An Analysis of the Business Environment Impacting British Airways

This report provides a comprehensive analysis of the business environment impacting British Airways (BA). It begins by examining the purposes of different organizational types, with a focus on BA's mission, vision, and objectives. The report then identifies and analyzes BA's stakeholders, including employees, competitors, government, and consumers, and discusses how BA responds to fulfill its responsibilities to these stakeholders. It explores various economic systems and their impact on BA, specifically addressing the challenges posed by fiscal and monetary policies. The report further investigates the impact of competition policy, regulatory mechanisms, market structure within the airline industry, and global factors such as trade regimes and EU policies on BA's operations. The report concludes with a summary of key findings and their implications for BA's strategic approach to navigating its complex business environment.

Business Environment

Table of Contents
INTRODUCTION ...............................................................................................................................4
TASK 1.................................................................................................................................................4
AC 1.1Purposes of different types of organisation, mission and vision of British Airways.......4
AC 1.2 Stakeholders of BA and challenges impacted them.......................................................5
AC 2.1 Economic systems that attempt to allocate resources effectively...................................6
AC 2.2 Challenges due to fiscal and monetary policies on business environment faced by BA7
The impact of fiscal and monetary policies on business organisations are explained as follow.7
AC 2.3 Impact of competition policy and other regulatory mechanisms on the activities of BA7
TASK 2.................................................................................................................................................8
AC 3.1 The market structure of the airline industry impacted the pricing and demand for airline
seats.............................................................................................................................................8
AC 3.2 The interplay of different players and market forces shape organisational responses...8
AC 3.3 Impacted of working practices and cultures of the countries on BA..............................8
AC 4.1Impact of global changes in trade regime caused by organisations................................9
AC 4.2 Impact of other global factors, including government policies/regulations ..................9
AC 4.3 Impact of policies of the European Union on UK business ........................................10
CONCLUSION..................................................................................................................................10
REFERENCES...................................................................................................................................11

Illustration Index
Illustration 1: Strategy for acheiving employees objectives.................................................................6

INTRODUCTION
Business Environment is combination of both internal and external factors which affects the
working of company, customers, employees, etc. Internal factors that affects business environment
are policies, productivity, management information system, etc. External factor includes customers,
suppliers, competitors, agents, etc. To improve the performance organisation needs to examine all
these factors and work accordingly.
The following research has based on business environment and to understand the importance
of it in the organisation British Airways (BA) has taken into the consideration. The aspects which
will covered by under the study are purpose of business, nature of environment, behaviour of
organisations in market environment. Along with these, it also consist of impact of global factors on
business activities. In the end, it is concluded with measures and findings of the study.
TASK 1
AC 1.1Purposes of different types of organisation, mission and vision of British Airways
There are various kinds of organisations which have their own purpose and objectives
behind doing business. The intention of conducting business by different companies are as follows.
 Sole Traders: It is owned by single person that's why it is called as sole trader. It includes
business of plumbing, busking, electrical work, etc. (Types of business organisations, 2015).
 Partnership: This type of business takes place between two or more than two business
partners. Example of partnership are Warner Bros, Hewlett Packyard, etc.
 Public limited company (plc): The share of this type of company are bought by public. Such
type of business has done for welfare of community rather then made profit. The example
are: ALBA PLC, British Airways PLC, Tesco PLC etc (Alcidi and Gros, 2011).
 Private limited company: In this, the shares of company are not available for public. The
capital of these company can be smaller or larger as compare to public limited company.
Examples are: Virgin Atlantic, Thames water, etc (Fernando, 2011).
BA PLC is one of the leading airline of UK. The mission and vision along with short and
long term objectives of are described as below:
 Mission: The mission of BA is to serve quality services to the customers by using limited
natural resources. It wants to be first choice of customers.
 Vision: The vision of BA is to become most responsible airline by providing various
facilities to the customers and doing social welfare.
 Objectives: BA has both short and long term objectives. Short term objective is to satisfy its

travellers by providing all facilities and services. It's long term objective is to enhance the
business and to become first choice of customers.
AC 1.2 Stakeholders of BA and challenges impacted them.
Stakeholders are those people who can affect or affected by the actions and decisions of
organisation. They affects by actions or decisions of BA. Various stakeholders of British Airways
with their objectives are as follows.
 Employees: These are important assets of company. Workers of BA enterprise give their
time and effort for growth and success of it. It is a challenge for BA to fulfil all the demands
of employees which sometimes results to strikes (Halbert and Ingulli, 2014).
 Competitors: Due to the leading position of BA, there are many competitors like Virgin
Atlantic. It is prime responsibility of BA to fulfil needs and demands of travellers. This
competition leads BA to use more innovative and creative strategies for attracting more
customers (Katie, 2013).
 Government: They monitor operations of BA along with its responsibilities towards society.
Along with this, they also check whether the company is following the laws properly or not.
Changing laws and policies sometimes affects the working of BA (Stakeholders and their
objectives. 2015).
 Consumers: These are the key stakeholders of BA because they are using the services of
organisation for personal benefits. They belongs to different country so it is a challenge to
BA to satisfy needs and demands of every passenger (Ghannadian, 2006).
AC 1.3 Response of BA to fulfil its responsibilities to these stakeholders
The responsibilities of BA towards the expectations and objectives of all stakeholders. It can
use effective strategy for fulfilling their needs and requirements. First of all BA needs to manage the
expectations of stakeholders by understanding and knowing them properly. Then it require to work
according to the perception of stakeholders which is responsibility of BA like providing quality
services to customers, thinking innovative to compete with competitors, etc (Manning, 2013). Then
it have to record the feedback of stakeholders that whether they get satisfied from services or not.
BA can satisfy UK government by following all laws and paying tax time to time (Managing
Stakeholder Expectations, 2010). It needs to follow various policies and procedures of government
to fulfil their objectives. If any of the stakeholder is not satisfied by enterprise then it is
responsibility of it to find out the loophole and improve services accordingly. BA can get trust and
loyalty from suppliers like Boing by fulfilling its needs and wants. It organise various programmes
and activities for employees to make them feel energetic and fresh. It also conduct trainings for
enhancing skills and knowledge of staff members. As BA is one of the leading airline in UK so it

has many competitors like Virgin Atlantic and easy jet. As per the slogan of BA “To fly, To serve” it
is providing effective facilities to the travellers for making their journey comfortable (British
Airways, 2015).
AC 2.1 Economic systems that attempt to allocate resources effectively
In economic system, production and exchange of goods as well as services are taking place.
It also look after optimum utilisation of resources along with their allocation. It consist of
combination of various agencies, institutions and customers that represent the economic structure of
BA. The economic system of BA is studied through the relation it maintain with its stakeholders, its
link with agencies, institutions and customers and flow of information between them (Gottheil,
2013). Each system has its own way of working along with advantage and disadvantage. They help
in effective allocation of resources in BA.
Business owner of BA takes decisions related to the investment and machines required for
the flights. There are many kinds of economic systems like market, planned and mixed economic
system (Lin, 2012). By the help of these economic system, business owners can get answer of
questions like what type of service is to provide?, how to implement that service?, who get benefits
from that service? etc. The objective of a economic system are efficiency, growth, equality and
liberty. For example, increase in cost of fuel needed for airline leads to affect the BA's economic
condition. It is also necessary to use quality fuel to prevent from any kind of incident. In 2013, the
focus was on getting more financial gains through subsidiary services in airline industry (Jones and
Vagliasindi, 2013).
Illustration 1: Strategy for acheiving employees objectives
Source: (Knowlton, 2013)

AC 2.2 Challenges due to fiscal and monetary policies on business environment faced by BA
The impact of fiscal and monetary policies on business organisations are explained as follow. Fiscal Policy: This policy consist of decision related to the spending and taxing taken by
UK government. BA also affects by increase and decrease in taxes and spendings. Increase
in spending for services by government results to increase in demand of flights. But if
government decrease the spending then it leads to loss to the firms due to decline in demand
of flights. If government decreases taxes then it leads to BA's profit but if government
increase the taxes then it increase the burden on BA (Haigh and Brubaker, 2010) .
 Monetary Policy: In this policy, decisions related to the money supply and interest rates are
taken by UK government. Decrease in interest rate leads to increase in money supply. Due
to this, government acquire more money and it stops government to rise taxes which results
to cheaper loans and credit rates for BA. This whole process would raise inflation which is
not good for airline industry. By decreasing interest rate government can decrease the
inflation but it leads to cut spending. In this situation, it becomes hard for businesses to get
loan (Halbert and Ingulli, 2014).
AC 2.3 Impact of competition policy and other regulatory mechanisms on the activities of BA
BA is one of the leading airlines in UK which results to increase in competition like Virgin
Atlantic. As per the competition policy of UK government, there should be fair and open
competition among the companies without any unfair activity. This policy promotes competition for
making market better and to improve organisation's efficiency (Hamilton and Webster, 2015). Entry
of any new airline will leads to increase in competition of BA. Company works in both long and
short hauls which also makes the competition tough in the market.
Regulatory policies in airline industry impacts the working of BA. Such as policy of
sustainable aviation for improving environment by government. Due to this policy, BA needs make
many changes such as it have to use biofuel and decrease the size of flights. Legal changes by
government impacts on the operations of airline industry (Katie, 2013). Government decides the
routes of flights which restricts BA to expand its business to those destinations where government
of UK does not give permission. It is also necessary to follow these laws and policies. There are
various aviation laws like no use of phone on flight, air traffic laws etc which are essential to follow
for the growth of business and welfare of customers (Aviation Law, 2015).
TASK 2
AC 3.1 The market structure of the airline industry impacted the pricing and demand for airline
seats
The market structure of airline industry is based on oligopoly which impacts the pricing and

demands for airline seats. As per this market structure, the availability of airline industries in market
is less. Due to the high set up prices, no one even try to enter this market. The passengers of airline
industry are of two types (Lange and et. al., 2015). First is Time sensitive passengers which
includes businessmen passengers who are travelling from one destination to another. Rise and fall in
the price of seats does not affect the demand of these passengers. They will buy the ticket if they
want to fly. Rise in trade activities results to rise in demands of seats. Second is Price sensitive
passengers, these type of passengers affects by the price of tickets. They like to buy tickets from
those flights which has low price. These passengers affects the demand of seats because at the time
of high price they do not prefer to fly. They increase demand of seats at the time of any holiday
offer, seasonal offer, etc. In this industry, if one airline cut its price then other will also do the same
to maintain the competition. This does not result to much price difference (Jarvis, 2014).
AC 3.2 The interplay of different players and market forces shape organisational responses
BA has strong competition with other airline companies like Virgin Atlantic, Easy Jet etc.
Various market forces affects the actions and decisions of BA along with its competitors. The
market forces that shapes the organisational responses are: Demand and Supply: Customers affects the demand and supply of airline industry. At the
time of vacation, special offer, tours and trips, demand of seats increases with increase in
passengers. BA gets affected due to the seasonal demands i.e. summer and winter. BA rise
the price of tickets due to the rise in cost of fuel which results to decrease in demand of
seats. To attract travellers of diverse field, BA is providing facility of various classes like
first class, economy class etc (Heinz and Pitfield, 2011).
 Global Interaction: To enhance the business, it is necessary to interact globally. BA analyse
the market time to time and works accordingly. It is thinking innovative ways for providing
various facilities to passengers .This helps in maintaining its position at top level. Virgin
Atlantic has increased its competition by entering into short haul routes. By providing low
fair and offering various discounts BA is increasing its demand (Hamilton and Webster,
2015).
AC 3.3 Impacted of working practices and cultures of the countries on BA
BA provide its services to various destinations which includes different countries like
Australia, Nigeria, Ghana, Egypt etc. Before providing service of flight to any destination it is
improtant to know culture and working practices of that place. Culture and working practices of
different countries effects BA in following way:
 Different countries have different policies like competition policy and laws like aviation law
which are important to follow. Government interventions are essential for the countries

suffering from terrorism or any kind of attack (Taylor‐Gooby, 2012).
 BA has to decide menu according to the taste and type of that particular country. To satisfy
the passengers it is important to offer them food of their taste and place from where they
belong. For example, for the passengers of china it is improtant to offer them chinese food.
 The timing of countries are also differ from each other. BA has to work according to timing
of countries which makes management complex. The timeing of europe is different from
america to manage work of both countries BA needs to form effective strategies (Siewiorek
and et.al, 2012) .
AC 4.1Impact of global changes in trade regime caused by organisations
World trade organisation (WTO) and other tourism bodies changes the aviation policies time
to time. This change in policies and practices affects the working of airlines. They need to replan
their decisions, strategies and objectives according to the introduced policy. Sustainable policy of
aviation is to make environment clean and safe (Ghannadian, 2006). BA has to follow this policy
which impacts the work of it. BA has to use bio fuels, ozone-friendly resources, reduce the size of
flights, change in engine and machines of flight, etc. Similarly the policy of open sky provide
liberalisation to airline industry. This policy adjust the programs which permit the other state flights
along with military flight. By using this policy BA provides various facilitates to travellers like
travelling with pets, non stop flights etc (Lange and et. al., 2015).
AC 4.2 Impact of other global factors, including government policies/regulations
There are various global factors which impact operations of BA. Government plays
important role in the growth of airline industry so it is essential to work according to the polices and
procedures of government. The health and safety policy of government are for the welfare of
travellers and crew members. This policy is helps in preventing from any kind of risk or injury. As
per this policy, BA need to provide quality food to the passengers and its staff members. There
should be proper arrangement of equipments required at the time of emergency. Government
sometimes rises the prices of fuel which results BA to increase ticket fair. This rise in price of
tickets effects the number of travellers. The monetary and fiscal policies of government also effects
BA. It makes BA to feel burden due to high taxes which again leads to rise in fair of flights
(Papatheodorou, 2012) .
AC 4.3 Impact of policies of the European Union on UK business
European Union (EU) has it's own different policies regarding thee aviation industry. These
polices are for airline companies, passengers, environment, etc. The policy related to the
cancellation or delay of flight impacts positively to the passengers of BA. According to this policy,

if any fligt gets cancel or delay due to any reason then a limited and fixed compensation will be
paid to the passengers (Haigh and Brubaker, 2010) . This policy helps BA in satisfying it's travellers
which results to prefer same flight again. EU provides the facility of checking fairs of different
flights online which helps in selecting flight as per the passenger need and preference. This increase
competition of BA and may leads to decrease the customers as they prefer low fair flights.
Passengers required to carry their health certificates along with them. They allow travellers to fly
only when they are healthy and safe. Those who have any health issue do not allowed to travel. The
policy of sustainable aviation helps in keeping environment safe and healthy. It impacts the working
of BA but for less emission of CO2 they have to follow this policy (Lin, 2012).
CONCLUSION
As per the study, it is concluded that in airline industry BA has top position and to maintain
this position it has to face many challenges. There are many factors that impacts the working of BA
such as government policies, various laws, global changes, different stakeholders, market situations,
competitors etc. Instead of all these things, BA is managing them very well by satisfying its
customers, employees, etc and using innovative and creative strategies. It is introducing new quality
facilities and services to the travellers. These results to achievements of objectives and targets with
better performance.

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