British Airways Strategic Analysis and Recommendations

This report provides a comprehensive strategic analysis of British Airways, a major airline in the United Kingdom. It begins with an introduction to strategic management and its importance in achieving competitive advantage, focusing on the airline industry's goals, objectives, and mission statement. The report then delves into environmental analysis using the PESTLE framework, examining political, economic, social, technological, legal, and environmental factors affecting British Airways. Industry analysis is conducted using Porter's Five Forces model, assessing the threats of new entrants, substitutes, buyer and supplier power, and industry rivalry. A capability analysis follows, employing a value chain analysis to identify primary and support activities, strengths, and weaknesses. The report also includes VRIO criteria to evaluate the company's resources and capabilities. Finally, it proposes a strategic plan for British Airways, followed by an evaluation of the proposed strategy and a concluding summary of the findings.

Strategic
Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASKS.............................................................................................................................................1
Q1. Mission, goals and objectives...............................................................................................1
Q2. Environmental analysis.........................................................................................................2
Q3. Industry analysis...................................................................................................................3
Q4. Capability analysis................................................................................................................5
Q5. Proposed strategy..................................................................................................................7
Q6. Strategy evaluation...............................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
A strategy is a kind of action plan which is built by organization in order to achieve set of
targets within a specific time period. Strategic management is a process that is used to build
some capabilities so that they can create some value for their stakeholders, consumers and
society (Hitt, Ireland and Hoskisson, 2012). By implementing this, an enterprise will be able to
achieve competitive advantage which will help them sin achieving success as compare to other
marketing players. The present report is based on British Airways which is a largest airline
industry in United Kingdom. They are planning to implement some strategies so that they will be
able to generate high revenues and achieve growth. The airline industry has approx. 183
destinations in all over the world so their global image is also good. In this context, report
explain goals, objectives and environmental analysis. Along with this, it explains industry and
capability analysis in detail.
TASKS
Q1. Mission, goals and objectives
When an organization implement strategy then in this their existing mission statement,
objectives and goals play an important role. These can provide an appropriate direction to the
other staff members so that they can perform well.
Mission statement: This statement explains the basic function of an organization in society
in the terms of products and services which are offered to the consumers. The mission of the
company is that “Our destinations ensures that customers fly confident that, together we are
responsible to take care of world we live in”. This can change the mind-set of service users that
they will be safe in air or ground so that they feel confidents towards the airline industry.
Objectives: British Airways has to focus on their short term as well as long term objectives
so that they can sustain their competitive advantage. Some of these goals are focused on three
main areas such as global, premium and airline. These objectives are as follows:
 To appeal all the customers at global level in order to improve their brand image.
 To provide high quality services to different service users.
 To develop a global connectivity with the consumers.
 To build a leading position in London as compare to other marketing players.
 To generate high revenues by meeting the needs and demands of the customers.
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So, these existing objectives and goals helps the airline industry in order to implement the
strategy in an effective way. Through this, their overall operations can be managed which can
lead them towards success.
Q2. Environmental analysis
It is a kind of tool which is used by business organization so that they can determine the
factors which affects their performance (Peppard and Ward, 2016). By using this type of
analysis, British Airways will be able to identify their strategic position in the market as compare
to other competitors. For this, the firm uses PESTLE analysis which stands for political,
economic, social, technological, legal and environmental. These factors are as follows:
Political: These factors are related to government policies, taxes laws, political stability,
trade barriers and so on. These different aspects influence the airline industry most as they are
performing their operations in different countries. If political stability is there, then British
Airways will be able to perform its operations in an effective manner.
Economic: Some economic factors are there which can affect the performance of company
directly like inflation rate, interest rate, foreign exchange, disposable income of an individual,
unemployment rate and so on (Keupp, Palmié and Gassmann, 2012). The performance of airline
industry is get affected in negative manner and due to which number of passengers are get
reduced to some extent. For example, the price of oil is get increased, financial crisis happened
then prices of tickets are get enhanced and due to which the industry will not be able to attract
number of customers.
Social: When an enterprise performs its operations at global level then due to variety in
culture or different mind-set of people their performance is get influenced. Some of these aspects
are there like beliefs, attitude, culture due to which companies will not be able to achieve its
goals (Stead and Stead, 2013). For example, due to economic downturn people are more
concerned for the prices so airline industry should offer more valuable services for the money.
Technological: Many companies are there which adopted the innovative or technological
advancements so that they can enhance the satisfaction level of their consumers. For example,
British Airways has to maintain their website so that they will be able to resolve the queries of
their consumers.
Legal: An enterprise has to follow some rules and regulations which are made by
government so that they can ensure smooth functioning at their workplace. Some of these
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legislative laws are like employment, health & safety and so on. The specific laws should be
followed by the firm so that they will be able to perform well.
Environmental: Sometimes, location and change in climate can affect the performance of
business organization. British Airways has to focused on some environmental changes and along
with this they have to follow laws so that carbon footprints can be reduced and their goals can be
achieved.
Q3. Industry analysis
It is a kind of tool which is used by organization in order to identify their own position as
compare to the firm who offer similar services or products. This is an important concept which
helps the industry in order to form a strategic planning. Along with this, British Airways will be
able to identify the opportunity and threats and they have to focus on their resources so that they
can sustain competitive advantage (Priem, Li and Carr, 2012). For this, the airline industry can
use porter’s five force model which explain that rivalry among companies is depends upon five
forces such as threat of new entrant, threat of substitute, bargaining power of buyers, bargaining
power of suppliers and industry rivalry. These forces are as follows:
Threat of new entrants: This is related to the entry of new company into the market and
how much it is difficult for the existing firm to face the competition. There are some profitable
markets which attract new industries as by performing their operations in particular location they
will be able to generate high revenues. There are some factors like absolute cost, customer’s
loyalty etc. which can affect the firm and they will not be able to perform their operations. For
example, British airways can enter into any market but sometimes this is difficult due to long
haul carriers. Furthermore, this will not be a threat for the airline industry.
Threat of substitute: Some industries are there who offer substitute products and services
to their customers (Molina-Azorin, 2012). For British airways this is not significant as the
substitution for travel are like sea transports and vehicles. But the air transport is the fastest
medium through which a long journey can be completed in few hours. So, it can be analysed that
there is no substitution for the airline firm. There are some factors like buyer switching cost,
quality depreciation on which it can be stated that how threats can affect the performance of an
organization.
Bargaining power of buyer: The bargaining power of customers can be described as the
ability of people who put a firm into pressure so that prices can be changed to some extent. This
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power of consumers will be high when they have too many options and company can have
reduced this by implementing the loyalty programs at market area. In the case of British
Airways, the bargaining power is high as end users can purchase tickets on cheaper rates as
compare to the respective airline industry. Apart from this, in some cases at international level
their power is low as they have no other option through which they can travel in short distance.
Source 1: Dudovskiy, J., 2017
Bargaining power of suppliers: The bargaining power of suppliers can be evaluated on
the basis of raw materials and components. For example, if there are few substitutes in the
market then their power is high. When the power of these suppliers is high then it will highly
affect the profitability of airline industry. If there is high competition between the suppliers, then
through this effective prices can be set for the fuel and aircraft.
Industry rivalry: The current intensity of rivalry can be evaluated on the basis of
competitiveness (Knudson and et. al., 2012). British Airways offer their services to their
customers at more flexible prices so that they can maintain their profitability level in more
effective manner. There are many companies who perform merger and acquisition so that they
can sustain competitive advantage in more effective way.
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Q4. Capability analysis
The company can use value chain analysis in order to conduct the analysis on the basis of
some aspects like competencies, resources and capability (Srdjevic, Bajcetic and Srdjevic, 2012).
Value chain analysis is a model that identified the primary and secondary activities which add
some value to its final services. By using this, the cost can be reduced and due to which
differentiation can be achieved. There are some primary and secondary activities.
Primary activities: These activities are highly concerned with the creating and delivering
products to the end users.
 Inbound logistics: These activities are related to the externally source material which is
used by airline industry in order to manufacture the products.
 Operations: It is related to the transformation process through which all inputs are
converted into the output so that customers will be able to get more quality and
innovative services.
 Outbound logistics: These are the activities which are associated with finished goods and
other services which are consumed by service users.
 Marketing & sales: It is an activity which can be used by organization so that consumers
will be able to know about different products and services. Service: By using some activities so that the performance of products can be maintained
in an effective way.
Support activities: Some activities are there which are not directly involved into the
production process as by using these the overall efficiency can be improved.
 Firm infrastructure: This is related to some functions and systems which are related to
finance, quality control, planning and so on.
 Procurement: This step in support activities is concerned with the resources that how the
resources are utilised in an effective manner so that business organization can perform its
operations effectively.
 Human resource management: Human resources are valuable assets of firm who perform
their work effectively so that goals can be achieved. The HR management is related to
some activities like recruitment, selection, rewarding and motivating.
 Technology: A business organization can use various technological advancements so that
they can secure the information in secure place.
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Source 2: Value Chain Analysis. 2017
Strength and weaknesses of British Airways Value chain analysis: After conducting the
value chain analysis the strength and weaknesses of British Airways can be identified. The
strengths are:
 The brand image of British Airways is strong at the global as well as domestic market.
 The Airline industry uses the digitalization and innovative approaches.
 Passengers wants to travel in British Airways airline as this provides an excellent
environment to them.
Some weaknesses are as follows:
 The current airline industry faces some challenges in order to provide training to the
employees.
 The prices of tickets are get increased due to increase in the prices of fuel.
 The competition is high in the market so they have low market share as compare to their
competitors.
VRIO criteria on the basis of various activities of value chain analysis:
Value chain
activities
Valuable Rare Imitate Substitute Competitive
consequences
Inbound logistics Yes Yes Yes Yes Sustainable
competitive
advantage
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Operations Yes Yes Yes Yes Sustainable
competitive
advantage
Outbound logistics Yes Yes No Yes Temporary
competitive
advantage
Marketing and sales Yes No No No Competitive parity
Services Yes Yes Yes No Temporary
competitive
advantage
Procurement No Yes No Yes Temporary
competitive
advantage
Technology Yes No Yes No Temporary
competitive
advantage
Human resource
management
Yes Yes Yes Yes Sustainable
competitive
advantage
Q5. Proposed strategy
The new strategies can be proposed by using some different models and approaches. Here,
Bowman’s strategy clock has been used by British Airways so that different strategic positioning
can be evaluated and products can be positioned effectively in order to achieve competitive
advantage.
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So
urce 3: Bowman's Strategy Clock (Strategic Positioning), 2015
On the basis of above bowman’s clock, some appropriate strategies can be identified so
that they will be able to achieve competitive advantage effectively. Here, focused differentiation
approach is used by British Airways so that they can achieve success.
In the focused differentiation approach, the customers perceived value is high and prices
and also high. For this, an enterprise can target their particular audience so that regular customers
can be converted into loyal one. The airline industry can offer more quality or innovative
services to their passengers (Fearne, Garcia Martinez and Dent, 2012). Along with this, they
have to provide effective services to their consumers a compare to their competitors. By using
these, they can create their unique image in the minds of people so that they will be able to create
a strong base of consumers. In this, the marketing department of particular industry focused on
the both products and prices. Services should be highly innovative or creative so that company
will be able to gain the attention of people towards their services in an effective way. Apart from
this, price is also an essential factor which can affect the buying behaviour of people. So, in this
way strategy is more effective as through this an enterprise will be able to achieve
competitiveness.
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In order to implement the strategy, firm have to adopt two approaches. First one is
customer’s expectations, as these are changing from time to time so manager has to adopt the
change continuously so that their satisfaction level can be increased. The satisfaction of a
consumer is depending upon two some factors like price, quality, value and so on. When these
will be achieved then they can perform well in an effective manner. So, it is the responsibility of
company to offer quality and valuable services to their potential users effectively. Apart from
this, an entity has to compare its own strategies with other competitors so that they can identify
their approaches and perform better than their rivals.
British Airways can also use Ansoff matrix in order to establish their business into other
country. There are four approaches which comes under this market development, market
penetration, diversification and product development (de Souza and Márcio de Almeida, 2013).
Here, the most appropriate strategy which is followed by the firm is diversification in which they
airline industry offer new services in the new market. When this strategy is gets implemented
then an entity will be able to perform well at the marketplace as compare to other competitors.
Here, by using this an organization will be able to get some advantages and benefits which lead
them towards success.
Q6. Strategy evaluation
The current proposed strategy can be evaluated on the basis of SAF model which stands
for suitability, accessibility and feasibility. When manager is going to measure the suitability of
strategy then they have to make sure that the particular proposed method is aligned with the
external environmental factors. Along with this, it is is suitable then it should be linked with
companies mission statement. If this factor is high, then company will be able to remove their all
weaknesses and threats. Along with this, they can grab the opportunities which will help them in
sustaining their competitive advantage (Mitchell, 2012). When British airways will adopt focus
differentiation then they have to focus on particular target market and they will get quality and
valuable services. Some customers are also there who are price sensitive so for them services can
be provided as per their choice or demand. Through this, the overall satisfaction among people
can be increased which will help them in performing better at the marketplace.
Along with this, feasibility can be measured on the basis of resources that these are
available in order to implement the strategy or not. This can also be related to financial, physical
and human resources. Financial resources are related to cost, capital, investment and so on. In
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order to maintain the feasibility level, higher authority should make a proper budget so that
spending level can be controlled in more effective or efficient manner. The human resources
should be motivated continuously so that they can perform better and their objectives can be
achieved.
The last one is accessibility is all about the risks and acceptability of the different
stakeholders (Priem, Li and Carr, 2012). So, in this manner overall proposed strategy can be
evaluated and the airline industry will be able to achieve competitiveness. The current changes
which are adopted by an enterprise must be acceptable by the customers as they will help the
company in achieving competitive advantage. For this, first the airline industry should identify
the needs and demands of people and for this marketing manager can conduct a survey which
will help them in fulfilling the requirements of different service users. If all customers will get
products or services as per their choice, then it will be acceptable by all kinds of stakeholders.
CONCLUSION
From the above carried out analysis, it can be summarized that strategic management is an
essential process which is used by the organization so that they will be able to fulfil all the
requirements of their different stakeholders. By using Pestle, an organization will be able to
identify the factors which can affect their operations. Through the porter 5 force model it can be
evaluated that how different factors can influence the competitiveness of the firm. Value chain
analysis will help the airline industry in attaining the competitive advantage at the workplace and
their cost can be reduced to some extent. British airways can use focus differentiation as well as
diversification approach in order to implement the strategies in an effective manner.
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REFERENCES
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biogeochemistry: stable and radiogenic isotope analyses of archaeological human
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