Strategic Analysis of British Airways: Business Strategy Report

This report offers a comprehensive analysis of British Airways' business strategy. It begins with an introduction to business strategy and its importance, followed by an examination of British Airways' mission, vision, and objectives. The report then delves into a PESTLE analysis to assess the macro-environment, covering political, economic, social, technological, legal, and environmental factors. A stakeholder analysis identifies key groups and their significance to the airline. The internal environment is evaluated using McKinsey's 7S model, exploring strategy, structure, systems, skills, staff, style, and shared values, alongside a SWOT analysis highlighting strengths, weaknesses, opportunities, and threats. The report also incorporates the value chain analysis and Porter's Five Forces model to evaluate the competitive landscape. Finally, the report discusses strategic capabilities and concludes with a summary of findings and recommendations for British Airways.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Application of an appropriate frameworks to analyse macro environment..........................1
TASK 2............................................................................................................................................4
P2: Analyse the internal environment and capabilities of British Airways................................4
TASK 3............................................................................................................................................8
P3: Application of Porter's Five Forces model to evaluate the competitive forces of market
sector for British Airways..........................................................................................................8
TASK 4..........................................................................................................................................10
P4 Application of different theories that will develop strategic growth management plan in an
organization...............................................................................................................................10
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business strategy may be defined as a company's high level plan to achieve specific goals
and objectives within pre-determined time frame. It is considered as long term business plan that
will cover the period of 3-5 years. Such business strategy is made by the Top Authorities of an
organisation such as Board of Directors, Chairman etc. It is more effective in developing
financial condition of company as it directs all the members of an organisation to perform at an
optimum manner according to the guidance and policies described under business strategy. The
present assignment report is based on British Airways which is one of the largest airline
company all over the world and gain the first rank position in UK airline industry. It was
established in the year 1974 and from the then to now, it serves more than 33 million passengers
and has generated over 8.67 billion pounds sterling with the help of attaining maximum support
of approx. 42,377 employees. The project includes the analysis of macro and micro
environmental factors along with the proper evaluation of competitive forces of the market for
British Airways. Along with this, application of a range of theories, concepts and models along
with the interpretation of strategic management plan for British Airways are also discussed under
this report.
TASK 1
P1: Application of an appropriate frameworks to analyse macro environment
British Airways is one of the largest airline industry in the whole world due to which it
can be easily recognised as domestic and international flights in the UK. It was established in the
year 1974 which has currently serve more than 33 million passengers by providing more than
300 destinations all around the world. It has attained nearly about 42000 employees which
contributes maximum support to achieve its mission, vision and objectives which are explained
as under:
Mission: The mission statement of British Airways states “ to make customers more
comfortable and confident when they fly with British Airways with their new fleets and updated
latest technology”.
Vision: The visions statement of British Airways states “to become the world's most
responsible airline by developing guiding principles that describes the activities performed to
achieve goals”.
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Objectives: British Airways have many objectives such as maximise employees as well
as customers satisfaction, increasing revenue, maintain competitive strength in the industry,
improve fuel efficiency and develop especial equipments for disable people (Agyapong and
Boamah, 2013).
Macro-environment consists of several external factors which can either affect negative
or positive impact on the business operations of an organisation. Such external factors includes
political, economical, social, technological etc. which are required to be analysed more carefully
by the organisations operated at global level such as British Airways in order to maintain their
stability in competitive market. For this, the management should conduct PESTLE analysis
which are described as under:
PESTLE ANALYSIS on British airways
PESTLE analysis – It is the analytical tool which is connected with external factors of
an organisation. By using this, organisation is able to know about the various external factors
which are related with environment and their impact on their business operations.
Illustration 1: Scanning the Environment: PESTEL Analysis
Source: Scanning the Environment: PESTEL Analysis. 2018
Political- Every organisation should follow rules and regulations, which are made by
government. But in airlines industry, there are more rules and regulations which are followed by
them. There are various security parameters which are made by different countries so British
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airways should follow the guidelines because it is operated in various countries. British airways
should analyse some factors which are affected them in positive and negative aspects. The
positive are, they should participate with various governments in various security measures to
fight the risk of violence and illegal immigration where as negatives are Flight routes which are
decided by the government, they decide a price cab on the flight fares as their regulations
(Ariciu, 2016).
Economical- Economic instability may affect the growth of British airways. There are
various factors such as inflation rate in various countries, hike in prices of oil, rising
unemployment, unwellness of superior, uncertainty in capital markets, erosion of house hold
budgets etc. these factor should considered by British Airways for making reliability of their
consumers.
Social- Everyone wants to value of money like a comfortable travelling in a trusted
airline. British Airways try to increase their trust with giving them quality in service in low price.
It may helps to British airways for building their brand image in the market as a low cost airlines.
Technological- This factor gave a great impact on the airlines, their customer service is
increased by this factors. There are various websites on internet which gives the price
comparability and lower price facility to the customers. By consideration of these factors British
Airways become a requirement of their customers in airline sector.
Legal - Some rules are decided by the government for the airlines sector. British airlines
should considered some factors in it such as route of the flight, cabin crew members, settlement
of payout according to the law (Scanning the Environment: PESTEL Analysis, 2018).
Environmental- There are various challenges which are faced by every airlines like air,
noise, water pollution and waste material management. British airways should follow the
guidelines which are made by the various government in the favour of environment.
Stakeholders analysis- It is related with the completion of a project. It is the connection between
organisation and their stakeholders which helps in achieving growth. It contains balancing all the
demands at a particular case.
Stakeholder analysis
Stakeholder group with—————-Level of importance
High interest and high power —————High importance
Low interest and high power —————Medium importance
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Low interest and low power —————-Low importance
High interest and low power —————-Medium importance
on the base of above matrix below is stakeholder relationship with BA is as under:
Passengers customers
Passengers are the lifeline of airlines without them there is no existance of airline
industry. In other words, passengers are primary stakeholders without these stakeholders airline
industry cant get growth.
The government
Government plays important role at various time in airlines industry with using such kind
of tools they are tax, various duties, inflation, price cab at flight fare. British airways maintain
company's economy through implementing these factors
Employees
It is connected with heart beat of an organisation. In airlines industry if they are satisfied,
the organisation will be achieve goals in time. So British Airways should maintain their staff
with giving them reward so they will motivated towards objectives.
TASK 2
P2: Analyse the internal environment and capabilities of British Airways
Strategic capabilities: It refers to the capabilities of the members of an organisation that
will help in formation and deployment of strategy in order to achieve its desired goals and
objectives. There are different key components of strategic capabilities which includes
environment, resources and expectations of different stakeholders which can affect the growth of
business organisation both in positive and negative manner.
McKinsey’s 7S model:
This is a management model developed by Robert H. Waterman and Tom Peters in
1980s. This tool assists to analyse the firm's organisational designs with the help of seven key
internal elements such as, strategy, structure, system, shared values, style, staff and skill. These
elements are designed in order to identify whether they are effectively aligned and allow the
organisation to reach to its desired goals. In this context, British Airways uses this framework
which is concern with seven elements of individual which helps to increase the overall
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performance and effectiveness of business. Thus, the seven elements are as examined below
under the following headings (Barberá and et. al., 2012).
 Strategy: This element is developed by the firm to achieve overall business direction,
competitive advantage and to compete in the market. This factor is used by British
Airways to pursue the business strategy in order to be at top in the market place.
 Structure: This factor explains that how the units and divisions of business are
organised. The structure of British Airways involves the hierarchy layers of roles,
responsibilities and reporting relationships within the organisation.
 System: This key element involves the procedures and processes of an organisation
which reveals daily business activities and to decide how work is done. It also involves,
employee recruitment and selection system, performance appraisal systems, etc. In this,
British airways maintains a number of specific systems such as, baggage handling
systems, in-flight entertainment systems and many more.
 Skills: These are the capabilities that employees of an organisation performs well.
Competency is also a part of skills set. In context to British airways, employees need to
improve their skills in the field of communication, resilience and team work. This will
helps the employees to work in a more competent way. This will improves the overall
task performing efficiency of the organisation.
 Staff: This aspect is related with the type and number of employees an organisation
needs. In reference with British airways, the recruitment, training, orientation and reward
benefits of employees must be given appropriate concentration. This will helps them to
increase their working knowledge. Rewards will motivate the staff of British airways to
give their best performance (Burlton, 2010).
 Style: This element represents the mean by which the firm is managed by high level
authority and top managers. Their ways of interacting with employees and their actions
highly influences the work environment of the company. In reference with British
airways, the leaders of company including the department head's behaviour with the
working staff will determine the working atmosphere. Good behaviour denotes positive
work environment.
 Shared values: These are central to the McKinsey modal. They include norms, values
and required standards that will guide the staff's behaviour and organisation actions. In
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case of British airways, these values are related with the behaviour that is expected from
their employees. Positive values will impact the growth of the organisation in a good
way . This will help in tempering the behaviour of management and the working staff
efficiently (SWOT Analysis. 2018).
SWOT Analysis:
Strength Weaknesses
 It is UK based largest international
airline with worldwide connectivity
upto 170 countries
 It has a market leadership in giving
digitization services to their customers.
 It inventing new technologies which
helps in giving better services to their
employees.
 It has Eco-friendly environment, they
use e tickets for their customers.
 It has excellent advertising service, so
that they have strong impact on their
customers

 They have less experienced staff
members so that, they get a less return
on their investments.
 Its bargaining process is defecting their
performance.
 Their unchangeable employee
management system is going to failure
for giving service to their customers.
 Lack of experienced staff is not
satisfying the needs of their customers
properly.
Opportunities Threats
 It has a world wide connectivity, so
their business will be expanded in
various travelling segments.
 Sponsorship of sports like hockey,
cricket may be helpful in achieving
strong brand image.
 World wide connectivity will helps in
earning more revenue to the BA.
 Alliance with growing companies will
 Hike of fuel price may reduce their
revenue.
 Rules and regulations of European
countries may be threat for BA
 competition in European countries from
various competitors may affect the
revenue.
 More dependence on IT may affect
their services.
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be helpful for their business.
Analysis of strategic capabilities:
Value chain analysis:
It is a process which is used by an organisation for giving a better product to their
customers. In other words, it is an analysis which helps in increasing quality to their product or
make their product different from others for achieving competitive advantage for a long time in
the market. It is based on primary and support activities which are defined as follows:
primary activities – these are short term process due to which they are affecting an organisation
at small level and they are easily solved. In these activities consist of inbound and outbound
logistics, marketing and sales (Campling, 2012).
Inbound logistics – suppliers are the main part due to which it is important to establish a
better relationship with suppliers. BA should give training to them according with customer's
need. It will be helpful in taking competitive advantage in European countries.
Human resource management- Employees are the main factor for making growth in the
organisation, In other words organisation depends on employee's performance in service
companies for getting competitive advantage. In BA employee's efficiency and their job
satisfaction will help to gain competitive advantage.
Outbound logistics- It refers to delivering goods to the customers for use. With giving better
services to their customers on various airports in the world helps BA to gain competitive
advantage in airlines.
Marketing and sales – It plays an important role in activities for achieving competitive
advantage in market place. Without marketing sales will not happened so BA should invest a
huge amount for this, It will be profitable for organisation and stakeholders of them.
Support activities – these are the activities which improves efficiency of the organisation. It gave
basis to the primary activities. In these activities there are some types of it, such as:
Technology development – It is an important factor, By which an organisation can
achieve competitive advantage in the market. Because it reduces the cost and developing their
efficiencies in their operations. BA should develop their technology so that they will increase
their revenue and their cost will also reduced.
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TASK 3
P3: Application of Porter's Five Forces model to evaluate the competitive forces of market sector
for British Airways
Porter's five forces: It is an analytical framework introduced by Michael Porter in order
to facilitate organisation to understand the competitiveness of business environment which
enables management to make potential strategies to achieve desired goals and objectives.
Therefore, to achieve competitive advantage British Airways should implement such model
which are briefly described as under:
Competitive rivalry: British Airways faced tough competitions on different level which
includes local competitors as well as competition with international airlines. The competitions is
intense at the global level on different terms of price, facilities and the services which can
facilitate company to achieve loyalty of targeted people. Competitors includes Easy Jet, Virgin
Atlantic etc. Thus, the British Airways faces high level of industry rivalry for which company
need to maintain their quality through recruiting skilled staff and choosing best suppliers.
Supplier Power: Suppliers for British Airways are the one who supplies the air planes,
fuel and labourers. There are limited number of suppliers due to which the company required to
invest more. In addition with this, British Airways should make efforts in developing good
relations with the suppliers due to getting their valuable services on time. Without suppliers,
British Airways even cannot perform its functions therefore the bargaining power of suppliers in
case of British Airways are very high (Drahokoupil, 2014).
Buyer power: Nowadays, the customers are more rational and price sensitive due to
having lots of options when it comes to choosing an airline. In addition with this, the chances of
shifting the buying decision of customers are more if they do not much satisfied with their
travelling experience unless the customers are very loyal towards British Airways. Apart form
this, there are many travel agents as well which provides the best deal for travelling to customers
which increases the bargaining power of buyer in case of British Airways.
Threat of substitution: There is substitution for air travel such as modes of
transportation like train, car, bus, ships etc. which can bring threat to British Airways customer
base but it all depend on the customers needs and preferences. For example, if the customers are
looking to travel at low price then they choose other modes of transport other than an airline. On
the other hand, if the customers looking for facilities and time saving then they bring more
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profitability for British Airways which is exactly target market for British Airways. Therefore,
the threat of substitutes for v are moderate.
Threat of New entry: There are lots of challenges and barriers to entry into the airline
industry is it requires huge amount of investment, efforts to gain market share due large number
of established airlines, having little product differentiation etc. This will bring more difficult for
new entrant to build up competitive advantage, maintenance of cost required and unavailability
of distribution channels. There are threat of new entry towards British Airways are very low.
Competitive analysis of British Airways:
Ans-off matrix strategy:
It is considered as an effective tool that assist organisation to evaluate the product with its
market growth strategy. It directs organisations to make some innovation in their existing
products so as to capture large market share. The main aim of such strategies is to suggest
organisation which trajectories can assist them to achieve growth and success.
Market penetration: Tough competition is faced by British Airways instead it has
achieved strong present in the existing market. Haul service and domestic service brings huge
financial losses to British Airways which largely impact on their existence in existing market.
Therefore, British Airways need to penetrate market to:
 Increase market share with competitive pricing strategy and promotion.
 By conducting aggressive promotion campaign in order to drive out their rivals in mature
market. Through loyalty schemes increases consumer base.
Market development: Under this, British Airways should focus on attracting new buyers
who are already targeted segments and non-buying customers in new segments. There are many
competitors in market such as Easy Jet, Virgin Atlantic etc. due to which it is important for
management of British Airways to retain their loyal customers through introducing loyalty
points, extra-ordinary services, vouchers etc.
Product development: Under this strategy, the firm tries to introduce new product into
existing market with an aim of capturing large market share. It is more helpful to adopt such
strategy by British Airways to achieve huge customer strength. British Airways has earlier in
the year 2010 has introduce new-in flight entertainment system in the Boeing 777-300 Ers which
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