Comprehensive Analysis: British Airways and Business Environment

This report provides a comprehensive analysis of the business environment affecting British Airways. It begins with an introduction to internal and external factors, followed by an examination of the company's mission, vision, and objectives, as well as practices adopted to meet stakeholder needs. The report then delves into different economic systems, focusing on how fiscal and monetary policies impact business activities. It also explores the influence of competition, regulatory changes, and market structures on pricing and demand in the air services industry. The analysis extends to the impact of global trade, global factors, and EU policies on British Airways' operations, culminating in a conclusion that synthesizes the key findings. The report covers topics such as the impact of competition policy, regulatory and legal changes on business activities, market structure impact on pricing and demand of air services, role of various players and market forces in shaping organizational responses, impact of working practices and cultures of different countries on the business activities of organization, impact of changes in global trade on the business activities of organization, influence of global factors on the business activities of the organization and impact of EU policies on the practices of British Airways.

Business environment

CONTENTS
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
1.1 Purposes of various types of organization as well as mission, vision and objectives of
British Airways............................................................................................................................3
1.2 Practices adopted by organization to meet the objectives of their stakeholders....................4
1.3 Practices adopted by organization to fulfill its responsibilities towards its stakeholders......4
2.1 Different types of economic systems that supports in allocating resources effectively........5
2.2 Impact of fiscal and monitory policies in the business activities of organization.................5
2.3 Impact of competition policy, regulatory and legal changes on the business activities of
organization.................................................................................................................................6
Task 2...............................................................................................................................................6
3.1 Impact of market structure on the pricing and demand of air services..................................6
3.2 Role of various players and market forces in shaping organizational responses..................7
3.3 Impact of working practices and cultures of different countries on the business activities of
organization.................................................................................................................................8
4.1 Impact of changes in global trade on the business activities of organization........................8
4.2 Influence of global factors on the business activities of the organization.............................8
4.3 Impact of EU policies on the practices of British Airways...................................................9
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

INTRODUCTION
Business environment consists different types of internal and external factors that affect
the business functions of an organization which are performed at the time of dealing with
suppliers, customers, human resources, government, investors and shareholders as well as
society and environment (Palmer and Hartley, 2008). Main factor included in case of internal
factor of business environment is related to maintain relationship with customers, employees,
government and suppliers. While, external factor involves the factors that re related to political,
social, legal, environmental, economic and technological. Due to this aspect, this present report
is focused on describing the impact of these factors in the practices of British Airways which is
one of the leading airline companies in UK. Along with this, it will include the description about
the impact on market forces and market structures on the business practices of British Airways.
TASK 1
1.1 Purposes of various types of organization as well as mission, vision and objectives of British
Airways
Purposes of various types of organization are as follows:
Partnership firm Sole trade Company Franchise
This type of firm is
formed through
merging two or more
commercial entities.
In this firm,
profitability is
divided among
partners as well as
authorities and
responsibilities
(Brown, Earle and
Lup, 2005).
This type of business
is established by
single owner with the
availability of less
capital. Here, only
business manager is
available who is
responsible for
making plans and
retaining profit.
It includes several
purposes that are
related to earn profit,
increase sales, render
good quality of
products and develop
better relationship
with customers
(Dong, Wu and Hou,
2009).
In this business, one
company gives right
to another company
to establish business
with the same name
of existing company.
Main purpose of this
organization to
enhance its
profitability as well
as its customers.
Mission, vision and objectives of British Airways
Mission
Main mission of this company is to render secure and safe airline services to its
customers in order to enhance its position in the market.
Vision
 To reduce the impact of its services on the environment as well as society.
 To adopt new and innovative technology for make its services more attractive and
comfortable.

 To emerge itself as a source of inspiration for the other companies (Craig and Campbell,
2012).
Objectives
Short term objectives Long term objectives
 To provide healthy environment to
employees in order to enhance the
level of its customer service.
 To increase the level of its
profitability and sales revenue (Hill,
2008).
 To maintain and enhance the growth
of company in London.
 To expand its business at the
international level.
 To enhance its brand image in both
national and international market
(Czinkota and et. al., 2009).
 To set standards for making services
more safe for customers.
1.2 Practices adopted by organization to meet the objectives of their stakeholders
In case of British Airways, major stakeholders are related to customers, employees,
government, suppliers and shareholders. In order to maintain better relationship with all of them,
management of company is focused on meeting the objectives of them. Practices adopted by
company to meet the objectives of British Airways are as follows:
Customers: Main aim of customer is to get high quality of products and services in a reasonable
price. Therefore, management of company always tries to understand the needs of customers
related to price, quality and other characteristics of services (Solomon and et. al., 2014). Due to
this, compliant procedure and survey methods are used for identifying the issues of customers.
Employees: Availability of healthy environment and better salary are considered as most
important objectives of human resources working in company. In order to meet these objectives,
British Airways provides better salary and incentives to them as per the set standards of industry.
Along with this, it is also focused on understanding their issues through using the method of
feedback on the regular basis.
Government: In case of government, objective is related to perform business practices in a legal
and ethical manner (Cherbakov and et. al., 2005). To achieve this objective, organization always
tries to follow the legislation and regulations of government so that good relationship between
them can be developed.
Suppliers: For maintaining better relationship with suppliers, timely payment has been done by
company. Availability of payment on time is beneficial for company to get goods and machinery
on time from the suppliers.
1.3 Practices adopted by organization to fulfill its responsibilities towards its stakeholders
In case of British Airways, there are various responsibilities towards its stakeholders that
need to be considered by the management of company at the time of performing their business
practices. One of the major responsibilities of company is to enhance the level of customer

satisfaction (Nicolini and Salini, 2006). In order to achieve this responsibility, better quality of
services are rendered to the customers in reasonable prices. Along with this, special offers and
discounts are also provided tm them at the time of occasion in order to make their trip more
affordable.
Further, second major responsibility of company is to identify the needs and issues if
employees in order to render them healthy and positive environment. For fulfilling this
objectives, feedback is taken by the management of company from its employees for the purpose
of analyzing the issues and needs of customers (Doganis, 2006). After that, corrective actions are
taken by manager with the help of expert guidance. However, organization always tries to adopt
innovative technologies in its business practices for minimizing the level of greenhouse effect
and CO2 emissions in order to fulfill responsibilities towards government and society.
2.1 Different types of economic systems that supports in allocating resources effectively
Different types of economic systems are as follows:
Free market economy
In this market, there is no government interface at the time of performing business
practices in terms of pricing, production and marketing. This economy allows to its member
companies to set the process of its products as per the customer demand.
Command economy
In this economy, all types of business decisions are taken by the government related to
selection of product and market as well as its pricing and targeted customers. This economy is
fully managed by the central and local government of the country (Shaw, 2011).
Mixed economy
In such economy, both government and management of company have equal rights to
participate in decision making process in terms on maintaining business activities. In comparison
to command economy, government has less intervention in the respect of fiscal and monitory
policy. British Airways come under this economy in which decisions related to taxation and
ticket prices are taken by government and all these decisions are controlled and executed by the
management of company (Hsu and Chang, 2005). In recession times, government is focused on
maintaining the development of company that is main advantage of this economy.
2.2 Impact of fiscal and monitory policies in the business activities of organization
Two major macroeconomic policies including fiscal and monitory policies are as follows:
Fiscal policy
Fiscal policy is made by the government of UK that influence British Airways to pay tax
on time as per their annual revenue and expenditure. This policy is focused on increasing and
decreasing the level of tax rate as per the condition of economy. Enhancement in tax rate put its
impact on the cost of company and leads British Airways to increase the prices of its air services
(Alamdari and Mason, 2006). Increment in the prices of ticket may have impact on the level of

customer satisfaction along with influencing customers to switch to another airline company. On
the other hand, decrement in tax rate leads to minimize the cost of company so that they can
invest remaining finance for the development of services in more effective manner.
Monitory policy
This policy is maintained by the Central Bank of country in which level of interest and
exchange rate are set by the government as per the level of demand and supply in the market.
Increment in interest rate and exchange rate influences company to raise the prices of its services
so that balance between expenses and revenues can be maintained in a better way (MacKerron,
and et. al., 2009). This policy is focused on ensuring the level of money supply for the purpose of
achieving the objectives that are related to inflation, consumption, growth and liquidity.
2.3 Impact of competition policy, regulatory and legal changes on the business activities of
organization
In accordance to competition policy, it is required for British Airways to perform its
business practices in a legal manner. Along with this, it is needed for them to render high quality
of services to its customers in a fair manner in order to get competitive advantage. In case of
British Airways, Air France, Lufthansa airlines and Virgin Atlantic are the major competitors
which are focused on maintaining fair competition in the market. Competition policy influence
company to provide its services in a competitive price with the availability of better quality. This
policy includes two major legislation of legal system (Cho and Hambrick, 2006). These are as
follows:
Competition Act 1998
This act includes a range of standards that are related to avoid unethical practices in
business along with focused on determining the limit related to set prices, collect tender and
share market outs.
Enterprises Act 2002
This law provides proper guidance for performing business practices in terms of
insolvency, merger, acquisition and bankruptcy (Palmer and Hartley, 2008). Further, this law
allows company to take competitive decisions in an independent manner.
According to regulatory and legal changes, various types of regulatory and legislative
policies have been developed by UK government and European Union. These policies including
labor policy, employment policy, anti-discrimination act, human right act and equality act that
are needed to be followed by the management of company in order to make their development
legal and ethical (Dong, Wu and Hou, 2009). Along with this, economic changes related to tax
rate, interest rate and exchange rate put its huge impact on the expenses and revenue of
organization.

TASK 2
3.1 Impact of market structure on the pricing and demand of air services
Different types of market structures are as follows:
Perfect competition market
This market includes the availability of same products that are purchased and sold by the
huge number of buyers and sellers. This market provides complete freedom to both buyer and
seller in order to start business in the market as well as to exit from the market. Main objective of
this structure is to enhance the level of profit to a higher extent.
Monopoly market
This market includes the availability of single seller who is responsible for setting the
prices of products according to its quality (Types of market structure, 2015). This market also
does not consist the close substitutes of product so that bargaining power of buyers is very low in
case of it.
Oligopoly market: In this market, less number of business entities are available which are
focused on selling homogeneous goods or services to its customers. In oligopoly market, new
strategy or technology used by come company put its impact on the profitability and revenue of
other companies by reducing its number of customers.
British Airways come under the structure of oligopoly market as it is focused on
rendering branded services to its customers as per the availability of high quality. This market
allows British Airways to earn more profit by rendering high quality services to its customers
(Craig and Campbell, 2012). Along with this, it also helps company to enhance its position in the
market and capturing huge market share.
3.2 Role of various players and market forces in shaping organizational responses
Various types of players and market forces are as follows:
Demand
Demand and price are equally proportional to each other. If, one increases, the other one
will also be increased and if, one decreases, another one also be decreased. In case of British
Airways, demand of its air services is increased in the season time. At the same time, company
needs to enhance the process of its air ticket so that they can more profitability. While in off
season, British Airways should focus on decreasing the prices of its services as demand of
customers is very less in that time (Market forces, 2015).
Supply
In order to satisfy its customers in an effectual manner, organization needs to maintain
balance the demand and supply. In case of British Airways, elastic demand is related to economy
passengers and inelastic demand is related to business class clients. In order to satisfy its
business clients, company should focus on rendering short routes flights to them (Hill, 2008).

While, long routes flights can be set for economy passengers but with the availability of less
price.
3.3 Impact of working practices and cultures of different countries on the business activities of
organization
Availability of working practices and cultures of different put its huge impact on the
business practices of organization as both have direct relationship with the level of motivation in
the respect of human resources (Czinkota and et. al., 2009). Better working practices lead
company to render positive and healthy environment to its employees at workplace. In
accordance to working practices, organization should focus on setting salary, incentives and
working hours as per the industry standards of different countries.
British Airways is an international company which renders air services in between 200
counties in all over the world with having the availability of thousands of human resources.
Every employee has their own religion, culture, nationality, principles as well as needs and
requirements. Availability of differentiation may lead to maximize the chances of conflict among
the human resources. Due to this, it is required for company to maintain single culture at
workplace so that they can minimize the chances of conflicts and lead to maintain healthy and
friendly environment at workplace (Solomon and et. al., 2014). Along with this, it is also
necessary for the management of British Airways to minimize the chances of discrimination at
the time of providing opportunity to its employees.
4.1 Impact of changes in global trade on the business activities of organization
As an international company, changes in global trade may have impact on the business
operation of British Airways to a higher extent. Global trade is the process of supplying goods
and services among two or more countries. In global trade, there are following changes that put
its positive and negative impact on the development of organization. These are as follows:
Price: British Airways provides air services in the countries of Europe and Asia. Due to
economy of different countries, prices of tickets never be same to each other (Cherbakov and et.
al., 2005). In Asia, level of economy is low as compare to Europe so that prices of tickets will
also be lowest.
Customer: organization needs to provide different types of offers as per the nature of customers
including economy passengers and business class clients.
Culture: Different counties have different cultures. Therefore, it is required for British Airways
to render services by considering the culture of separate people or country (Nicolini and Salini,
2006).
Origin: In accordance to this, management of company should focus on setting its mission,
vision and objectives separately in terms of national and international market.
Furthermore, there are various professional and regulatory organizations that influence
the business practices of British Airways in the respect of global trade. These are as follows:

World trade organization (WTO): It is an international governmental organization
which focuses on maintaining and regulating the international trade to a great extent. In case of
airline industry, its major role is to influence all the airline companies including British Airways
to provide fair and ethical services to all their national and international customers at an
affordable price.
Organization for Economic Co-operation and Development (OECD): This regulatory
body is focused on analyzing various issues in the airline industry due to availability of
competition. By analyzing this, it ensures to maintain healthy competition in the local and
international market.
BRIC Economies: It includes countries like Brazil, Russia, India and China. These are
the main emerging economies and working with these countries will be more beneficial for the
management of British Airways in terms of increasing its sales, profitability and revenue.
4.2 Influence of global factors on the business activities of the organization
Various types of global factors are as follows:
Economic factor: Recession is the major factor that is focused on decreasing the profitability of
British Airways as it influences people to reduce the level of their expenses to a higher extent
(Doganis, 2006). Along with this, it includes interest rate, tax rate, inflation rate and exchange
rate that put its huge impact on the cost of company.
Political factor: According to this factor, organization needs to follow the policies made by
government related to minimize the impact of terrorism. However, it is requited for company to
consider the rules of World trade organization in order to perform its business practices in a legal
manner.
Legal factor: In accordance to this, it is necessary for management to consider the regulations of
government that are related to data protection act, employment act, competition act and human
right act (Shaw, 2011).
Social factor: It includes factors related to social class, lifestyle, income level and perception of
individuals that are needed to be considered by the management of company in order to satisfy
its customers in a proper way.
Technological factor: New technology adopted by competitors is influenced British Airways to
modify its technology and strategies in order to get competitive advantage.
Environmental factor: For ensuring the safety of environment, organization needs to focus on
modern technology so that level of CO2 emission and greenhouse effect can be decreased to a
higher level (Alamdari and Mason, 2006). New techniques need to be involved for minimizing
the level of population created by its BA’s flights.
4.3 Impact of EU policies on the practices of British Airways
Airline industry in international market is controlled by Civil Aviation Authority and the
Secretary of State for Transport which are responsible for monitoring the business activities of
every airline company in terms of organizing, financing and managing. In case of Europe,

performance of airlines is monitored by EU treaty in which enforcement responsibilities are
allocated in between European Commission and Members States. Along with this, rights related
to cargo and flights are maintained by ICAO with the availability of bilateral agreement in
between the government of two countries (MacKerron and et. al., 2009). According to the
agreement of International Air Services Transit 1944, every airline has right to take off, to lend
as well as to stop when emergency happens. In UK, government has right to give suggestions in
the rest of making business connections with foreign countries.
In case of EU, Civil Aviation Authority plays a crucial role in promoting British Airways
to perform its air services in an ethical manner (Cho and Hambrick, 2006). Along with this, it
encourage organization to maintain the safety of its customers by rendering better quality of
services. Further, it ensures that services provided by company must be met the needs and
requirement of customers and must be safe for the environment as well as society.
CONCLUSION
From the above study, it has been concluded that it is essential for British Airways to
follow the rules and regulations of UK government as well as European Union in order to
perform its business operations in a legal way. Along with this, it is required for the management
of company to maintain better relationship with stakeholders by considering their needs and
requirements. Fulfilling the needs of stakeholders is the best way through which they can gain
leading position in the market.

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