Business and Business Environment: British Airways Case Study

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BUSINESS AND BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION........................................................................................................................3
COMPANY OVERVIEW..............................................................................................................4
LO1 DIFFERENT TYPES OF ORGANISATIONS.............................................................................5
PUBLIC ORGANISATIONS......................................................................................................5
PRIVATE ORGANISATIONS....................................................................................................6
VOLUNTARY ORGANISATIONS..............................................................................................8
SIZE AND SCOPE OF RANGE OF DIFFERENT TYPES OF ORGANISATIONS..............................9
LO2 INTERRELATIONSHIP OF VARIOUS FUNCTIONS WITHIN AN ORGANISATION AND THERE
LINK WITH THE ORGANISATIONAL STRUCTURE.....................................................................11
RELATIONSHIP BETWEEN DIFFERENT ORGANISATIONAL FUNCTIONS...............................11
ADVANTAGES..................................................................................................................... 11
DISADVANTAGES................................................................................................................ 12
LINK BETWEEN DIFFERENT ORGANISATIONAL FUNCTIONS TO BUSINESS OBJECTIVES AND
STRUCTURE........................................................................................................................ 12
LO3 IMPACT OF MACRO ENVIRONMENT ON THE BUSINESS OPERATIONS............................15
PESTLE ANALYSIS................................................................................................................15
LO4 INTERNAL STRENGTHS AND WEAKNESSES OF THE SPECIFIC BUSINESSES AND THEIR
INTERRELATIONSHIP WITH THE EXTERNAL MACRO FACTORS...............................................18
PORTER’S FIVE FORCES ANALYSIS OF THE BA FOR ANALYSING EXTERNAL MICRO
ENVIRONMENTAL FACTORS...............................................................................................18
ANALYSIS OF THE INTERNAL FACTORS WITHIN THE MICROENVIRONMENT OF BA WITH
APPLICATION OF SWOT ANALYSIS......................................................................................19
INTERRELATION OF THE STRENGTHS AND WEAKNESSES OF THE BA WITH THE EXTERNAL
MACRO-ENVIRONMENT FACTORS OF THE ORGANISATION...............................................20
CONCLUSION.......................................................................................................................... 22
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REFERENCES........................................................................................................................... 23
INTRODUCTION
A business organisation could be termed as a structured and well-managed social entity that
represents a group of people that works towards the achievement of the common business
goal. Every business organisation is exposed to a business environment that may affect and
get influenced by the activities and operations of the business (Jones, 2012). This
assignment report will provide a brief overview of the different aspects of the business
environment that could affect the decisions and operations of a business organisation. The
different types of business organisations such as public, private and voluntary organisations
will be analysed and discussed in consideration with their objectives, size, stakeholders and
legal structure. The different functions of the business and their interrelationship are
analysed along with its advantages and disadvantages. Moreover, the macro and
microenvironment of a business organisation are also analysed in the context of the ‘British
Airways'. For analysing the macro and microenvironment of the company, the techniques of
PESTLE and SWOT analysis will be applied. This would enable in identifying the key strengths
and weaknesses of the company in relation to the internal and external business
environment.
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COMPANY OVERVIEW
British Airways is a global Airline company based in the UK. It is the flag carrier airline of the
UK, headquartered in Harmondsworth. On the basis of the fleet size and passengers carried,
it holds the second position is the UK after easyJet. The company was founded in 1974 by
the British government to manage the two nationalised and two regional airlines within the
UK (British Airways, 2019) The main airline operating hub for the company is the London
Heathrow Airport. Being a global airline company, it has to confront the challenges and
opportunities in the wider business environment across the world.
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LO1 DIFFERENT TYPES OF ORGANISATIONS
The business organisations are the entities that perform economic activities of buying and
selling to accomplish their business goals and objectives. Business is the continuous process
that involves working with a group of people either small or large with coordination and
cooperative relationship to achieve the common business goals by taking risks and
responsibilities (Jones, 2012). The business organisations are classified into three types;
PUBLIC ORGANISATIONS
The public organisations are the business entities that are formed to serve the general
population. the public organisations are established and operated by the local, regional or
central government (Daft, et al., 2010). These organisations are financially supported by the
government. The key characteristic of the public organisation is;
 It is managed and controlled by the government.
 It is accountable for the welfare of citizens
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TypesOfOrganisationsPublicSectorOrganisationsPrivateSectorOrganisationsVoluntarySectorOrganisation

 It is free from any interruptions and interferences of external parties
 It covers almost all the sectors of the business environment.
LEGAL STATUS
The legal forms of public organisations are;
 Departmental organisations: These organisations are the extensions of the local and
national government that comprise government officials, civil servants and
controlled by the department of the ministry (Kumar, 2011).
 Government organisations: These organisations are an important part of the
government that is established by the act of parliament. These are the autonomous
public entities set by the act of law.
 Statutory or public corporations: these organisations are established with the
commercial objectives with at least 51% government shares. These are considered
separate legal entities.
GOALS AND OBJECTIVES OF PUBLIC ORGANISATIONS:
The key business objectives, products and services of the public sector organisation are
directed towards;
 Achieving economic growth and development by upgrading current infrastructure
and services
 Reducing regional imbalance and accelerating balanced economic development
within the nation (Daft, et al., 2010)
 Investing in public utility services such as water, transportation, electricity and
internet
PRIVATE ORGANISATIONS
The private sector organisations are owned and operated by a person or a group of people
with the ultimate aim of achieving higher profit from performing different business
activities. private organisations are all those business entities that aim at earning profit and
are not operated and owned by the government (Corbett, 2016). the private organisations
can be further classified into different types;
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SOLE TRADERS:
Sole trader organisations are owned and operated by an individual with the aim of
earning considerable profit to meet their daily needs. These are free from any control and
can be started with limited investment. For –e.g. a small restaurant or grocery shop.
However, the liabilities of the sole traders are limited (Worthington, 2018). The key purpose
of a sole proprietorship is easy setup, unlimited liability and free from legal formality.
Legal status: the sole proprietors are required to complete an annual taxation form and the
taxes are paid at personal rates at the net profit gained from the business. Auditing and
accounting are not mandatory.
JOINT VENTURE:
In Joint Venture, two or more business organisations establish a new business
venture either temporary or permanent to achieve mutual objectives.
Legal status: a joint venture is also considered as a separate legal entity and regulated
similarly to the other private businesses.
PARTNERSHIP:
In partnership, two or more business individuals or organisations set up a new
business entity. The involved partners share the risks, responsibilities, profit and losses of
the business equally or with mutual agreement (Masters, 2018). Partnerships are of two
types general partnership and limited liability partnership.
Legal status: the partnership is governed by the partnership agreement created at the
starting of the business or under the regulations of the partnership act.
FRANCHISING:
Franchising means a contractual business relationship where a franchisor allows the
franchisee to use the business trademark and model in exchange for an ongoing royalty
payment or an upfront payment (Nguyen, and Janssens, 2017).
Legal status: the franchisor and franchisee must formulate a standard legal agreement as
the franchisor is a separate legal entity and the franchisee is generally a limited company.
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LICENSING:
In licensing, a business organisation permits another organisation to use its
intellectual property such as patents and technology. The licensor may also allow the
licensee to produce their products (Gerhardt, et al., 2015).
Legal status: registration is not necessary for licensing.
GOALS AND OBJECTIVES OF PRIVATE ORGANISATIONS
The most common goals and objectives of the private sector organisations are:
 The primary objectives are to achieve higher profit as possible with available
business resources and activities.
 Private organisations are established with the aim of long-term growth and survival.
However, the majority of private businesses fails within the initial period of 1 year.
 The private organisations are also aimed at improving the organisational image and
reputation in the targeted market (Liu, et al., 2017).
 To achieve growth through the sales of products and services is one of the key
objectives of all private businesses.
VOLUNTARY ORGANISATIONS
The voluntary sector organisations could be termed as the social welfare organisations as
the key purpose of these organisations is to development and enrichment of the society and
people. These organisations are generally not-for-profit businesses that may have zero or
little government intervention. These are autonomous firms are governed by unpaid
trustees (Milligan, 2017). The key business objectives of the voluntary organisations are
public welfare, society growth, development, and ensuring basic living needs for all. The
voluntary organisations are of two types; non-profit organisation (NPO) and Non-
government organisations (NGO).
Legal status: the three legal structures for voluntary organisations are a trust, an
unincorporated association and a company limited by guarantee.
GOALS AND OBJECTIVES OF VOLUNTARY ORGANISATIONS:
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 The welfare of the general public and society
 Providing basic living needs to the underprivileged communities
 Development of society (Milligan, 2017)
SIZE AND SCOPE OF RANGE OF DIFFERENT TYPES OF ORGANISATIONS
The size and scope of the business organisations are determined by several factors such as:
 Availability of funds
 Skills of the owners
 Managerial abilities
 Nature of business
 Business vision and objectives
 Extent of market
SIZE OF THE DIFFERENT BUSINESS ORGANISATIONS
The classification of the business by the size is presented below;
 Micro enterprises: the business with less than 10 employees are a micro business
that is usually owned and controlled by an individual and established with personal
investment and small loans (Goldman, et al., 2015).
 Small enterprises: businesses with less than 50 employees are small businesses that
require limited investment and operations.
 Medium enterprises: the medium enterprises are those that employ around 50-250
people and require higher investment and regular operations and accounting.
 Large enterprises: the businesses with more than 250 employees are the large
business that requires higher investment and strategic operations (Goldman, et al.,
2015).
SCOPE OF THE DIFFERENT BUSINESS ORGANISATIONS
The different types of business organisations discussed above may also differ in the scope
for its functioning and growth. The scope of the businesses at a different level are;
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Local level: the businesses that have limited products, investment, resources and assets are
operates at the local level (Häusler, et al., 2016). These organisations have very limited
scope for growth and development as its operations are aimed at the nearby environment.
National level: the companies whose operations spread across the national territory are the
national level organisations that have a wider scope than the local level organisations as it
serves a wider area and to the wider range of customers.
International level: the international organisations are those that offer their products and
services across the national border. This business has a wider scope of profit and growth as
compared to national level organisations.
Multinational level: the multinational organisations are those that have their offices and
stores in the other countries (Häusler, et al., 2016). Unlike international organisations, the
production and business operations of the multinational companies are widespread in
different countries and thus, have a wider scope.
Global level: the global businesses make investments in different countries and have
distribution, production and operations plants in several locations across the world. The
global businesses are aimed at achieving economies of scale with its widespread business
operations.
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LO2 INTERRELATIONSHIP OF VARIOUS FUNCTIONS WITHIN AN
ORGANISATION AND THERE LINK WITH THE ORGANISATIONAL
STRUCTURE
The organisational functions can be termed as the business activities and processes that are
performed to achieve the core departmental objective that supports in the accomplishment
of the ultimate aim of the business (Jansen, 2017). The most common functional areas of
British Airways are:
1. Finance and Performance
2. Human Resource
3. Sales and Marketing
4. Engineering
5. Customer and operations unit
6. Business and strategy units
RELATIONSHIP BETWEEN DIFFERENT ORGANISATIONAL FUNCTIONS
All these business functions of British Airways are interrelated with each other for fulfilling
their respective roles and responsibilities (Jansen, 2017). For example, the finance and
performance functions are interdependent of the human resource function to acquire
skilled and talented personnel to perform financial activities such as accounting, budgeting,
and auditing. On the other hand, the finance and performance function also depends on the
business and strategy units as the financial budgets and plans are prepared on the basis of
the set business plans and strategies for the specific time period and similarly the business
strategies are also formulated on the basis of the financial performance and abilities of the
organisation. Moreover, the sales and marketing function is required to collaborate with the
operations and financial functions to perform marketing activities and plan. Therefore, it is
clear that all the business functions are interrelated as well as interdependent on each other
and works in collaboration to accomplish the business goals. The interrelations between the
different organisational might have positive as a well negative impact on the business;
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