Business Environment Report: British Airways Analysis and Findings

This report provides a comprehensive analysis of the business environment affecting British Airways (BA). It identifies the organization's purposes, mission, and vision, as well as the key stakeholders, including customers, employees, competitors, suppliers, government, and shareholders, and discusses the challenges BA faces in satisfying them. The report examines economic systems, focusing on how fiscal and monetary policies impact business organizations like BA, along with regulatory, competition, and legal changes. Furthermore, it assesses the effects of pricing and demand on the airline industry due to market structure, and explores how BA responds to market forces and global factors, including trade regimes and EU policies. The report concludes with a discussion of the interplay of these factors on BA's operations and strategic decisions.

Business Environment

Table of Contents
INTRODUCTION................................................................................................................................3
TASK 1.................................................................................................................................................3
1.1 Identify purposes of different organisation, and describe mission and vision of British
Airways............................................................................................................................................3
1.2 Identify the key stakeholders and the challenges impacted on various stakeholders of BA ....4
1.3 Response of BA to fulfil its responsibilities to these stakeholders...........................................4
TASK 2.................................................................................................................................................5
2.1Explain the economic systems attempt to allocate resources effectively...................................5
The economic systems that attempt to allocate resources are are explained below. They are: ......5
Planned Economy:...........................................................................................................................5
2.2 Assess the impact of fiscal and monetary policies on business organizations...........................6
2.3 As a PLC, impact of regulatory, competition policies and legal changes on BA ...................7
TASK 3 ................................................................................................................................................7
3.1 Impact of the pricing and demand for airline seats on airline industry due to market structure
.........................................................................................................................................................7
3.2 Responses organisations towards the interplay of different players and market forces ...........7
3.3 Impact of working practices and cultures of the countries on British Airways .......................8
TASK 4.................................................................................................................................................9
4.1 Impact of global changes in trade regime caused by organisations on British airways............9
4.2 Impact of other global factors, including policies/regulations of government players on BA. 9
4.3 Impact of EU policies on travel, competition or aviation on British Airways..........................9
CONCLUSION..................................................................................................................................10
References...........................................................................................................................................11

INTRODUCTION
Business Environment is defined as the combination of both internal and external factors
that affects the organisation's functioning. There are two types of environment i.e. Macro
environment and Micro environment. Micro Environment consists of suppliers, competitors,
customers, etc (Chow and et.al., 2012). And Macro environment consists of economic, political,
social, legal factors.
This report contain the proper discussion of business environment and for this, British Airways is
taken as consideration. British Airways is public limited company and the largest airline in UK. It
consists of Organisational purposes of BA, the nature of the national environment which affects the
operations of business, the behaviour of BA in market environment, the significance of the global
factors affects the activities of organisation
TASK 1
1.1 Identify purposes of different organisation, and describe mission and vision of British Airways
Different types of organisations are available in market with their different purpose. These
types of organisations are as follows: Sole trader: The business owned by single person then its called as sole trader. The purpose
is to provide services to clients. Examples are book keeping, freelancing, etc (Björklund,
2011). Partnership: The business which has two or more owners then it is called as partnership
(Aterido, Hallward-Driemeier and Pagés, 2011). Example are John Lewis, Warner Bros, etc. Public Limited Company: Business owned by shareholders. Its shares can be bought by
general public. These are listed on stock exchange. British Airways is PLC. Private limited Company: It is also owned by shareholders but shares are not available for
general public. Example is John Laing, Greenhouse Group, etc (Fernando, 2011). Co-operatives: It is jointly owned enterprise which is operated by its members for mutual
benefits. Worker cooperatives, volunteer cooperatives, etc are examples. Franchises: In this business, one sells the right to another business to run a franchise.
Examples are McDonald, Pizza Hut.
 Public Sector: It uses services provided by government. Example is UKAEA (UK Atomic
Energy Authority)
British airways is PLC. One of the leading airlines in UK. The mission and vision along with
objectives of company are: Mission: The mission of British Airways is to become undisputed leader in world and
wants to be the first choice airline for travellers. It is seeking to ensure that travellers fly

with confident (British Airways, 2015). Vision: The vision of BA is to achieve corporate responsibility and to become world's most
responsible airlines. It wants to provide all facilities to its customers for making there flight
more comfortable.
 Objectives: BA's short term objectives are to provide all facilities and services to travellers.
It tries to make comfortable journey for each type of passenger (British Airways, 2015).
Along with this. Its long term goal is to provide top- quality services, to become first choice
airline and expanding the leader position.
1.2 Identify the key stakeholders and the challenges impacted on various stakeholders of BA
Stakeholders affects the growth and success of company and also get affected by the
decisions, actions, objectives of organisation. It is a challenge for BA to satisfy their stakeholders
(Halbert and Ingulli, 2014). The key stakeholders of BA are: Customers: These are important stakeholders of BA. They expect proper management and
maintenance by the company (Jarvis, 2014). Travellers are belong to different country so, its
a big challenge for BA to satisfy every passenger. Employees: BA need to fulfil demands and needs of cabin crew staff as they are Front Face
of airlines. It is a big challenge to maintain increasing demands of customers and to satisfy
them. The impact of this is that employees have to make efforts to give their best to
organisation. Competitors: British Airlines is the largest and leading airlines in UK. So, it has a strong
competition in market like Easy jet and Virgin Atlantic. Company face challenge in
attracting more customers (Kaynak, and Kucukemiroglu, 2015). Suppliers: The suppliers of BA are boing and Airbus. It has only one fuel supplier which
somewhere affects the decision power of BA (Halbert and Ingulli, 2014). Government: Government of UK have strict regulations. These have high impact on the
growth of company. Due to these laws, some carriers cannot be operated on some specific
routes.
 Shareholders: The financial success of company is crucial for shareholders (Lin, 2012).
They play an important role, so it is essential for BA to maintain strong relationships with
them.
1.3 Response of BA to fulfil its responsibilities to these stakeholders
Each company has some responsibilities towards stakeholders. BA always try to fulfil them
by taking appropriate actions. Along with challenges, there comes a responsibility to face those
challenges. BA takes to following actions for fulfilling its responsibilities towards stakeholders:

 To satisfy demands of customers, BA is offering them special offers. For example, there are
special offers to customers on trips and journeys like holiday offers, luxury offers, seasonal
offers, etc. It also organise trip and tours in affordable prices. It flights to 23 destinations in
Europe (Jarvis, 2014).
 BA follows all laws of government by paying the taxes timely along with carrier charges. It
conduct organisational audit. For example, it follows all monetary and fiscal polices of
government.
 To compete with its competitors, BA is providing all type of facilitates to every level of
passengers. So that travellers like to select it as first choice for travelling (Lange and et.al,
2015). For example, it is providing low cost airlines.
 BA like to maintain loyalty and trust with suppliers. BA buy everything from food to fuel to
entertain its customers (British Airways, 2015) For example, It has good relations with
boing.
 Shareholders have high interest in financial growth of company. BA is continuously gaining
profit by achieving its goals and objectives. For example, company is serving financial
market by expanding business into leisure market.
 BA organise different activities and programmes for employees to make them feel fresh and
energetic. For example, it conduct training programmes to improve skills, abilities and
knowledge of members.
TASK 2
2.1Explain the economic systems attempt to allocate resources effectively.
The economic systems that attempt to allocate resources are are explained below. They are:
Planned Economy:
In this economic system, the government controls the system. The province determine how to use
and parcel out resources. The government set cost and wages; it may even influence what sorts of
work individuals do.
Mixed Economy:
Mixed economy is a system in which goods and services are allocated by both government and
marketplace (Burns and Cowlishaw, 2014). There is no particular way of deciding what quotient of
goods and services must be produced and parceled out by public and private sector organizations.
Thus, both have balanced effort depending upon market share they acquire to share in the industry.
UK is a developed country where mixed economy exist. The mixed economic system that efforts to
allocate resources efficaciously in British Airways. In the difficult economic times and the unbroken

sky-rocketed cost of fuel, it is necessary that British Airways concentrate on managing governable
spending. The airline has rate short-haulage improvement in its drive to carefree competitor
expenditure base. Great development has been made with the transformation plan. According to
research, during 2013 there were extra focus on driving more financial gains per air travel through
subsidiary services, exploiting underutilized possession such as Avios, and exploding the worth
from leading capitalist contracts.
2.2 Assess the impact of fiscal and monetary policies on business organizations.
The impact of fiscal and monetary policies on business organizations are as follows:
Impacts of Fiscal Policies:
 Expenditure of Business Doing – Fiscal policy can also boost interest rates for which
British Airways may have to pay more for lines of credit. Higher rates in interest is known to
raise the economic value of pounds which gives British Airways more purchasing power
from suppliers in international market (Heinz, S. F. and Pitfield, 2011).
 Investment funds Decisions – Fiscal policy is also known to affect on how much risk is
taken by British Airways . When there is an first appearance of tax bonus for employee
grooming, then airways may feel assured in hiring more airways employees.
 Passenger's Requirements – Fiscal policy is connected with tax and it impacts on demand
from passengers by affecting the disposable income they have to pay. Travelers become
more alert for their budget plan when taxable services increase and this can affect income
generation of British Airways (Chief Financial Officer’s Statement, 2015).
Impacts of Monetary Policies:
 International Exchange rate – There is a well-defined relation between interest rates and
value of British pound. When Bank of England makes cost of transaction inexpensive,
economy starts to see more money flowing out there. In this case, services become cheaper
and income for British Airways rises (Burns and Cowlishaw, 2014).
 Bank Loans – When banks find it low-budget for borrowing money from Bank of England,
then British Airways can further borrow the same from banks on low-budget rate of interest.
When situation gets reversed, the cost of borrowing becomes costlier for British Airways.
2.3 As a PLC, impact of regulatory, competition policies and legal changes on BA
BA is a PLC, i.e. the shares are hold by general public also. There are various policies which
affects industrial growth. UK's different policies somehow affects growth of British Airways.

 Regulatory Policies: Any change in airline industry will definitely affects working of British
Airways. One of the example is to follow the policy of sustainable aviation. It is to improve
condition of environment (Wu and Peng, 2014). BA is impacted by regulatory policies as it
has to make some changes in its operations. It can use biofuel or can reduce the size of
flights. This policy affects working of BA flights but there is no other option. Competition Policies: British Airways is one of the leading airlines in UK. The entry of any
new airline affects the business of it. If any airline expands its business in market then it also
increase competition for BA. As BA works in both long haul and short haul market so entry
to any of market will increase competition for BA (Jarvis, 2014).
 Legal Changes: Government control the routes of flights with pricing policies. So any
change in laws will affects the operations of airlines. Working of BA is generally affected by
power of trade unions (Hamilton and Webster, 2015). It suffers from their strikes. Any
change in rights of employee, customer and environment affects working of BA.
TASK 3
3.1 Impact of the pricing and demand for airline seats on airline industry due to market structure
The market structure of the airline industry impacts the pricing and demand for airline seats
in many ways. As market structure of airline industries are based on Oligopoly, which means there
are less number of companies available in market to compete with. Set up cost in this market
scenario is very high. There are many chances of making money but due to high set up rates, no one
even try to enter. The market is also divided into two types of passengers one is time sensitive and
other is price sensitive. In matter of pricing and demands of seats then airlines have power to set
prices of flights but it does not mean that they can set whatever prices they want. There is great
price war among airline industries (Gregory, 2010). If one industry try to cut price then other will
also cut fares to keep in competition. If there are very much differences in the prices of airlines then
customers will move towards cheaper airlines (Matching supply and demand in the airline industry,
2015). Businessman travels as per their schedule. On the other hand, price sensitive passengers like
to select flights according to the ticket prices. As there will be increase in trade activities then there
will be increase in demand of seats as well.
3.2 Responses organisations towards the interplay of different players and market forces
Different competitors and various market forces in airline industry affects decision making
power and responsibility of BA. It depends upon company how it responses to that changes. Below
are different market forces: Supply and Demand: Demand and supply of airlines are affected by seasonal demands
(winter and summer). Some flights like jet airways are focusing on decreasing the number of

seats to increase fare at the time of higher oil prices (Burns and Cowlishaw, 2014). As per
the demand, BA is providing different classes (first class, business class and economy class)
for different passengers. (Matching supply and demand in the airline industry, 2015). Customer perceptions: For any company, it is important to know views and thoughts of
customers. BA always tries to present good image by doing social welfare activities
(Papatheodorou, 2012). Easy jet and Virgin Atlantic also trying the same but clients are
more affected by facilities of BA. Pricing Decisions: As airline industry is based on oligopoly so pricing decisions of one
airline affects other(Gregory, 2010). BA provides many trips and tours with special offers at
the time of holidays. Employee skills: Airline industries need skilled and technically strong employees. BA hires
skilled employees (British Airways, 2015). It hires technically strong engineers, experienced
pilots, etc.
 Technology: In present era, technology is most important part of any organisation
(Siewiorek, Saarinen, Lainema and Lehtinen, 2012). British airways is continuously doing
experiments for providing Hi-tech facilities to passengers. For example It is testing a hi-tech
blanket whose changing colour shows the satisfaction level of clients. With the use of
technologies, it can keep proper record of all flights along with arrival time, departure time,
number of passengers travelling, etc.
3.3 Impact of working practices and cultures of the countries on British Airways
Countries have their own rules and regulations. Before starting any business at global level it
is important to know about their political, social, economical and technical factors. As British
Airways is sending its flights at 78 countries. The practices which impact BA are as follows:
 BA is widely impacted by different taxes, competition policies of countries. It also get
affected by problems like war, terrorism, different types of diseases such as Ebola. In such
case they need government interventions (Aras and Crowther, 2011).
 Different countries have different culture which affects the food list of airlines
(Papatheodorou, 2012). BA provide food according to the taste and type of particular
country. For example, In Japan, BA need to provide continental food to passengers.
 Work timing of countries are different from each other which create difficulty in managing
operations. For example, work timing preferred by employees of Pakistan is different from
work timing of US. So, BA has to work accordingly.
 BA has to follow culture of different countries like dressing style of air hostess. For
example, in Iraq, Pakistan western dresses are not allowed. In such case, BA has to take care
of it also.

TASK 4
4.1 Impact of global changes in trade regime caused by organisations on British airways
Today every organisation is thinking for clean and safe surrounding. The organisations like
World Trade Organization (WTO) and other tourism bodies have issue the policy of sustainable
aviation. According to that every airline industry has to take care of environment. BA has to use
biofuel, eco friendly resources for less emission of CO2 (Brunelle-Yeung and et.al, 2014). It has to
focus on climate effect which need more investment in engines and fuels. The open sky policy for
aviation is regarding the liberalization which allow to adjust regime which permit the military and
other state flights (Burns and Cowlishaw, 2014). It also decrease government intervention which is
beneficial for BA. The open sky policy of BA provide many facilities to passengers like non stop
travelling between New York and Paris, travelling with pets. This helps BA in catching attention of
more travellers.
4.2 Impact of other global factors, including policies/regulations of government players on BA
Other global factors related to the government policies that can affect working of British
Airways are as follows:
 Tax policies of government affects financial condition of BA. Firm sometimes feel financial
burden due to high taxes and charges ( British Airways, 2015). These leads to increase in
ticket prices.
 Airlines need to modernise their flights to achieve emission reduction targets. This policy of
government affects maintenance of BA flights as buying new flights need high investment
(Katie, 2013).
 Government has create some safety policies. BA has to entails additional costs because they
are not being neglected (Aras and Crowther, 2011).
 The draft aviation policy for better connectivity of regions also impacts BA. This policy
leads to increase in financial burden on company (Sustainable Aviation: Ensuring A
Sustainable Future For Our Industry, 2015).
 Rising fuel prices in countries affects negatively. This makes BA to increase ticket prices
which reduce ratio of customers.
4.3 Impact of EU policies on travel, competition or aviation on British Airways
European Union (EU) has different policies regarding airlines. These policies are related to
passengers, environment, etc. These are: Cancellation of Flights: According to EU policies, if any flight get delay or cancel then
definite compensation will be paid to passenger. People can also travel to their destinations
by using alternative means. (Taylor‐Gooby, 2012). It satisfy customers of BA which make
them to travel again.

 Clear pricing: During online booking of tickets, price of flights are displayed clearly along
with the taxes and other charges. This help passengers in comparing prices with other
airlines. This policy affects BA as passengers will prefer low price airlines. Liberalisation: The liberalisation policy helps in increasing employment. This helps BA in
hiring highly skilled and talented employees(Fu and Oum, 2014). This improves
performance and growth of BA.
 Travel documents and health certificates: Before travelling, passengers need to carry these
documents. If staff found traveller healthy and safe, only then it allow them to travel. This
policy helps BA in keeping trust of passengers ( British Airways, 2015).
CONCLUSION
As per the research, BA has a strong competitive market. To remain in competition it has to
take some measures into consideration. British Airways should improve their quality standards.
They can improve customer services with attractive offers. They need to look after employee
relations. For better performance and future growth, they have to conduct programmes for
improving relations among them. This can solve the issues of strike. They have to keep low prices
of flights. This will increase number of diverse customers. They should use best strategies for better
promotion and publicity. This assist in getting more popularity among customers.

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