British Airways Business Environment Analysis

This report provides a comprehensive analysis of the business environment of British Airways. It examines the organizational purposes of different business types, focusing on how British Airways meets the objectives of various stakeholders (suppliers, customers, employees, shareholders, and government). The report then delves into the national environment, analyzing the impact of economic systems, fiscal and monetary policies, and competition policies on British Airways' activities. A significant portion is dedicated to the behavior of organizations within their market environment, exploring market structures, the interplay of market forces, and the influence of working practices and cultures of different countries on British Airways' operations. Finally, the report assesses the impact of global changes caused by aviation bodies and other global factors, including EU policies on competition, on the airline's strategies and performance. The report concludes with a summary of the key findings and their implications for British Airways' future success.

Business Environment Analysis
of British Airways

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1 : Understand the Organizational purposes of businesses..................................................3
1.1 Identify the purposes of different types of organization........................................................3
1.2 How British Airways meets the objectives of different stakeholders....................................4
1.3 Explain the responsibilities of British Airways and their strategies employed....................5
TASK 2 : Understand the nature of the national environment in which businesses operate...........5
2.1 How economic systems attempt to allocate resources effectively.........................................5
2.2 Impact of fiscal and monetary policies on business organizations and their activities.........6
2.3 Evaluate the impact of competition policy and other regulatory mechanisms on the
activities of a British Airways......................................................................................................7
Task 3 : Understand the behavior of organizations in their market environment...........................7
3.1 How market structures determine the pricing and output decisions of businesses................7
3.2 How the interplay of various players and market forces form firm responses......................8
3.3 How British Airways has been effected by the working practices and cultures of the
countries.......................................................................................................................................9
4.1 Impact of global changes caused by various aviation bodies on British Airways...............10
4.2 Other global factors and their impact on British Airways...................................................11
4.3 EU policies on competition .................................................................................................11
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................13
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INTRODUCTION
Business environment of a company is ever-changing and thus, it is very momentous for
the administration to be progressive and lively from all view. In order to be harmonious with the
environment, company needs to have a number of considerations which allow to uphold the
rivalry in commercial enterprise effectively. In this report the focus is made on different types
of organizations such as public, private corporations, companies, international organizations,
not-for-profit organizations, partnerships and sole proprietorship and their purposes. British
Airways adopt objectives of profiting orders from airline of different services they deal with
their various responsibilities and strategies(Adrangi, B., Chow, G. and Gritta, R., 2001).
TASK 1 : UNDERSTAND THE ORGANIZATIONAL PURPOSES OF
BUSINESSES
1.1 Identify the purposes of different types of organization
There are a various organizations, some are legally registered under law and some does
not need lawful influences. These organizations are public, private corporations, companies,
international organizations, not-for-profit organizations, partnerships and sole proprietorship. A
hybrid organizational structure is a physical structure that functions in both the public body and
the private body at the same time, accomplishing national duties and processing moneymaking
market activities.
The purpose of these type of organizations are: Establishment (which includes national and international) - The main purpose of an
organization is to establish itself within the domestic and international arena. For
example : Starbucks is a public limited company and serves globally. Its business goal is
to gain profitability and government income, thereby accelerating the wealth of its share
owner (Soubbotina, 2004). Thus, its organizational purpose is to render more customers
by supplying qualified products and services. Profit Maximization – The other purpose of a company is to maximize profits. For
example: Corner Shop is a private limited company serving variety of products and
services and thus its mission is to be the master for shoppers by delivering brand value in
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terms of superior quality, better customer service etc. Its vision involves making an
international presence in food, conventional store, sanitary etc. By keeping all these in
mind, the organizational purpose of it is to make global interest by expanding
dramatically and as a result to earn more profit in long run(Dwivedi, 2009). Charity and Welfare - National Council of Voluntary Organization (NCVO) are the title-
holders in voluntary sector. They help in volunteering and work for the betterment of
society. They do this by connecting, representing and encouraging voluntary
organizations. There main aim is to work for the volunteer movement which is essential
for a better society – especially in times of challenge and alteration. they work for the
purpose of charity and welfare of the society (Ingulli, 2014). Purpose of sole trade
 Partnership
1.2 How British Airways meets the objectives of different stakeholders
Suppliers : Suppliers are the stakeholders of British Airways that adopt objectives of
profiting orders from airline of different services they deal with. British Airways meets their aim
by being consistent in their orders by providing tactful information about enhancing quality of
the services which they provide. Suppliers are not that important in decision making because
they are afraid of losing their contract bridge with British Airways (British Airways, 2015).
Customers : Customers in British Airways are actually passengers. These passengers are
the stakeholders who buy services. Their aim is to obtain quality services at fare prices in which
they can find worth against their purchases. British Airways meets these objectives by offering
quality services on time while also providing place substitute to them (Yeoman, Sparrow and
McGunnigle, 2000).
Employees: British Airway's employees are intrinsic stakeholders and their aim is to
acquire fair aid from airlines in terms of wage, rewards, promotions etc. Airways meet these
objectives by intensifying their skills and competencies through grooming and improvement
programs in order to make them give improved public presentation and to be capable of
acquiring rewards.
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Shareholders – There expectation from the business is to see that it is highly profitable, offers
good return to them and is also honest in all possible accords. Hence the company has to ensure
that the shareholders are well informed.
Government - Government authorities dealing with British Airways want to ensure that the
company adheres with all the policies and regulations. In the same way, it also wishes that the
company should keep a transparency in its business operations. The firm thus meets the
stipulated objectives by adhering with the laws, paying taxes on time.
1.3 Explain the responsibilities of British Airways and their strategies employed
There are variety of responsibilities of British Airways as an system and number of
strategies it apply to meet these duties. They are discussed as:
Corporate Social Responsibilities – It is important for an organization to provide
something to the society against the harm it gives to the society. This is punctually reasoned by
British Airways working ways. They conduct variety of socially centered programs which are
designed to enhance the living standards of people (Shaikh, 2010).
Lawful and Legal Responsibilities – These are known to bind British Airway's for
operating under the law and airways does this by applying a strategy that can modify with law.
Their strategy is to regard everything that is preserved and given by law (Britton, 2009).
Environmental Responsibilities – These obligations require that airways makes least
waste in surroundings with optimum utilization of resources, and the wastage can be decreased.
This is guaranteed by British Airways through initiating different standards of operations within
its own role and this makes the airways environmental amiable (Kennerley and Neely, 2003).
TASK 2: UNDERSTAND THE NATURE OF THE NATIONAL
ENVIRONMENT IN WHICH BUSINESSES OPERATE
2.1 How economic systems attempt to allocate resources effectively
What is Mixed Economy?
In this economy, goods and services’ allocation is done by both government and market
forces. There is no specific way of determining what proportion of goods and services must be
produced and distributed by public and private sector companies (Manning and Morris, 2007).
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Thus, both have equal contribution depending upon market share they get to share in industry.
This type of economy is majorly found in developed countries like UK.
The mixed economic systems that attempts to allocate resources effectively in British
Airways. Given the challenging economic times and the uninterrupted high prices of fuel, it is
essential that British Airways focuses on managing controllable expenditure. The airline has
prioritized short-haulage betterment in its drive to untroubled competitive expenditure base.
Cracking development has been made with the transformation plan have been made. According
to research, during 2013 there were extra focus on driving more income per flight through
ancillary services, exploiting underutilized assets such as Avios, and increasing the value from
leading businessperson contracts (Knox, Agnew and McCarthy, 2014).
Command economic systems: In this economic system, government of UK allocate all resources
to BA as per availability which are necessary to manage its airline operations in the aviation
sector.
Market economic system: In this approach, government do not play any kind of role to provide
resources in the nation. General all organizations provide effective facilities to British Airways to
handle its business activities in the Britain.
2.2 Impact of fiscal and monetary policies on business organizations and their activities
Impacts of Monetary Policies:
 Bank Borrowings – 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. The cost of borrowing becomes costlier for British
Airways, when situation is vise verse (Schipper, 2004).
 Foreign Exchange rate – There is a chiseled relation between interest rates and
value of pounds. When Bank of England makes cost of transaction cheaper
economy starts to see more money flowing out there, in this case, services
become cheaper and income for British Airways rises.
Impacts of Fiscal Policies:
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 Passenger's Demand – Fiscal policy is associated 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 (Roy and Ghoshal,
2008).
 Investment Decisions – Fiscal policy is also known to effect on how much risk
is taken by British Airways . When there is an introduction of tax bonus for
employee grooming, then airways may feel assured in hiring more airways
employees (Stredwick, 2005).
 Cost of Doing Business – Fiscal policy can also hike interest rates for which
British Airways may have to pay more for lines of credit. Higher rates in interest
is known to raise the value of pounds which gives companies like British Airways
more purchasing power from suppliers in international market (Kennerley and
Neely, 2003).
2.3 Evaluate the impact of competition policy and other regulatory mechanisms on the activities
of a British Airways
Impact of competition policy on British Airways.
There are different consequence of competition policy on British Airways. It makes
services inexpensive for travelers that are buying those services and in this way it becomes low-
priced for passengers. The policy also cater guidelines for bias practices that are to be adopted in
order to boost good and firm competition in market. This makes it challenging for airlines like to
British Airways.
Other regulatory mechanisms on the activities of a British Airways
 Safety and Security Act- British Airways is best-known for its intense safety
standards. Traveler's security and unit are the chief interest areas. The airline
precede the extremely formulated machines in British Airways, and the most
innovative and civilized services to ensure the safety of their travelers (European,
commission, 2010).
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 Employees Act- The airline staff is a larger society. The British labor law of 1974
eyed on worker as well as administration. This aimed at keeping worker blissful
and crease less running of British Airways (Ingulli, 2014).
 Discrimination act- As per this rule, BA is also liable to follow these polices
during recruitment and selection of employees by avoiding these factors like race,
religion, sex and color in the United Kingdom.
 Data protection acts- British Airways is also responsible to follow data protection
act to provide proper data safety of consumers as well as consumers in the nation.
It also oblige the firm to use firewall and IPV 6 security in UK.
TASK 3 : UNDERSTAND THE BEHAVIOR OF ORGANIZATIONS IN THEIR
MARKET ENVIRONMENT
3.1 How market structures determine the pricing and output decisions of businesses
There are various types of market structures and they define pricing and output of
products and services in different manner. They are as follows: Perfect Competition – Perfect competition is a market structure in which there is no
limitation to entry and exit in any business enterprise. In this case, there are galore of
organizations producing and marketing homogeneous services in market. Thus, single
company like British Airways is unable to influence as there are similar rival like
Lufthansa, etc existing in industry(Cohen, 2010). Thus, valuation is ascertained by
demand and supply forces and consequently the arrangement of services takes place.
Airline gains normal profits in short run.
 Monopoly – In a monopoly market structure in which there is only individual seller of
services. British Airways being a monopolist is the solitary seller of certain services for
which company can establish its own level of pricing and organizing. This is because
entry of other enterprise is limited in the business. On another note this type of structure
does not exist in reality (Stredwick, 2005).
 Oligopoly- According to this market structure, there are only few organizations exist in
the airlines sector. Pricing policies of air tickets are lesser than monopoly market due to
rivalry in the market of United Kingdom (Madi, 2013). This process increases the
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frequency of consumers due to less cost on air services as comparison of monopoly
structure in the country.
3.2 How the interplay of various players and market forces form firm responses.
There are many organisations as well as market forces which form enterprises responses in the
United Kingdom. Demand and supply elasticity- It is very important for the organization to provide their
customers will all the required commodities or services by the firm to their customers.
Accordingly, British Airways should be able to provide their services according to their
customers demand and should be able to supply their services according to demand. Competition- Airline sector contains various types of corporations which impact business
of firm by reducing cost of air services in the nation. For example, British Airways
decrease prices of its tickets in the aviation market to enhance its market share in the UK.
These things contribute effective role to improve the business of corporation in the nation
(Cohen, 2010). Economic Forces- These factors also impact of firm through increasing price of raw
products in the country. For example, There are many materials for British Airways like
engine fuel, spare parts as well as maintenance which directly enhance expenditure of
firm. Organisation is using many tactics such as utilization of solar technologies to reduce
fuel consumption during flight. This way, company can overcome from this effect in the
nation (Weatherston, 2000). Political and Administrative Forces- these forces are highly impact on organisation by
increasing trade, tariffs and taxes in the country. For example, British Airways always
takes effective steps to overcome from these issues in the nation. Corporation is also
conduct regularly meeting with government officers to talk about for these things in the
United Kingdom. This way, organisation gets unique direction by taking their
suggestions to solve these type of issues in the nation (Roy and Ghoshal, 2008). Human Resources- In the airline sector, employees of firm has no more knowledge of
regarding their field in the firm. These things creates more delay to provide effective
services for customers in the nation. For example, British Airways are applying huge
efforts such as induction of training program and generate awareness about new
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technologies to reduce this impact in the country. This way, organisation can achieve
more competitive advantages by giving effective air services to consumers in the UK.
Corporation can sustain in the world for long period of time (Dwivedi, 2009).
 Technological Forces- They also creates positive or negative effects for organisation in
the United Kingdom. For example, British Airways also installing new technological
equipments better reliability of consumers and employees in the aeroplanes. These things
are giving optimistic advantages to the consumers and staff members during the air travel
(Britton, 2009). In an addition, organisation is also increasing logistics services in the
UK. This process is enhancing the business of corporation in the Britain. British Airways
is installing new gadgets like advanced security system for the safety of the passenger's
and employees in aeroplane to reduce terrorist attacks.
3.3 How British Airways has been effected by the working practices and cultures of the countries
There are many reasons which affects firm through working practices and culture in
different nations. These things can also generate positive and negative impacts in the countries.
British Airways is consecrated towards for multifaith policies in nation. Government of United
Kingdom render good facilities for foreign citizens to live in this country. So organisation makes
its culture and working practices as per situation in the nation. This way, British airways is
getting positive feedback from its employees in the UK (Gottschall and et.al., 2014). These
things are enhancing performance of firm in the aviation industry. On the other hand,
organisation is achieving negative response with utilization of Britain policies because Japanese
people do not consider fully open culture and working practices in the Japan. These people want
to follow only their job style in this nation. This way, they do not work with British Airways.
Organisation also consider to recruit young people for better efficiency in the nation. Corporation
is achieving better profit due to increasing rate of youngsters in the UK. On the contrary note,
frequency of young employees are decreasing as comparison of United Kingdom. So these
policies also affecting performance of British Airways in the Japan. Corporation is unable to earn
more profit in this nation. Organisation is running its operations successfully due to domestic
rules and regulations in the Britain. This things help to increase its speed and efficiency in the
UK. According to (Hergibo and et.al., 2010), corporation is facing so many complexities
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regarding international policies, trades and tariffs. These things are reducing profit of the
organisation in the Japan.
4.1 Impact of global changes caused by various aviation bodies on British Airways
British Airways operate in a business that is strictly governed by various regulatory
bodies such as World Trade Organization (WTO), Civil Aviation Authorities (CAA), etc.
(British Airways, 2015). These bodies influence the commercial activities of BA as well as its
performance standard. The implications are discussed under the following headings:
 Impact on flying rights : CAA plays important role in monitoring various
decisions of the company related to finance, management and operations. It is
eligible take appropriate actions under the Civil Aviation Act 1982 if the
company's operations are not in line with the regulations of the controlling body.
In addition to that the airlines operations are also regulated by European as well
other foreign governments in which it operates its flights in(FIIT, 2014).
 Allocation of airport slots : International Air Transport Authority IATA regulate
the decisions of BA related to airport slot allocation. Thus the company has to
function in accordance with the guidelines of IATA. It is very important for the
aviation company to get slots at airports to provide attractive schedules to
passengers (Hoffman, 2012).
 Impact on Air Fares setting : The prices of airfares of airlines are governed by the
international governments. BA air prices need to seek approval from these
governments hence the pricing decisions of the company are impacted greatly by
these foreign governments.
4.2 Other global factors and their impact on British Airways
BA operates in strictly regulated business environment. Its operations are largely
impacted by certain governing authorities such as foreign and local bodies which are set by the
aviation industry. Regulatory institutions include IATA, ICAO, CAA, etc. ensure that the airline
players abide by the regulations and play fair in the market. It also ensures that unethical
business practices are kept in check.
EU Policies impact significantly on British Airways which are discussed in the following points:
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 Travel: EU policies impact British Airways operations in order to build sustainable
strategies. EU policies encourage airline players to minimize the impacts of their
operations that can harm environment. BA formulates tactics to reduce carbon emissions
by undertaking projects such as “Greensky Biofuel project”.
 Competition: EU's competition policy largely impacts the operations of BA. The
company has to modify its pricing strategies to offer low fares to passengers in order to
hold them (Stredwick, 2005)
In order to understand more clearly PEST can be adopted, which are as follows:
Political: It is very common that the tax rates and fiscal policies changes frequently. It affects the
organization negatively as it has to make changes on their prices of tickets in accordance with
BA.
Economic: This factors includes change in foreign exchange rate, inflation, etc. It is very
important for the British Airways to take precautions so that they will be able to over come these
types of situations.
Social: Tastes and preference of customers changes frequently and it is essential for the BA to
make changes in their services and satisfy their customers.
Technology: Changes in technology takes place frequently BA should make changes in their
services so that they will be able to provide services more effectively.
4.3 EU policies on competition
British Airways need to formulate competition strategies to compete with rival airline
companies. In order to gain competitive edge over competitors the firm need to redesign the
products and services that are causing loses for BA. For instance passengers on long haul flights
would welcome the company's decision of including entertainment zones in order to keep them
engaged. Similarly for cost sensitive passengers, cheaper flight packages with excellent services
can be introduced to attract them (Adrangi, Chow and Gritta, 2001). More satisfied passengers
lead to higher profit margins and strong position among competitors. Along with that the
company has to hold on to its skilled and experienced workforce to reduce cost on recruitment
processes which can rather be invested in best training programs to make them more productive.
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