British Airways: Analysis of Business & Management Developments

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This report provides an analysis of British Airways, focusing on contemporary developments in business and management. It begins by examining the significance of external and internal business environments using PESTLE and SWOT frameworks to assess the factors influencing British Airways' competitive advantages. The report then critically assesses the relevance of globalization to British Airways, evaluating the effectiveness of the company's response to globalization and identifying areas for improvement. Key aspects covered include the impact of political, economic, technological, and legal factors, as well as strengths, weaknesses, opportunities, and threats faced by the airline. The analysis also delves into the drivers of globalization, such as cost considerations, and their influence on British Airways' policies and competitive strategies.

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Table of Contents
INTRODUCTION........................................................................................................................ 2
TASK 1...................................................................................................................................... 3
SIGNIFICANCE OF EXTERNAL AND INTERNAL BUSINESS ENVIRONMENTS...........................3
PESTLE FRAMEWORK........................................................................................................ 3
SWOT ANALYSIS............................................................................................................... 5
TASK 2...................................................................................................................................... 7
CRITICAL ASSESSMENT ON RELEVANCE OF GLOBALISATION TO BRITISH AIRWAYS.............7
CRITICAL EVALUATION OF EFFECTIVENESS OF BRITISH AIRWAYS RESPONSE....................12
AREAS FOR IMPROVEMENTS.............................................................................................. 14
CONCLUSION.......................................................................................................................... 15
REFERENCES........................................................................................................................... 16
APPENDIX............................................................................................................................... 19
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INTRODUCTION
This report is focused on the current business scenario in travel agency activities. This report
is prepared on British Airways. British Airways is among the largest airlines of the United
Kingdom that was privatised in 1987 (British Airways, 2018). The activities of the British
Airways include not only transportation of passengers and travellers but also operate for
domestic and global freight, mail and other additional services. There is continuous growth
in the company over the years along with an increase in the level of competition is intense
in the field of travel and tourism industry.
The first part of this report includes an analysis of internal and external factors of the
business environment. It also examines the influences of external factors of business
environment on the competitive advantages of British Airways. In the second part of this
report, globalisation is the selected to assess British Airways. The role of globalisation is very
important in influencing the policies as well as a competitive strategy within British Airways.
It also evaluates the effectiveness of the response of the organization along with
recommendations on areas for improvement.
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TASK 1
SIGNIFICANCE OF EXTERNAL AND INTERNAL BUSINESS ENVIRONMENTS
The large tourism market is divided into small sub-market on the basis of demographics,
geographical, psychological and behavioural segmentation. The travellers and tourists are
grouped by British Airways as per their needs, desires and expectations. The impact of 4
external factors of the business environment can be understood by using PESTLE analysis.
PESTLE FRAMEWORK
POLITICAL: the airline companies such as British Airways are largely affected by the political
environment in the UK. Heavy regulations and limitations are imposed by the UK
government on the airline schedule making the operations of airline difficult owing to
security measures (Masood, et al. 2016). This resulted in the increased expenses of the
British Airways. The working of British Airways is also affected by the engagement of
employees and workers with trade unions. The assurance from the company British Airways
for considering security measures for the safe journey has increased the confidences of the
consumers to travel.
It is essential for the company British Airways to consider the impact of political elements
while emphasising the legal regulations on the employee as well as traveller interest. The
British Airways have stooped its flight to some specific countries that include the Middle
East and other primary countries due to the possibility of a terrorist attack (Westphal, 2016).
For example, the war-like situation in Iraq and Syria led to cancellation and decline in a
number of flights to these locations.
The airline services are also largely affected due to frequent strikes form employee unions in
the UK. The recent incident being 2900 crew members in the mixed fleet of British Airways
resorting to strike over poverty pay along with threats for a strike in July 2017 by around
1400 crew members (Ross, 2017). It results in the disruption of the operations thereby
affecting the brand image of the British Airways. After the withdrawal from the European
Aviation Safety Agency post- Brexit, the maintenance approvals and airworthiness of the
flights that originated from the UK might not be recognised by other European countries
(Ollila, 2017).
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ECONOMIC: the company British Airways is also affected by the economic factors. The
decline in the value of Euro after Brexit affected the company. The business and operation
of the British Airways were severely impacted due to the slow annual global growth at 2 per
cent and the global economic crisis (Boffey, 2018). The purchasing power of the consumers
declined result in fall in a number of travellers. Though, the increase in landing charges
benefitted the existing companies such as British Airways thereby barring new entrants in
the tourism field.
The impact of Brexit created uncertainty resulting in a reduction of major investments by
the UK carriers (Powley, 2018). The shifting of airport operational offices due to the planning
of the third runway at Heathrow resulted in an increase in the costs and expense. The cost
of the third runway at Heathrow is £14 billion which impacts the costing of British Airways.
The increase of about 65 per cent in the annual profits is reported by the British Airways due
to strong demand and low costs of fuel (Clark, 2017).
TECHNOLOGICAL: as the level of competition in the airline market is intense, the companies
such as British Airways are focused on investing the sum of money into various R &D
activities and foster on expansion in the technological field. British Airways uses advanced
technology to enhance their engineering and also support a high quality of flights in order to
gain a competitive advantage (Barnes, 2018). British Airways is not only the organization
that is using technology. The use of online booking services and check-ins are the new
industry standards that have reduced the expenses of the company and also increased the
competition level.
New technology is developed by the company by investing a large amount to improve the
services as well as security measures. Improvement in warehouse management system
results in cost reduction and also enhanced the customer satisfaction. This is the most
dynamic and uncontrollable element due to continuous changes in the technical
environment. However, the organization is also focused on the traditional services as there
are still large numbers of people who prefer to purchase service in the manual as well as
classic way. The advancement in mobile technology proved boom for the organisations such
as British Airways in order to solve the queries of the customers using online method.
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LEGAL: the company British Airways faced legal issues due to the vitality of trade unions.
British Airways suffered strike actions and were aware of the implications of the issues
caused by trade unions. The company is largely affected by many strikes along with
engagement with trade unions. The company is adversely affected by the legal regulations
on the rights related to customer and employment.
Unite union expressed that £16,000 annually is earned by an average member of the mixed
fleet which was refuted by British Airways stating £21,000 is the lowest-paid amount for a
full-time member of the mixed fleet (Ollila, 2017). The settlement concluded that the
salaries will be raised between £1404 and £2908 by March 2018 as per the experiences. All
the crew members of the mixed fleet would receive a one-off payment of £250 who would
attend the work through the strike period (Ross, 2017). The airline business is progressively
controlled due to choices varying from various issues regarding the infrastructure to the
route flights as well as slot capacity considering security plus environmental needs.
SWOT ANALYSIS
The internal factors of the business environment can be assessed by using SWOT analysis:
STRENGTHS: the brand reputation of the British Airways is fantastic in the tourism market as
it is operating in the airline industry for a long time. This results in their best experience in
handling both passengers and travelling activities. There are different methods such as
behaviours, symbolism and communication to retain its customers. The British Airways is
ranked at 18th position among the leading consumer super brand of the nation. The highest
scheduled departures around 86,000 are reported by British Airways in August 2016. It also
has around 267 strong fleet size in June 2017 that flies over 183 destinations thereby
achieving greater operational scope and also increased benefits from economies of scale.
The advantages of significant synergies are enjoyed by the company reading resources
sharing, improved connectivity and also enlarging its network. The further plan of British
Airways is to roll out technology-driven services through 2017 thus providing best services
to increase customer satisfaction.
WEAKNESSES: the major weakness of the British Airways is the disruption of services due to
consistent employee issues. In recent past years, the operations and customer relationships
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were affected by the pension issues raised by employees. The company faced a lot of
disruption in services due to strike by employees over low pay and also allowances. The
recent incident occurred in early 2017 in which about 2900 crew members in the mixed fleet
of the company resorted to strike over the “poverty pay” to cabin crew (Calder, 2017). This
issues remained unsolved which was followed by threats to go on strike by 1400 crew in July
2017 (Calder, 2017). These incidents of strikes disrupted the operations due to cancellation
and also compensate the travellers in some situations.
In another incident, the British Airways Flight got delayed worldwide due to a technical
glitch in their new check-in system in September 2016. The systems of the British Airways
were affected by the major IT failure due to "power surge" that resulted in the cancellation
of flights and more than 75,000 passengers affected by this issue (Press Association, 2017).
About £100 million was to be paid to the customers in compensation by British Airways due
to the IT meltdown affecting over 1,000 flights over the weekend (Butler, 2017).
OPPORTUNITIES: there are huge prospects for the organization British airways around the
world. The organization can increase its operations by venturing at the global level. The
organization has integrated with aviation policy of India. Another major opportunity for the
organization is to focus on marketing as well as consumer-centricity (Evans and Whitehead,
2017). The British Airways have their strong presence over the Heathrow terminal which is
the major hub across the world.
THREATS:
Due to consistent growth, the level of competition in the tourism industry is intense across
global destinations. The cost of fuel and labour can be affected by the inflation rate.
Disruption of service impacts the organization due to employee’s tensions and issues
(Masood, et al. 2016). Due to innovation in rail technology, the organization faces
competition from high-speed rail service providers.
After the withdrawal from the European Aviation Safety Agency post- Brexit also affects the
maintenance approvals and airworthiness of the flights which might not be recognised by
other European countries (Barnes, 2018). Reduction in investment due to uncertainty over
Brexit impacts the organization. It is mandated for airlines to purchase carbon pollution
permit in order to operate in the EU region.
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TASK 2
CRITICAL ASSESSMENT ON RELEVANCE OF GLOBALISATION TO BRITISH
AIRWAYS
DRIVERS OF GLOBALISATION
With the introduction of the Globalisation, vast opportunities have been offered to
organizations such as British Airways. The organization does not rely on growth by focusing
on the just domestic market rather it focuses on the international business environment.
The drivers of the globalisation help in identifying the relevance of globalisation to British
Airways along with its influences on the policies:
COST: in order to grow and develop at an international level, the company needs to focus
on the cost driver of the globalisation (Mowforth and Munt, 2015). The organization focuses
on price penetration by understanding the needs of the customers and offering economical
products in order to satisfy the needs of the customers. Price penetrations policies are
adopted by British Airways assist them in pursuing the price leadership. Through
globalisation, British Airways leads to make tough decisions regarding the market, product
positioning and customer segment by applying appropriate strategies.
This leads to investing in economies of scale and also controlling the costs that include
research and development, overheads and logistics. British Airways can be motivated by the
globalisation to maximise their investment (Evans and Whitehead, 2017). Globalisation
helps the company British Airways to establish its subsidiaries in order to attain the
economies of scale and scope in case of any dynamic changes in the marketplace as
compared to the single-nation market. The aim is to get the most benefit from the
investment cost. Promotion and advertisement across the borders ensure the awareness of
products in order to make to available for the people.
COMPETITION: due to intense competition in the market, it is essential for the company to
introduce, upgrade and also distribute the new tourism products at a faster rate to sustain
advantages. It is essential for the company British Airways to enter into the international
market due to strong interdependencies between the countries and also allows two-way
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trades and FDI actions for the growth of the company (Catherwood, et al. 2016).
Globalisation is relevant for British Airways in order to retaliate against the entry of foreign
competitors in the domestic market or entry of new product by competitors by offering a
similar product.
The globalisation process is driven by leading companies. In order to be competitive in the
market, British Airways need to research and pick the ideas regarding the tourism products.
British Airways need to remain competitive by intensifying their marketing activities for
sustaining advantages in the business market.
MARKET FACTORS: the market is another factor that describes the relevance of
globalisation to British Airways. There are major similarities among the consumers in
advanced economies in terms of income, education, lifestyle, aspirations and their leisure
time usage (Westphal, 2016). Expansion in other countries through globalisation will help
the marketer in British Airways to identify the buyers who have high purchasing power and
also the countries that have well-developed infrastructures.
It is not essential for the company to serve the entire world with its global strategy. The
organization can have their own critical choices in taking a decision regarding the locations
to spend resources and target the specific customer segment. The organisational structure
of the British Airways can follow the same in its regional groupings that are splitting entire
Europe into central, northern and southern regions with similar traits in demographics and
behavioural (Evans and Whitehead, 2017). The saturation and recession in the domestic
market can hamper the growth of British Airways, therefore, globalisation is the medium for
the British Airways to overcome this situation. It is been noted that there is increasing
uniformity in the taste and preferences of travellers around the world.
ENVIRONMENT AND TECHNOLOGY: the demand and requirement of the products can
continue to accelerate due to increase in the wealth and mobility of the consumers,
promotion and publicity regarding the globalisation benefits, rapid transfer of information
along with technological evolutions in the business environment. The organization British
Airways can be benefitted by globalisation (Mowforth and Munt, 2015). Advance
communication benefits the newly emerging market to pass through the stages of economic
development that toiled by other organizations over the years. The foundation for modern
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globalisation is set and shaped by technology and transporting the innovation within the
aviation industry.
Globalisation leads the organization to not only access to new trading regions but also to
newer technologies. Though there is bureaucracy in the aviation industry, leading
companies can conquer the new markets with much ease (Kew and Stredwick, 2017). IT
systems and internet are the latest drivers of the technology which is used by British
Airways to create e-business and e-commerce at the global level.
PORTER’S GENERIC STRATEGIES
Porter’s generic strategies are used to assess the relevance of globalisation to British
Airways along with its influences on competitive strategies.
COST LEADERSHIP: cost is one of the driving factors of globalisation. The organization British
Airways can take advantage of the variance of sourcing efficiency and cost form one country
to another. An organization such as British Airways is moving forward to build economies of
scale at a global level along with maintaining high development cost of the product. It is
essential for British Airways to develop the services at a lower cost in order to compete in
the market. The organization British Airways can close its air routes which are not beneficial
in order to cut down the cost.
DIFFERENTIATION: the major emphasis of British Airways is on differentiating its products
and services from that of competitors. The organization set the high prices by providing a
high quality of products and services in order to mark the differentiation. “Drink to phone”
is the service provided free to premium passengers while first-class travellers are provided
with sleeper services (Mowforth and Munt, 2015). Training programs and sessions are
organized by the company in order to train their employees and improve the service
delivery. This strategy is used by British Airways to create a significant brand value in the
market.
FOCUS: if this strategy is adopted by the company, the focus of the company will be to enter
a specific market segment that has a low degree of competition. British Airways focuses on a
niche market that comprises of the individuals who prefer to have the high-class quality of
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services regardless of its price. This results in a boost in sales along with gaining lump sum
profit by the company and focusing on the segment to understand the needs of travellers
resulting in higher customer satisfaction.
Various techniques and methods are adopted by British Airways to be efficient in the market
and achieve the maximum level in the value chain. British Airways is able to gain a
competitive advantage in inbound logistics by forming a continuous relationship with
suppliers and also adopting sophisticated methods of managing stock and inventory (Evans
and Whitehead, 2017). The company aims to attain a competitive advantage by
implementing new services such as quick Check-ins, security for luggage and so on. British
Airways provide excellent customer services in outbound logistics. All the stakeholders
including their customers are involved in the marketing activities.
One of the important tools utilised by British Airways is post-sale services that help in
achieving competitive advantage. Post-sale services are placed in a better position in the
value chain system thereby positively affecting the economies of scale and technological
development. The rationale to gain a competitive advantage over the competitors in the
aviation industry is a well-developed infrastructure of the firm and providing a high level of
job satisfaction to its employees.
The tangible source possessed by British Airways is around 267 strong fleet sizes in June
2017 that flies over 183 destinations and the other intangible resources comprise the
databases of the customer British Airways, 2018). Ground level training and security training
are provided by the company. Maintain the security of the travellers while travelling is an
important capability that enhances their competencies (Catherwood, et al. 2016). The
company British Airways have tangible resources that are a monopoly over the Heathrow
Airport. It is recognised as a premium and reputable brand that have core competencies in
their products and services. The subsidiary “Open Skies” of British Airways allows 64
travellers per flight and provides 1 assistant per 12 travellers (British Airways, 2018). Timely
arrivals and departure is the success factor of British Airways. The important criteria for
success are possessing committed sponsors and active champions.
Hence it can be said that globalisation is essential for the travel agency that is British
Airways as it influences its policies and competitive strategy. The expectations of the
customer are increased that intensifies the level of competition (Masood, et al. 2016).
British Agency needs to globalise in order to gain an advantage at both the global and local
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market. Globalisation has forced local companies such as British Airways to deal with the
competition and maintain market share along with entering a new market and explore the
unexploited market segment before the entry of foreign competitors.
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