Business Environment Analysis of British Airways

This report provides a comprehensive analysis of the business environment of British Airways, examining its purpose, stakeholder needs, economic factors, market structures, and the impact of global trade. It discusses the strategies employed by the airline to maintain its competitive edge and meet the demands of both internal and external stakeholders. The report also evaluates the influence of fiscal and monetary policies, competition, and regulatory mechanisms on the airline's operations, concluding with insights on the importance of understanding the business environment for enhancing profitability and sustainability.

BUSINESS ENVIRONMENT ANALYSIS OF BRITISH
AIRWAYS
STUDENT ID:
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Table of Contents
Introduction:....................................................................................................................................3
LO1:.................................................................................................................................................3
1.1 Identifying the purpose of different institution:.........................................................................3
1.2 Factors in which the institution meets the need of stakeholders:..............................................4
1.3 The duties of the institution and strategies to meet the standards:............................................5
LO2:.................................................................................................................................................6
2.1 The procedure in which the economic system allocate the different resources:.......................6
2.2 The effect of the fiscal and monetary policies in the institution:..............................................6
2.3 The effect of the competition and regulatory mechanism in the British Airways:....................7
LO3:.................................................................................................................................................8
3.1 Describing the impact of market structures on finalising the business decisions of cost and
output...............................................................................................................................................8
3.2 Explaining the means by which the market forces gives a shape to the responses of the
organisation......................................................................................................................................9
3.3 Judging the ways of shaping up of the behavioural attitude of the chosen organisation by the
business environment and cultural environment.............................................................................9
LO4:...............................................................................................................................................11
4.1 Describe the importance of global trade to business firms of UK...........................................11
4.2 Evaluating the influence of international factors on the companies of UK.............................12
4.3 Analysing the influence of policies framed by the European Union on the companies of UK
market............................................................................................................................................12
Conclusion.....................................................................................................................................13
References:....................................................................................................................................14
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Introduction:
The British Airways is one of the largest and most profitable organisations not only in the United
Kingdom, however also in the world. The British Airways is conducting its business since 1972.
Thus, to maintain a sustainable position in the competitive market, they are able to apply many
successful methods. Maintaining the business environment is one of them, the business
environment is crucial for almost every organisation whether it is a profitable or unprofitable
company. Thus, The British Airways concentrated in this matter by maintaining both the internal
and external environment of the organisation. In this study the purpose of the organisation, the
nature of their business and the global factors that have assisted the company to shape the
business is evaluated.
LO1:
1.1 Identifying the purpose of different institution:
Mainly three types of organisations are there in the business market public, private and charitable
organisation. However, the objectives or the purposes of these three organisations are very
different from each other.
The main motto of all the public sector institution in the United Kingdom is to concentrate less
on the profit margin and serving more to the people of the country. For an example, the fire
service department in the UK focuses on the entire problem related to the fire and rescue service.
Mainly the head of the institution is the government and they think of the service first the profit
ratio for them does not matter that much (Balmer, 2012, p.1064). However, they have their own
rules and regulations and the third parties do not have any rights to interfere with the terms and
service of the organisation.
On the other hand, the private organisation’s objectives are to some extent opposite to the public
sector organisation. Earning as much profit as they can in a single financial year is their main
objective. In addition, they do not tend to forget to give quality service to their customers. The
head of the private sector institution is generally an individual or a particular group of people.
The British Airways is one of the leading private sector organisations in the world. In the year of
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2015, they made revenue of almost 11,000 pounds alone and this was made possible by only
providing a good business environment to their internal and external stakeholders
(Britishairways.co.uk, 2017). The British Airways has their own policies in the organisation;
however, they have certain limitation made by the government before implementing some new
policies in the organisation.
In addition, the charitable organisation in the United Kingdom entirely focuses on giving a
proper service to their customers. The British Airways is completely a non-profitable
organisation that does not focus on the profit ratio. For an example The National Kidney
Federation in The United Kingdom is a unique charitable institution, the company runs by the
kidney patients and they provide kidneys to the patients in need. However, these kinds of
organisations most of the time based on the funds provided by the third parties.
1.2 Factors in which the institution meets the need of stakeholders:
The stakeholders of The British Airways play a huge role in the development of the institution.
Generally, two types of stakeholders are there in the organisation one is internal and other is
external stakeholders. Conducting and maintaining the position of a successful business is not an
easy factor for The British Airways, in every step they needed to meet the standards of each
stakeholder to make their service effective (Markides, 2013, p.314). The stakeholders of The
British Airways do not only mean the employees or the investors of the institution. It also means
their valuable customers and their needs come among the top priorities of The British Airways.
The organisation applies different policies and strategies to satisfy the requirement of the
stakeholders. Managing the internal stakeholders that consist of the employees, different
managers, senior executives, the company allocated a skilful human resource team that one of
the major duties is to solve their major and minor issues. The company tries to organise many
monthly and weekly meetings, where they know about their expectation and even they do not
hesitate to take any suggestions that would benefit The British Airways (Cameron and Whetten,
2013, p11). The company tries to give a handsome monthly salary to all their employees and
schedule proper work timing so that the workers would be able to balance both their personal and
professional life. The British Airways knows applying these policies would benefit their
company in many ways.
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On the other hand, there are external stakeholders; their works are inter-connected with the
duties of the internal stakeholders. Thus, The British Airways does not ignore their
responsibilities towards the external stakeholders. The shareholders, suppliers and even the
creditor’s falls in the external shareholder's list, thus, the importance of their contribution could
be judged by the position of the stakeholders. Satisfying their needs The British Airways tries to
convey their organisational objective to them as much and as often as possible, this helps them to
ignore any future conflict. In addition, the regular meeting with them also helps to fulfil their
demands and queries.
1.3 The duties of the institution and strategies to meet the standards:
The British Airways is growing day by day and as a result, their responsibilities are increasing.
The responsibilities might vary in maintaining the economic or social environment, where in one
hand they needed to think of making a profit and on the other hand, they needed to think about
their duties to the customers (Scott and Davis, 2015, p.19). In the matter of the economic
environment, The British Airways needs to make a harmony between the customer's and
organisational needs and it is solely based on the performance of the institution.
In this scenario, The British Airways needed to provide a service that would help them in a long-
term business procedure. A service that not only would satisfy their stakeholders need, however
also work for the benefit of the company. Thus, to make it possible The British Airways tries to
deliver the flying packages and services that are more affordable and attractive than the products
of their fellow competitors. This procedure assists The British Airways to bring new customers
and make more profit. The markets share prices and even market shares play a huge role in
maintaining the economic standards of the organisation.
On the other hand, the other strategies that help them to meet the standards are their social
responsibilities towards the people. The another name of it is the human capital, thus, to maintain
it in a proper manner The British Airways tries to treat their employees in a right manner, in
addition, it also makes them productive in different ways (Minoja, 2012, p.710. The British
Airways is conducting business worldwide that means they need to meet the criteria according to
the need of people from the different region of the world. In addition, the environmental issues
are also one of the key responsibilities of the British Airways, where they try to minimise their
ecological impact in different areas whether outsourcing the raw materials or in the production
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procedure. The company tries to protect the water and land resources as much as possible. This
also assists them to increase their business valuation.
LO2:
2.1 The procedure in which the economic system allocate the different
resources:
The economic system and the resources of The British Airways are interrelated with each other.
In the scenario of The British Airways, it is a complicated process, as it is a huge organisation
and millions of funds are invested almost every day in the business. For the reason, it is
necessary for the company to choose their resources carefully, as only their resources would be
able to provide them with a strong economic structure (Davis, 2014, p.199). The price factor
plays a crucial role in making the decision what to produce and whom to provide the service. The
most popular service in The British Airways automatically diverts in generating more profit for
the institution. In the matter of the mixed economy, where most of the countries deal with both
private and government sectors, The British Airways focuses on the market that could be able to
provide them with a trustable resource to make a sustainable economic system in the institution.
Sometimes the choosing the resource or allocate it with their economical system comes as a
challenging matter, as in the year 2008, when the UK encounter with the recession the economy
system of the country shrinks by almost 7%. In that scenario, The British Airways experiences
high negative budget deficit or in the year of 2011 when the UK witness a major snowfall
experience then The British Airways faced many challenges to maintain their economic
sustainability. In this matter, the organisation changes their resources, investment percentage and
even their service packages according to the need (Lee and Zomaya, 2012, p.271). In this
scenario, The British Airways decreases their average flights on a regular basis. Not only has that
The British Airways tries to maintain an average profit by introducing themselves to the new
resources that could be their new investors or creditors.
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2.2 The effect of the fiscal and monetary policies in the institution:
The fiscal policies of a nation refer to the tax rates that the government determines and the
monetary policies have the relation with the monetary committee of the nation like the currency
bureau or the main bank of the nation. The changes in any of these elements determine the
business of The British Airways. For an example, the fuel duty increased in 2013, as a result the
organisation was bounded to change their business packages. In the year of 2014 the personal
allowance was hiked from almost 500 pounds to 10,000 pounds, as a result the people in the
country got more buying power and this worked for the favour of the organisation as the
customers of The British Airways has more disposable money to buy services from the
organisation (Borio and Zhu, 2012, p.240). On the other hand, there are fluctuation in the
business cost and the effect of the changes in the inflation rate, if the prices of all the goods and
service go up then it sometimes gets complicated for The British Airways to keep up with their
customers. In this case, The British Airways take different policies to deal with the situation.
The current interest rate is almost 0.5% in the UK for the last two years, thus The British
Airways did not need to make particular changes in this sector (Caa.co.uk, 2017). As it is a
airways industry if they take funds then they did not need to pay them extra money in return.
Following the fiscal and monetary policies, The British Airways decided to invest almost 115
million pounds at the UK’s Heathrow airport in the coming years. However, all the changes they
made all considering the demands and requirement of the customer, colleagues and even the
partners.
2.3 The effect of the competition and regulatory mechanism in the British
Airways:
The competition and regulatory mechanism play a huge part in the business of The British
Airways. The competition in the market makes the organisation forced to apply different policies
and services for their customers. Almost every day different competitors are arriving in the
market and they are coming with many attractive products and services. Thus, it is very difficult
for The British Airways to make a sustainable business and organise their products and services
so that they do not lose their existing customers (Costantini and Mazzanti, 2012, p.141). In
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addition, The British Airways also concentrates on making new customers so that in near future
they remain in the competition.
The British Airways does all these things maintaining the regulatory mechanism developed by
the government so that there would be no discrepancies in their rules and regulation. Many
critics said that the regulatory mechanism brings limitation in doing business. However, The
British Airways adjusted it very professionally where they not only able to cope up with their
competitors, however, they are able to bring a good amount of profit in the organisation. Thus, it
could be evaluated that the competition in the market might come as a major challenge to The
British Airways; however, the organisation was able to manage it professionally.
LO3:
3.1 Describing the impact of market structures on finalising the business
decisions of cost and output
Market structure can be explained in terms of the characteristic features of the UK market. It has
been noticed very clearly that structure of the market determines the behavioural approach of the
business organisations to a large extent. In other words, market structures represent the total
number of business firms that sells similar products and services. As opined by Scheffler et al.
(2016, p.568), market structures can be categorised into the monopoly, oligopoly and perfect
competition. Monopoly can be defined in terms of the presence of only one seller who sells its
goods and services in the existing market without any rival manufacturers. Oligopoly is the
market structure where there is an existence of few manufacturers who are selling identical
products and services in the same market. In this context, it can be stated that competition is
quite higher in the oligopolistic market.
In a case of perfect competition market structure, there are many producers and sellers in the
market without the monopolistic components. In this context, it can be commented that cost of
the goods is not staying within the control of the manufacturers and sellers. British Airways is a
perfect example of perfect competition market structure. As stated by Haynes (2015, p.39), the
determination of the market price is done through the balance between the supply and the
demand in a particular market period. According to the present scenario of the UK market, the
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owners of the British Airways should focus on fixing up the costs of the fares of the flight after
conducting a thorough analysis of the demands of the consumers. Apart from this, the popular
organisation of United Kingdom should focus on improving the quality of consumer service
which is capable of increasing the consumer loyalty and rate of customer satisfaction.
3.2 Explaining the means by which the market forces gives a shape to the
responses of the organisation
According to (Haynes (2015, p.39), the change observed in the demand and change in the supply
is considered to be an important factor in shaping up the responses of British Airways. Demand
and supply in the existing market of UK are responsible for determining the cost of British
Airways. It has been observed that there are four major kinds of market forces such as quality,
Cycle time, Consumer satisfaction, and fiscal Viability. It is essential for the managerial section
and higher authorities of this popular airline of United Kingdom should give importance on
developing these key indicators because these are determinators of boosting the overall profit
percentage of the respective company. As opined by Ardichvili et al. (2012), p.415), market
forces are responsible for making the organisation to improve its sustainability in the competitive
market of United Kingdom. The advanced usage of technology in the present scenario of society
is creating a demand among the customers of British Airways regarding standard quality
customer service and cheaper fares.
In addition to this, there are fickle consumers who are constantly demanding for new and
advanced customised responses from the owners and workforce of British Airways. With respect
to the current scenario of the competitive market of United Kingdom, the employers of the
respective organisation should put lay emphasis on improving the sector of customer service by
quickly responding to their queries. It should give importance on resolving the complaints of the
service- users. Apart from this, the owners of British Airways should focus on providing flexible
responses to the customers of the existing market of UK. Besides, modifications need in the
working practices of the managers by refining the policies of British Airways.
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3.3 Judging the ways of shaping up of the behavioural attitude of the chosen
organisation by the business environment and cultural environment
In accordance with the opinion of Ho et al. (2012, p.433), organisational culture creates a direct
impact on shaping up the behavioural approach of British Airways by enhancing the productivity
of the respective organisation. Therefore, the consumers want more luxury and comfort during
their journey in British airways. However, by building a strong culture within the working
environment of the respective organisation, it is possible to meet the satisfaction level of the
consumers.
The internal culture of the organisation refers to the values and ethics of the respective
organisation whereas the external culture refers to the commitment of the employees of the
organisation. It is required for the British Airways to maintain a consistency between the internal
and external culture and both the cultures should be kept in proper alignment with the business
goals and objectives.
From the perspective of the business environment, it has been observed that competitors of
British Airways such as Virgin Atlantic are providing the relaxable journey to its consumers in
the short- haul destinations. Therefore, the employees of British Airways who belongs to the
short- haul destination department should be rewarded with promotions and salary hikes. This
approach will help these employees to stay loyal towards the particular business organisation of
United Kingdom. However, the productivity and profitability of the British Airways will get
enhanced in the due process. Along with this, improved customer service and good
communication are capable of increasing the level of satisfaction among its customer base. The
initiative taken by British Airways to provide cheaper rates to its consumers who do not possess
any checked luggage is enhancing the possibility of adding more users of United Kingdom. In
this way, the business environment and cultural environment is responsible for shaping up the
organisational behavioural attitude (Afonso and Sousa, 2012, p.4454).
The macro- environmental factors of the business environment of British airways can be
explained in terms of political, economic, social, technological, legal and environmental factors
which are briefly discussed in this particular study.
Political factors:
It has been observed in the current scenario of the political condition of UK, the incident of
terrorism at Brussels airport has caused the declination of 1.5% in terms of share pricing. The
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business practices of the respective airline got hampered because of this particular incident
which took place in March 2016. There are other factors like increasing rate of lobbying in the
domestic market of UK and growing demands of trade unions are causing hindrances in the
working practices of British Airways (Britishairways.co.uk, 2017).
Economic factors:
According to the statistics of 2015, the fuel cost of British Airways has been observed with a
declination by £ 484 million, in comparison with the statistics of 2013. This figure showcases the
fact that the business organisation got benefitted due to the declination in the cost of fuel.
However, the drastic fall in the oil costs since past two years resulted in the lowering down of the
rate of the corporate consumers (Chen and Simchi-Levi, 2012, p.782).
Social factors:
Consumers of UK want a relaxable and secured journey from the British Airways. The
Economic recession has made the UK consumers become more conscious about the reasonable
pricing of the flight fares that are offered to them by British airways (Doh et al. 2012, p.22).
Technological factors:
With the advent of new technology, it has been observed that self-service automated check- in
machinery was placed at the terminals of Heathrow Airport so that passengers get their boarding
passes quickly. Along with this, the official website of this international airline provides online
check- in facilities to the passengers of British Airways.
Legal factors:
It should be noted that the business practices of this popular airlines are being controlled in a
progressive manner. The preferences of the controls differ from issues that are associated with
infrastructure and capacity of slots. The needs of modern security and environmental
requirements are considered by this particular airline.
Environmental factors:
It has been observed that the airline industrial sector is facing challenges from the change in the
climatic conditions of United Kingdom. Therefore, it is required for this particular air is to adjust
with the change in the climatic conditions of UK by restricting the radiation and decreasing the
rate of emission of poisonous gases.
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LO4:
4.1 Describe the importance of global trade to business firms of UK
In accordance with the opinion of Zhang et al.(2012, p.523 ), global trade affects the business
practices of the business firms of UK market that can explain in terms of cost- effectiveness and
widening of the business expansion in other nations. It should be noted that investing capital for
expanding its business activities in the other countries apart from the domestic market of United
Kingdom, it is possible for the business organisations to reduce its production cost. In this
context, it can be stated that British Airways would be able to retain its competitive advantage by
lowering down the price of flight fares to its customer base. In addition to this, international trade
is also responsible for increasing the potentiality of its operational activities by providing its
service to the users of other nations. In this way, the significance of global trade affects the
business practices of the UK companies which help them to increase its overall profitability.
4.2 Evaluating the influence of international factors on the companies of UK
Organisational culture can be defined in terms of values and mission of the respective
organisation. It is essential for the senior management of British Airways to establish a strong
and flexible culture within the working procedures of British Airways. The goals and objectives
of the respective business unit should be kept in alignment with the organisational culture.
Afonso and Sousa (2012, p.4454) opined that this approach will help the workforce of the
organisation to increase their efficacy by enhancing their commitment to their assigned tasks. In
the context of the British Airways, it can be stated that the customers of UK society are
becoming demanding about the reasonable pricing of the renowned airways of UK society.
According to Jeffery (2015, p.38), the global factors that are impacting the business activities of
the UK business organisations can be explained in terms of trade blocs and prevalence of global
financial crisis. The global economic recession is affecting the business functions of the UK
firms by reducing the buying capacity of the customers. For instance, British Airways should
lower down the flight fares in order to retain its competitive advantage in the existing market of
UK. The existence of trading blocs is capable of providing easy accessibility to the UK firms for
entering the new markets.
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4.3 Analysing the influence of policies framed by the European Union on the
companies of UK market
The policy of employment:
It has been noticed that the UK government has initiated a new employment service named ‘ The
New Deal ' which provides training opportunity to the organisations that are funded by UK
governmental bodies. The government is trying to create employment opportunities to the job
seekers in order to create the competitive advantage for the UK companies in the global market.
In this context, it can be stated that owners of British Airways would be benefitted because it
operates in the international market (Chen and Simchi-Levi, 2012, p.782).
Inflation Policy:
The UK government prevents the hike in pricing with the help of Monetary Policy Committee
(MPC) which helps the Bank of England to fix the rates of interest. Under this legal framework,
the rate of interest is being raised by Bank of England if the individuals of UK are found to be
borrowing money from the Bank and spending to a great extent. With respect to this policy, it
can be stated that the UK is no more a part of European Union so this policy is not affecting the
business practices of the firms of UK. However, British Airways is a global airline, so its
business practices gets affected by this particular policy because its customers of other nations
are availing the flight facilities of this particular airline (Wallace et al. 2015, p.47).
Conclusion
From the above discussion, it can be concluded that business environment helps to increase the
efficacy of the work performance of the employees thereby increasing the workflow of the
business organisations of United Kingdom. In addition to this, the proper understanding of the
business environment helps the business firms to enhance the overall profitability and
broadening the business activities in both the domestic and international market.
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