Analyzing Competitive Environment and Value Chain of British Airways

This report analyzes the competitive environment of British Airways using Porter's five forces model and examines its value chain activities, including inbound logistics, operations, and outbound logistics. It also discusses the airline's products and services, as well as how it deploys information technology and innovative ideas to improve its business processes and enhance its competitive positioning.

Report
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Introduction to British Airways..............................................................................................3
Background Information about British Airways....................................................................3
Discuss about products and services of British Airways........................................................4
Analyse competitive environment by applying Porter's five force analysis...........................4
Analyse inbound logistics, operations and outbound logistics...............................................7
Analyse two support activities in Porter's value chain...........................................................8
Identify key value adding activities with justification...........................................................8
How business could deploy information technology (IT) and use innovative ideas in
improving its business processes and enhance its competitive positioning...........................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
Information technology is defined as tool which helps in fostering innovation at business
(Abdullah and et. al., 2016). With help of innovation, enterprise can gain various benefits in
terms of developing smart application, enhancement of data storage, fast processing, distribution
of information and others. The information or innovation technology plays effective role in
management of data, customer interaction, communication, sales, R&D, logistics and others. The
organisation given for assignment is British Airways which was established in 31st
March, 1974 at United Kingdom. The key people of BA are Alex Cruz, Stephen William and
Lawrence Gunning. It is providing services at global level. The main aim of report is to discuss
about information of company, their background along with their products and services. It also
highlights about competitive environment, inbound and outbound logistics, operations. Porter's
value chain and their activities are discussed along with use of innovation for improving business
practices to enhance competitive positioning.
MAIN BODY
Introduction to British Airways
British Airways is regarded as flag carriers airline in United Kingdom. It was founded in
1974 headquarter at Waterside, Harmondsworth near London Heathrow Airport. This has two
different hubs at Gatwick and Heatthrow Airport. BA has 282 fleet size with has 183 destinations
in different places. The parent company of British Airways is International Airlines Group.
Chairman and CEO is Alex Cruz and CFO & Director is Stephen William and Lawrence
Gunning. Revenue and net income earned by respective organisation is £13,020 and £1,952
million respectively. This is regarded as second largest airline in UK which is based on
passengers as well as fleet size carried behind easyJet. It is listed on London Stock Exchange as
well as FTSE 100 index. This is first passenger airline which have generated more than $1
billion at single air route.
Background Information about British Airways
British Airways was created in 1974 after BA Board established through government in
order to manage two airline business named as British European Airways and British Overseas
Airways Corporations, two regional airlines such as Northeast Airlines from Newcastle and
Cambrian Airways from Cardiff (Busse, Meinlschmidt and Foerstl, 2017). Also in 1974, four
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different companies has merged with British Airways. In 2011, respective organisation has
merged with Iberia in order to create International Airlines Groups (IAG) which is known as
holding company registered at Madrid, Spain. IAG is known for world's third largest airline
groups in context of annual revenue as well as second largest at Europe. In 1987, it became
privatised which is planned by Conservation Government. There are more than 65,157
employees working in different locations. It has covered 160 destinations which includes 8
domestic as well as 26 at United States. This is member and founder of Oneworld named as
airline alliance.
Discuss about products and services of British Airways
British Airway is regarded as full service global airline which focus on offering low fares
with worldwide route network in order to fly to and from local airports. It is part of IAG which is
global leading premium airlines. The products and services of BA includes flights, dining,
loyalty scheme, business class, punctuality and others. It carry 145,000 customers on daily basis
and provide high quality choice as well as convenience. This flies in more than 200 destinations
in 80 countries across worldwide. As it carriers up to 145,000 consumer every day and 45
million customer per year and serving 25 million cups of tea, 1.25 million with bottle of
champagne and 9.9 million bottles of wine (BRITISH AIRWAYS FACTSHEET, 2020). The main
advantages of booking tickets with BA includes flexible prices to family, cabins as per need of
consumers, complimentary drinks as well as foods, free selection of seat, no extra charges while
booking tickets and so on. BA provide loyalty schemes to all members who are avios on every
flights in terms of car hire, hotel accommodation, seat selection and others. The respective
organisation provide best punctuality record of timely flights arrival and departures.
Analyse competitive environment by applying Porter's five force analysis
Competitive environment is defined as dynamic external system where functions and
operations of business took place (Castillo, 2016). If there is large number of seller for same
goods and services then there is more competitive at marketplace in which business has to
compete with each other. On other hand, if there is less number of seller for particular goods and
services then firm has an advantages to gain competitive edge that assist in gaining of high
profits margins as well as market share from market. In context of airline industry, there is less
competition as it is difficult to come at market with new brand because there are already existing
brand which provide products as well as services to people in appropriate manner. The respective
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airline industry is operating their business at global level by providing all relevant facilities to
their people in better way. For determining competitive environment, business need to apply
various theories and models. In order to analyse competitive environment, British Airways has to
adopt Porter's five force model that is described here.
Porter's Five Force Model
It is also known as competitive position analysis which was founded by Michael E Porter
in 1979 for evaluating as well as assessing competitive position and strengths of organisation
(Porter’s Five Forces of Competitive Position Analysis, 2020). The theory is framework which
assist to analyse level of competition within specific industry. This is important when initiating
new business or entering to new sector. It is developed to identify power which lies in
organisation situation and accordingly making strategies and plan for attainment of goal and
objectives in an effective manner. There are five aspects which should be understand by business
while entering into new market with their products and services. In context of British Airways, it
has to determine all those factors which are essential for business to carry out activities and
operations. It is used by all types of organisation for their products and services so that they can
manufacture or enter into new market with innovative and unique products and services. The
explanation of al five factors are described below:
Threat of New Entrants- This bring new desire as well as capacity in order to gain
market share (DePasquale and et. al., 2017). The threats of new entrants depends on entering of
new industry at marketplace. When there is high barriers then there is low threats for existing
players. This includes high consumer demand, huge investment, government plan and policies
and others. In context of airline industry there is high barriers to enter into new companies as
there is high rules and regulations, large investment and others.
Bargaining Power of Suppliers- This is defined as how much power as well as control
is possessed by company's suppliers for raising potential in order to raise price or reduction of
quality purchase of products and services to lower industry's profitability potential. Supplier's
power is determined through availability of substitute suppliers as well as concentration of
suppliers. In respect of British Airways, they get their aviation, fuel, planes from other
organisation in order to run their own business. Such suppliers possess collective power in
industry that impact profitability of airline and their operations. For example, if there is high
competition among suppliers then prices of fuel as well as aircraft is high. Respective
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organisation depends on two suppliers for buying products and services such as Boeing as well
as Airbus. As these are main suppliers to BA due to which they possess high bargaining power.
Bargaining Power of Buyers- This is also referred as market of outputs in which force
analyse about what extent consumers can able to put their business under pressure that impact
consumer's sensitivity for price changes. Power is high when consumer has many options to buy
products and services and power is low when they have few options to purchase goods. The
respective organisation focus on their passengers for generating revenue. Organisation offer short
haul flight services where passengers has many options across Europe (Porter’s 5 Forces for
British Airways, 2019). This helps in providing high power to consumers to purchase tickets
from other companies at low prices. On other hand, power is low when it comes towards
international flights as BA has effective worldwide network.
Threat of Substitute Products- The availability of products increase propensity of
consumer to switch their alternatives. Whenever consumer finds many options for similar
products and services then they have options to switch from one to another brand without
bearing any switching cost. BA faces challenges for threat of substitute products as there is rise
in number of reasonable long haul carriers. Therefore, there is no significant threat of new
entrants into new market.
Rivalry Among Existing Competitors- This is defined as last force of model which
examines about how intense competition is in marketplace that is determined through number of
existing competitors as well as considering about what each competitors are capable of doing
(Durney and Donnelly, 2015). British Airways has both long as well as short haul flight services.
In context of long haul category, there is no difference among other aviation and BA business in
respect of pricing and services. On other hand, short haul is fragmented due to existence of
different companies offering services. BA faces huge competition on several levels such as local
competitors, competition with international airlines. The respective organisation faces high
competition with their rivalry due to prices, convenience and others.
Therefore, with the analysis of above aspect, it can be justify that British Airways faces
moderate competition at marketplace where in some elements they gain advantages whereas
other aspects business activities and operations are impacted. It is important for BA to develop
attractive, unique and innovative services at flight for their passengers. This will helps in
attracting large number of consumers to avail services.
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Analyse inbound logistics, operations and outbound logistics
It is very important for organisation to identify their inbound logistics, operations and
outbound logistics. They are described in context of British Airway such as:
Inbound Logistics- It is defined as way where purchasing of inputs like raw materials
and others are taken care (Ellwart and et. al., 2015). This is referred as transport, storage,
expediting, sourcing, receiving of products that are coming into business. It also connect with
external companies like suppliers for buying of goods and services. For instance, material
handling, inventory control, warehousing, vehicle scheduling and returning to suppliers. The
inbound logistics of BA are complex in nature and requires timely delivery of catering products,
fleet of planes, range of on-board goods. It is very important to ensure about freshness of drinks,
juice, foods and others during flights. The respective airline can attain competitive advantages
through inbound logistics by establishment of on going relationship with suppliers, professional
training and proper system for stock control.
Operations- It is defined as conversion of raw materials to finished goods. Value of
consumer rise if operations are performed up to mark and product is manufactured in right way
to meet standards of quality. Different activities are associated in operations for transforming
input to final product form. For example, packaging, equipment maintenance, machining, testing,
assembly, printing, testing and facility operations. In context of British Airways, it flies at global
level in more than 400 destinations where scope of business is extensive (British Airways Value
Chain Analysis, 2019). It has large operations by offering consumers increase in security for
luggage, quick check in services, online booking, ticket booking and others. This provide
customisation of service provision, utilisation of digital technologies which add value for
respective airline.
Outbound Logistics- This is defined as way in which final product is sold or distributed
to consumer. It includes delivery of product and includes distribution system, storage and
internal as well as external factors. This is referred as sending finished goods from
manufacturing to retailers as well as distributors. Outbound logistics includes activities such as
storing, collecting and physically distributing to buyers. For example, finished goods at
warehousing, delivery vehicle operations, material handling, order processing, scheduling and
others. This includes sending of ready products to consumer for consumption. British Airways
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flies in more than 80 countries globally. Outbound logistics of BA includes handling of baggage
in destination point and using information as well as communication systems.
Analyse two support activities in Porter's value chain
Porter's value chain model was developed in 1985 by Michael Porter. This is defined as
strategic tool that is used by organisation for analysis of different activities that are conducted by
firm internally (Evans and Price, 2017). Such activities are regarded as differentiation advantage
and source of cost. This assist business to gain competitive advantage at marketplace. Respective
organisation is divided into two different activities such as primary as well as secondary
activities. Different types of activities are includes in model like human resource management,
infrastructure of firm, procurement, sales and so on. British Airways has applied such model for
determining competitive advantages against Spice Jet and others. The two support activities of
BA are described below:
Procurement- It is defined as acquisition of resources, input for business. This is the way
about how company get their raw materials which includes negotiating as well as finding prices
with help of vendors and suppliers. Here, purchased inputs includes supplies, raw materials,
assets like laboratory equipment, buildings, machinery, office equipments and so on. BA can
gain competitive advantages for procurement functions by help of its size as well as benefits
which greatly impact their economies of scale (Analysis Of British Airways As An Airline
Company, 2020).
Human Resource Management- The retaining as well as hiring employees who helps in
fulfilment of business strategy along with designing, selling and marketing product. The
management of employees is used for primary activities and skilled employees should be hired
for marketing, sales, logistics, operation and other activities. In context of BA, it see their
employees as efficient sources to gain competitive advantages and providing regular initiatives
and programs for enhancement of employee job satisfaction level and efficiency.
Therefore, above two are important support activities which should be adopted by British
Airway for running their activities and operations in an effective and efficient manner. This helps
to attain goal as well as objectives of business in most better way.
Identify key value adding activities with justification
Value adding activities are defined as those action or activities that provide benefits to
consumers in terms of their goods and services (Ilmudeen and Bao, 2018). It is very important
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for business to adopt analysis as well as determine about which activity helps in adding value to
goods and services so that they can meet need and demand of consumer along with providing
satisfaction to them. The key value adding activities adopted by British Airways are as follow:
 British Airway should launch as well as introduce innovative, unique and new design on
regular manner to attract large number of consumers towards their products and services
along with enhancement of loyalty and brand value at marketplace (Khalifa and Ali,
2017). It is beneficial for each and every employees, companies, customers to provide
high quality services which leads to rise in market share and motivation of employees to
rise performance.
 British Airway should focus on rising promotional activities which assist them to attract
large number of consumers from all aspects such as local, domestic, national, global. This
leads to rise in sales, market shares and profitability of business at competitive market.
Therefore, British Airway should adopt various types of promotional tools and techniques
like digital technology, social media such as YouTube, Facebook, Instagram and so on.
Therefore, these above are considered as important value added services for British
Airways which assist them to provide high and premium quality products and services to
consumers in order to fulfils need and demand of consumers in appropriate manner.
How business could deploy information technology (IT) and use innovative ideas in improving
its business processes and enhance its competitive positioning
It is very important for business to adopt new ideas and technology in their business for
running activities and operations in an effective and efficient manner (Luo and Ren, 2016). In
this context, there are several information technology as well as innovation ideas which has
applied by British Airways for attainment of competitive advantage at marketplace. Some of
them are described below:
 British Airways has to design their seat that possess in built sensor to collect medial
information about passengers (Riazi and et. al., 2015). This assist them to know about
their people and suffering of any disease which impact other passengers seating near by
them.
 The respective organisation can install woven for touch sensor that is used for controlling
panel through which they want to make easiness for their consumers in appropriate
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manner. In addition to this, it will assist in attracting large number of people to enhance
market share that leads to rise in profitability as well as sales of business.
Therefore, with the adoption of such highly advanced technology assist British Airways
to attain competitive advantages along with success and growth of business.
CONCLUSION
From the above analysis, it has summarised that in current scenario all company has to
implement information technology in their business so that activities and operations can be run in
an effective and efficient manner. For implementation of information technology in business in
appropriate way, various types of activities and operations has to be conducted like in depth
analysis of organisation along with determining their background and products and services. The
competitive analysis of organisation has to be determined with help of Porter's five force model
to know about threat of substitute, new entrant, bargaining power of supplier, buyer and
competition among each other. In addition to this, organisation has to conduct their business
functions and operations with help of Porter's value chain model to know primary as well as
supporting activities in best manner. Apart from this, information technology has to be deployed
in business so that all work are carried in technical and innovative manner.
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REFERENCES
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Online
Analysis Of British Airways As An Airline Company. 2020. [Online]. Available through:
<https://myassignmenthelp.com/free-samples/analysis-of-british-airways-as-an-airline-
company>.
BRITISH AIRWAYS FACTSHEET. 2020. [Online]. Available through:
<https://mediacentre.britishairways.com/factsheets/details/86/Factsheets-3/33>.
British Airways Value Chain Analysis. 2019. [Online]. Available through: <https://research-
methodology.net/british-airways-value-chain-analysis/>.
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Porter’s 5 Forces for British Airways. 2019. [Online]. Available through:
<https://www.bestessayservices.com/blog/porters-5-forces-for-british-airways/>.
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<https://www.cgma.org/resources/tools/essential-tools/porters-five-forces.html>.
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