Report: Business Environment Analysis and British Airways' Response

This report provides a comprehensive analysis of the business environment faced by British Airways (BA). It begins by defining the aims of various organizations and then delves into the specific mission, vision, and objectives of BA. The report identifies key stakeholders, including customers, government, suppliers, and employees, and examines the challenges each faces, such as recession, regulatory changes, and political instability. It details how BA responds to these challenges to fulfill its responsibilities. The report then explores economic systems, including command, market, and mixed economies, and their implications for resource allocation. It also analyzes the impact of fiscal and monetary policies on BA's business environment. Furthermore, the report examines how market structure, particularly in the airline industry, affects pricing and demand. It considers the interplay of market forces, including working practices and cultural factors, and their influence on BA. Finally, the report discusses the effects of global changes in trade regimes, including those caused by organizations like the WTO, and the impact of EU policies on BA's competitiveness, offering measures BA can take to remain competitive.

BUSINESS ENVIRONMENT

Table of Contents
Introduction..........................................................................................................................................3
Task 1 ...................................................................................................................................................3
1.1 Determine the aim of various kind of organisation...................................................................3
1.2 Determine the key stakeholders and how these challenges impacts the various stakeholders of
BA....................................................................................................................................................4
1.3 How did BA respond to fulfil its responsibilities to these stakeholders with suitable examples
.........................................................................................................................................................5
2.1Explain economic systems that efforts to assign resources for organisation effectively............5
2.2 Explain challenges due to fiscal and monetary policies on business environment faced by
firm...................................................................................................................................................6
2.3 Describe the impact of regulatory, competition and legal policies changes on British Airways
.........................................................................................................................................................6
TASK 2.................................................................................................................................................7
3.1 How has the market structure of the airline industry effected the pricing and demand for
airline seats......................................................................................................................................7
3.2 How the interplay of different players and market forces shape organisational responses.......7
3.3 How British Airways has been impacted by the working practices and cultures of the
countries...........................................................................................................................................8
4.1 Explain the effect of global changes in trade regime caused by organisations such as WTO
and other international civil aviation and tourism bodies on British airways.................................9
4.2 What are the other global factors, considering policies/regulations of government players
which may effect British Airways..................................................................................................10
4.3 Can European Union policies on travel, competition or aviation impact British Airways, what
measures can be taken by BA in order to remain competitive?.....................................................10
Conclusion..........................................................................................................................................11
References...........................................................................................................................................11

INTRODUCTION
Business environment contains all the external and internal factors that impact on the
business for growing in nation or world. It also requires natural resources, living persons and places
to exist for development of business (Bjorklund, 2011). British Airways is one of the leading
organisation in the UK. It provides air service for its consumers in the world. The present report
defines the organisational functions of business in nation. It also introduces the nature of business
environment of aviation industry in which corporation operates its business in the world. Further, it
explains behaviour of British Airways in the market of UK. In an addition, it represents importance
of international factors which is crucial for national business activities of organization.
TASK 1
1.1 Determine the aim of various kind of organisation. Describe mission and vision along with
short- and long-term objectives of British Airways
There are many type of organisations in United Kingdom. Some of them is described below
the paragraph.
 Private Organisation- These types of firms try to give higher priority to cover its investment
cost in the market. For example, Purpose of TESCO retail organisation emphasize on more
earning profit from market as soon as possible (Commander and Svejnar, 2011). Then after,
company think about the serving of customer in the market.
 Partnership Corporation- This type of firm also comes under the private enterprise. For
Example, the main aim of ASDA retail firm is to give progress legal business in the market
to earn more profit from the consumers (Chavis, Klapper and Love 2011).
 Non-Government Organisation (NGO)- It is also different type of organization. For
example, Oxfam enterprise is enable people to work together and utilizes shared resources to
get common goals and objectives (Sessoms, 2015). It provides its efforts to solve out the
social problems in state or country.
 Public Firm- Mainly this type of organisation contains maximum government stake in the
market. For example, British Airways provides equal priority regarding retained earnings
and serving of customers in the market. Mission, vision long and short term Objectives also
help to organization to achieve goals. It is explained below the paragraph.
 Mission of British Airways (BA) - Company is focused on better service of air travelling for
its consumers in the world.
 Vision of BA- Organisation is wanted to become leading firm in the world regarding airline
services of its customers.

Short Term Objectives of BA
 To become first priority for its premium consumers in the world with help of its better
network.
 To deliver a superior service for its customers at each airport in the world.
Long Term Objectives of BA
 To increase its presence in many important global cities.
 To create leading position in Britain (Porter and Rivkin, 2012).
 To meet out needs of customers
 To enhance its profit margins by new revenue schemes.
1.2 Determine the key stakeholders and how these challenges impact the various stakeholders of
BA
There are many key stakeholders in the organisation. Customers, government, suppliers as
well as employees are main stakeholders of British airways. Generally stakeholders of BA face
various challenges in the Britain. It is represented below the paragraph.
 Recession- This factor creates bad effect on all the stakeholders of British Airways. For
example, consumers face more problems regarding airline services due to higher prices of
tickets. Further, fall in economy creates adverse effect on suppliers by decreasing sales of its
products because British Airway has no appropriate money to purchase more spare parts and
fuel (Aterido, Hallward-Driemeier and Pagés, 2011). Company also uses retrenchment
process which also creates job problems for its employees.
 Modification of Rules and Regulations- These policies produce negative impact on
stakeholders. For example, customer services are affected due to changes in current legal
policies which creates negative image in mind of them in the respect of British Airways
because changed rules increase the rates of air tickets. Further, it also affects revenue of
suppliers due to changes of acts like higher income tax, trade and tariffs which reduces the
profit shares in the airline market.
 Political Instability- These factors create adverse effect on employees and consumers. For
example, it influences employees of British Airways to change the strategic financial
policies (Strumickas and Valanciene, 2015). In addition to this, it increases prices of air
ticket due to changes in supply and demand which directly creates adverse effect on the
purchasing behaviour of consumers.

1.3 How did BA respond to fulfil its responsibilities to these stakeholders with suitable examples
Generally, British airways has given many efforts to fulfil its responsibilities towards the
stakeholders in the country. Mainly, firm reserves its retained earnings to complete its
responsibilities. Fulfilling responsibilities towards stakeholders provides many benefits to the
company. Actions adopted by company for the same are as follows:
Stakeholders Responsibilities
Customers British Airways provides many help to the consumers. For example,
corporation has maintained its service for the customers to provide full
flexibility regarding air ticket prices in the situation of political instability
(Faria and Wellington, 2014). In the recession period, firm did not reduce
the schedule of flights to continue its better services for consumers in
different countries.
Employees Management of firm uses many techniques to provide better working
environment to its staff members. For example, Management of BA has
applied its huge efforts like motivation techniques, promotions as well as
transfers to reduce turnover rate of employees in the condition of economic
instability
Suppliers Organisation has used many practices to complete its responsibilities with
respect to suppliers in the market. For example, company focuses on
maintaining good relationship with its suppliers through proper
conversation. British airways also conducts meetings with government
officials to reduce the chances of loss in the UK (Aydogan, 2011).
2.1Explain economic systems that efforts to assign resources for organisation effectively
There are many type of economic systems for the allocation of resources in the country. It
explained below the paragraph.
 Command Economic System- In this system, Administration has list of all valuable resources
in the country. Government of United of Kingdom has power to allocate its resources to
firms. Authority assigns resources to all companies in equal manner for effective
development of economy in the world. There is also advantage to the country (Gemma,
2014). Command economy is also able to develop a better supply of its resources. Generally
government also rewards its persons for optimal efforts with affordable prices in the nation.

 Market Economic System- In this scheme, public and private companies have authority for
the allocation of resources. These companies assign resources itself as per need of particular
firm in the country. Government has no right for allocation of any valuable resources or
other segment (Reddick and Roy, 2013). So organisations take decision regarding economy
run, supply and demand of materials. The main advantage of this capitalism is that
corporations can develop better economy by using effective allocation of resources in the
UK.
 Mixed Economy System- In this economy, government and organisation both have authority
for allocation of valuable resources in the country. It is mixture of command and market of
economy. So government and firm conduct meeting for allocation of resources in nation.
This system assigns the resources as per demand of company in the Britain (Gold, 2014).
Then after, administration and organisation discuss on it. After perfect analysis, they allot
resources to every corporation in the UK.
2.2 Explain challenges due to fiscal and monetary policies on business environment faced by firm
British airways can face many challenges regarding fiscal and monetary policies. It is
represented below the paragraph.
 Challenges of Fiscal Policies- Changes in fiscal policies created lot of trouble for the
company because it increased various types of tax rates like income and VAT in this country.
So income of firm reduced in the market. This thing obliged the BA to increases prises of its
flights to sustain in the market (Burke, 2015). Further, falling income of company also
increases the chances of unemployment in the country.
 Challenges of Monetary Policies- These policies are focused on enhancing and decreasing
the rate of inflation in United Kingdom. Enhanced inflation rate affects the aggregate
demand and supply which create adverse effect on customers. This in turn decreases the
growth of British Airways in the airline market due to reduced earnings of people
(Kindsfaterienė and Lukaševičius, 2015). Further, it leads to increase the service cost of
company due to increased rate of fuel in the market.
2.3 Describe the impact of regulatory, competition and legal policies changes on British Airways
There are many impacts due to changes in competition, regulatory and legal policies on
British Airways. As per the Botha, Kourie and Snyman (2014), changes in competition policies
influence organisation to keep price low in the market. So, customers can get better services at
affordable prices in the aviation industry. They need to retain the best air service in the flights and
airports. These competition policies also help firms to innovate better services in the airline market
for the consumers (Botha, Kourie and Snyman, 2014) However, alteration in competition creates

negative impact on British Airways as it leads to decrease the level of profit due to charging lower
prices on air tickets. According to Aterido, Hallward-Driemeier and Pagés (2011), changes in legal
policies affect firm in the market. Sometimes, legal policies and regulatory policies of UK insist the
organisation to change engines of aeroplane due to certain reasons like noise and air pollution in the
environment. It creates impact on the profit of British Airways. In addition, it enhances unnecessary
repair and maintenance cost of firm for the purpose of maintaining the whole safety of customers
(Aterido, Hallward-Driemeier and Pagés, 2011). On the other side, regulatory policies create bad
impact on the supply and demand due to changes in current rules which increase the prices of air
tickets.
TASK 2
3.1 How has the market structure of the airline industry Affected the pricing and demand for airline
seats
Airline industry is highly affected through pricing and demand for airline seats .It is stated
below the paragraph.
Perfect competition is followed by airline industry in nation. Any one organisation can enter
in airline industry by following rules and regulation of aviation industry in UK. This structure
serves homogeneous services in the market (Wetherly and Otter, 2014). In market of United
Kingdom, there are many firms in airline industry. It compels Air organisations to keep lower prices
due to many private corporations in the aviation market. Perfect competition is increasing cut-throat
rivalry in air market. It also increases the demand of airline seats in the United Kingdom. Reduced
rate of air tickets is increasing frequency of person in the air travelling (Halbert and Ingulli, 2011).
In the monopoly market structure, pricing of air tickets increases in the air line market which
automatically reduces the demand of airline seats because company charges very high rates in the
market due to single company in the market. So, premium segment of people travel in aeroplanes.
In the oligopoly, costing of air services is slightly low as comparison of monopoly market
structure due to few air companies in the market of UK (Wild, Wild and Han, 2014). It also
increases the few demand of customers in aviation industry regarding air travelling.
3.2 How the interplay of different players and market forces shape organisational responses
There are many different players and market forces which shape organisational responses in
the nation. It is explained in below paragraph.
 Supply and demand- They are important market forces which contribute an effective role for
the organisation to develop better strategies for providing better responses to the consumers
(Reddick and Roy, 2013). British Airways analyses supply and demand of airlines services

as per the market condition. In season time, demand of air ticket increases that helps
company to enhance its profit as in such time, business can charge high prices from
customers. On the other hand, in off season, business needs to decrease the prices of its
services in order to maintain the number of customers as well as revenue and profitability.
This process helps the firm to manage its operations and gives better services to consumers
in an appropriate manner.
 Competition- There are many local and international competitors in the aviation market
which affect the business of British Airways by attracting the customers of it towards their
services. Due to this, British Airways reduces the prices of its air tickets in the market in
order to beat its competitors (Hill and Hernández-Requejo, 2011). This technique helps firm
to increases its business by maintaining supply and demand in the air industry.
 Technological Forces- There are many technologies which create effect on the organization.
For example, British airways has adopt many new and innovative technologies for
improving its shipping and logistics work in the market (Holm, 2011). Further, company
also uses navigation system for tracking to provide flexibility to its consumers.
 Economic Forces- Economic forces affect the British Airways by increasing prices of raw
material like fuel and its spare part which directly affect the cost of maintenance and repair.
In addition to this, they also focuses on maintaining the supply and demand of air services in
the airline industry. For example, organisation is trying to use solar technology to reduce
fuel cost of its plane as a response. These process also save too much expense of firm.
 Political and Government Forces- In the UK, these factors greatly affect the British airways
by enhancing interest rate, tax rate and level of global trade which put impact on the supply
and demand of air tickets in the nation (Solomon and et.al., 2014). For example,
organisation regularly conducts meeting with government officials to overcome from these
situations in the market. This way, corporation maintains its air services in the market.
 Natural Resources- There are many natural resources which are widely used in the world.
So, increasing cost and shortage of fuel affect flight schedule of many airline organisations.
Further, it also creates effect on supply and demand of air services in the UK. For example,
British airways uses fuel efficient engines which reduces oil consumption as possible
(Elzinga, Gulledge and Lee, 2012). Management of firm also makes optimal flight schedule
to cover the maximum passengers in the minimum flights for providing better services to
them.
 Human Resources- Generally employees of air industry have no knowledge of about the

technical things which provide huge complexity to consumers and employees in air service.
Further, these things also create problems to manage supply and demand in the nation. For
example, British Airways recruits many new employees to provide effective training
regarding technical expertise (Carroll and Buchholtz, 2014). So this process provides long
term benefits to the organisation. It also play major role to give better service in air
travelling in the market.
3.3 How British Airways has been impacted by the working practices and cultures of the countries
There are many reasons which create optimal effect on working practices of organisation.
Some of them are represented below the paragraph.
 Multi Faith Country- In the current world, UK has become multi faith country because there
are living many people of different countries. This thing also increases the different type of
religion in the United Kingdom. British airways designs new ways according to mixed
culture of its country (Cavusgil and et.al., 2014). This thing does not harm any personal
value of any employee in the Britain. It does not discriminate any person on the basis of
country and religion. This process is leaving good impact for the country by increasing its
performance of working in the aviation market.
 Young People- In the United Kingdom, ratio of young people increasing in the country. So
British Airways is recruiting more young people in its organisation. This process also
provides greater working efficiency regarding better working practices in the corporation
(Nickels, McHugh and McHugh, 2011). It also gives huge help to complete goals and
objectives in the market.
 Work Life Balance- Organisation also makes its policies, rules and regulations very effective
way in the United Kingdom. This process also greatly helps the employees of British
Airways to balance its personal and professional life. Management of enterprise regularly
provides training and motivation sessions regarding their enhancement of core knowledge
and work life balance. This approach also increases the efficiency of staff members as well
as provides stability between personal and professional life (Bjorklund, 2011). This thing
gives huge help in reduced turnover of employees in the British Airways.
4.1 Explain the effect of global changes in trade regime caused by organisations such as WTO and
other international civil aviation and tourism bodies on British airways.
There are so many effects of global changes in trade regime on British airways. These are
stated in below paragraph.
International organisation like WTO and tourism bodies can help in increasing business of

BA in another countries. For example, rules and regulations of international civil aviation can
provide appropriate help in enhancing business activities of organization in many nations like
Brazil, china and Nepal which can lead to increase its effective growth in global airline market
(Commander and Svejnar, 2011). This way, management of British airways can enhance its
existence in many countries. These efforts can assist organization to create effective brand image in
the mind of consumers which can aid to improve its global market share. Further, firm can get help
to earn better revenues and profit by selling air tickets to the passengers.
Further, rules made by professional bodies of tourism provide huge reliability to manage its
international business operations like selling of air tickets and buying of raw material in the market.
Further, information provided by WTO and tourism bodies contribute an effective role for BA to
select proper market entry strategies and take many other decisions in several countries (Porter and
Rivkin, 2012). These international authorities help firm to perform business activities as per the
rules and regulations made by government along with maintaining level of competition and
effective culture at workplace in order to establish in an effective as well as legal manner.
4.2 What are the other global factors, considering policies/regulations of government players which
may affect British Airways
There are many global factors which are impacting the business practices of organisation in
the country. Some of them are described in below paragraph.
 Environmental Factors- In the present era, Organization has to follow the all the acts and
policies regarding the safety of environment which provide huge help to keep climate safe
from hazardous chemical, carbon smoke, global warming and noise pollution (Chavis,
Klapper and Love, 2011). Environmental factors influence the enterprise to use fuel efficient
engines and advanced technology to save the natural resources globally. It enhances the
expenses of company as it needs to perform business activities as per the environment
friendly rules and regulations. In addition to this, it reduces the profit share of company
which creates negative impact on British Airways in the market.
 Number of Passengers- Global factors suggest British Airways to follow the minimum
number of passenger’s criteria to take off its flight from the airport (Aterido, Hallward-
Driemeier and Pagés, 2011). This process impacts on international operation and customers
services of firm. In addition to this, it provides effective help to manage its operations which
creates positive impact on British Airways in the airline market.
 Policies of Employees- International factors oblige British Airways to follow the proper
rules and regulations for its staff members like operating working hours and insurance of its
members during the flight. These policies are created good impact on organisation that are

regarding the safety of its employees as well as passengers. Further, such policies contribute
an effective role for BA to increase its efficiency and performance in the airline industry.
4.3 Can European Union policies on travel, competition or aviation impact British Airways, what
measures can be taken by BA in order to remain competitive?
Generally, European Union policies can create positive and negative impact on British
Airways regarding travel and competition. Organization can take many measures to remain
competitive in the market.
 Safe Guarded Policies of Competition- According to Elzinga, Gulledge and Lee (2012),
Rivalry among the air companies is not higher. Therefore, it is not so difficult for British
Airways to gain optimal profit in the market of United Kingdom. Due to this impact,
organisation needs to adopt safe guarded policies of competition with including ethical
consideration. In this manner, management of company provides better quality services to
its consumers in the market (Elzinga, Gulledge and Lee, 2012). As per the Strumickas and
Valanciene (2015), Corporation develops new market strategy like better discounts and
special offers on festivals to attract number of consumers towards the flights which creates
positive effect on them. In addition to this, BA earns good profit and growth in the aviation
market of Britain by adopting ethical practices which help to remain competitive in the
market (Strumickas and Valanciene, 2015).
 Airport Policies- According to Cavusgil and et.al (2014), airport facilities of UK is well
managed like efficient runways for safety landing of planes which creates optimistic effect
for the firm. Infrastructure of airport is organized in an appropriate manner. So, these things
help British Airways to run its business optimally in the market (Cavusgil and et.al., 2014).
According to Faria and Wellington (2014), organisation provides high quality service to its
consumers at the airport by recruiting more employees to run its operation smoothly. This
process contributes an effective role for BA to avoid long queue which automatically leads
to reduce waiting time of consumers at the airport. These steps aid British Airways to sustain
competitive in the aviation market of United Kingdom (Faria and Wellington, 2014). On the
other side, these activities increase the expenditure and investment of organisation which
reduces its profit in the nation.
CONCLUSION
From the report, it is found that long and short term objectives provide perfect direction to
British Airways in the market. Recession, political instability, modification of rules and regulations
affect various type of stakeholder in the Britain. Changes in regulation and competition policies
create optimistic effect for profit of organisation. Various market structure of air industry leaves

different type of effects on airline seats. It can be concluded that new ideas of corporation is
providing positive impact on working practices and culture. Changes of global trades increase the
security and reliability of customers. It also enhances the expenses of organisation for the execution
of these rules and regulations in the world.

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