Business Strategy: Internal and External Analysis of British Airways

This document discusses the internal and external analysis of British Airways, including political, economic, social, technological, legal, and environmental factors. It also covers the SWOT analysis, Ansoff Growth Matrix, benchmarking, VRIO analysis, and McKinsey's 7S model. Additionally, it explores Porter's five forces to understand the competitive environment.

UNIT 32: BUSINESS
STRATEGY

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
Internal and external analysis......................................................................................................3
PART B...........................................................................................................................................9
Porter’s five force........................................................................................................................9
PART C.........................................................................................................................................10
Strategic Planning......................................................................................................................10
Strategic marketing plan............................................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Business strategy is the planning and decisions which organizations take so that their
objectives and goals can be achieved in the market. This would make the organization get a
competitive advantage in the market and better sense of direction to raise their standards and
brand value in the market. British airways are having its headquarters in London, United
Kingdom and make a net income of £ 1,952 million as of 2018. The company is covering 183
destinations and was founded in 1974. The report consists of internal and external factors which
are influencing the functioning of the business in the market. Measures and decisions which can
make the organization have higher functioning in the market in order to be able to operate
effectively in the market.
PART A
Internal and external analysis
It is very important to understand the external factors in the market and since they are not
in the control of the business therefore the company will have to make decisions and plans
according to them so that there is going to be higher performance which would be present. The
following report is going to be discussing on the external environment influencing British
Airways.
 Political factors
Due to Brexit there are a lot of changes which the company has had to make but now there is
stability in the organization. The firm is following the trade laws, policies, market trends, labour
cost, etc so that they can have smooth functioning and gain competitive advantage.
 Economic factors
The company is having a stable economic factor in the market and making a lot of
investments as well to be able to expand themselves in more destinations which is going to be
good for the reputation of the company (Ahmadian and Khosrowpour, 2017).

 Social factors
The needs and expectations of the consumers have changed which is that they need safety
and healthy environment which is being improved upon by British Airways.
 Technological factors
There is information technology which has been added in British Airways in order to be able
to operate and increase the brand value in the market for higher satisfaction level of the
customers.
 Legal factors
The company has to make sure that they are following the laws for the employees and the
customers so that there is going to be higher performance which is going to be present and the
loyalty of the consumers is also going to increase (Büyüközkan and et.al., 2020).
 Environmental factors
There is a strategic plan for improving the environment which British Airways has taken and
are also taking actions for CSR which is making the reputation of the organization increase in the
market.
SWOT
Businesses in the market need to understand the internal environment as well so that there
are going to be effective decisions which are going to be taken and the working environment for
the employees is going to be well maintained. The following report is going to discuss the
 Strengths
The company is having a lot of experience of the industry and market therefore they are
being able to take the right measures and strategies are being used by the organization. The
company analysis all the factors which are going to impact the organizations functioning and
accordingly make the plan for themselves which is making the organization gain unique identity
and brand value in the market.

 Weaknesses
The level of performance of British Airways needs to improve in the market so that there is
going to be higher profitability margins which are going to be present. The company is not
having skills and dedicated workforce which is making the operations and smooth functioning be
affected in the organization which is not good for a long run of the business in the market
 Opportunities
British Airways can expand themselves in the market which is going to be very beneficial for
the company to have a long run in the market making the organization have a stable functioning.
Other competitors in the market have already taken measures in order to be able to make a strong
capitalization for themselves in the market by investing a lot (Yuliansyah, Gurd and Mohamed,
2017). Technological aspect needs to be improved further so that the company is going to have
smooth functioning in the market.
 Threats
The competition in the market is high and there is a lot of risk which is present to operate
effectively in this industry as well. There are a lot of negative influence which is present on the
environment which needs to be improved so that there is going to be higher performance which
the business can have in the market.
Ansoff Growth Matrix
The company is having higher experience therefore the organization can opt for
diversification strategy in the market which is a great risk but the organization will be able to
have good functioning with this factor. It is important for the organization to be able to have the
right products and services in the market which is going to help the company be able to operate
effectively in the market making the organization have a strong base for them in the market. The
company is also having a strong portfolio for themselves in the market which is going to make
the organization have a stable reputation and standard matching the expectation of the customers
in the market as well (Imaz and Eizagirre, 2020). The competition in the market is also
increasing which needs to be taken care of by the business in order to be able to operate

effectively and the other strategies in Ansoff growth matrix are going to make the organization
have a limited growth and the company wants to get in higher competitive advantage for a long
run.
Benchmarking
It is important for the organization to use benchmarking for the employees since there are
a lot of technological changes and improvement which the company is doing in the organization
to have better and higher functioning. Employees have to maintain the standards and
improvement of the organization needs to be stable so that there is going to be higher
performance which is going to be present in the organization.
VRIO analysis
Resources Valuable Rare Inimitable Organization
Capital  
Intellectual property   
Human Resource  
Technology    
 Valuable
Resources which are being used in the organization are adding value in the company and
impacting the profit margins. The satisfaction level of the customers is present and loyal of the
customers in the organization as well because of the quality of products and services. Human
resource also helps the company to take in the changes effectively (Jaiswal, 2019). Company is
focused on capital of the organization so that there is going to be more investments which the
organization can do in the market.
 Rare

The company is using rare resources in the organization which is going to limit the customers
and satisfy them for a long run (Li and Cui, 2020). Technology and intellectual property of the
organization is being positioned as rare in the market so that there is going to be higher
competitive advantage which British Airways can have in the market. Investment which British
Airways is doing in the market is rare in nature which is making the company have higher
functioning and operations.
 Inimitable
The products and services of British Airways are inimitable in nature which is going to make
the organization have a lot of limitations in the market and that is not a good factor for the
company (Li, Qiao and Wang, 2017). Innovation is present in the company so that there is going
to be higher functioning which is going to be present.
 Organization
British airways will have to use their strategies and measures effectively in the market so that
there is going to be higher performance which would be present in the organization. The
competition in the market is increasing and the profitability of the company is being affected
which is not good for the reputation of the company for a long run.
McKinsey’s 7S model
This model gives a structure to British Airways to be able to operate effectively and
efficiently in the market for higher functioning which is a very important factor for the company
to have in the market.
 Structure
British Airways is having a strong structure for themselves in the market after all the
experience the company has gained in the market which is going to make the organization be
able to achieve their goals and objectives (Ratliff and Vinod, 2016).
 Strategy

The command in needs to be strong and interconnect needs to be present as well so that there
is going to be effective functioning which is going to be present. Hierarchy is being taken care of
by the organization for higher operations.
 System
There is daily scheduling and functioning which is being prepared so that the company will
be able to have smooth functioning and operations making the organization be able to gain
competitive advantage in the market.
 Skill
The employees in British Airways are talented and well maintained according to their skills
in the company which is going to make the performance of the organization improve in the
market.
 Style
There is a unique style of all individuals which needs to be understood and improved upon
according to the business so that there is going to be higher performance of the organization
which is going to be present (NJERI and SUSAN, 2018).
 Staff
The employees of the firm have to be well motivated form time to time and also according to
the situations so that the business will be able to operate effectively in the market.
 Shared values
There has to be a shared common ground in the employees which is that their behaviour and
temper in the company needs to be according to the organization and management so that the
best can be taken by the company.

PART B
Porter’s five force
It is a framework for examining an organization’s competitive environment. It
encompasses five forces i.e. bargaining power of buyers, threats of new entrants, threats of new
entrants, competitive rivalries, bargaining power of customers, and threats of substitute. This
framework is used for the British Airway to determine intensity of the competition in the airline
industry.
Threats of new entrants (Low)
UK’s airline industry is highly deregulated sector so there is least chance to direct entry
of new entrants in the market. British Airway faces very less threat of new entrants due to several
reasons such as there is a large capital requirement for the new entrant because they cannot enter
in the market with low capital (Lohmann and Spasojevic, 2018). Easy Jet and Ryanair already
has captured good market share in the airline industry so there is very less chance to the new
entrants to enter in the UK’s market and offers similar services to the customer. In addition,
British Airway also offers airline ticket services at affordable price. Overall new entrants cannot
survive in the airline industry within minimum time.
Bargaining power of suppliers (High)
Due to low availability of suppliers in the airline industry, British Airway have to offer
salary hike to the suppliers because without meeting demands, airline cannot proceed further and
it can directly affect customers. Company needs lots of suppliers in it’s company due to this
company gets negative impact on it’s profit margin. It denotes bargaining power of suppliers is
too high in the market.
Bargaining power of buyers (High)
High availability of airline companies has increased bargaining power of the buyers at
regional level (). Customers gets more alternative options so they always seek for those airline
companies which offer airline ticket services at lower cost with good services in the UK’s
market. Due to advancement of technology, customers have option of internet through which

they can easily access those companies which offers it’s ticket at lower prices as compared
others. In the UK, more than 46% customers books airline tickets through online platform. But to
gain long haul service, buyers have fewer alternative option due to less availability of price and
product differentiation. Due to this, British Airway often get profitability in it’s sector from the
customer.
Threats of substitute products (Low)
British Airway has low threat related to long-haul market. But in local market has high
threat of substitute product. The main requirement of the customer is reasonable price for the
airline tickets which larger number of airline companies offers them. For such customers brand
name does not that much essential rather than to low price because they have aim to save money
only that is one of the major positive point for them.
Competitive Rivalry (Low)
The major advantage for the British Airway is to offer the holiday packages for both
services like longer-haul and short-haul accordingly customer’s requirements. There is not too
much difference of price with its competitors for the long-haul flights. So, it enables to gain
competitive advantage from it’s competitors but competition is lied in the form of fragmented
short-haul market (Upadhaya and et.al., 2018). Due to this, company have to face tough
competition in the UK’s market.
From the above discussion over the porter’s five forces, it can be analyzed that British
Airway should follow other effective strategy like differentiation, hybrid because these will help
company to gain competitive advantage in the business market and also improves customer’s
buying behavior for the long-haul and short-haul markets.
PART C
Strategic Planning
Strategic planning can be defined as the procedure of offering planned direction to the
company. Management of the British Airway practices various strategic tacftics to operate it’s
strategic planning in effective manner.

Porter’s generic strategy
 Cost leadership
Cost leadership a tactical option that assists company to become a good market leader and
achieves competitive benefits. According to cost leadership strategy, organization should sell it’s
product like airline tickets and holiday packages at lower costs through which can have
competitive edge over competitors. This strategic option also allows company to establish strong
customer base by selling goods at affordable price.
 Differentiation strategy
It permits company to build a innovative brand image in the market in term of innovative
activities. The key objective of the strategy is to create differentiation in product and services
among others. In this strategic option, company has option to invest huge capital over the R&D
department that supports company to bring uniqueness in existing product line as well as help to
introduce new product through which company can earn more profit in it’s business.
 Focus strategy
This strategy is known as combination of differentiation and low-cost strategy but it is used in
small-scale business in respect of improving profitability ratio in the local market (Kotze, 2017).
This strategy allows small scale companies to achieve competitive advantage by offering product
at lower cost. it also offer other strategic option to the company such as differentiate it’s brand
image in the domestic market by offering several innovative products to the customer.
it has analyzed that British Airway should implement differentiation strategy because it
supports to good brand image in the airline industry.
Hybrid strategy
This strategy is proposed to gain competitive edge over the competitors in the business
market. This strategy assists company to become competent in it’s business industry. this
provides strategic option to the company like either to select differentiation strategy or cost
leadership strategy. This strategy recommends company to implement only one strategy instead
of two options because it helps in generating profit margin over the product line. With the

support of Hybrid strategy, British Airway can go for cost-leadership strategy through which it
can sell it’s airline tickets at reasonable price which in exchange leads competitive advantage in
the company. Otherwise, it can go for diversification strategy that allows company to invest
funds over the R&D activities. Such investment will bring good returns like improves quality of
existing product line that will also support company to gain competitive advantage.
Bowman’s Strategy Clock
It is more famous model due to bag of the strategies because it encompasses numerous
strategic options in which company can follow as per the market situations. Strategies are
mentioned below:
 Low price: In this strategic option, company allows to sell it’s product or service at
reasonable price. British Airway can offer airline tickets within combo or holiday
packages at affordable price that will assist in improving selling revenue over the airline
tickets and leads more competitive advantage in the airline industry.
 Hybrid: It is another effective strategic choice that guides British Airway to implement
only one strategic option either cost-leadership or differentiation.
 Differentiation: This strategic option allows company to influence quality of existing
product line like airline ticket service, holiday packages, online booking services etc.
with high support of R&D activities.
 Focused differentiation: Organization follow this strategy accordingly requirement and
needs of niche customers (Walsh and Dodds, 2017).
 Risky High margins: It is bit risky and aggressive strategy rather than others because it
allows organization to enhance price of the product in respect of maximizing high profit
margin. But the negative impact of the strategy is that it can affect selling scale of the
company due to hike price in the business market.
 Monopoly pricing: It is implemented by organization to offer goods and service to
operate monopoly in it’s business industry.
 Loss market share: This strategic option permits company to fix a affordable cost of the
particular product or service which can help in attracting users towards product or service
for buying purpose.

Strategic marketing plan
Aim
 To enhance 35% sales hike.
 To generate highly competitive advantage in the airline industry.
Objectives
 Specific: The main goal of the British Airway is to expand selling infrastructure of the
airline ticket services in order to achieve good competitive advantage in the airline
industry.
 Measurable: High growth of the selling revenue over the proposed product line can be
measure in effective manner.
 Achievable: High growth of the market share can be achieved up to 30%. Usually
company has gained 35% sales hike.
 Realistic: To achieve large sales growth in the selling infrastructure is the realistic goal
of the British Airway.
 Timeframe: Company has aim to gain it’s target within 2 year effectively.
Marketing Mix
 Product: It is a British Airline company that have good product line as well as services
which helps in attracting and influencing customer’s towards company for buying
purpose.
 Price: Penetration pricing strategy follows by British Airway that helps to achieve
competitive advantage.
 Place: It provide airline ticket services more than 400 destination, so it will quite easy
for the company to establish large customer base in the airline industry.
 Promotion: Digital and traditional marketing strategy implements by British Airway to
sponsor it’s airline product services in the airline industry.
Strategic Formulation
There are various strategic options that can be followed by organization in the strategic
marketing plan. Strategies are:
 R&D: British Airway should conduct research over the available product line and new product
development. While R&D supports organization in leading advancement in existing product
line (Tukdeo, 2016).

 Employee Training: It is another effective tactical option that will assist to make it’s
workforce more competent and strong in the job place. With the strategy, organization
can gain all short-term and long-term aims within timeframe.
 Motivation: With the support of this strategy, organization can stay motivated staff
towards differentiation strategy in the company.
Implementation
Strategic management of the British Airway assigns different tasks among team members for
such campaign so that each team members can accomplish their responsibility effectively. 360
feedback strategy also assist company to implement all strategies that enlisted in the marketing
plan in the job place (Ozturkoglu, 2016).
Control and Evaluation
British Airway controls and evaluates all tactical options that have followed in the plan with
the support of HR and talent management.
Timeframe
This strategic plan will implement for two year only.
CONCLUSION
From the above report it can be concluded that businesses in the market have to make the
right decisions and planning for themselves in the market in order to be able to operate
effectively. There must be a good sense of direction which needs to be present in a business so
that the objectives and goals can be achieved of the business. The company needs to have high
profitability for themselves which is going to help the company be able to invest in expansion
and gaining a higher branding and value for themselves in the market.

REFERENCES
Books and Journals
Lohmann, G. and Spasojevic, B., 2018. Airline business strategy. The routledge companion to
air transport management, pp.139-153.
Upadhaya, B and et.al., 2018. Diffusion of corporate social responsibility in the airline
industry. International Journal of Operations & Production Management.
Kotze, R., 2017. Sustainability Analysis of the Airline Industry–Low Cost Carriers and Full
Service Carriers. IIIEE Theses.
Walsh, P.R. and Dodds, R., 2017. Measuring the choice of environmental sustainability
strategies in creating a competitive advantage. Business Strategy and the
Environment, 26(5), pp.672-687.
Tukdeo, R., 2016. Strategic analysis & recommendation.
Ozturkoglu, Y., 2016. On the 4Ps & 4Cs of green logistics marketing mix. Logistics and
Transport, 29.
Ahmadian, A. and Khosrowpour, S., 2017. Corporate social responsibility: Past, present, and
success strategy for the future. Journal of Service Science (JSS). 10(1). pp.1-12.
Akbar, Y.H. and Kisilowski, M., 2020. To bargain or not to bargain: Airlines, legitimacy and
nonmarket strategy in a COVID-19 world. Journal of air transport management. 88.
p.101867.
Büyüközkan, G and et.al., 2020. A combined group decision making based IFCM and
SERVQUAL approach for strategic analysis of airline service quality. Journal of
Intelligent & Fuzzy Systems. 38(1). pp.859-872.

Cheng, Y. and Shen, H., 2020. United Airlines crisis from the stakeholder perspective: Exploring
customers’ ethical judgment, trust and distrust, and behavioral intentions. Public
Relations Review. p.101908.
Feng, M., Zhou, D. and Yang, Y., 2019, April. SWOT Analysis and Countermeasure of Jilin
Province Aviation Logistics Industry Development Strategy Based on Low Carbon and
Environmental Protection. In IOP Conference Series: Earth and Environmental
Science (Vol. 252, No. 4, p. 042043). IOP Publishing.
Imaz, O. and Eizagirre, A., 2020. Responsible Innovation for Sustainable Development Goals in
Business: An Agenda for Cooperative Firms. Sustainability, 12(17), p.6948.
Jaiswal, S., 2019. ADVANCED CORPORATE CULTURE: DEFINED BUSINESS
STRATEGY. Journal Current Science. 20(06).
Li, X., Qiao, H. and Wang, S., 2017. Exploring evolution and emerging trends in business model
study: a co-citation analysis. Scientometrics. 111(2). pp.869-887.
Li, Y. and Cui, Q., 2020. Analyzing the role of competition and cooperation in airline
environmental efficiency through two dynamic environmental cross-efficiency
models. International Journal of Sustainable Transportation. pp.1-15.
Lin, Y.H and et.al., 2018. A content analysis of airline mission statements: Changing trends and
contemporary components. Tourism management perspectives. 28. pp.156-165.
NJERI, M.E. and SUSAN, D.W., 2018. INFLUENCE OF MACRO-ENVIRONMENTAL
FACTORS ON ORGANIZATIONAL PERFORMANCE OF AIRLINES: A CASE
STUDY KENYA AIRWAYS LTD. International Journal of Social Sciences
Management and Entrepreneurship (IJSSME). 1(1).
Rajendran, S. and Pagel, E., 2020. Recommendations for Emerging Air Taxi Network
Operations based on Online Review Analysis of Helicopter Services. arXiv preprint
arXiv:2006.10898.
Ratliff, R. and Vinod, B., 2016. An applied process for airline strategic fare optimization. Journal
of Revenue and Pricing Management. 15(5). pp.320-333.

Shtal, T and et.al., 2018. Methods of analysis of the external environment of business activities.
Su, M., Luan, W. and Sun, T., 2019. Effect of high-speed rail competition on airlines’
intertemporal price strategies. Journal of Air Transport Management. 80. p.101694.
Yuliansyah, Y., Gurd, B. and Mohamed, N., 2017. The significant of business strategy in
improving organizational performance. Humanomics.