Business and Business Environment: A Case Study of British Airways

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BUSINESS AND BUSINESS ENVIRONMENT
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BUSINESS AND BUSINESS ENVIRONMENT
Table of Contents
Introduction....................................................................................................................................3
PESTLE Analysis...........................................................................................................................3
Impacts on Business Operations...................................................................................................6
SWOT Analysis..............................................................................................................................6
Critical analysis of the strength and weakness...........................................................................9
Interrelation with External Macro Factors...............................................................................10
Conclusion....................................................................................................................................10
References.....................................................................................................................................12
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BUSINESS AND BUSINESS ENVIRONMENT
Introduction
Environmental factors are very critical and crucial for determining the success and sustainability
of an organization. Environmental factors are divided into Macro-environmental factors and
Micro-environmental factors which represent the external and internal aspects of an organization.
British Airways is the largest airlines organization in UK and one of the most successful
organizations in the aviation industry globally. The following study critically analyzes the
Macro-environmental factors and Micro-environmental factors of British Airways and
determines the interrelation between them to evaluate the success and sustainability of the
organization.
PESTLE Analysis
The PESTLE Analysis of the aviation industry is:
 Political: Political factors of different countries vary due to the political condition,
stability, and mentality within the countries. However, while many government around
the globe are able to pose an open-mindedness to the aviation industry's businesses, there
are still many heavy regulations which are imposed upon the aviation industry by the
government (Henriksen and Ponte, 2018). This is mainly due to risks that are associated
with the safety and security of the people and as such, various types of regulations are
promoted to main the safety of the passengers rather than the aviation industry. In
countries with high risk of terrorist attacks and activities, war factors, and other security
hazards, the aviation industry is unable to operate in the country due to government
regulations.
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 Economical: Economic factors are of high importance for the aviation industry as it
helps to sustain and enhance their businesses. Since the 1930’s aviation industry has been
globally successful and has generated trillions of dollars in revenue. However, the global
economic crisis of 2008 caused the growth of the revenue generation of the aviation
industry to come to a halt. As a result of the recession, the aviation industry were losing
customers globally and in order to generate revenue, the industry had to provide the
customers with cheap flight tickets as well as had to cut off thousands of employees
globally (Xu, Chan, and Zhang, 2019). However, the aviation industry has been able to
make a comeback due to the developing and improving economy of multiple countries
globally.
 Social: Social aspect has been very crucial for the success of the aviation industry. The
aviation industry had been a huge preference for the people before the 21st century as it
allowed them to travel from one place to another in order to meet and communicate with
others. However, because of the cultural and social changes of the 21st century as well as
the rapid progress and development of technology, the aviation industry has been facing
problems and issues in gaining and sustaining a customer base. This is due to the fact that
majority of the airlines passengers have retired and are uninterested in traveling, while
the new generation of people are more reliant on using technology to interact and
communicate with people living in different parts of the world (Xue and Fu, 2018). This
not only impacts the revenue generation of the industry, but it also affects their business
operations.
 Technological: Technology has been an integral part of aviation industry which has
helped in their success throughout the years. Due to the global advancements of
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technology, the aviation industry has been able to take advantage of it and incorporate it
within their business operations. Due to the technological development, aviation industry
has been able to provide the convenience of booking tickets and checking in through
hand-held devices of the passengers. Moreover, the aviation industry has been able to
incorporate the technological development within their aircrafts which resulted in
lightweight aircrafts and improved security and communication systems (Garousi et al.,
2018). Furthermore, through social media advertising, the aviation industry is able to gain
the interests of newer generation people which has helped in their revenue generation and
success.
 Legal: Legal factors play a critical factor for the success of the aviation industry. Due to
the increased regulations for the airlines industry by the government, the aviation
industry has been faced with challenges and issues. This includes lack of permission to
operate in countries with volatile political situation, facing lawsuits from customers due
to security and safety issues, and many more. This along with various other regulations
and laws have affected the business operations of the aviation industry by making them
lose customers which affects their revenue generation (Siddiqui and Bisaria, 2018).
 Environmental: Various environmental regulations as well as laws have been
implemented by the government which has caused issues for the aviation industry
globally. Furthermore, due to the growing environmentally conscious people in recent
times, the aviation industry has been faced with various backlashes as well as lawsuits
due to the high emissions from the airplanes as well high consumption of natural
resources. This has affected the business operations of the aviation industry by making
them lose customers which affects their revenue generation (Qiu, Li, and Abbas, 2018).
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Impacts on Business Operations
For British Airways, the macro-environmental factors have an immense impact on their business
operations. The positive impact of the micro-environmental factors on British Airways is that
due to the British government have been very helpful in backing up the organization as well as
implementing regulations which would benefit the business operations of British Airways. The
technological development in recent times has helped British Airways to drastically improve
themselves and cater to the needs and requirements of the customers (Ortiz Blanco and Villiers,
2018). This has allowed them to gain a considerable customer base as well as a strong revenue
generation system.
However, the macro-environmental factors also had a negative impact on the business operations
of British Airways. The social changes bought forth in recent times have affected the business
operations due to the fact that people prefer to communicate through digital technologies rather
than taking a flight. Moreover, due to Brexit, the economic condition of Britain has been
unstable which has affected the business operations of British Airways. Furthermore, growing
environmentally conscious people in recent times has led to the implementation of various laws
and regulations pertaining to environmental protection which has affected the business
operations of British Airways.
SWOT Analysis
The SWOT analysis is one of the most essential components required to critically analyze the
major strength and weakness of the organization and threats and opportunity of the industry in an
effective manner (Bazargan, 2016). The SWOT Analysis of the British Airways is performed in
the below table
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Strength
 The British airways is the largest
airways present in the UK. The
organization has more than 90 years of
experience in the aviation sector. It is
considered as one of the premium
airlines with a magnificent brand
image that helps to sustain customer
base in an effective manner
 According to the data British Airways
is 3rd when it comes to revenue
collection in the aviation circuit. The
brand image of the company has been
maintained in an efficient manner with
famous campaign like the face
campaign(Catherwood, Finlayand
McLaughlin, 2016)
 The British Airways have a excellent
relationship with UK government. The
company is backed by the UK
government that helps the airlines to
establish overseas collaboration in a
prominent manner. This help in
enhancing the holistic business of the
Weakness
 One of the major weakness of the
British Airways is its over dependence
on the UK market. It is seen that
approximately 50% of the revenue of
the airlines is generated from the UK
market. Due to globalization this may
affect the financial stability of the
company in a negative way.
 Presence of a massive employee union
is another problem for the
administration of the British Airways
(Mantur,2016). Collective Bargaining
by the union takes place. If the
Bargaining process fails, it may
adversely affect the business operation
of the organization
 British Airways is still unable to
develop its business effectively in the
Developing markets like China, India
those are considered as the rising
economies
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Airlines
 Main strength of the airline’s lies in its
efficient human resource. British
Airways possess its own branch of
engineers for fleet maintenance. Line
Maintenance is performed in more
than 70 airports. This is a highly
efficient and knowledgeable team that
helps in reduction of any
risk(Marcenko, 2015).
 It is one of the most tech savvy
company. It has developed online e
ticketing system. Online information
system is present that enables
customers to access vital information
about the flights in an efficient
manner.
Opportunity
 At present due to globalization the
market is expanding in the aviation
industry. There is rise in customer
base as the middle-class people are
also availing air travel. Moreover,
there is huge opportunity to expand
Threats
 At present fierce competition is
present in the market. Airlines are
giving discount to attract passengers
this may affect the holistic business
 There is presence stringent regulation
of government that includes safety of
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business into the developing
economies(Sezgin, and Yuncu, 2016).
 Due to government regulation many
small airlines are exiting the market
thus making opportunity for the large
airlines to expand its customer base in
an efficient manner
passenger and environmental issues
those are threat to the business of the
airlines(Silva, 2015)
 There is development of bullet trains
by the government those are a threat to
the aviation industry.
Critical analysis of the strength and weakness
The brand image and the reputation of the British airlines is one of the most important factors
that helps is sustainable business development of the organization. According to Thomasand
Kummer (2015), in this world of globalization brand image has a huge impact on the middle-
class population as they have high propensity to consume. On the other hand, British airways is
stuck in the UK market and it needs to expand its business in a global scale. As there is a high
amount of middle-class population in the developing economy it should penetrate the Asian
market to expand its business. The British Airways have its own maintenance team that is a huge
advantage form the financial point of view. It takes a huge amount financial resource to
outsource the maintenance of the fleet. It is stated that quality control is not properly done when
the service is outsourced. It may have huge detrimental impact on passenger service. Moreover,
British Airways has implemented e ticketing and online information and complaint section that
should attract the young consumers in an efficient manner (Bazargan, 2016). On the other hand,
there is problems regarding the large union of the organization. Effective HRM policies and
diplomatic relation should be established so that this weakness of the Airways may be Mitigated.
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Interrelation with External Macro Factors
The political compliance of the British Airways with the UK government is excellent. This has
helped the company to form collaboration in other countries. As every country has their own
Airline policy, stable political backup should help the British Airways in making compliance
with the regulations(Thomas, 2015). Moreover, at present the global financial condition is facing
instability. Due to this the Airlines are downsizing and cutting cost and giving discounts on
ticket. This has turn out to be a weak point for British Airways as they have a large employee
union and downsizing has affected collective bargain. It is may have detrimental effect on
business operation. Furthermore, social factors like increasing propensity to consume is
enhancing the business (Hartman, and Boscoianu, 2015). On the other hand, alternatives like
bullet trains has affected the business. Technological advancement like implementation of
internet and wireless systems has helped to increase the business of the British airways. It has
helped in implementation of the E ticketing and information system. On the other hand, the
environmental regulations of pollution free fuel have enhanced the cost of the company.
Conclusion
The study mainly focused on the Pestle analysis of the aviation industry in a global basis.
Moreover, the SWOT analysis of the British airways is critically discussed in the study. Main
strength of the British airways that includes Brand image, sophisticated technology, efficient
human resource and compliance with government. On the other hand, weakness includes
dependence on the UK market, employee’s union. Furthermore, relationship between the
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strength and weakness of British Airways with the macro factors like political, financial, social
technological factors has been critically analyzed in the study.
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References
Bazargan, M., 2016. Airline maintenance strategies–in-house vs. outsourced–an optimization
approach. Journal of Quality in Maintenance Engineering, 22(2), pp.114-129.
Catherwood, P.A., Finlay, D.D. and McLaughlin, J.A.D., 2016. Intelligent subcutaneous body
area networks: anticipating implantable devices. IEEE Technology and Society Magazine, 35(3),
pp.73-80.
Garousi, V., Taşlı, S., Sertel, O., Tokgöz, M., Herkiloğlu, K., Arkın, H.F.E. and Bilir, O., 2018.
Experience in automated testing of simulation software in the aviation industry. IEEE Software.
Hartman, N. and Boscoianu, M., 2015. Single European Sky-the transformation of the aviation
industry based on the dynamic capabilities. INCAS Bulletin, 7(1), p.97.
Henriksen, L.F. and Ponte, S., 2018. Public orchestration, social networks, and transnational
environmental governance: Lessons from the aviation industry. Regulation &
Governance, 12(1), pp.23-45.
Mantur, N., 2016. The Emirates: Airline Company or a global lifestyle brand? (Doctoral
dissertation).
Marcenko, V., 2015. Airlines' Ancillary Services via Direct Channels: Generation Y’s
Perspective.
Ortiz Blanco, L. and Villiers, S., 2018. British Airways v Commission: Always Aim for the
Sky. Journal of European Competition Law & Practice, 9(4), pp.237-238.
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