Analysis of British Airways' Business Environment and CRM Strategies

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CONTEMPORARY BUSINESS AND MANAGEMENT
ASSESSMENT 2019
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Table of content
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
Range of external business environment factors..........................................................................3
Task 2...............................................................................................................................................8
Influence of customer relationship management in organisation policies...................................8
Effectiveness of organisational response...................................................................................10
Areas for improvement in the response.....................................................................................12
Conclusion.....................................................................................................................................14
References......................................................................................................................................15
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Introduction
Appropriate management of business in this global market is essential to retain competitive
advantage in this market. In order to understand the strategies of business management
researcher has chosen British Airways. It is the flag carrier of and second largest airline
organisation operating in the UK. This organisation is based in Waterside near its main working
area in Heathrow, London. Parent organisation of British Airways is International Airlines Group
and it has alliance with Oneworld. This company has a fleet size of 276 and covers up 183
destinations worldwide. Easyjet, Jet2, Thomson Airways, Delta Airways are some current
competitors of this airlines organisation. Current revenue of this company is £11,443 million and
net income is £1,473 million. Number of employees in this organisation is 45000
Task 1
Range of external business environment factors
After an organisation stock up their finance and find a suitable location for business and hire
proper staffs, higher authority has to make a proper business plan to increase their productivity.
As opined by Noe et al. (2017: 87-91) managers and other stakeholders must considers various
external factors that can have influence in the airlines business. Higher authorities of this airlines
organisation need contingency plans to deal with adverse influences from external parameters.
Some of these factors will be discussed to generate understanding of their effects through a
PESTLE analysis.
Factors Effect Impact
Political ● Tax rates of UK is 20%
● Aviation market is quite stable
● currency rate of UK is $1.30
Positive
Economical ● Contribution of UK aviation in GDP is £19.8
● Revenues are generated from the market is
Negative
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£11,443 million.
● Adverse impact on business due to Brexit.
Sociocultural ● Population of UK is 66 million.
● Mortality rates is 9.34 per 1000
● Mean age of this country is 40 years
Positive
Technological ● Technical growth is 4.5%. Positive
Legal ● Employment Right Act 1996
● Companies Act 2006
Positive
Environmental ● British Airways maintain their CSR policies
through giving some portion of their income to
social improvement.
● Control of pollution Act 1974
● Environment Act 1995
Positive
Table 1: PESTLE table
(Source: Given by researcher)
Political factors:
● Local infrastructure changes: Changes in laws, construction of runways, and
innovation of whole systems are highly important to establish airlines business in the
market. Managers and other higher authorities have to depend on the local rules and
regulations for the success in business (Badwan et al. 2017: 20-28). Significant changes
in local infrastructure in UK may prove catastrophic or fruitful to the business of British
Airways.
● Political conflicts: Increase in price of fuels is developing political conflicts in UK. Due
to excessive increase of fuel price authorities of British Airways have increase their ticket
values which is generating unrest among the customers. Due to political conflicts with the
Middle Eastern countries fuel supply has decreased and results to skyrocketing of fuel
price (Choi et al. 2017: 81-92). People are living in the energy centric world where
control over natural resources generates economic vulnerability among some business
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owners. Due these political conflicts British Airways has to face huge economical loss
and also have an adverse impact on the productivity. Resolving this kind of disputes can
be slow and costly. These disputes can results to huge damage to the commercial world
of UK and also damage reputation of British Airways.
Economic factors:
● Market economy: The global economy is one of the huge external factors that plays a
key role in the business of Airlines. This fluctuation of UK market is based on politics,
terrorist attacks, any external conflicts and wars, and devaluation of currency might have
some adverse impact in the business of British Airways.
● Finance and credit: Stock market, solvency of various banks and different financial
institutions have affect in the ability of doing business. Market interest rates of UK which
is on average 7.52%, availability of credit and loans for customers are some external
factors that have impact in the business (Clauss, 2017: 385-403). However, authorities of
British Airways do not have any control on it.
● Income: Income of the consumers indicates the ability of an individual to spend on the
journey through Airways in various parts of the country. There is a sharp rise in the
number of incoming family members in the various parts of UK. This leads to rise of
overall family income and results in higher demand of lifestyle and luxury. Therefore use
of airline has increased which leads to increase in profitability of British Airways.
However, there is some adverse effect in the market due to Brexit in recent years
(Hammer, 2015: 3-16). Due to Brexit various organisations are cutting down the pay
scale of their employees because of lack of financing which leads to some decrease of
customers.
Sociocultural factors
● Change in customer base: Customer base that has been targeted by this airline
organisation may vary suddenly or over a period of time. This change in customer base
can attracts more new customers and can have good impact in the business. Various
strategies can be made by BA to meet customer satisfaction needs and wants. In addition
to that, higher authorities also think about the cultural and sociological factors and
implement proper strategies according to it so that there is no adverse impact on the
business due to these.
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● Labour market trends: Employees should get well trained to manage customers
according to their needs and also deal with them according to their behaviours. According
to some senior officials of British Airways, customers become more discriminating,
curious and also demanding. However, employees have to learn how to handle consumers
of in adverse situations. Basic salary package of employees of British Airways is £17000
to £20000 per year.
● Customer values: A values among the customers are strongly held and can have great
influence in the business of British Airways. Majority of the people of UK who lives in a
society endorse the values of that particular society. Values of an individual are one of
the key determinants of what is essential and what is not (Kourula et al. 2017: 14-18).
Values also determine the reactions of that individual person in a specific situation and
individual’s behaviour towards any situations generated by society. In addition to that,
values affect the services that a consumer gets while that person is travelling through one
place to another. In present days consumers do not tolerate any kind of bad services or
misbehaviour of the staffs of.
Technological factors
● Noticeable changes in trends and technologies: This aviation organisation of UK has
spent huge amount of money in the innovation of technologies in order to make the
business profitable. However, some factors cannot be control by the company.
Technologies are innovating everyday and meet with it every moment is highly
challenging tasks for BA. Through proper strategic planning organisation can control use
of technologies however use of social media that is widespread can have effect on the
business.
● Collaboration between human resource and AI: Technology is a huge part in the
aviation sector. Proper collaboration between human resources and Artificial Intelligence
is highly essential to conduct business (Rosemann, M., & vom Brocke, J. (2015: 105-
122). AI helps to maintain business operation of British Airways and helps employees to
properly execute work within given time range. AI helps to personalised employee
experiences as it provide helps to new employee who are not familiar to work.
Legal factors
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● Changes in UK laws: State, local laws or federal laws changes can have direct impact in
the business if the service becomes highly outlawed or unregulated. British Airways has
learnt this lesson when UK laws gives stress in the employee satisfaction and this
aviation organisation has to regulate its company laws according to it. Various
government policies that affect communication among various stakeholders in the
organisations is Communication Act 2003.
● Liabilities: There are some serious complaints against this aviation organisation about
not maintaining proper cleanliness in the planes. In addition to that, they have lack of
long serving well informed airport staffs. These results to delay in service or improper
service. Handling of baggage is an issue that have notices in the complaint filed against
British Airways.
Environmental factors
● Impact of bad weather: Weather is a natural thing that cannot be controlled and have to
be dealt according to variations. Storms, tornadoes, wildfires, hurricanes are some
influential external factors that have huge impact in the aviation business. Continuous
bad weather has huge impact on the profitability on BA. However, authorities cannot do
any about it rather than waiting to get weather in better condition.
● Pollution and environmental regulations: British government have developed various
laws and regulations to protect their environment. Control of Pollution Act 1974 and
Environment Act 1995 are example of them and these laws have significant impact on
the organisational operations of British Airways. Authorities of this aviation organisation
have stressed on using environment friendly equipments to meet this regulations
efficiently (British Airways, 2019).
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Task 2
Influence of customer relationship management in organisation policies
Customer relationship management is a strategic approach that allows higher authorities of
British Airways to manage organisational relationship with consumers or potential clients and all
important data regarding to it. As business of this aviation organisation grows, data started from
various sources like sales, support for customers or motoring department of Social media. Proper
application of Customer relationship management helps employees and managers to effectively
manage data that are used to analyse and understand trends and behaviours of customers. Most
importantly, effective CRM helps to develop positive customer experiences in the Airways
services. This is based on relevant, relevance and real time information that is highly important
for the business operations.
CRM is a process that has been implemented by the higher authorities of BA with the help of
various CRM systems. Customer relationship management system is a tools that gather data in
the cloud based storage (Soltani et al. 2018: 237-246). Those data are properly managed and then
analysed in order to get important information that might help to develop effective strategies.
Those strategies help to increase the business of BA and help to make decisions. Customer
relationship management tools are basically used by the employees of British Airways for
manage data of sales and marketing. However, as per comment of Tukker & Tischner, (2017: 56-
59) nowadays business shift their focus to the experience of the consumers as company has to
engage with customers multiple times and they are the main stakeholders of the organisation.
Therefore CRM systems are used as one of the integral component of consumers’ service of BA.
From various researches it has noticed that improvement in consumer experience affect the
growth of business of British Airways through increasing loyalty. Therefore to get a long term
good effect in the business operation marketing managers of this airline industries are mainly
focusing on relationship with their consumers which have some huge impact.
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Figure 1: Influence of customer relationship management
(Source: Given by researcher)
● Organise as well as analyse data: Effective customer relationship management helps to
properly analyse data which helps to take any decision. Decisions that are taken through
utilising good information can provide better results in organisational context. CRM lets
marketing department to access various data points to easily gather relevant data and
implement it in market.
● Proper identification and managing leads: CRM of British Airways can have huge
impact on the sale process. As an example, survey integration that has done Surveypal to
salesforce allows this organisation to develop new leads in sales. As stated by Welford,
(2016: 33-38) this new leads helps to develop new follow up actions which is based on
sale data. This new and innovative ways help organisation to cut down on time for
response which leads to better management of customers with informative leads.
● Understand needs of consumers: Through proper use of customer relationship
management managers and other higher authorities can get access to relevant data like
contact information of consumers, their history of travelling, and contact history of
consumer services. In addition to that, management can implement information of
consumer data in the CRM tools so that officials can get a better understanding of
expectation of customers (Rahimi & Kozak, 2017: 40-51). This information about clients
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are essential as it enables British Airways to develop an overview of customer needs
which can results to development positive experience among clients.
● Improvement of services: Collection of clients’ feedback and merging those in into the
CRM can provides a better understanding of consumers’ needs and wants in relation to
the services of this Airways company. Needs of clients can vary according to societal and
cultural background and management has to take care of this in order to make provide
better customer experiences. This data can also help to identify issues and mitigate them
to meet clients’ needs.
● Lead management: There is long process before an interested person becomes a
customer. Management of British Airways has to identify a lead to quantify that and for
that effective CRM is highly needed. A lead can form various channels such as websites,
social selling or an event (Rahimi, 2017: 443-449). With this various channels, higher
authorities of BA have to be specific about which department is mainly responsible for
registering the leads. Without a process which is clearly defined leads can be lost. This
can generate frustration, lost productivity and bad experience generation in customers.
Effectiveness of organisational response
Customer relationship management is one of the strongest and most effective approaches while
developing relationship with the consumers. Customer relationship management not only
manage business but also create a strong bonding within the stakeholders of British Airways.
Development of this kind of bonding helps organisations to increase their business and
profitability. Once a personal bond is created, it get quite easy for BA to understand basic needs
of the consumers and provide help according to it. This identification of needs helps staffs to
serve in better possible way (Rahimi, 2017: 1380-1402). Well developed strategies become
highly fruitful for business operation. British Airways use various innovative tools such as
Microsoft Dynamic CRM and Vtiger CRM to manage customer relationship.
Collecting and organising relevant data of customers is a full time job for British Airways.
Customer relationship management provides various advantages that help this airlines
organisation to identify understand and help customers. This helps to provide clients services that
they need which leads to increase the profitability. Customer relationship management has
significant impact on the organisation response.
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Figure 2: Effectiveness of organisational response
(Source: Given by researcher)
● Improved information for organisation: If organisation understands psychology of the
customers better then a positive experience can be generated through providing effective
services to them. Every work and every interaction that are having British Airways with
its customers must be properly identified and documented and well recorded. In order to
do that, employees and senior official of this airline organisation have to be organised
and also start using various innovative technologies this technologies can help
organisation to accurately quantify as well as categorised all relevant data for future use
(Nyadzayo & Khajehzadeh, 2016: 262-270). Additionally, it also makes data available to
all departments of company. Through proper use of CRM employee can use a cloud
based storage system that can gather huge amount of data and customer information. This
results less time waste for both clients and staffs.
● Enhanced communication: CRM provide significant service through providing access
to same data. Sometimes consumers can have single source of contact, and for some
reason that source of contact cannot be communicable. This leads that customer to work
with some new service provider which generate unhappiness as that new service provider
do not understand specific needs and wants. Customer relationship management tools
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helps to reduce these chances through documenting information about consumers in
detail which helps to communicate whenever need (Navimipour & Soltani, 2016: 1052-
1066). It does not matter who is providing help to clients as they have the access to the
same client information. Cloud based CRM is used by British Airways which provide
facility to employees to help their clients even from outside the workplace as it can get
accessible through phone.
● Improvement of customer service: Time is valuable for every person and customers
want to resolve issues as soon as possible. Sometimes customers get unhappy while their
problems do not get solved with a specific time which can have adverse impact in the
customer retention policy of BA. Through effective use of CRM, whenever a customer
contact with the company to solve any issue employee can retrieve client data related to
past service history. This helps staffs to find a solution that can help customer and make
that person happy. British Airways has representatives who are highly experienced and
have access to past data and records can find out effective solution in a small amount of
time. These experienced employees have access to database of various problems and
therefore they can resolve client issues within minutes (Kangu et al. 2017: 113-127). In
addition to that, management of BA also use crowd sourcing facility to get a possible
solution of an issue that cannot resolved by the employees.
● Automation in task: Completion of sale is not an easy task as it has long process and
organisation has to take care of consumer satisfaction level throughout the service. This
helps to generate a brand image. There are different small tasks that have to be completed
in order to maintain the function of this airline organisation properly. As opined by
Hassan et al. (2015: 563-567) Management of BA have to take care of different legal
problems, fill out forms and send them to respective places and customer relationship
management tools helps employees to efficiently do this tasks. This leads employees of
British Airways to become more focus on the efforts to close a lead and resolve client
issues while CRM system gathered detail of consumers.
Areas for improvement in the response
Loyalty of a customer depends on their experience, not the brand they choose. Rahimi & Kozak
(2017: 40-51) comment everyday air travel experiences which may lead to frustrations like extra
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