Strategic Management: Analysis of British Airways

This report analyzes the strengths, weaknesses, opportunities, and threats of British Airways in the Airlines industry. It provides strategic recommendations for the company.

STRATEGIC
MANAGEMENT

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Contents
Introduction................................................................................................................................1
Background of the company......................................................................................................1
Strengths.....................................................................................................................................2
Weaknesses................................................................................................................................3
Opportunities..............................................................................................................................3
Threats........................................................................................................................................4
Strategic options.........................................................................................................................5
Value chain.............................................................................................................................5
Resources................................................................................................................................6
Strategic Recommendations.......................................................................................................6
Conclusion..................................................................................................................................7
REFERENCES...........................................................................................................................8

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Introduction
Every organisation is dealing with their own set of challenges and it has become essential for
the firms to manage these for improving their competitiveness in the market. In this regards
the most crucial role is played by the strategic management which is again dependent on their
internal analysis. The strengths of the company help them in gaining competitive advantage
over the rivals. This gives a firm a strong position in the market that allows them to control
market variables (Rothaermel, 2015). It is essential that companies work on their strengths so
that they can create a very different space for themselves. It is also crucial in the current
business environment that a firm evaluates the weaknesses they have. This allows a firm to
reduce the chances of business failure. Along with this any company needs to evaluate the
opportunities they have in the market. This must be done on the basis of the resources and
capabilities they have to grab the opportunities. In order to achieve strategic success it is
crucial that a firm evaluates the threats they are facing and the way in which they are having
impact on the business process. In the competitive environment of Airlines Industry, firms
need to have knowledge about their strengths and weaknesses as well as the opportunities and
threats they are facing in the market. Based on this analysis company has to find the
strategies that can give them competitive advantage.
This report will analyse the strengths, weaknesses, opportunities and threats for British
Airways which is one of the biggest firms in the Airlines industry of UK. Other core strategic
concept that may be useful in the long-term has also been illustrated. Based on this analysis,
the report also illustrates the recommendation for the company
Background of the company
British Airways is one of the carrier airlines in UK and on the basis of the fleet size,
passenger carried it is just behind easy Jet. It can be termed as biggest flag as they have an
fleet size of 277 and flies to across 183 destinations. It was established in 1974 by the British
government for managing two nationalised airlines British European Airways and British
Overseas Airways Corporation as well as Cambrian Airways from Cardiff, Northeast Airlines
from Newcastle upon tine and two regional airlines. According to the 2016 report, this
company earned revenue of 11,443 million ponds.

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Strengths
 This Company has been successful at execution of new projects and created good
returns on the capital investments by creating new revenue streams. They have been
successful in most of their projects throughout the world (Gregory, 2010). The return
has also been high which has added in their revenue base.
 They have been successful in automating the activities and they have used in different
automated technologies that helps them in scaling up and scaling down based on the
demand in the market. It brought consistency in performance and has increased
quality of their services. The use of advanced data technologies and the
implementation of automatic technologies in their inventory have helped them in
providing better services to their clients (Albers, Baum, Auerbach & Delfmann,
2017).
 Their workforce is highly skilled and is able to deal with every situation. This has
become possible due to its training programme and learning methodologies. They take
care of the motivation of the employees in an appropriate manner so that they remain
motivated towards self-development (Airline staff rates, 2019).
 British Airways have made a strong and reliable distribution network that gave them a
reach to large potential market in various parts of the world. They have been
continuously adding to their distribution network.
 Company has a strong base of dependable suppliers of raw material and hence
enabling the firm to overcome any supply chain blockage. They have large numbers
of suppliers with them and they have a good relationship with their suppliers
(Airways, 2017).
 British Airways has invested a lot of money on building a strong brand portfolio.
They have been doing it through the years. They have their brand name in different
parts of the world and this has also helped them in reaching to different parts of the
world with an ease.
 They have created a dealers and distributors chain that not only promotes the products
and services of the firm but also invest in the training of the sales team so as to
explain to the clients about the way in which they can extract the highest of benefits
from their offerings. They have incorporated it in their culture (Grundy & Moxon,
2013).
 The type of products and services that company delivers and the customer support
they give to their consumers have extended their loyal customer base. They have

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achieved higher customer satisfaction level and have also created good brand equity
among the potential consumers (Mills, 2017).
Weaknesses
 More numbers of investments is required in the new technologies. Since the company
aims to expand into new regions hence it will require more technological help to make
this process easier. Right now the investment in technologies is not according to the
vision of the company.
 British Airways have been successful in doing their core business but they have faced
problems in moving towards the other product segments with its current culture. They
have limited resources outside their core business. This has restricted their cash flows
from new sources.
 The research and development activities are lesser than what is done by their
competitors. They are not able to compete with the fastest growing players in the
industry and this is the major reason why their innovation process has been slow.
They need to concentrate on the products that are new and as per the requirements of
the customers in the market (Gollan, 2017).
 Company has faced lose in terms of the market share in the hands of the small players
or new entrants. This challenge from the new entrants becomes greater in the niche
categories. This company need to build internal feedback mechanism directly through
the help of sales team at the grounds that can specifically help them in countering
these problems (Rothaermel, 2015).
 This company has missed many opportunities when compared with their rivals. Their
cost of inventory is on the higher side because they have not been able to do demand
forecasting appropriately which should have been done appropriately both in channel
and in-house.
 They have not been successful at integrating firms with different organisational
culture and there had been many examples where they have noticed many failures to
merge firms. For example there mergers with Iberia. The plans that both the
companies have made for their merger to succeed did not get implemented as they
were not able to coordinate appropriately (Stafford, 2009). For example about the
working schedule, cost saving. This is also because of the different work cultures and
their failure to adapt in it.

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 As compared to their prime rivals within the industry, this company is facing a higher
attrition rate and they will have to spend on different types of development of human
resource.
Opportunities
 British government has made many agreements with governments from different parts
of the world (Bright, 2018). This has promoted the chances of the company to adopt
new technologies. At the same time, free trade agreement by the government has
opened new opportunities for the company especially in the new emerging markets.
 The development of market will help them in gaining edge over the competitors hence
increasing their competitiveness in the future.
 They have the opportunity to develop their online platforms so as to ensure that new
sales channels get added for the British Airways. The online platform will also give
them opportunity to collect the information about their customers so as to understand
their requirements appropriately. With the help of technologies such as data analytics,
company will easily be able to work in a better manner (Heinz & Pitfield, 2011).
 Stable free cash flow gives opportunity for investing in different product segments
(Maszczynski, 2019). High cash reserves ($ 3.9 million) will ensure that they can take
risk and at the same time company can invest in new technologies and in development
of new technologies.
 Economic slowdown and enhancement in the customer spending after years of
recession and slow growth rate in the aviation industry is an opportunity for the
company to expand in the low cost airlines market.
 Government policies such as green drive have provided an opportunity for
procurement of the products that are environment friendly. This will also help in the
sustainability of the company in the future. Government is establishing taskforce to
accelerate growth through grseen finance. Green financial management standards
have been set up to ensure that there is boost to low carbon economy of Britain
(Gov.uk, 2017). Developing green airports and the use of cleaner fuels will help the BA
to improve its sustainability.
 Due to downfall in the economic progress a low inflation rate can be noticed which
gives an opportunity for the company to get loans for new investments at the lower
rate of interests.

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Threats
 The Paris agreement of 2016 on environment has made new environment regulations
that can act as a threat to certain kind of offerings. Company will have to change their
business operation as soon as possible so as to avoid any environment related
compliances.
 No regular innovation as it is seen that company that are not able to regularly innovate
their products. They have generally made innovations in their products in response to
what the developments being done by other players. This is the major reason why
there have been regular swings in the higher and lower sales number (Wright,
Groenevelt & Shumsky, 2010).
 Growing strengths of local distributors has enhanced the threats in the markets as they
will hamper the growth of the profits. This will enhance the cost of operations which
is not good in the existing global environment.
 There is increase in the cost of work force and at the same time there is decrease in
the numbers of skilled workforce in some parts of the world and hence threat to
steady growth in those markets.
 An intense competition lies in the aviation industry. This has become major threat to
the business of the company. This has reduced the profitability and hence has also
decreased the overall sales of their profitability.
 The volatility in the political climate and fluctuation in the currency exchange has
created a threat for the company as they will have to ensure that they have new ways
of doing business. Since the globalisation is higher hence change in any part of the
world gets reflected back in other parts of the world (Karami, 2017).
 The legal compliances have increased especially in terms of standards of product in
the markets due to enhancement in the strictness of legal laws related to consumers.
 The international sales might decrease due to increase in the concept of isolationism
by the governments. This has already started to implement in the countries like
America which has been the major contributor in the revenue of this firm.
Strategic options
There are several strategic options available with the company. It has become essential for
analysing the chances of company to be successful in the market.

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Value chain
It is crucial to analyse the way in which this company does its operations.
Primary activity
 Inbound logistics: This firm’s inbound logistics operations are complex and includes
time to time delivery of the plane’s fleet, catering offerings and other wide range of
products that are available on-board. They understand the necessity to maintain the
freshness of the food they deliver to their customers (OAG, 2018). They have been
able to maintain their inbound logistics because of the help of their relationship with
suppliers, professional training and sophisticated system for stock control.
 Operations: It is UK’s largest international schedule airline, and this airway flies at
the global levels and has quite large scope of expansion. They have increased security
for their luggage, quick service and large use of online technologies especially the
technology use in the customer service department has made its operation effective
(Vallaster & von Wallpach, 2013).
 Outbound logistics: The efficient handling of the luggage in the point of destination
and use of advanced communication and information technology has strengthened
their outbound logistics.
 Marketing and sales: This Company is focusing on brand reliability, convenience and
safety when it comes to its marketing. Their marketing message is spread through
both conventional and technological mediums. Sales are also achieved through both
the mediums.
 Service: Post-sale services as an essential ground for finding competitive advantage in
the marketplace. They have initiated their loyalty club cards and also maintained
communication with their consumers in order to improve the service provisions.
Support activity
 Procurement: With the help of their suppliers from different parts of the world, this
company has been procuring different raw materials and resources in an effective
manner (Milmo, 2010). Company has developed multiple channels for procurement.
 Firm Infrastructure: This firm has an excellent infrastructure that helps them in doing
their business operations in an appropriate manner. They are doing continuous
advancements in their infrastructure so that customer satisfaction can be improved
(Claimcompass, 2019).

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 Human resource management: This Company has an excellent workforce which is
highly skilled and trained. They have adopted the best methodologies for improving
the quality of the talents being and nourished at the workplace. But at the same time it
is also to be noted that there is significant increase in the numbers of people that have
left the organisation (Moresi, 2010).
 Technology Development: Company is using high quality technological equipment in
their business but at the same time it is also to be noted that the incorporation of
technology has only been when their competitors have already done it. This has
reduced their chances to gain advantage over their major rivals.
Resources
It is also crucial for strategic benefits that company evaluates the type of resources they have.
The quality of the resources is illustrated through VRIO framework.
 Valuable: Company has been adding the resources in their organisation so as to
improve the value added to the customers. Their major focus is towards improving the
value by adding quality of their offerings.
 Rare: Since the competition in the industry is high hence they are not able to develop
resources that are rare and hence their services are also not rare.
 Imitable: Company’s Resources are easily imitable at the same time it is also seen that
this company has not invested hugely on innovation. This has further enhanced the
inimitable nature of their resources and capabilities (Assaf & Josiassen, 2011).
 Organisation: This Company is totally capable of effectively utilising all its resources.
They have continuously investing in technology so that utilisation of their resources
can be done sustainably. This is necessary for their growth.
Strategic Recommendations
By analysing the strengths, weaknesses, opportunities and threats of the company, there are
various strategic recommendations can be made:
 Low cost offerings: It is crucial that company analyses the turmoil in the European
economy and concentrates on the low cost offerings. This will not only help them in
expanding in the lower cost market but at the same time it also helps them in
attracting larger numbers of middle class families who do not want extra expenses on
luxury products.

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 Innovation: In the time when the competition has increased, it is essential for the
company to invest in the new innovation technologies. This will help the company in
making a very different position for them in the market. This is essential for gaining
competitive advantage over the rivals. The innovation must be done on the basis of
the requirements that they have analysed in the market. Innovation is also needed to
be done in the business process so that level of consumer satisfaction can be enhanced
(Tckhakaia, Cabras & Rodrigues, 2015).
 Strategic human resource management: It is seen that this company has employees
from different parts of the world and it is crucial that firm understands their changing
needs. This is necessary for the development of good environment at the workplace.
As this company is facing the challenges related to high turnover hence company
need to improve their benefits and incentives plans. Company also need to build
innovation culture in the organisation so that more innovative ideas can come into the
business.
 Resource based view: In order to improve the overall value of the product it is crucial
that British Airways invest their time in resource based view towards their
development. In this process, company need to develop their capabilities and also
need to work on the areas such as threshold resources so as to increase their
competitiveness in the market. They have been doing well in terms of development of
the intangible resources but they have failed in making their development in the
tangible resources (Skapinker, 2018). For this company need to take the help of
partners and advanced technologies.
 Strategic alliances: In the last decade or so it is seen that there are many big aviation
countries that have gone into strategic alliances. This has increased the chances of the
company to invest in new areas at the same time it ensures that loss has been properly
managed. More numbers of strategic alliances will increase their capabilities and at
the same time it will make them a bigger force. But first this company need to
improve their approach towards adaptation of cultures of other company (Mayer,
Ryley & Gillingwater, 2012).
 Advanced technologies: Advanced technologies such as data technology and IOT will
help the firm to enhance their decision making capability. It will help them in their
future planning. This company has been poor in dealing with future predictions which
is the major reason for their failure in constant sale of their products and has also
resulted in higher cost of inventory (The Drum, 2017). For this, company can take use

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of predictive analytics on the basis of data they have collected in their business. This
will also enhance the lifetime of their inventory and will lower the cost of
management of their business operations.
Conclusion
From the above based report, it can be concluded that British Airways is one of the biggest
Aviation firms in Britain. Their strengths include good capital expenditure, bigger brand
name, strong reliable distribution network is their strengths. Their weakness includes not
being successful in other product areas, weaker innovation capacity, higher attrition rates.
They have opportunity to expand their business in the developing nations and can also have
opportunity to increase their sales through online technologies. They are facing threats from
the fact that there is higher competitive force in the market which is reducing their power to
expansion. Their primary activities have not been as effective as of their competitors. They
also need to work on development of their secondary activities so that overall effectiveness of
their operations can be improved.
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