Business Strategy: Analysis of External and Internal Factors for British Airways

This report analyzes the external and internal factors that impact the business strategy of British Airways. It includes a PESTLE analysis of the external environment and a VRIO analysis of the internal capabilities of the company.

Business
strategy

INTRODUCTION
Business strategy is describe as strategic management process that contains activities and
process that plays significant role in guiding and providing framework for business in order to
achieve business goals in effective manner. It has prominent impact over to obtain competitive
advantages and strengthen position within industry.
British Airways is a flag carrier airline of UK with it’s headquartering in England. It is
known as second largest airline of UK based on fleet size & passengers carried. The organisation
founded in 1974 with 250 fleet size and 183 destinations. Net income of it comes under $1,952
million by 2018.
This report in made on the basis of business strategies that has prominent impact over
growth and expansion of business. In this report internal and externals analysis of respective
organisation is discussed with their capabilities of running business. Further competitive
analysis, theories and concepts are explained with suitable strategic plan for business.
TASK1
P1: Apply suitable framework to analyse affects of external environment factors over British
Airways.
One of the best method to analyse and identify factors that are uncontrollable for firm and
affects business growth at serious level is pestle analysis. It is the method that helps in analyse
external environment that has positive or negative impacts over business organisations. There are
some factors that affects growth of respective organisation are explained as follows:
PESTLE Analysis
Political: It plays important role in aviation sector which includes factors like political stability
and many others. The airline industry is majorly affected by government policies of UK. Apart
from government policies uncertainty due to Brexit that affects air travel includes border,
customs and immigration laws. British Airways has a effective approach to manage effects of
Brexit and communicating with customers that flights will be running as per their normal
schedule following Brexit. Several steps are taken by British Airways in order to make travel
form lending markets US or other Western countries that has prominent role in huge success of
respective organisation.
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Economical: The economic stability, unemployment and GDP are prominent factors that
impacts business. UK Brexit was result in economic slowdown that impacts airlines in negative
ways. In these circumstances British Airways has some strength in order to maintain sustainable
growth rate including higher investment in strategic areas of business, concentration on customer
experience and ability to change business model as per the requirements of economic situation of
nation. Even in critical conditions of economic uncertainty caused by Brexit, company has
significant growth revenues. It generates profit of by 10.3% reaching $1,952 million from $1,769
million. Thus economic condition of UK may not have intense impact over position and growth
of British Airways due its capability to deal with uncertainties successfully.
Social: This factor may include demographic changes that has significant role in aviation sector,
British Airways targets millennia’s who has different travel as compared to others lies between
precious generation to them who spends more than baby boomer on air travel in growing
Western markets. In context of this British Airways has significant impact of this factor. On the
basis of social component respective business focuses on providing best experience to its
customer and also on efficient operation of business which results in reliable and social image of
business.
Technological: The core element of success in aviation sector is known as technology. for
instance use of safer and more fuel-efficient aircraft model and evolution of better sales &
service technologies that has prominent impact in terms of fastest growth of airline
internationally. In context of respective airline focuses on more investment in technology so as to
enhance efficiency, higher profitability and better services. During past few years respective
company has made technological improvements in various areas such as- company website to
streamline booking process and makes improvement in BA app that helps customers in easy,
quick and affordable booking with considering all required information.
Legal: The major component in entire aviation sector of United Kingdom. Apart from passenger
safety & security or customer convenience, there are some other laws related labour laws and
other different areas of operation all are factors that impacts British Airways. In 2019 respective
company faced a huge challenge from pilot’s strike and lots legal attempt to block planned strike
and later agreed upon settlement to avoid disruptions. Thus there are several legal factors that are
uncontrollable and affects airline adversely.
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Environmental: Last factor of external environment that affects airline sector in terms of airline
operators and aviation authorities as well. British Airways is first within sector who taken some
impacts in order to make business model more sustainable. Sustainability is one of the core areas
of strategic importance of brand which investing continuously in order to enhance fuel efficiency
helps in reducing carbon footprints. Thus British Airways is more concerned about
environmental safety of nation that leads to have positive impacts over business performance
based on environmental factors and generates growth opportunities for long run.
P2: Identify internal factor that impacts business with providing capabilities.
Internal environment of any organisation is related with variety of factors such as-
organisational structure, culture, employees & staffs, resources, rules and policies of business
that has prominent role in long-term sustainability of business. In context of analysis of internal
elements and capabilities of British Airways VRIO analysis model is discussed as follows:
VRIO Analysis
RESOURCES VALUABLE RARE INIMITABLE ORGANISABLE COMPETITIVE
ADVANTAGE
Brand
Awareness
Brand
Awareness - - -
Temporary
Competitive
Advantage
Leadership
Team
Leadership
Team
Leadership
Team - -
Temporary
Competitive
Advantage
Innovation
Capability
Innovation
Capability
Innovation
Capability
Innovation
Capability
Sustainable
Competitive
Advantage
High
Customer
Ratings
High
Customer
Ratings
High
Customer
Ratings
High
Customer
Ratings
High
Customer
Ratings
Potential
Competitive
Advantage
Valuable resources: In terms of British Airways VRIO analysis of business shows financial
resources of it are comes under category of valuable resources for firm that plays significant role
in effective functioning of business in different situations. Global presence and awareness is
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another important valuable resource for business. Further valuable resources of respective
company are considered below: Brand awareness: British Airways operated at broader scale and provide travel services
for domestic as well as internationally that leads to effective brand awareness of it. The
global image of company reflects as valuable resources for business as per VRIO
analysis of it. Leadership teams: Based on VRIO analysis the skilled and well trained teams of
leadership are considered as valuable resource for business that leads to smooth
functioning of business through providing motivation and guidance to its employees &
staffs. Innovation capabilities: British Airways constantly investing in technological
advancement of business like use of more fuel-efficient and safer aircraft model that
reflects as valuable resource for company. Customer ratings: Due to offering of better services in order to enhance experience of
passengers through the journeys and before & after of journey that has prominent impact
over business performance also comes under valuable resources.
Rare Resources: These are the resources formulated and managed in such a way that are
difficult for competitors to acquire. Rare resources are those that adopted by one or few business
organisations that have prominent impact in terms of reducing competition and strengthen
business performance. Following are the rare resources of British Airways: Leadership teams: British Airways has well skilled teams of leadership who posses
motivating, influencing and leading skills that has prominent impact in terms of treating
customer well and better or helping them for enjoying best travel experience. Innovation capabilities: As per VRIO analysis innovation and modification capabilities
of British Airways comes under valuable resources that has prominent influence over
revenue generation. Customer ratings: VRIO analysis of British Airways shows customer ratings of company
views as valuable resource due to better offerings that increase customer experience.
Inimitable Resources: This category of company resources includes those resources that have
capability to be unique and specific as compared to other players within industry. For instance
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human resources, skills and abilities of them are difficult to copy by others. These inimitable
resources of British Airways are as under: Innovation Capability: Based on VRIO analysis of respective company reflects as
innovation capabilities of firm is inimitable and not easy to copy by other players of
business due to requirement of huge capital investments and experts to built unique and
advanced technology. Customer Ratings: As per VRIO analysis of respective company reflects as high
customer ratings of business views as valuable, rare and inimitable resource at the same
time that plays prominent role in business operations and growth.
Organisable Resources: Another important category as per VRIO analysis is organisable
resources of firm that are manageable and controllable at the same time valuable, rare and
inimitable are considered as follows: Customer Ratings: Effective operational strategies and better customers services results
in higher customer’s experience for which they give high customer ratings. Thus
customer ratings of British Airways reflects as valuable, rare, inimitable and organised st
the same time based on VRIO analysis of company.
CONCLUSION
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REFERENCES
Books and Journals
Online
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