Business Environment Analysis of British Airways - Semester Report

This report provides a comprehensive analysis of the business environment surrounding British Airways. It begins with an introduction to the concept of the business environment and its impact on the airline industry, followed by an examination of the organizational purposes of businesses, including different types of organizations, their stakeholders, and responsibilities. The report then delves into the national environment, exploring economic systems, fiscal and monetary policies, and the effects of competition and regulatory mechanisms on British Airways. It also examines the airline's market environment, analyzing market structures, forces, and the behavior of the organization within its market. Furthermore, the report assesses the significance of global factors, such as international trade and the policies of the European Union, on British Airways' operations. The analysis covers topics such as stakeholder management, economic systems, market dynamics, and the influence of global factors. The report concludes by summarizing the key findings and providing insights into the challenges and opportunities faced by British Airways within its dynamic business environment.

BUSINESS ENVIRONMENT ANALYSIS OF BRITISH AIRWAYS
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Table of Contents
Introduction .........................................................................................................................................3
Task 1 Understand the organizational purposes of businesses ............................................................3
1.1 Identify the various types and purposes of different business organizations.............................3
1.2 Describe the various stakeholders and how an organization could meet their objectives.........3
1.3 Explain the various responsibilities of an organization along with ways of fulfilling them.....4
Task 2 Understand the nature of the national environment in which businesses operate ...................5
2.1 Explain how economic systems attempt to allocate resources effectively................................5
2.2 Assess the impact of fiscal and monetary policy on business organization and their activities 5
2.3 Evaluate the impact of competition policy and regulatory mechanisms on the activities of
British Airways................................................................................................................................5
Task 3 Understand the behavior of organizations in their market environment...................................6
3.1 Explain how market structure determine the pricing and output decisions of businesses.........6
3.2 The ways in which market forces shape organizational responses............................................6
3.3 Judge how business and cultural environment shape the behavior of British Airways.............7
Task 4 Be able to assess the significance of the global factors that shape national business activities
..............................................................................................................................................................7
4.1 Discuss the significance of international trade to UK business organizations..........................7
4.2 Analyze the impact of global factors on UK business organizations.........................................8
4.3 Evaluate the impact of policies of the European Union on UK business organizations............8
Conclusion............................................................................................................................................8
References............................................................................................................................................9
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INTRODUCTION
The term business environment is an integrated form of external and internal practices that
influences the activities of business organizations. In such context, the present study has been
describing detailed information about those forces that changes the way of management in British
Airways (Schmidheiny, 2000). The business has been providing range of airline services to the
consumers from different destinations. In that respect, researcher has stated different types of
organizations along with the purposes and objectives. Furthermore, description has been made
regarding fiscal and monetary policies of the organizations. All the business entities in UK have
been considering Competition Policy; thus it drives the business entities to conduct the business in
ethical and legal way and information about competition aspects have been included in the present
study. Later on, discussion has also been made regarding significance of international trade to UK
business entities along with the impact of global factors on business organizations. Industries that
operate under European Union are entitled to consider the rules and regulations for acquiring long
term sustainability (Reed, 2001).
TASK 1 UNDERSTAND THE ORGANIZATIONAL PURPOSES OF BUSINESSES
1.1 Identify the various types and purposes of different business organizations
Private, public, sole trading and partnership are the different categories of organizations that
works for different purposes as per the types of business. In the case of Private organizations,
private bodies have the authority to own the organization and it is also a significant part of the
economy. Firms working the same have to share the amount of profits equally with all the
shareholders and defined stakeholders (Polanyi, 2001). Government does not play any kind of role
in such category of organization; hence the level of government interference does not exist here. On
the other hand, public limited organizations are also there in the category in which public bodies are
entitled to take shares of the company. Public bodies have the authority to vote for the company
afterwards acquiring the shares (Schmidheiny, 2000).
British Airways is also a public limited body in which public bodies are entitled to take
shares from the company and the chiefly considers prominent service delivery to the clients. The
main purpose of the airline is to boost the level of revenue and for that the business delivers
adequate services to the clients (British Airways, 2009). Furthermore, all the services of British
Airways are quality concerned; thus the business focuses on delivering safe and secure services to
the customers at the time of their journey.
1.2 Describe the various stakeholders and how an organization could meet their objectives
Stakeholders have been assisting British Airways to manage all the business practices in
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adequate manner and these stakeholders are employees, customers, suppliers and business owners.
British Airways is entitled to maintain the interest of stakeholders so as to manage the flow of
resources in business scenario (Paul, 2008). Stakeholder of BA play huge role in the organization
because they put their advice and opinion in decision making process which helps in taking
adequate decisions for the business. All the preferences of stakeholders can be fulfilled if the
business entity will deliver proper rights and responsibilities to those people. As per the allocated
capital, stakeholders must receive dividends accordingly.
British Airways make sure that all the employees are involved in decision making process so
that their interest can be maintained. The resources of the organization are used in optimum manner
as per the interest of stakeholders and that also aids BA to produce optimum results for the business
(Parkin, 2002). Customers have been deriving adequate services from the business entities and this
also assists BA to retain the potential end users. Further, suppliers are the major players of BA since
they are accountable to supply basic requirements to the airline; thus this helps BA to deliver
appropriate services to the customers (Schmidheiny, 2000).
1.3 Explain the various responsibilities of an organization along with ways of fulfilling them
In order to meet all the needs and demand of stakeholders, it is essential for British Airways
to develop different strategies and techniques. From many research studies, it has been explored that
British Airways has been managing its responsibilities in adequate manner and that also enhances
sustainability of the business aspects: Society: The business has been following corporate social responsibilities and according to
the same, the standard of services are increased; thus British Airways are able to retain the
customers for longer period (Nimwegen and et al., 2008). The seems to be involved in CSR
activities where in all the practices are managed as per the environmental aspects. These
efforts further assists the business entity to acquire competitive advantage in the global
market place. Employees: For the welfare of all the employees, British Airways has been managing
employee retention strategies where in employees are provided with different benefits and
offers (Krasner, 2003). In order to maintain the interest of employees, BA maintains equality
and diversity management.
 Shareholders: All the shareholders of British Airways are provided with adequate profits as
per the ratio of capital invested in the business. This helps the shareholders to remain with
the business entity and as a result, it maintains the flow of resources in the business
activities (Klapper, Laeven and Rajan, 2004).
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TASK 2 UNDERSTAND THE NATURE OF THE NATIONAL ENVIRONMENT IN WHICH
BUSINESSES OPERATE
2.1 Explain how economic systems attempt to allocate resources effectively
Economic system is an integrated version where in roles, responsibilities and actions of
different bodies are involved for the purpose of managing resources in the economy. British
Airways has been conducting the business in mixed economy where in government has the
authority to intervene in the process of resource flow (Erixon, 2011). Further, government is also
entitled to monitor the business processes especially in the area of resource allocation. Economic
system attempts to allocate adequate resources so that the ratio of wastage can be minimized.
British Airways has been allocating the resources adequately in different business activities and
prior doing the same, assistance needs to be acquired from the governmental bodies (Elsevier,
2013).
Strategic decisions of British Airways are directly influenced by the government actions and
policies. Operating the business in the subsequent economy leads British Airways to consider needs
and demands of clients on higher extent (Chen, and Mohamed, 2008). The main benefit of this
economy is that it helps the business entities to allocate resources as per the production processes.
Hence, distribution of resources is based on the norms and framework determined by the
government. Therefore, British Airways has to consider different economic systems so that to
manage political as well as economical approaches in different concerned areas where BA deals
(Parkin, 2002).
2.2 Assess the impact of fiscal and monetary policy on business organization and their activities
Monetary policies are developed by the ruling bodies of UK and those policies needs to be
quite stable so that it can stabilize the profitability factor and that further can raise wealth prospects
of the business (Brooks and Weatherston, 2000). As per the policy, the government takes decision
related to supply and flow of money and this determined the resources to be managed in the entire
economy. In UK, Reserve Bank and Central Bank both are accountable to take decisions related to
supply of money. Similarly, BA can manage supply of money through considering the GDP factor.
Hence, business capability of British Airways augments and directly it assists in managing long
term sustainability. Fiscal policy on the other hand is concerned with government's decision related
to spending of money and taxation (Borsch, 2004). The policy is vital in terms of accelerating
growth aspects and as a result, it results in increasing purchasing power of people. The policy is
also suitable in terms of encouraging the customers to spend more on business activities.
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2.3 Evaluate the impact of competition policy and regulatory mechanisms on the activities of
British Airways
To remain competitive at market place, British Airways has been considering Competition
Policies so that all the business practices can be managed in adequate manner. In the below
mentioned section, several policies are discussed in detailed manner:
 British Airways is also considering Competition Commission Act so that competition can be
properly administered especially in the zone of mergers and strategic alliances (Bartle,
2002). Such aspect has been followed for creating suitable competition.
 It has been observed that British Airways considers Office of Fair Trading Act so that client
interest can be protected and healthy competition can be given to the rivalries. This act is
also vital in terms of promoting adequate and fair competition at market place.
 Further, British Airways also considers Civil Aviation Authority (which is a statutory
corporation) in which all the activities of business should be prominently managed (Erixon,
2011).
TASK 3 UNDERSTAND THE BEHAVIOR OF ORGANIZATIONS IN THEIR MARKET
ENVIRONMENT
3.1 Explain how market structure determine the pricing and output decisions of businesses
Market structure of every business ought to be analyzed properly so that pricing related
decisions can be managed successfully (Hall, 2013). The types of market structure are discussed in
the below section: Perfect competition: Perfect competition market is the one in which number of buyers and
sellers exist and according to the demand they can change the pricing and output decisions.
The buyer's and seller's power can not be controlled by any other factor and new business
entities can enter at market place without having any barriers. Number of quantity to be sold
is also not determined (Krasner, 2003). Monopoly market: In the subsequent market place, there is merely one supplier who is alone
entitle to rule the market place; thus the entity acts as a monopolist. Prices can be
determined according to the market category and availability of substitutes.
 Oligopoly market: British Airways has been operating the business in oligopoly market
where number of suppliers exist and they can directly impact business decisions. Huge
resources are required to be allocated in the business concerns so that services can be
adequately delivered (Nimwegen and et al., 2008). As per the market structure, British
Airways has to give huge concern towards promotional aspects because customer
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satisfaction is the main motive of every business entity.
3.2 The ways in which market forces shape organizational responses
One of the most imperative facets present at market place is supply and demand because
these two dimensions particularly shapes organizational responses. Afterwards, deriving such
responses favorable changes could be made to existing business strategies. Needs and demands of
customers have been changing rapidly and in all such factors leads to numerous changes in business
actions. Considering the market forces, it can be said that supply and demand both have reciprocal
relationship with each other and integration of both factors directly affects British Airway's
operations (Schmidheiny, 2000). BA has been considering Supplier's power as according to that,
organizational resources are properly allocated and managed. All the operations of British Airways
are also managed through costing strategies so that within the organizational resources, activities
can be managed. Needs and demands of customers chiefly shapes organizational aspects and on that
basis, all the activities can be managed. Economic, social and political changes have been arising
and combination of all such facets results to transitions in business activities. Every entity has to
consider competition aspects prevailing at market place so that sustainability chances can be
acquired (Polanyi, 2001). Every business needs to collect adequate idea about the rivalries because
availability of substitute products can hamper thew overall growth of the business.
3.3 Judge how business and cultural environment shape the behavior of British Airways
It is vital for British Airways to meet all the requirements of customers and for that different
aspects needs to be taken into account. In such respect, the airline needs to emphasize on different
plans and policies as that would also aid in considering moral and ethical values for business
management (Hall, 2013). External as well as internal business factors changes the values of
business and at the same time time, it impedes the behavior of human resources. While delivering
services to the clients, all the employees must have to consider cultural aspects because that
motivates them to maintain the standard of services (Parkin, 2002).
It has been analyzed that British Airways always considers employee management because
that can only encourage British Airways to augment the level of productivity. Employees will
contribute in success aspects only when they are provided with diverse benefits from the
management (Erixon, 2011). Hence, BA should show greater concern towards employee
engagement and motivation. Further, proper concern should be there regarding quality services as
that can also underpin the efficacy of business practices.
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TASK 4 BE ABLE TO ASSESS THE SIGNIFICANCE OF THE GLOBAL FACTORS THAT
SHAPE NATIONAL BUSINESS ACTIVITIES
4.1 Discuss the significance of international trade to UK business organizations
International trade is highly beneficial for all the business entities of UK as that extends the
market reach and along with the same, it also enhances customer base. UK business entities are
allowed to enter into global market place because of less restriction and easy entry (Brooks and
Weatherston, 2000). As far as domestic market is concerned, business entities faces less issues
because of limited scope; on the other hand, entering into international market expands the scope of
growth and success on higher extent. Though, international trade generates tough competition; but
then also it encourages the business entities to spend more on research development and as a result,
it increases the level of competitiveness (Borsch, 2004).
Apart from these benefits, international trade is also vital for British Airways because that
allows the business entities to persuade more customers even from different segments. International
market is profitable for all the business entities and so it is for UK business entities; thus entering in
the same zone can provide range of benefits to the organization (Krasner, 2003). International trade
can develop trade relationships among other developed countries and as a result, economic
prosperity can be boosted. Hence, through trading internationally, UK business organization can
improve their fiscal downturn and also it will help them to improve the living standard of people.
4.2 Analyze the impact of global factors on UK business organizations
Impact of global factors can be positive and negative and both are discussed in the below
mentioned section. Global forces have been assisting UK business organizations to use more
technological aspects in the business processes. Thus, using technology on higher ground could
assist UK business entities to facilitate innovation and creativity in business process and as a result,
it augments differentiation factor of business (Impact of Global Forces on UK Business
Organisations, 2013). For instance – British Airways has been focusing on global forces which
enhances success and growth aspects more. However on the other side, global factors changes
political, social and economic aspects and that could impede the business activities. The process of
globalization has been affecting British Airways because huge number of entities are working in the
same industry and probably it drives BA towards changes (Brooks and Weatherston, 2000). Hence,
from the discussion it is clear that British Airways has been acquiring positive as well as negative
values from global forces.
4.3 Evaluate the impact of policies of the European Union on UK business organizations
European Union is a political authority which provides great support to several other sub
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systems. Operations of European Union have great impact on the business activities of UK business
organizations. It also provides great strength to the organizational and structure of economic
aspects (Bartle, 2002). Authority ensure that business organizations are following key rules and the
principles of market in order to boost ethical work practice. European Union also focus on various
standards which can improve the profit margin ratio and productivity of business organization (Hall,
2013).
With an assistance of major functions the business organization can manage diverse
operational activities. It is necessary for management of British Airways to focus on diverse custom
documents so that ethical trade practice can be promoted within market. Legal aspects also need to
be followed as it facilitates in creating healthy competition (Erixon, 2011). Other consideration of
EU provides stable exchange rates while dealing in international market which is beneficial for
British Airways.
CONCLUSION
Summing up the entire research, it can be said that British Airways has been managing all
the business activities in adequate manner; however instead of that certain changes needs to be
implemented in business activities. The flow of money can be increased if business entities will
emphasize chiefly on monetary and fiscal policies. Articulating the discussion, it is evident that
business entities need to comply with numerous norms and legal framework so that market related
issues and constraints can be avoided. The study has used relevant materials and articles which
increases its credibility and accessibility degree.
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REFERENCES
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Parkin, M., 2002. Eurpoean economics. Pearson education.
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Polanyi, K., 2001. The Great Transformation: The Political and Economic Origins of Our Time. 2nd
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Reed, D., 2001. Economic Change, Governance and Natural Resource Wealth: The Political
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Online
British Airways. 2009. [Pdf]. Available through:
<https://www.britishairways.com/cms/global/microsites/ba_reports0910/pdfs/
Our_business.pdf>. [Accessed on 8th December 2015].
Hall, S., 2013. The Implications of Fiscal Policy and Monetary Policy to Business. [Online].
Available through: <http://www.ehow.com/facts_6899691_implications-policy-monetary-
policy-business.html>. [Accessed on 8th December 2015].
Impact of Global Forces on UK Business Organisations. 2013. [Online]. Available through:
<http://research-methodology.net/impact-of-global-forces-on-uk-business-organisations//>.
[Accessed on 8th December 2015].
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