Analysis of the External Business Environment - British Airways

This report provides an analysis of the external business environment affecting British Airways. It begins by discussing the influence of local government on the airline's operations, including taxation, construction permits, and employment policies. The report then examines the role and impact of the European Union (EU), focusing on employment and regional policies. It also assesses the influence of pressure groups on the hospitality industry, using examples like environmental concerns and boycotts. Furthermore, the report analyzes the legal framework within the UK, highlighting differences between English and Scottish systems, and evaluates the UK and EU legislative processes as they impact businesses and services. The analysis covers various aspects, from competition and anti-discrimination policies to their effects on British Airways' operations and profitability.

EXTERNAL
BUSINESS
ENVIRONMENT
1

TABLE OF CONTENTS
TASK 1............................................................................................................................................3
TASK 2............................................................................................................................................3
2.1 Discussing the structure, operations and influence of local government on British Airways
.....................................................................................................................................................3
2.2 Role and influence of the EU and its impact on business and service industry ...................4
2.3 Assessing the roles of pressure groups and their political influence in relation to national
and local issues in regards to hospitality industry.......................................................................5
2.4 Analyzing the legal framework within UK, with the main differences in English and
Scottish systems...........................................................................................................................6
2.5 Evaluating the UK and EU legislative process as it impact business and services at both
local and national level................................................................................................................7
TASK 3............................................................................................................................................8
3.1 Assessment of different types and characteristics of business which operates within
hospitality industry......................................................................................................................8
3.2 Discussion of legal process necessary for formation and dissolution of registered company
.....................................................................................................................................................9
3.3 Analyzing the structure and processes that determine the responsibilities and control
within a registered company......................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
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TASK 1
In PPT.
TASK 2
2.1 Discussing the structure, operations and influence of local government on British Airways
Local government is a kind of public administration, working at the lowest tier of
management in a particular state. It performs its duties as per the powers which are assigned to
them by statute law or directives of the upper level of government. In UK, there are around 426
local bodies that are responsible for governing various operations at local level. The role of local
government is to provide overall direction to municipal bodies with the help of strategic planning
(Narwold, 2008). It further renders the large number of services to local communities like,
employment generation, public health facilities, education, local area development,
transportation connectivity within local areas etc. Regional government devises various laws that
have direct impact on the functioning of company. Therefore, it can be stated that service
organizations are directly affected by the structure and operations of local government (Joardar,
Kostova and Wu, 2014).
Structure and operations of local government
Local government of the UK consists of; counties, districts, metropolitan districts and
London borough. In this respect, there are 426 local administrative bodies that are operating in
country at present. The role of County council is to determine the government expenditure in
local areas so-as-to fulfill the requirements of local individuals. It helps in determining the local
taxation and other rules. The district council looks after 326 districts in England and governs
functions like, recycling the waste material, collecting tax for council and doing development
planning (Bracci and Maran, 2013). Thereafter, London and metropolitan borough provide all
the services rendered by county and district council majorly which includes administrative
services by police, fire and public safety, social care, improving fields like, transportation,
education etc.
Influence of local government
Local government affects the functions of British Airways directly. For example, increase
in local taxes by the government can reduce the profitability of company. Similarly, if business
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wants to build new airport, near the residential area than it is required take construction permit
from the local government (Giudice, Kuenzel and Springbett, 2011). The denial of government
in this respect can limit the growth of organization. Local government of UK forces the service
organizations to give job opportunities to local citizens first. Therefore, BA takes part in campus
placements to appoint young individuals of UK. Also, the local government persuades different
organizations operating in UK to assist in waste management and reduce carbon footprints. In
this respect, different Corporate Social Responsibility activities are carried down by (O’Connor,
2011). Therefore, intense research is done to identify various processes that reduce the carbon
emission. However, it requires large amount of investment which also increases the operational
cost for company.
2.2 Role and influence of the EU and its impact on business and service industry
European Union is a political and economic body comprising of 28 member states that are
situated basically in Europe. The main purpose of EU is to arrive at consensus decisions for the
development and growth of member’s states. It also aims at developing a single and standardized
market for the member nation where they can trade freely. Further, similar laws and regulations
are applicable to all the member states to ensure uniformity. The major objective of EU policy is
to assure un restricted motion of individuals, services and products and capital by applying
standardized policy of business and assuring regional prosperity (Shaikh, 2010). EU regulates
various functions of business entities so that they provide ethical goods and services to the
citizens. The polices and regulations devised by union help in encouraging trade and enhancing
the economic state of member countries. In this respect, EU contributed up to 18.495 trillion US
dollar in global GDP. Furthermore, various policies are framed by EU to encourage business
and help in economic development of nation (Viramgami, 2007). They are explained as follows:
1. Employment policy: The main aim of this policy is to create job opportunities for the
individuals of Europe so as to reduce the unemployment and poverty level of country. It
further help in developing flexible labor market comprising of skilled human capital. Due
tho this policy, business and service entity are required to give proper training and
development to its employees (Fbracci and Maran, 2013). They are also required to
support government in its employment programs by creating jobs. Considering this,
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British Airways participate in training programs initiated by government so that
individual can get job on airports, flight attendant etc.
2. Regional policy: The major purpose of regional policy is to ensure the development and
prosperity of under developed regions of European Union. The main aim of this policy is
to reduce unemployment, ensure infrastructure development in such regions. Therefore,
business and service entities can make investment in under developed regions such as,
Slovakia, Estonia, Poland etc. In this respect, British Airways can start offering its
services in poor growing regions so as to encourage tourism and render more
employment to local citizens to enhance their living standard (Chun and Hahn, 2007).
2.3 Assessing the roles of pressure groups and their political influence in relation to national and
local issues in regards to hospitality industry
Pressure groups is collection of those individuals who share common belief, interest of
thoughts and through this they try to impact government actions and policies. They further play
an important role in determining the opinions of public in terms of any social, political and
religious issues. Therefore, to impact government and public opinion varied actions are used by
pressure groups like, lobbying, noncompliance of civil polices, media campaign, publicity stunts
etc. They further exert pressure on political parties by doing protest and civil disobedience so
they help in attaining their special interest. Pressure groups are those individuals that are opposed
to prevalent norms of society or commercial activity etc (Dascalu and et. al, 2010). The adverse
actions of pressure group can lead to negative brand image of target organization. The impact of
pressure groups can be explained with the help of example of free Tibet group of UK leaded a
global boycott campaign against Intercontinental hotel group for developing luxury hotel in
Lhasa, Tibet (Fraser and Pong, 2009).
A related kind of negative impact of pressure group has been witnessed by British
Airways recently. It was alleged by environmental pressure group namely, Green Peace that
services of British Airways are causing serious damage to environment. The organization was
accused for encouraging binge flying which means flying frequently in short time duration. It
further benefit the company with increased sales and revenue but have serious impact on
environment through curse in terms of extreme carbon emission and climate change. Therefore,
the pressure group forced the organization to reduce the number of flights from Gatwick to
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Newquay in Cornwall to specifically discourage the Binge flying (Impact of pressure group on
British Airways. 2007). Further, Green pace provided free tickets to customers who canceled
their air ticket with BA. This further discourage the sales of company and lead to negative image
of brand in market.
2.4 Analyzing the legal framework within UK, with the main differences in English and Scottish
systems
To operate smoothly in UK, there are large number of legal frameworks that must be
reasoned by company while functioning. Legal framework assures that funds are raised from
public in transparent manner. Further, uniform polices must be applicable to all the organizations
and individuals (Richardson, 2006). In UK there are three major legal systems that are
applicable, England, Wales, Scot law, Northern Ireland etc. These systems further regulate the
market through different laws that are explained as follows:
 Common Law: As per this law, the judges have sole right to give fair decision as per the
conditions. The judge have proper knowledge on the different legal aspects and capable
of giving unbiased decision.
 European Law UK is among the 28 member countries of EU. Therefore, laws and
regulations framed by EU should have more priority over UK law.
 The European Convention on Human Rights: UK is part of ECHR policies and
therefore, it should ensure that human rights of individuals of country are safeguarded.
Therefore, actions of any organization like, British Airways etc must not affect the rights
of its customers, employees or suppliers (Atkinson, 2009).
Furthermore, there are many differences between English and Scottish system which are
described below:
English law Scottish law
It is law applicable to England and Wales
constituting the elements of Common law only.
It is hybrid system having constituents of
common and civil law.
As per this law it is lawful for hotels and pubs
to serve hard drinks throughout the day.
As per the Scott laws, pubs are not allowed to
serve alcohol 24 hours a day.
Here, individuals are permitted to smoke
public spots like, malls, stations etc
As per Scot law one can smoke only in hotels,
restaurant and pubs.
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In English law, legal rights are available to
individual on completing the age of 16.
The legal rights can be acquired under Scott
law only after age of 18 year.
It have independent legal doctrine since the
year 1189.
The legal policies are framed under Scott law
later the Act of Union, in 1707.
2.5 Evaluating the UK and EU legislative process as it impact business and services at both local
and national level
There are large number of legislative policies applicable to service and business industry.
These polices have direct affect on the operations of these company therefore, they must be
considered without fail. Since, hospitality sector is highest income and employment generating
sector of UK, the government of UK ensure that all the organizations within it perform its
operations effectively. To avoid legal consequences it is feasible for British Airways to focus on
laws and regulations made by government of UK and EU (Johnson, Lenartowicz and Apud,
2006). In this respect, company follow laws like, competition policy, anti discrimination, health
and safety act, licensing rules etc. However, these regulations have direct impact on the business
of which are explained as follows:
 Competition policy: As per this policy, it is important for organizations to ensure
healthy competition with its rival. This policy aims at enhancing the competition in
market so that customer can be benefited (Fey, and Birkinshaw, 2005). In this respect,
BA can invest significant amount in research and development so that company can
ensure continuous innovations that provide competitive advantage to brand on the
contrast to its rivals. However, this increases the overall operational cost of company and
reduces the profitability of business.
 Anti discrimination policy: This policy states that it is crucial for company to provide
equal job chances to individual having same knowledge, skills etc (Koutrakos, 2006).
The main aim of this policy is to reduce discrimination on the basis of sex, gender,
religion, caste, creed, color etc. British Airways ensure that the existing or prospective
candidates for vacant job post does not face any kind of discrimination.
 License policy: Hospitality organization cannot function in UK or Europe without
having a valid license issued by government of country. The violation of policies of UK
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or EU can stimulate government to cancel the license of company. To avoid this all the
polices must be strictly considered.
TASK 3
3.1 Assessment of different types and characteristics of business which operates within
hospitality industry
There are mainly many businesses which are operating under the hospitality industry.
These businesses when combined together forms the the complete hospitality industry. These
business have some of the similar characteristic but there are some unique features which every
business possess. The different types and characteristic of business are described as follows:
3. Hotels: This is one of the business which is operating its activities within the hospitality
sector. This is the building or establishment which provides accommodation, meals and
other additional services to the travellers and business tourist. The main features of this
type of organization is that they provide accommodation to the customers. Further, they
provide food along with the accommodating facility (Koutrakos, 2006). Moreover, this
form also provides facilities like laundry, swimming pool, entertainment facilities,
luxurious services, etc. In UK which is a centre attraction of tourism have many big
hotels. The total hotels in the UK is 45,000 and which generate the annual turnover of
£40bn (Fey, and Birkinshaw, 2005).
4. Restaurant: This organization provides only foods and beverages to their customers.
They are specialized in providing meals which are cooked by orders. The special features
are that they provide foods and beverages to the customers and not any accommodation
facility (Johnson, Lenartowicz and Apud, 2006). Every accommodation sector contains
restaurant but any restaurant do not have hotel facility. The annual turnover of this sector
is above £40 million.
5. Pubs: Hospitality industry also includes pubs which is a source of entertainment. In this
premises, liquor and other drinks are served mainly along with some meals which are
served and consumed on the premises (Atkinson, 2009). This establishment also contains
dance floors where people relax and get entertained.
6. Catering: Catering services are also conducted and performed under this industry. In this,
customers are provided with food and drinks at social event or any other gatherings. They
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do not have any premises or outlet. They mainly take orders and serve the meals at
events.
In a similar manner, British Airways is also working under service sector that is aviation
industry. This also has several business which are operating under them. One is the airline
services that is BA provides airline services to the customers and in which they take the people
from one place to another (Richardson, 2006). Along with that they provide meals in the flight
and also luxurious facilities. Further, this also includes airports business where lounge services
are provided to the travellers and also restaurants are established which provides foods and
drinks.
3.2 Discussion of legal process necessary for formation and dissolution of registered company
In order to form a new company in the UK, legal procedure has to be followed by the
directors. In order to register the British Airways by the legal authority, various steps have to be
followed which are described as follows:
Formation of Company
 First step is to incorporate the company and for that purpose an owner has to fill the form
which are registered by Companys Act. In which company's name, company's address
has to be included (Clifton and Díaz‐Fuentes, 2010). There should be at least one director
and one shareholder.
 After that through Companies house, online it can register the company if the firm is
limited by shares.
 Within 3 months of starting to do business, company should get register for Corporation
Tax.
 The company can also be registered by post using form IN01 or by using an agent or
third party software (Craig and Campbell, 2012).
 The application get register within 24 hours and it costs £15.
 After this, company address should be communicated officially. To this address all the
officials communication will be sent that is letters from Communication House and HM
Revenue and Customs.
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 Later to this, directors and company secretary has to be appointed. After which shares
should be issued and shareholders should be made by the company (Campbell and Craig,
2008).
 The Memorandum of Association and Article of Association is issued. And lastly, company get register for the Corporation Tax which finally makes the
company a separate entity for doing business. This is how British Airways get formed.
Dissolution of Company
Dissolution is done by two means that is one id done when company can pay its bills
which is known as solvency of a company whereas, a company who is unable to pay its bills are
termed as insolvent companies. British Airways has done its dissolution on a voluntary basis thus
steps followed is as follows:
 The application must be made by the directors on a official form which has a registration
fee of £10. Prior filling that form company should not have commenced any trade within
3 months (Frynas and Mellahi, 2011).
 After filing the form, directors must notify and communicate the interested parties that is
shareholders, creditors, Her Majesty's Revenue and Customs, all employees, any director
who have not signed any form.
 Objections carried out by Companies house should be handled in a well mannered.
 Companies House has the right to dissolve the company and its effect has to be bear by
directors and owners (Gitman and McDaniel, 2008).
 All the assets has to be sold off before dissolving the firm.
 Any cost incurred during the dissolution has to be bear by directors.
3.3 Analyzing the structure and processes that determine the responsibilities and control within a
registered company
The structure of company defines the hierarchical arrangement of roles and
responsibilities, communication etc within the business. Each and every member in organization
have different role in registered organization like, British Airways which is further explained as
follows:
 Board of Directors: They are responsible for making strategic decisions for business that
help in attaining its long term vision and objective.
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 Non-Executive Directors: They help board of directors in devising policies and ensuring
business planning. They act in the best interest of stakeholders (Narwold, 2008).
 Executive Directors: They help board of directors in developing vision and strategic
goals for business. They provide professional advice to BOD.
 Financial Reporting and control: They help company in determining best profitable
investment option for business by evaluating different alternatives (Mason, 2007).
 Role of auditors: They evaluate the financial performance of company and ensure tax
and other duties are paid fairly on time.
 Right and responsibilities of shareholder: They have right in participating in major
decisions of company. They further have right to elect their member who will operate the
company on behalf of them (Mariappanadar, 2012).
CONCLUSION
As per the study conducted on the external business environment it can be concluded
that, it is highly important for the business sector to carry out the assessment of external
environment. Further, the structure and operation carried out in UK economy influence the
business operations. Moreover, the demographic trends are changing and this affects the
employment patterns. It can also be concluded that political and economic environment also
influence the working of British Airways. In addition to this, there are many types of business
which are operating under hospitality industry and they all have similar characteristic and single
unique feature. Further, the legal procedure has to be followed while forming and dissolving the
British Airways. Additionally, the structure and process of BA determines the responsibilities
and controls within a registered company.
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REFERENCES
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Campbell, C. and Craig, T. 2008. Organisation and the Business Environment. UK: Butterworth-
Heinemann.
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Routledge.
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performance. Journal of Management. 31(4).pp. 597-621
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Frynas, G. J. and Mellahi, K., 2011. Global Strategic Management. Oxford University Press.
Gitman, L. and McDaniel, C., 2008. The Future of Business: The Essentials. 4th ed. Cengage
Learning.
Giudice, G. Kuenzel, R. and Springbett, T., 2011. UK Economy: The Crisis in Perspective.
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Harrison, A., 2013. Business Environment in a Global Context. Oxford University Press.
Hassanien, A, Dale, C. and Clarke, A., 2010. Hospitality Business Development. Routledge.
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