British Airways: Business Environment and Stakeholder Analysis Report

This report provides a comprehensive analysis of British Airways (BA) within its business environment. It begins by exploring the purposes of different organizational types, focusing on BA's mission, vision, and objectives. The report identifies BA's key stakeholders (customers, shareholders, suppliers, and workers) and examines the impact of various challenges on these groups, such as economic downturns and policy changes. It details BA's responsibilities to meet stakeholder expectations, including employee relations, government compliance, social contributions, and environmental sustainability. The analysis then delves into economic systems, particularly those impacting resource allocation, with a focus on how fiscal and monetary policies have affected BA over the past decade. The report further examines the impact of market structure within the airline industry, the interplay of market forces, and the influence of working practices and cultures. It concludes by assessing the impact of global changes in trade regimes, global factors, and EU policies on BA's operations and strategic responses, providing a holistic view of the airline's business environment.

BUSINESS ENVIRONMENT
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TABLE OF CONTENTS
INTRODUCTION................................................................................................................................4
TASK 1.................................................................................................................................................4
1.1 Purpose of different types of organizations...............................................................................4
1.2 Key stakeholders of BA and impact of different challenges on them........................................5
1.3 Responsibilities of BA to meet the expectations of its stakeholders.........................................6
2.1 Economic system which helps in allocation of resources in an effective manner.....................6
2.2 Challenges faced by BA from last one decade by changes in fiscal and monetary policies.....7
2.3 Impact of regulatory and competition policies on BA...............................................................7
TASK 2.................................................................................................................................................8
3.1 Impact of market structure of the airline industry on pricing and demand for airline seats......8
3.2 Interplay of different players and market forces shape organizational responses.....................8
3.3 Impact of working practices and cultures of the countries where BA predominantly operate. .9
4.1 Impact of global changes in trade regime on BA......................................................................9
4.2 Impact of different global factors on BA.................................................................................10
4.3 Impact of EU policies of travel, competition or aviation on BA.............................................11
CONCLUSION...................................................................................................................................11
REFERENCES...................................................................................................................................12
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INTRODUCTION
Business environment is a combination of internal and external factors which affect the
development of organization, business operations, performance, etc. A business never operated in a
vacuum place or in other words, it can be said that for running a successful company, human beings,
resources, places and other supportive things are required (Daft, 2010). The following research is
based on business environment and to explore its different roles in organization, British Airways
(BA) is taken into the consideration. The outcomes which will be getting after completing the study
are organizational purpose of business, nature of national environment in business operates,
response of company in the market environment and importance of global factors which gives the
shapes of response of BA business.
TASK 1
1.1 Purpose of different types of organizations
The purpose of every organization is different according to their nature of business as well as
available product lines or services. In UK, main types of business organizations are as follows:
Sole trader: It is the most common form of business in UK and near about 40% people are
having their own business. In such type of organization, there is no requirement of complicated
paper work and all the decisions are being taken by the owner of company quickly and in favour of
customers. The example of this type of organization is electrical work, plumbing, small mobile
repairing shop, etc. (Ellsworth, 2002).
Partnership: It can be done between two and more than two business partners. Under this
kind of organization, people are sharing their skills, knowledge and workload as well as learn
different types of working practices to improve the quality and delivery time of services.
Partnerships are commonly held in professional services such as accountants, doctors, solicitors,
etc.
Companies: Companies are owned by shareholders who have appointed company’s director
to run the business in right direction. There are two types of companies, that is, private and public
limited. In private organization, it is run and owned by a single person with the purpose of making
profit, business expansion, increase market share, etc. (Griffin and Moorhead, 2013). The example
of private company is Virgin Atlantic. On the other hand, public limited company is run by local
government or group of people for the public. The share of such type of organizations is purchased
by a community to get some additional benefits. The purpose of this kind of business is providing
profits to community. The examples of PLC are Tesco, Next, Sainsbury, etc.
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Franchises: This type of organization is becoming popular in UK because a franchisor
grants permission to sell a service or product to franchisee under the name of company. The
franchisee that is trading under the name of company is getting benefits from local monopoly.
McDonald is the perfect example of franchise because it has operated its business across the world
by giving franchises (Guy, 2009).
BA’s mission, vision along with short and long term objectives:
Mission: To provide safety and confidence to customers when they are travelling in air from
BA airlines.
Vision: To become the most responsible airline in the world (British Airways 2008/09
Annual report and Accounts, 2009).
Short and long term objectives:To be the airline of choice for long-haul premium customers. To
deliver the best travelling services to service users at every destination. To increase the presence at
international level by providing the best airline services. To build top position in London in the
sector of airline industry. To meet the customer demand and needs as well as to improve the existing
services (British Airways 2008/09 Annual report and Accounts, 2009).
1.2 Key stakeholders of BA and impact of different challenges on them
Stakeholders are those groups of people who are investing their money in a company with the
aim of getting some additional benefits or goods return on investment. The major key stakeholders
of BA are as follows:
Customers: There are many customers who are travelling from BA on regular basis. In this context,
they expected that company has provided theme good services and other benefit because they are
loyal customers of firm. Consumers also gives some suggestions to improve the airline services of
BA. (Harrison, 2013).
Shareholders: These are the people who own company’s shares for getting additional benefits in
return of investment. They expect that BA should pay good dividends in the return and must meet
their expectations in a appropriate time.
Suppliers: Boeing and Airbus are the major suppliers of aircraft of BA and they have the
expectation from the firm that it have transparency during paying money as well as in making
contracts (Jennings and Hyde, 2012).
Workers: There are more than 15000 employees that are working in different nations of the world
and its BA‘s responsibility to provide healthy working environment as well as to offer good
packages to meet the required needs.
Impact of different challenges on BA stakeholders: While performing the business operations in
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different areas of the world, BA has faced several challenges which directly affect the expectations
of its stakeholders (Sayamov, 2013). The impact of challenges can be understood by an example. In
the period of recession in UK, the spending power of customers has decreased. This has directly
affected the revenue of BA and due to this; company was unable to pay the set wages. Along with
this, firm was cutting various jobs and fired the employees at that time. In addition to this, BA was
not giving the promised dividend to the shareholders. Therefore, from the above example, it can be
said that one challenge has affected all the stakeholders negatively (Svensson, 2001). In addition to
this, BA also increases the prices of its air tickets in recession time which create problems for
middle class consumers in UK. Some times, management of organization can not give timely
money to their vendors which creates issues to manage effective relationship with them.
Corporation also faces difficulty to manage its workers due to shortage of monetary funds. So these
are some changes which are faced by stakeholders of BA in United Kingdom.
1.3 Responsibilities of BA to meet the expectations of its stakeholders
BA reveals different responsibilities and adopts a wide number of strategies to meet own
responsibilities to fulfill its stakeholder’s expectations in a right manner.
Employee Responsibility: The employees of every organization expect that firm has
provided them good working environment, fair wages, working hour flexibility, etc. In this context,
it is BA’s responsibility to meet all the expectations by adopting different ways such as developing
good and healthy working environment, providing fair wages, identifying training and development
needs, etc (Tsang, 2012).
Government Responsibility: It is BA’s responsibility to pay the right amount of tax to
government and to follow ethical practices to perform the business operations in different areas of
the world. Along with this, by giving employment to the right people, BA has to give own
contribution in the development of nation (Zehtabi, 2012).
Social Responsibility: BA has the responsibility to relive some percentage of amounts from
profit for the community development and to use it in different works such as educating students,
opening schools, providing health facilities to poor families, etc.
Environmental Responsibilities: By adopting the sustainable aviation strategy, BA has to
use bio fuels. It helps in decreasing the emission of greenhouse gases and other harmful components
in the environment. Along with this, by adopting GO GREEN concept, company has to reduce the
use of plastics which affect the environment in a negative manner (Mann and Roberts, 2012).
2.1 Economic system which helps in allocation of resources in an effective manner
There are different economic systems which are normally used in resource allocation. These
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are like:
Command economy: This economy system is used for those resources which are less
available on earth such as oil, natural resources, land, minerals and materials etc. Mostly, the
following system is used by government to allocate the scare resources in an effective manner
(Economic systems, 2015).
Free enterprise economy: Under the following economy system, government has made little
interference in organizational decision making process regarding the allocation of resources. Along
with this, government has given some flexibility in rules and regulations of resource allocation. For
BA, it is important for the firm to allocate the resources within organization in a right manner to
survive in the competitive market. So, with the help of this system, BA can provide services
according to the market demand (Economic systems, 2015).
Mixed economy system: It is somewhere like free enterprise economy system but with the
little interface of government by different policies such as monetary, fiscal policy, etc. In this
economy system, three questions arise which are what to produce (decision taken by both company
and government), how to produce (determine by manufacturers and partly by government) and for
whom to produce (determine from purchasing power of customers). BA is a public limited company
and it is running business with the purpose of providing good services in favour of community
rather than making profits (Economic systems, 2015).
2.2 Challenges faced by BA from last one decade by changes in fiscal and monetary policies
Challenges faced by BA due to change in fiscal policy: The modifications in fiscal policy
such as taxation, interest rate, spending and investment limitations have created various challenges
for BA from last one decade. The example of some challenges due to change in fiscal policy are
decreased customer demand because of lower income, increased cost of doing business because of
increased interest rate of loan, limited investment, etc. All such things have limited the growth of
BA in various nations (Thompson, 2013). These challenges create problem to manage its airline
operations in different areas. They obligate BA to increase cost of air tickets for domestic and
international consumers. Due to this reason, organization generated less amount of profit in the UK.
Challenges faced by BA due to change in monetary policy: It is accountable for modifying
rates of interest of loans by banks. If monetary policy drops the rate then it will result in a way that
people will easily get the loan on lower interest as well as customer’s spending power will increased
in the against of interest of loan. This means higher company’s profits. On the other hand, higher
rates may influence in the opposite manner by boosting the business expenditure as well as by
decreasing individuals’ disposable income which also lowers company’s profits (Czinkota, Michael
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and et.al., 2009). In last decade, higher rates created many problems for BA to manage its financial
operations like investment decisions and its expansion in various countries. In addition to this, it
also increases the expenditure of organization which create huge problems to manage its business
activities in United Kingdom.
2.3 Impact of regulatory and competition policies on BA
Impact of regulatory policy on BA: Regulatory policy is applying for those companies which are
having large market share. Such types of organizations are closely monitored by the government
bodies and other authorities to recognize any illegal practice in which BA is engaged. It has
continuous monitored the operations of BA to determine the illegal and unethical operational
activities. This process increases extra work load on managers and employees of organization. In
addition to this, it enhances pressure in order to manage proper documentation of every activities on
the staff members of BA. These regulatory policies compel the firm to increase staff in each city of
UK.
Impact of competition policy on BA: This tool maintains healthy competition in the market and
provides similar advantages of competition to companies. It has worked in more than 100 nations
and supports the economy of scale of country. The impact of competition policy is to keep BA from
any sort of anti-competition agreement with its major competitors and to decrease the chances of
raising prices. The negative impact of this on BA is not able to enter into any friendly agreement
with competitors in order to reduce competition in the industry (Fan, Nyland and Zhu, 2008). It also
reduces profit of organization because firm has to keep its price low of its air tickets in order to
maintain its sales in the nation.
TASK 2
3.1 Impact of market structure of the airline industry on pricing and demand for airline seats
Monopoly market structure is dominated by a single seller where the seller is dominate with
the USP of the product. As the seller id the sole seller, he/she does not faces any competition.
Whereas in monopolistic competition them market consists of seller selling differentiated products.
There are more then one seller in monopoly market. In a perfect competitive market a single firm or
producers supplies the product. The price is decided by the producer as the consumers do not have
any other product alternative. On the contrary, in oligopoly the market is hared among a few firms.
The dominating power for the products is limited to those few firms.
In The market structure of airline industry in UK is oligopoly. It means that there are some
airline companies which compete with each other (Daft, 2010). Under this, every organization has
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price cutting or increased power but they cannot set the prices as they want. When one airline firm
has cut down the pricing of travelling then its other rivals are also start cutting down their prices.
The situation happened under the following market structure is called as price war because all
enterprises are trying to grab the huge market share. These characteristics of oligopoly have affected
the pricing and demand for airline seats (Ellsworth, 2002).
Due to competition in airline industry, the pricing of services has decreased and became
affordable for the customers. It has increased the demand of airline seats within UK and other
nations. People become attracted towards low pricing airline and in this situation, the demand for
particular airlines organizations seats have increased (Guy, 2009). This impact has good for the
some companies and bad for some firms. If organizations have the capability to attract the
customers and to meet the demand gap of market then it will be a profitable deal for it.
3.2 Interplay of different players and market forces that shape organizational responses
There are various market forces and players which influence and affect the BA responses.
Here, the market forces and players are discussed which gives the shapes of BA responses.
Supply and demand: As per the demand of airline’s seats for a particular destination,
according to it, BA has increased or decreased the number of flights for that place. For example, in
London Olympics, 2012, there were many people that came to London to attain this event. During
the period of July 2012 to August 2012, BA increased the number of flights and their scheduling
which were connecting different nations to London (Jennings and Hyde, 2012). From this example,
it can be understood that according to the demand of services, BA has increased the demand and
given response.
Customer perception and action: From the studies of different customer reviews who are
being using the services of BA, have not perception towards the company. According to them, seat
comfort, cabin staff services, food and beverages, ground services, in-flight entertainment, etc. are
not giving them value of money. Therefore, it can be said that the perception of customers for BA is
not good and next time, they would choose another airline services for travelling. By seeing the
passenger’s reviews in which their losing interest in BA’s services is in limelight, organization is
required to take some important steps. This would help in improving the airline’s services and
rebuilding a good image at international market (Harrison, 2013).
Economic of sales: It defines the cost advantages which have been gained by an organization
because of size of outcomes, scale of operations, etc. In case of BA, from the last decade, the
operating cost of organization has increased which has affected the pricing of services (Lane, 2010).
In this context, to reduce the operating cost and to achieve economic of sales, BA has made a
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merger with Iberia in 2009. The result of this merger is that company has saved 360 million euro
per year and recovered the loss of 2009 years within one and half year (Chapman, 2009).
3.3 Impact of working practices and cultures of the countries where BA predominantly operate
Impact of working practices of nations on BA operations: BA has operated its business in
various nations and every country is having its own working practices that are related to laws and
regulations. This thing has impacted several business operations of company which can be
understood by an example. UK and US; both has some safe work practices and procedures for
employees who are working in BA terminals. Therefore, according to the difference in working
practices, BA has adopted some common ways of working for both the nations and operated its
business (Svensson, 2001). In addition to this, organization also hires young candidates to improve
its working practices in various nations. This thing creates effective impact on the BA to increase its
efficiency and performance in the different countries.
Impact of diversified culture of countries on BA operations: At the time of operating
business in different nations, BA has faced numerous kinds of cultural issues. These affect the
performance of company in both negative as well as in positive manner. For instance, the culture of
South Africa is different from UK and to operate business here, BA has to appoint some employees
of South Africa and need to understand their culture. It helps the firm to develop an understanding
and tactics to run the business in other nations (Thompson, 2013). However, the negative impact is
that BA has to adopt different types of working practices and environment for diversified
employees. In addition, these things produce many issue for BA to manage different type of people
in South Africa. They also create adverse effect on performance of organization in different
countries.
4.1 Impact of global changes in trade regime on BA
There is significant impact of global change in trade regime to UK organizations such as BA
in the form of following:Cheap Resources: While running business at international level, BA will
get the opportunity to obtain several types of resources. It will assist the firm to have control over
other expenditures, to improve the services and to decrease the cost of operating. The result of this
is decreasing prices of tickets and meeting the customers’ expectations in right direction (Mann and
Roberts, 2012).
Technological Advancement: BA will be getting technology advancement benefits after changing
trade regime. It will help company to bring modifications in the engines of aircrafts, to increase the
capacity of flight size, to improve the capacity and capability of aircraft, etc. This helps in reducing
the carbon and other greenhouse gases (Zehtabi, 2012).
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Effective Human Resource: The impact of changes in trade regime on BA is that it will hire the
diversified cultural people at his working place which will be good for the organization in case of
expanding business in other nations.
Broadening Horizons: The changes in trade regime will affect the business operations of BA in
terms to it will broaden horizon of the firm to run the business in any country without facing any
kind of issues and less paper work. It will provide development and success opportunities to BA
(Sayamov, 2013).
4.2 Impact of different global factors on BA
There are various impacts of global factors on UK organizations such as BA and these can
influence company in both negative and positive manner. The impacts of different types of global
factors are as follows:
Political Factors: The level of political stability, bureaucracy in global affairs, international
initiatives of trade control, etc. are some of the political factors of UK and other nations which can
be find at international level. All these factors affect the business operations of BA in terms of
reducing potential amount of profits (Dudovskiy, 2013).
Economic Factors: Global economic crisis, stock market fluctuations, changing policies of
World trade Organizations, etc. are some of the economic factors which affect the business of BA in
form of limited investment, using bio fuels and adopting sustainable aviation methods.
Social Factors: The education level, income level, diversity of cultural, lifestyle of people,
values and beliefs of community are considered into social factors at global level which may
significantly impact the BA services and other operations. For example, while preparing the
advertisement, company has to consider the local culture and traditions which influence the people
for buying the services of BA (Dudovskiy, 2013).
Technological Factors: The changes in technology will be beneficial for BA in terms of
achieving sustainable aviation, increasing the capacity of engine, reducing carbon emission by
improving the performance of engine, etc. (Dudovskiy, 2013).
4.3 Impact of EU policies of travel, competition or aviation on BA
There are number of European Union Policies and other governmental bodies that can affect
UK organization’s business such as BA which are as follows:
Employment Policy: As per this policy, BA has to give employment to those people who are
unemployed due to any reason. The purpose of EU is to increase the employment ratio of UK. But
the impact of this on BA is that company has to hire some uneducated and not capable employees
within firm which affect the performance of BA (Vernon, 2011).
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Regional Policy: It has been developed by EU for regional which are coming under European
Union. The modifications in the existing policy affect the decision making policy of BA regarding
hiring of employees (Vernon, 2011).
Inflation Policy: It is made for having control over the fluctuations in prices of airline seats. It has
been developed by Monetary Policy Committee of Bank of England for setting the interest rates. It
helps in controlling the spending rate of consumers which has direct impact on the revenue of BA.
Taxation Policy: Under this policy, BA has paid tax in European Union nations in case of profits
and loss. The reason of collection of tax from organizations is spending that money in favor of
community and nation’s development (Vernon, 2011).
CONCLUSION
From the above report, it has been concluded that all the organizations have conducted the
business with different purposes because it depends on their nature of business and types of offering
products or services. British Airways has some responsibility towards its various stakeholders to
meet their expectations. Along with this, it has been seen that the changes in competition and
regulatory policies made positive and negative; both types of impacts on BA’s operations. Last but
the least, it has been found that numerous kinds of global factors have affected the business
performance.
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REFERENCES
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Press.
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responsiveness for Chinese multinationals: An area for future study. Management Research
News. 31(12). pp.922 – 940.
Griffin, R. and Moorhead, G., 2013. Organizational Behavior: Managing People and
Organizations. 11th ed. Cengage Learning.
Guy, F., 2009. The Global Environment of Business. Oxford University Press.
Harrison, A., 2013. Business Environment in a Global Context. 2nd ed. Oxford University Press.
Jennings, K. and Hyde, H., 2012. The Greater Goal: Connecting Purpose and Performance.
Berrett-Koehler Publishers.
Mann, R. and Roberts, B., 2012. Essentials of Business Law and the Legal Environment. 11th ed.
Cengage Learning.
Sayamov, N. Y., 2013. Education as a global “soft power” for sustainable development. Campus-
Wide Information Systems. 30(5). pp.346 – 357.
Svensson, G., 2001. “Glocalization” of business activities: a “glocal strategy” approach.
Management Decision. 39(1). pp.6 – 18.
Thompson, F. L., 2013. Using Industrial Organizational Psychology for the Greater Good: Helping
Those who Help Others. Routledge.
Tsang, P., 2012. ICT maturity as a driver to global competitiveness: a national level analysis.
International Journal of Accounting and Information Management. 20(3). pp.255 – 281.
Zehtabi, E. M., 2012. Assessing the forward-looking policies of entrepreneurship development in
Iran. World Journal of Entrepreneurship, Management and Sustainable Development. 8(1).
pp.60 – 70.
Online
British Airways 2008/09 Annual report and Accounts. 2009. [PDF]. Available through:
<https://www.britishairways.com/cms/global/microsites/ba_reports0809/pdfs/
Chief_Executive.pdf>. [Accessed on 29th November 2015].
Chapman, A., 2009. BA and Iberia- economics of sales. [Online]. Available through: <
http://www.tutor2u.net/economics/blog/ba-and-iberia-economies-of-scale>. [Accessed on
29th November 2015].
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