Business Environment Report

This report provides a comprehensive analysis of the business environment surrounding British Airways. It examines the purpose of different organizational structures, identifying key stakeholders and British Airways' responsibilities towards them. The report delves into different economic systems, analyzing the impact of fiscal and monetary policies on the business environment and the influence of competition policies and regulatory mechanisms. The market structure of British Airways, its impact on pricing and demand, and the shaping of organizational structure by market forces are also discussed. The report further explores the impact of working practices and cultures, global changes in trade regimes, global factors affecting UK businesses, and the influence of EU policies on travel, competition, and aviation. The conclusion summarizes the key findings, highlighting British Airways' focus on expansion and its adaptation to various internal and external factors.

BUSINESS ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...................................................................................................................................1
TASK 1....................................................................................................................................................1
1.1 Purpose of different organisation...................................................................................................1
1.2 Key Stakeholders of British Airways............................................................................................2
1.3 Responsibilities of BA to its stakeholders.....................................................................................3
TASK 2....................................................................................................................................................3
2.1 Different economic system............................................................................................................3
2.2 Impact of fiscal and monetary policy on business environment....................................................4
2.3 Impact of competitions policies and regulatory mechanisms in British Airways..........................4
TASK 3....................................................................................................................................................5
3.1 Market Structure of British Airways and its impact on Pricing and Demand...............................5
3.2 Market Forces shape organisational structure................................................................................5
3.3 Impact of working practices and cultures of BA...........................................................................6
TASK 4....................................................................................................................................................7
4.1 Impact of global changes in trade regime caused by organisations such as WTO and other
international civil aviation...................................................................................................................7
4.2 Impact of global factors on UK business organisation..................................................................7
4.3 Impact of EU policies on travel, competition or aviation..............................................................8
CONCLUSION........................................................................................................................................9
REFRENCES.........................................................................................................................................10

INTRODUCTION
The word Business environment means combination of external and internal factors
within the institution that influence company's operating situation. It involves customers,
political, suppliers, economic, government, social, legal and technological factors etc.
Sometimes, all these factors influence the business directly or indirectly. Hence, business
environment can be defined as the whole surroundings, which may directly or indirectly have
relation with functioning of business. Business environment differs from place to place and
people to people therefore, it is not stable at one point (Carroll and Buchholtz, 2014).
In this respect, discussion is being carried out on British Airways in the present study.
It is one of the leading global airline companies which serve high quality airline services to
millions of customers. Further, the study is highly focused with the organisational purposes,
nature of the business environment, behaviour of organisation in marketplace as well as its
global factors shaping business.
TASK 1
1.1 Purpose of different organisation
In today’s contemporary market there are varieties of legal types of organizations such as:
corporations, governments, non-government firms, charities, non-profit corporations,
partnerships and universities. All such organizations are having different purpose as follows:
1. Private limited company: This type of business is owned by shareholders and is been
run by directors itself. Their liability towards business is limited. Company have to be
registered and it should be issued with a certificate of incorporation.
2. Public limited company: In this, legal designation of company has limited liability.
Two or more people are required to form PLC. They work for the benefits of
community as well as society.
3. Non-profit organizations: These types of firms provide the help or resources to a
target audience with a specific need (Sue, 2013). They usually include the wants of
relevant community and developing programs to fulfill those needs.
4. Partnership Company: In this, business is owned by two or more owners of the
enterprise. A partner is set up using Deed of partnership. Profit earned and loss held is
been shared equally among partners.
5. Sole-trader: This business is been owned by single person itself. Owner has total
control over business. Owner enjoys all the profits and benefits of the company.
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Vision and Mission of British Airways are as follows:
Vision: The main vision of British Airways is to modernize its current fleet of
aeroplanes while offering new services. They want to become the most responsible, efficient
airways.
Mission: Its Mission is to attract more customers around the globe. Firm want their
customers to enjoy premium services. Its main focus is on aviation like moving people and
cargo is their core business (Cross, 2015).
Short and long term objectives of British Airways are as follows:
Their objective is to focus every level of passengers and to build a strong bond
between them. They provide high quality services for global passengers, premium
passengers.
Long -term objectives
Its main focus is on aviation with latest equipment, unique technology and product
and services. They want to mark their presence in most global cities by 2025. Meet
customers’ needs and demands through new revenue streams. They want to develop and
build their presence worldwide.
1.2 Key Stakeholders of British Airways
Stakeholders are those who show interest directly or indirectly. They are classified
into 3 group’s internal, external, connected stakeholders.
Following Challenges impacted stakeholders of British Airways are:
Key Stakeholders Extent to which BA meets
the objectives
Shareholders BA is required to pay the
dividend to the shareholders
on a timely basis (Cavusgil
and et.al, 2014).
Customers British airway is required to
attract new and younger
audience by providing them
premium services, global
services as well as varied
product variants.
Employees Company is required to pay
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the employees with extra
benefits like bonus etc.
Suppliers They have to keep the
suppliers informed about on-
going operations followed by
giving them timely payment
(Welford, 2013).
1.3 Responsibilities of BA to its stakeholders
British Airways is one of the world’s largest leading premium airlines around the
globe. They are having different responsibilities for their different stakeholders. Keeping in
mind the responsibility for customers and colleague’s welfare by introducing new projects for
them such as, The London Olympic and Paralympics games, in which hundreds of British
Airways employees participated. Launched their first one destination fund project in which
funds were supported by donations from customers itself, and they launched a new project
called low- carbon project. By addressing the above challenges, BA also needs to provide a
high level of coordination and cooperation so that they can put all their resources more
effectively. In addition to this, they also required to provide quality services to all their
customers in order to enhance their level of satisfaction. For this, improvements to service for
disabled customers by doing following programs such as flagship disability assistance
programme takes place. They upgraded their existing fleet by enhancing the customer
experience and extending the lives of the Aircraft (Cavusgil and et.al., 2014). They are also
working with great passion and commitment in order to fulfil the social responsibility. It is
the best effective way through which they can deliver the best return to all its stakeholders.
Moreover, several health and development services of employees needed to be encouraged so
that workers can easily expand their skills and experience.
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TASK 2
2.1 Different economic system
Different economic system How the economies allocates the resources
Traditional Economic system Resource allocation here is done by
producing products and services that are
direct related to customs, traditions etc
(Bargiela-Chiappini, 2013).
Planned economy Resource allocation lies solely in the hands of
government. decisions regarding production,
distribution and investment are taken by
government (Kale, 2014).
Mixed economy In this economy government interference is
allowed in order to achieve social objectives.
2.2 Impact of fiscal and monetary policy on business environment
Fiscal Policy- It means government adjusts its spending level and taxes rates to
monitor and influence economy. It states that if taxes are low then investment will be high
and automatically income will go to increase.
Monetary policy: It is policy in which monetary transactions are controlled by central
banks, the supply of money in the economy is control over interest rates an order to maintain
price stability and achieve high economic growth. In this decision regarding short-term
interest rates may affect the long-term interest rates in nearby future (Kale, 2014).
These policies may impact the economy in many ways. In the time of recession, UK
was facing down fall in economy that impacted operations of British Airways. During that
time, British Airways lowered down the rates of air tickets to attract more and new
customers. Demand of customers was increased. As in, customers are investing more in
British Airways (Carroll and Buchholtz, 2014).I in other words, because of changes made in
fiscal and monetary policy by British Airways demand was getting up. Now, British Airways
as well as Far East and Middle East markets are now performing well. But Demand for
premium services remains low, because of recession and changes in British Airways.
2.3 Impact of competitions policies and regulatory mechanisms in British Airways
The changes of regulatory environment could lead to increased competition for the
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company. A British airway is one of the fastest growing company and they are highly concern
about their customers. Due to the changing regulatory environment there competition could
lead to increased and it is result of liberalisation. This can be determining as a major outcome
of following this policy. Further, it has created substantial benefits to customers as well as
presenting new opportunities to their workers.
Competition act 1998 is the major source of competition law in UK (Welford, 2013).
One of the major reasons of following this policy is just to deal with restrictive business
practices and abuse of a dominant market positions. In addition to this, fair trading has come
up with a solution i.e. reduction of the booking payments done by travel agents for British
Airways has not infringed (Cavusgil and et.al., 2014). The civil aviation authority directly or
indirectly regulates all aspects of aviation in UK, such as British Airways. The CAA has
neglected its primary duty to see the interests of passengers. They have done this by
endorsing a settlement that allows the monopoly to ignore its inefficiencies and investors by
applying excessive charges on users.
Moreover, it can be stated that competition policy make business compete and
motivate them to reduce their cost and develop quality. It is the best effective way which
provides several beneficial outcomes to the company as well as customers. By providing
quality in low cost company can easily make loyal customers and enhancing their market
share as well. Further, with the help of regulatory mechanism British Airways can easily
examine its impact on the business performance. It contribute both to develop economic
performance and to poverty decrease.
TASK 3
3.1 Market Structure of British Airways and its impact on Pricing and Demand
Market structure influences demand and pricing which are made by organisations.
The aim of every organisation is to increase profits and minimise their losses (Sue, 2013).
There are various types of markets such as:
1. Perfect competition: This competition is characterized by many infinite numbers of
buyers and sellers in marketplace. As there are many market players so prices are
fixed and it cannot be changed in any case. If any of the participants tries to change
it, buyers and sellers switch to their alternatives.
2. Monopoly competition: In this competition there is only one producer of a particular
goods and services. As they are not having any substitute, in this competition
monopolist can charge any price due to less competition in marketplace. Their
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revenue will be limited, customers will pay price according to their wish.
3. Oligopoly competition: In this competition primary difference is that it is having
only one producer of a good or service, but there are number of producers in
marketplace (Björklund, 2011). Further, in the oligopoly competition they do not
have the same pricing power as monopolists.
4. Monopolistic competition: This is a type of market system combing elements of a
monopoly and perfect competition. In this there are number of competitors in the
market. Each competitor is sufficiently different from others as some competitor
charge high prices.
British Airways comes under oligopoly competition where the BA has few organisations
to dominate like Air France. There is only little market that are competing which British
Airways. Oligopoly is the market structure in which set-up costs are extremely high due to
which companies are not able to enter into market easily. As it can maximize their profits and
reduces their losses by providing better services to customers according to their needs and
demand (Behara and Gunderson, 2015).
3.2 Market Forces shape organisational structure
Market forces include demand and supply that has an impact on overall working of
British airways (Björklund, 2011). If the forces are not judged properly then the company is
likely to face issues. In this regard, if there is a presence of high passenger demand on
account of festive seasons then company will have to increase its fleet and planes. They may
further be required to provide variety of products keeping in minds the needs and demand of
the customers. In the same, if demand is low then British Airways spend lot of money on
research and development in order to eliminate loops and provide better and refined services
to its customers. They are looking for value for money, demanding excellent services and
high quality standards at lower costs (Carroll and Buchholtz, 2014). In case of having low
supply services and high demand than company should reduce its fares in order to attract
more customers (Cross 2015).
3.3 Impact of working practices and cultures of BA
Culture defines the principle and values which guides people to behave in an
organisation. On the other hand, the organisational culture defines the way in which members
of an organisation relate to each other (Juščius, 2015). The external environment can be
categorized into the economic environment, political environment, government environment,
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socio cultural environment and the international environment. For example British Airways
has to operate in different countries.
They are serving their business operations in different countries due to which they are
facing many problems related to language, price, taste etc. While serving the consumers in
India they have to focus on not introducing beef in its servings to passengers. In the same
way, while carrying out promotional activities in Arab nations. The company is required to
not include women in the ads.
Hence, employees must be trained in such a way that they can interact with customers
coming from different background and different language and culture easily. Moreover, all of
these obstacles can be easily covered up by the way of encouraging innovation and creativity.
It is the best way through which effectiveness of whole airline services can be improved. BA
can take part in various CSR activities such as reducing air and pollution etc. They can allow
people to take several decisions regarding their business.
TASK 4
4.1 Impact of global changes in trade regime caused by organisations such as WTO and other
international civil aviation
British Airways is a well-known for being one of the world’s largest and leading
global premium airlines. It is engage with several activities such as international trade and
also give appropriate support to small and medium-sized businesses. SMEs are essential and
growing segment of the UK economy and British Airways is trying to help in that economy
by connecting SMEs to new customers overseas.
Due to the globalization, there are several changes taking place in the country and it
highly is affecting the business operations of BA. It is important that SMEs are given new
opportunity to promote and sell their products in the global marketplace (Cross, 2015). The
whole international trading systems among different countries are expanding very highly due
to the several modern techniques. These techniques can be defining as transportation system,
transportation corporations, outsourcing of manufacturing and services etc. Following global
changes in British Airways are associated with international trade in two distinct ways such
as:
 Air transport is traded as a service in its own right
 Key intermediate service for many other kinds of trade in domain of goods and
services
It has been highlighted that world trade organisation (WTO), has an effective and reliable
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air transport infrastructure, especially in developing country like UK. It also have important
role in international civil aviation. It is expected to increase of technological innovation,
deregulation and enhancement of foreign companies, which are making new customers in
broader range of countries.
In the same way, international trade is very significant for the overall operations of British
airways. It may lead to enhance the overall foreign earnings. Further there may also be an
increased presence of overseas consumers that is likely to enhance brand image of company
in long run.
4.2 Impact of global factors on UK business organisation
There is a presence of many Global factors that puts an impact on overall working of
British Airways. In the area of legal factors the company is required to adhere with them as
and when the changes are made by government. In the same way, Economical factor if
positive then may lead to increase in demand of services. Hence BA is required to implement
tactics by taking care of the on-going fluctuations. In the same way, there is a presence of
technological factor also where in the company may be required to adopt innovations and
inventions so as to face the market competition. The impact is likely to be positive if the
company makes changes in technology as per demand (Voegtlin and Patzer, 2012).
4.3 Impact of EU policies on travel, competition or aviation
European Union and its policies are likely to impact the operations of British Airways
in many ways.
Employment Policy: The Company is required to adhere with the employment norms.
Failure to do so may led to many legal issues for the company. This can led to damaging its
overall brand image.
Education and Training policy: The UK government has made it mandatory for
companies to provide training opportunities to employees. Failure to do so may led to an
increased employee turnover (Dowling and Moran 2012).
International policy: As per the given policy British airways is required to promote
overall international trade. For this the need is to enhance its international operations. The
impact is likely to be positive as the company will get a wide array of overseas consumers
followed by an enhancement in the global image (Voegtlin, 2012).
.
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CONCLUSION
From the above report it can be concluded that British Airways is highly focused with
expanding its business operations to better serve increasing amount of passengers. For this,
they are improving its passenger services by maintaining strong relationship with its
employees. They serve in different countries that lead to change in work culture of the
organization. Further, it has been articulated that they works under oligopoly market structure
in which set-up cost is high. Moreover, it is necessary for the organization to reach at
equilibrium point where demand and supply is equal.
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