize to gain competitive advantage
during such situations and gaining customer base by providing exciting services.
Threats of British Airways
1. There is high competition in the Airlines industry due to the presence of numerous
companies which operate locally as well as internationally. There are competition based
on fares, quality of services and so on which may pose threats as there are competitive
forces offering similar services at low prices.
2. There are strict government regulations in several regions which make operations
challenging. The operations of flights and services get regulated based on routes, business
partners, slots available in airports, fares, security, safety, infrastructure as well as

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impacts which are caused on the environment. These affect the industry as a whole as
well as the companies individually as their operations gets controlled and stringent.
3. The developing technologies, infrastructure and alternatives have increased challenges
for the airlines industry. Technological advancements are to be kept updated with, in
order to offer best services. However, there also are alternatives which are available
which has simplified travel options in the developed and developing nations.
Step 2:
Results from the Evaluations:
1. British Airways is located across various locations in the world, even though they are
very much dependent in the UK market.
2. The company operates in many countries through subsidiaries, which is a restricting force
to crease brand awareness globally.
3. The market penetration is poor in many parts of the world, especially the developing
nations.
4. British Airways has unionized work force, which makes its operations vulnerable to
negotiations and bargaining between management and unions. If there are tensions
between management and union regarding expectations, the operations and services are
most likely to be disrupted due to employee withdrawal.
5. The company has standardized options which brings competitive advantage to the
company which can easily be identified by other dominant forces to capitalize the market
in other regions of operations.

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Objectives
The objectives of the company is to enhance market and sales by implementing several
strategies for development (Horkoff et al. 2014). Effective planning and strategizing will help
British Airways achieve newer heights and greater revenue collection in the market.
1. The company should enter various markets outside UK.
2. 50% of its total revenue collection is restricted to the UK market which they should work
on.
3. The company should create brand awareness in other parts of the world and not only
operate through subsidiaries.
4. The weaknesses should be worked on to achieve competitive advantage in the market.
5. The intention should be to increase customer base in the market.
Recommendation
1. The company should aim at entering the markets in the developing nation. The saturation
of economic growth in UK and US might be very risky for British Airways if they do not
expand their market in the developing nations with great prospects.
2. The company can employ various analysis to understand the trends and preferences of
the target audience in these market before entering and offering services in accordance
with them in order to maximize sales and profit in the newer markets.
3. According to ANSOFF Matrix, the strategy which is being employed by British Airways
in the markets in which it operates in is following the Market development strategy to
grow the business (Hussain et al. 2013). The company should rather opt to follow product
development in the newer markets as well as customize the services based on the trends

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and expectation of the customers. The emphasis should be laid on to penetrate the market
and create brand awareness by offering various services which are acceptable and
exciting to the target customers in the market.
4. British Airways should target the middle class of the society in the developing nations as
it is the largest section of the society which is growing continually. The aim should be to
develop strategies to offer services based on their expectations and demands which will
increase sales and prospect.
5. Brand awareness should be created in the countries of operation as there is poor brand
awareness in many regions where British Airways operate.
6. British Airways should aim to grow less dependent in the UK Market as it also gets
subjected to political and financial instabilities which directly affect the company and its
business.
7. The company can enhance the quality and services at other countries of operation than its
base by choosing the geocentric staffing which will help them have the best workforce
with diverse knowledge affecting the company to grow positively and have a greater
reach (Pesic, Milic and Stankovic 2013).
8. The company should aim at maintaining healthy relationship with the unions in the
company which will ensure that there is no disruption of services and operation leading to
poor operations. It would help British Airways maintain standards and good reputation.
Conclusion
British Airways have grown up to be one of the pioneers of the Airlines Industry in
United Kingdom. It has been offering services to its patrons for over 90 years while the
parent company is one of the three largest giants in the Airlines Industry, International

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Airlines Group. The company has gained reputation and market share even though they
operate through subsidiaries in many parts of the world. The company should aim to grow
and increase market share and revenue collection from developing countries and not tend to
show over dependency on the UK market. The company should thus develop strategies to
grow and enhance the business prospects.

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References
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