Business Strategy Analysis of British Airways: A Comprehensive Report

This report provides a comprehensive analysis of British Airways' business strategy, encompassing both internal and external environmental factors. It begins with an introduction to business strategy and its significance, particularly within the context of the airline industry. The report then delves into an evaluation of British Airways' resources and capabilities using PESTLE, SWOT, and VRIO analyses. The external competitive environment is assessed using Porter's Five Forces, highlighting the competitive dynamics within the airline sector. Furthermore, the report identifies British Airways' existing and potential competitive advantages. The report then moves on to the critical evaluation of various strategic directions available to the business, recommending growth platforms and strategies. Finally, the report discusses the means for observing the strategies for getting success, followed by the plan of strategic management. The report concludes with a summary of findings and recommendations for British Airways' strategic direction. The report aims to provide a detailed understanding of the airline's strategic position and potential pathways for future success.

BUSINESS
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK A...........................................................................................................................................3
Analysis and evaluating the organisation resources and capabilities .........................................3
Analysis and critically evaluation of the competitive environment...........................................7
Identification and justification of the business organisation’s existing and possible
competitive edge ......................................................................................................................11
Effective strategies and objectives for fulfilment of strategic objectives ..........................11
TASK B.........................................................................................................................................12
Critical evaluation of various types of strategic directions available to business.....................12
Justify and recommend the growth platform and strategies ..................................................13
Evaluating the different ways and means for the purpose of observing the strategies for
getting success .........................................................................................................................13
Plan of strategic management..................................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Business strategy refers to the combination of all decisions which are taken and actions
which are performed by the business for accomplishing the goals of business and secure the
competitive position in the market. It is the backbone as it is roadmap leading to the goals
desired. If there is any fault in roadmap which may result in getting business lost in the crowd of
competitors. Business objective without a strategy is no less than a gamble if businesses enter
in the market without a planned strategy. With the increasing competition the significance of
the business strategy is becoming apparent and a huge increase in business strategies types
which are used by the business(Acuña-Carvajal, 2019). This project is made in context of
British Airways which is the flag carrier of the United Kingdoms airlines. The airline is
headquartered in London, England, near the main hub at the Heathrow Airport. Firm is the
second largest UK based airline based on the size of fleet and passengers carried. Airlines was
founded in the year 1974 after renaming the Aircraft Transport and Travel Limited(Aldea,
acob and Quartel 2018). This project will outlay the application of the suitable frameworks for
analysing the macro factors influence on firm and its strategies. Along with it the analysis of
internal environment of the company by the use of proper models. In addition the Porter Five
Forces application for evaluating the forces for the industry in which the firm operates. Further
the application of theories and models for developing and interpreting the strategic planning for
the firm will be done.
MAIN BODY
TASK A
Analysis and evaluating the organisation resources and capabilities
Pestle analysis - It is a tool used for gaining the macro picture of the environment of the
industry and assists the firm for forming the impression of factors which may impact the
industry and business.
 Political factors- British Airways gets impacted by the change in the policies of the
government. After the invasion of Russia on Ukraine, Russia put the ban on s the flights
of UK for using the airspace of Russia in retaliation of sanctions imposed by the Uk on
them. British airlines flight operations came to a hault and this all political scenario
caused the drop in share of the market(Bayo-Moriones, and et. Al,. 2020). It also

increased the operations cost as they are unable to use Russian airspace and look for
alternative routes.
 Economic factors- In the start of 2020 cases of COVID increased at a fast speed and
for preventing its government imposed the lockdown and because of it the British
Airways experienced the huge loss as the economic activity was halted. Passenger
revenue was decreased due to the expensive cost of fuel and currency hedges as pound
experienced the historic depreciation during COVID pandemic. Fluctuations in the price
of fuel has direct impact on the industry.
 Social factors- Low fares of the tickets attracts the travellers towards the airlines as they
do not want to spend more money on the tickets. British Airways knows this mindset of
the people and has decreased the planes legroom and added the extra seats for offering
cheap tickets and compete with the competitors who are offering low fares.
 Technological factors- Airlines used automation technology for collecting the post flight
review from passengers. Use of this technology saves the data collection cost and give
pathway for the consumers living in the various parts of globe to connect with them.
 Legal factors- British Airways is subjected to the aviation related and nation specific
rules and regulations consisting of discrimination, fairness and disability. Any law
violation will lead to heavy fines, bans and damage the image of brand.
 Environmental factors- By the increased number of aircraft and flights every year the
impact of environmental factors has become the prime concern for the regulatory
authorities all around the globe(Bui, and et. Al,. 2022). Airlines keep a responsible
attitude towards the climate and society by acknowledging the global warming and
working for mitigating the carbon emissions.
Swot analysis – It is a frame work used for identification and analysing the firms
capabilities and its main goal is increasing the factors awareness which impacts the decisions of
the business.
Strengths Weaknesses
 Safety- Airlines is fortunate for having
the low number of accidents and
 Dependent on the local market-
Airlines revenue primarily depends on

incidents. British Airways has a good
image for safety and has consistently
ranked in the top 20 safest
airlines(Chen, and et. Al,. 2018).
 Sustainability- Airlines has putted lot
of focus on becoming a sustainable
brand. Firm has been trying for
reducing the carbon footprint by
investing in the fuel efficiency.
the market of UK. It has greatly
impacted the firms sales after the covid
19 crisis , so they need to start the new
schemes for increasing the sales in
global markets.
 Engine of Rolls Royce- Rolls Royce
Trent 1000 engine has created many
challenges for the airlines. It has
reduced the British Airways punctuality
and availability of the aircraft.
Opportunities Threats
 Service expansion- Firm may expand
many services for the growth of the
revenue. They may start the premium
services which will attract the high end
consumers and businesses.
 Global expansion- Airlines need for
expanding in the global markets which
will aid in stabilizing the sources of
revenue and increase the consumer
base.
 Market competition- Increase in
competitions has took away the share
of market. Firms need to fight the
competition and regularly spend the
money.
 Brexit- It has created a lot of economic
uncertainty which has significant effect
on the airlines(Elias Mota, B.A.,and et.
Al,.2020). New laws set is also
impacting the airlines working.
Stakeholders analysis- It refers to the tools and techniques which is used for
identification of the expectation and requirements of major interest of internal and external
environment both in the project. It is a methodology used for promoting the reform in policy and
process of institutions.
 High Power and High Interest- In this category the leaders and management of the
airlines are included as they have high power of taking decisions in the firm regarding its
business operations and also have high interest as they at the top positions and their
main motive is to generate more profits(Habib, A. and Hasan, M.M., 2021).

 High Power and Low Interest- Government is the one who has the high power in the
firm as they make policies and regulations regarding the airlines which they have to
follow but they show no interest as they do not interfere in the activities of the business.
 Low Power and Low Interest- Local communities come in this category as they have
no power and no interest in the firm. They don't interfere in the airlines operations and
cannot impact any of the decisions of the company.
 Low Power and High Interest- Consumers are included in this category as they have
low power in the airlines and cannot take any decision in the firm but they have high
interest in the services of the airlines as they book tickets and travel from the airlines
generating revenue for the firm.
Vrio analysis- It is a internal analysis which aid the businesses for identification of the
advantages and resources which give them competitive benefit.(Hristov, I. and Appolloni, A.,
2022). It consists of the value, rarity, imitability and organised.
Resources Value Rare Imitation Organized Competitive
Advantage
Intellectual
rights of
the
property
Extremely
valuable
Very rare Risk is low Company is using
at full extent
Strong
competitive
advantage
Sales force
and
Manageme
nt
Yes No Imitated by rivals Lot of potential
for upside
Sustainable
competitive
advantage
Product
portfolio
Yes it is
valuable
No Can be easily
imitated by rivals
Using it as a
good effect
Short term
competitive
advantage
 Value- For British Airways the resources which are valuable are intellectual property
rights, work force and portfolio of products or services. All these have created high
value for the airlines by giving them competitive advantage against the competitors.

These resources have helped them to provide the consumers with better quality services
leading to more profitability(Kabongo, J.D., 2020.). They are the strong competitive
advantage for the firm.
 Rare- For the firm there is no rare resource which would help them to fight the high
competition in the aviation sector. Sales force is rare but to a limited extent which and
portfolio of the services which is also not so unique in comparison to competitors. So
this resource is has created sustainable advantage for the company.
 Imitation- Rights of the intellectual property is the only resources which can not be
imitated by the other firms and other resources such as sales force and service portfolio
can be easily imitated by the rivals creating the sustainable advantage for the airlines. Organized- All the above mentioned resources are being used by the airline at their full
potential so this resource has short term competitive advantage for the British Airways.
Resources like work force has some potential of improvement.
Analysis and critically evaluation of the competitive environment
Porters Five Forces analysis- It is a simple but very effective business tool for analysis
which is used for determination of which strategy has potential for being profitable in the firms
competitive environment.
 Power of competitors- Airline industry is divided in 2 main sectors which are schedule
and budget airlines. Where the schedule airlines operate globally whereas budget
airlines focus on the short destination. British Airways have to compete in the both
sectors. Share in the market is not much significant in compare to the competitors. So
this power is low for the airlines.
 Threat of new entrants- In the airline industry threat of new entry is very low as there
are many entry barriers and regulations. But new participants are coming in the market
which is creating challenge for the British Airways but due to high operating cost they
don't survive in market.
 Power of consumers- The consumers power is moderate as consumer have different
choices such as low cost airlines , easy jet and the airlines schedule. They have vats
range of options to choose and there is less cost of switching but there are less firms in
this sector their power becomes moderate.

 Power of suppliers- Suppliers power is high as there is less no. of suppliers in market
which are Air bus and Boeing. They collectively provide planes to more than 600
airlines. British Airways has contract with them and they cannot back from it. So the
suppliers greatly impact the industry. Threat of substitutes- This force is moderate as UK is a island and major
transportations to the world is by sea or air. But after the launch of tunnel from UK to
France the travellers have got new route for travelling. So the British Airways has some
threat but to less extent.
McKinsey analysis- It is the tool for analysing the firms organisational design and main
goal o of this model is for depicting how effectiveness may be achieved in the firm.
 Strategy- British Airways pursue the strategy of business of service differentiation.
Airline differentiates the services by relying extensively on information technology and
digitalization and provides high level of service customization. Aggressive global
expansion is the other business strategy used by the airline.
 Structure- Airline is owned by the International Airline Group which is the biggest
group in Europe. British Airways follows the hierarchical structure which reflects the
large business size.
 Systems- Beside from standard set of organisation systems like recruitment of
employees and appraisals and system of quality control, airlines maintains the numbers
of sectors specific systems. They include check in system for passenger, handling of
baggages and many others.
 Style- Collaborative style of leadership is used by British Airways which is effective
for them in cutting the cost. This style fosters the creativity, motivation and commitment
from the juniors.
 Skills- British Airways employees have access to the online learning module for the
developing the performance and personal feedbacks in management and administration
community. They also have a development programme for the females where the middle
executives take residential courses.

 Staff- In the British Airways the use of technology has decreased the requirement of
employees. Employees are encouraged by the successful business growth and rewarded
with the best remunerations in the industry for influencing the performance.
 Shared values- British Airways is facing with the change constantly. For managing the
change some questions are asked like is culture helpful for improvements and do values
tandem with the strategy and pressure.

Porters Generic analysis- These strategies are used for determining the direction of the
firm. They are the ways for gaining competitive advantage.
 Cost Leadership- It is strategy in which the British Airways becomes the low price
provider in industry. Ways for implementing the cost leadership strategy varies and
depends on the industry's structure. Airlines has access to raw material, technology and
economies of scale etc. They look for the sources for becoming the cost leader by
providing less priced services.
 Differentiation strategy- By this strategy the main purpose of the airline is to offer the
services which are innovative and attractive in comparison to services of other rivals.
Their full focus is on becoming innovative in the sector with the dimensions which are
valued by the buyers. For this British Airways has selected to provide best services to the
consumers so they consider it as unique and vital.
 Focus strategy- British Airways by this strategy use they focus on the one specific
markets in industry. They examines the dynamics of the market and their requirements
before developing the low cost services for market. They seek the cost advantage in the
target segment.
 Differentiation focus- In this strategy the airlines seeks the differentiation from its target
segment and focus on building some differentiation in the market as compare to the rivals
in the specific markets.

Identification and justification of the business organisation’s existing and possible competitive
edge
It is the primary element for any type of the effective strategy and marketing. By
maintaining the data related to other airlines related to their business operations will assist the
British Airways for identifying the weaknesses and strengths. It also assists in developing the
appropriate suggestions for avoiding the competitive edge on the rivals. By the aid of Porters
Five Forces model the airlines can effectively evaluate the trend of the aviation sector. With it
the airlines will become more dynamic by fulfilment of needs and wants of consumers.
Effective strategies and objectives for fulfilment of strategic objectives
Different types of tools and techniques are required by the firm for the attainment of set
objectives in a efficient manner. By these techniques help they can easily eliminate the
challenges which come in the way of performing the business activities(Yoon, Y. and Sengupta,
S., 2021). British Airways I used some strategies which are mentioned here-
 Managing the relations with consumers- It is used by British Airways managers
which assists them in developing in a better way and maintain healthy relationship with
the customers. According to the ongoing condition of the business there is increase in
the competition. It is vital for the airlines for developing the relationship with customers.
It helps them in retaining and enhancing the firms consumer base.
 Motivation strategies- Various types of motivating strategies are being used by British
Airways for motivating employee's. By help of the strategy they can achieve the airlines
objectives resulting in growth and success in market(Tseng, and et. Al,.2022).

TASK B
Critical evaluation of various types of strategic directions available to business
For the overcoming of the different types of issues and challenges which occur in the business
firm, it is vital for the managers of the airlines to adopt the different kinds of strategies. British
Airways manager are using Porters generic model and Bowman strategy clock model stared
below-
Bowman's strategy clock analysis
 Low cost and low value addition- It assists the British Airways for the maintenance of
service price which will help them in attaining the competitive edge over the rivals.
 Low cost- It helps the airlines for providing the services with the help of economies of
scale which will allow them to provide services at low price.
 Hybrid- With the help of this strategy British Airways can effectively involves the
value in services on regular basis.
 Differentiation- By implementing this strategy the managers of British Airways put
more efforts by providing services to customers.
 Focused differentiation- It assists the airline in providing better services with premium
quality which they can offer at extra cost. Airlines managers can concentrate on various
techniques for gaining the more revenue.
 Risk high margins- It aids them in taking high cost of services and allow for increasing
the service value(Salehi, M. and Arianpoor, A., 2021).
 Monopoly pricing- There is monopoly in the aviation sector and airline is providing
high quality services to the customers. There is immense competition faced by the airline
in service segmentation, so airline should decrease price of services.
 Loss of market share- By this strategy the airline is not able to provide services which
gives value to customer leading to less share in market.