PESTLE model and Porter Fives forces

THE BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
1. Define PESTLE model and Porter Fives forces identifying and analyse macro and micro
environmental factors influence Airlines sector.........................................................................1
2. Description on analyse of internal business environment with the help of using of value
chain model. ...............................................................................................................................4
3. Reflection................................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business environment is inclusive of the forces like internal and external factors. It can
affect the functioning of an enterprise in larger mode. There are various kinds of things as are
employees, customers, management, supply, demand and regulations of an enterprise. It helps to
influence the operating situation of enterprise. Thus, it can be said that the changing needs of
customer and new innovations in market and all these activities are based on the business
environment (Knowles, Holton and Swanson, 2014). The present report will outline the business
activities of British Airways. It is the largest Airlines in the UK. In this it is the sum total of
individuals, institutions, and other forces which are outside of control of business enterprise. In
this assignment, the activities are inclusive as Porter forces, value chain analysis and internal as
well external factors in order to conduct the business environment. The main aim is to identify
the impact of business environment so that firm can operate its business activities effectively.
MAIN BODY
1. Define PESTLE model and Porter Fives forces identifying and analyse macro and micro
environmental factors influence Airlines sector.
PESTLE model
The PESTLE model will be inclusive of factors like political, social. Economical,
technological, environmental and legal factors. This all are affecting the working of enterprise in
larger mode. British Airways pestle analysis have significant effect on the operation of entity as
are-
Political factor-This is the major international airlines which flies more than 400 destinations
throughout the whole world. In this way, it can be said that political stability and perception of
safety towards customers having tremendous impact on British Airways. The airline industry are
subject to high regulations (Armstrong and Taylor, 2014). In addition to this, legal authorities of
many countries are taking various kind of initiatives steps to put forwards security measures.
This will helpful to cope with the risk of violence and unlawful immigration. Thus, it can be said
that airline participate with various of legal authorities so it can guarantee the security and safety.
Economic factor- This will be inclusive of Inflation rate, currency exchange rates and overall
economic climate in UK. It is having direct and indirect implication on the performance of
British Airways. In addition to this, it can be said that cost of fuels is also one of the major cause
for the British Airways. In this way, it has been noticed that economic deadline are very common
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on airline business. There are some issues which are affecting the operation of Airline industry as
are uncertainty in capital markets, rising unemployment, falling in the prices of house and this all
factors led to major drop in the airline business and trust of consumers.
Social factors- The need and habits of the customer are one of the major issue which can affect
the functions of Airline industry. In addition to this, the economic downturn make the travellers
to be more concerned about the prices. In this way need to offer the high quality service the
customers at the low level of cost (Brewster and Hegewisch, 2017). This kind of factors affects
the need of buyer and how big is the potential markets. In addition to this, British Airways is
taking various steps in order to deal with the airline services and gain small gain rather than
loosing its share value.
Technological factors- In this term it can be said that passenger used to check their mobile
phones and internet system at the time of checking in. The technical function are become the
most vital part of human life. Thus, quires to the all customer are need to be noted and can be
done this process through feedback facility (Storey, 2014). Enhancing the usage of technological
facility will be helpful to have arrivals management system, departure management system and
other technologies which are helpful in order to create the balance.
Legal factors- The Airline industry is being progressively controlled. In this way, it can be said
that there are various control which are related to the issues as are related to the infrastructure to
the route flights and slot capacity (Budhwar and Debrah, 2013). The legal issues are affecting the
operation of British Airways. In this British Airline is need to be-aware with the number of strike
actions and implications which can be caused by the trade unions.
Environmental- There are various kind of environmental factors which are faced by the air line
industry and it is consists of air, noise, water, pollutions and waste management etc. They need
to cope up with the various environmental measures as are changes in climate etc. in this they
need to cope across the wide range if national, international and local environmental regulations
(HMarchington and et.al., 2016). Thus, it can be said that Airlines need limit the growth of
radiations and emission so that emission factor can be reduced. This all kind of functions are
need to cope up so their can be sustainability in environment.
Porters five forces
There are many ways which is need to be used by the enterprise which helps to determine
the likelihood of its profitability. It is one of the largest airline in the united Kingdom. It is full of
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global airline company. With the help of conducting the Porters fives forces analysis on the
British Airways, the position can be determine effectively. This enterprise gives it major
consideration over the passenger service, cargo and ground service handling etc. In this way,
there are following comprehensive analysis of Porters five forces and this is defined in the
following manner as are-
Supply power- in this it has been defined that British Airways obtains its plans, aviation and
fuel from the other companies so that function of the firm can be run in the effective manner.
This kind of the supplier can able to command specific level of collective power in the industry.
It can be understood with the help of example as are- the high level of competition among the
supplier can be seen and it could ensure the best prices of the aircraft and fuels (Aswathappa,
2013). These Airlines are largely dependent over the two manufacturers as are Airbus and
Boeing. Thy both are the largest suppliers to the British Airlines. As per the present scenario the
prices in the Fuel are continuously declined.
Power of buyers- British airways mainly focused over the passenger for having long term
revenue. They work as to offer the short haul flight services. In this way there are the wide range
of options foe the presager in Europe. This kind of the enterprise taking various effective steps in
order to provide effective services so that firm no need to have compromises with the profitable
condition in the market. With the help of the internet facility they are able to obtain the
information about the airlines. In this it can be said that the most of the customers are price
sensitive. At the time of buying the tickets they used to travel with the help of agents and provide
the best deal to customer who are travelling in the bulk manner. These are the attractive features
to the travellers.
Barriers to market entry- In this it can be said that there are number of barriers for the new
airline industry to take entry. This is one of the most stiff measure which is imposed by the In
industry regulators. In addition to this, it can be said that investment in the industry also a kind of
huge investment. Moreover, it can be said that Withdrawal of the Asia is having from the market
of the Europe works as to deterring many nee low cost airlines in order to get the entry in market.
In this way, it can be said that there are no significant threat of any new entrant into market.
There is very little amount of product differentiation is remained due to this it is very difficult to
build the competitive edge and there is availability of distribution channel (Chelladurai and
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Kerwin, 2017). In this way, it can be said that there is the lower amount of presence to the British
Airways.
Competitive rivalries- In this it can be termed out that British Airway need to offer the both the
long and short haul services. It is clearly seen that there is no such difference in the services and
pricing of the other aviation companies. This firm is having the huger competition inclusive of
the local competitors as well as the international airlines. In this manner it can be said that
mainly the competition is depends on the factors as are price, convenience and services. The all
the things are need to provide in qualified manner to customers in order to maintain the market
value. Thus, it can be true to said that the British Airline is facing the high level of industry
rivalry.
Threat of substitute- There are the some key substitutes in relation to the product and services
are offered by the British Airway and it is inclusive of the things as are Trains, cars, buses etc.
Hence, this all can be used by the customer who need to travel for the short distance. In this way,
there is only one threaten to the enterprise is the short haul flight service (HMarchington and
et.al., 2016). In this term it can be said that there is no substitute the long haul services. As per
the present scenario the customers works towards to have the services which helps to save the
time. There is huge probability of choosing the British Airline services. Thus, they need to
provide effective and affordable services to their passengers. In this term it can be said that there
is the moderate level of threat to the British Airways.
2. Description on analyse of internal business environment with the help of using of value chain
model.
In this term it can be said that British Airline use the value chain analysis involves in
order to adopt the systematic approach so that firm is able to gain the competitive advantage in
the market. This is the framework which work as to make distinction between the primary and
support business activities. Thus, the value chain analysis deals with the following activities as
are-
In this manner there are some primary activities as are-
Inbound logistic- This term derives as the British Airways inbound logistic operations are some
complex and involve as are the timely deliver of the fleet of plans, catering products and number
of other on- board products. In this it is essential to ensure the freshness of foods and other which
is used to get the serviced during the flights (Knowles, Holton and Swanson, 2014). This is
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comes ender the primary activities. With the help of developing the on- going relationship with
the customer the British Airline will get the success to in terms to the inbound logistic. It is
essential to gain the competitive advantage in the firm.
Operations- At this stage business work as to put its focus over the preparing of the good and
services to sold to the customers. It is one of the largest UK international schedule airline. It
covered almost 400 destinations. In this firm is gaining competitive advantage as it is capable to
provide services to its customers as increase security for the luggage, offering quick check in
services and other services (Budhwar and Debrah, 2013). In addition to this, it can be said that
the customization of the services and wide rage of business activities will work as to add
additional value to the British Airlines.
Illustration 1: Value chain Analysis
(Source: British Airways Value Chain Analysis, 2017)
Outbound logistic- It involves the activities as to offering the ready products to customer for
consumption. They are mainly related to manufacturing companies. This kind of Airline derives
values in outbound logistic primary operations with the efficient handling of baggage
(Chelladurai and Kerwin, 2017).
Marketing and sales- In this term it can be said that British Airways marketing strategy is
directed to the communication of the marketing message in order to target the customer
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segments. This British Airways brand provide the services as are efficient, reliable, safety and
convenience (Armstrong and Taylor, 2014). In this term marketing message is communicated to
target the customers by having effective utilisation of rage of elements as are marketing
communication and it can be done with the help of things as are prints, media, advertising and
sales promotions etc.
3. Reflection
Porter’s five force model is one of the best tool for analyzing the macro environment. It
develops my understanding related to the various factors that are present in macro environment
and the way they could impact the company both in positive and negative manner. I analyzed
that company need to make strong relations with its suppliers so that it can easily get raw
material available on time. If there are not many suppliers in the market then company can face
difficulty in getting raw material at the law price. Further I identified that bargaining power of
customers can directly impact the sales of the Airline company. When there are many
companies than customer got choice to switch from one brand to another due to high price of
lack of quality services. Therefore, to retain the customers it is essential for airline company to
provide them innovative services which can easily grab their attention and retain them. I
developed my understanding related to the way that if there are many companies who are
providing same types of services and products. It leads to enhance the buying power of
customers and impact the firm sales. Apart from this, I enhanced my knowledge related to the
barrier of market entry. In the airline industry there is huge number of capital required along with
the strong financial support. Along with this there are huge number of competitor it is not easy
for the new companies to survive in a competitive market. Therefore, to enter in new market it is
important for company to focus on developing new and innovative products so that it can easily
make good position in the market. Apart from this, I learned that due to high competition in
airline industry it is not easy for the firm to focus factors such as price, innovation and quality of
products. There are some key substitutes o the company such as cars, buses and ships etc.
Customer can easily travel through this and it can threaten the airline industry. Therefore, I
analysed that macro environmental factor can impact the company and its position in the market.
It is important for the firm to make all its products and services through ensuring all these factors
so that it can easily survive in a competitive market. Along with this company can position itself
in the market if it analyses all the factors while carrying out business operations.
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CONCLUSION
Based on the above report it can be concluded that business environment plays the
essential role in order to cope up with the functioning of enterprise. There are various kinds of
things as are employees, customers, management, supply, demand and regulations of an
enterprise. The present report has outlined the activities of British Airways and things as are
PESTLE model, Porters fives forces and value chain analysis etc.
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REFERENCES
Book & Journal
Knowles, M. S., Holton III, E. F. and Swanson, R. A., 2014. The adult learner: The definitive
classic in adult education and human resource development. Routledge.
Armstrong, M. and Taylor, S., 2014. Armstrong's handbook of human resource management
practice. Kogan Page Publishers.
Brewster, C. and Hegewisch, A. eds., 2017. Policy and Practice in European Human Resource
Management: The Price Waterhouse Cranfield Survey. Taylor & Francis.
Storey, J., 2014. New Perspectives on Human Resource Management (Routledge Revivals).
Routledge.
Budhwar, P. S. and Debrah, Y. A. eds., 2013. Human resource management in developing
countries. Routledge.
Marchington, M., Wilkinson, A., Donnelly, R. and Kynighou, A., 2016. Human resource
management at work. Kogan Page Publishers.
Aswathappa, K., 2013. Human resource management: Text and cases. Tata McGraw-Hill
Education.
Chelladurai, P. and Kerwin, S., 2017. Human resource management in sport and recreation.
Human Kinetics.
Online
British Airways Value Chain Analysis. 2017. [Online] Available through: <https://research-
methodology.net/british-airways-value-chain-analysis/>.
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