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02/19/2012

Business Environment: British Airways


Business Environment: British Airways

Introduction

Every organisation and industry is affected by different internal and external factors. In order to determine such elements and how o be able to identify how these affect the specific industry, marketing tools such as SWOT and PESTLE are needed.  Principally, the main purpose of this paper is to analyse British Airways using SWOT and PESTLE analysis

Accordingly, this airline company is an industry that ventures on providing air service operations both in the national, local, and international airfreight. British Airways provides different services from cargo freights, public and private passengers, commercial, as well as mail services and also auxiliary services. Such industry specifically operates their business along the USA and the European countries employing more than 42,000 employees in all their departments.

            This industry also facilitates and manages flight reservation for their travelers and other booking through the use of online service in which their clients and customers can easily access. British Airways also aims on sustaining their integrity to stay competitive in the market and to be considered as the best airlines which focus in standard and quality service to achieve customer satisfaction. The industry is considered to have 570 airports in about 134 nations.

SWOT Analysis

            The mission of the British Airways is considered as wider than being merely an airline company with quality service and good customer relations. Even though they are attentive and conscious of the risks of being too widely and broadly defined, the mission is suited to an age when the facets and elements of travelling are dramatically changing. It is said that most of the airline industries are seeing less and less profit per person, which leads to a necessity to find new ventures as well as  hold on to existing clients through loyalty programmes. The mission of British Airways gives the management with a new mandate on being more than just an airline industry. As noted, the mission of the industry is to set new industry standards in terms of customer service and innovation and provide the best financial performance. In addition, their mission is to evolve from being an airline industry to a world travel business having the flexibility to stretch and expand their brand in new business portfolios.

This section will evaluate the environment and strategic position of British airways. It can be said that British Airways are being challenged by the changes in the market environment. To ensure that the industry will stay competitive and survive in the market place, the management of British Airways has been able to expand their technological departments as well as service quality. This part will determine the strengths, weaknesses, opportunities, and threats for British Airways.

One of the strengths of British airways is its high-tech and up-to-date as well as first-rate modern fleet of aircrafts to provide convenience and comfort for their passengers. In addition, strength of the airline is the ability of the management to make their operations surpassed their rival industries by giving quality services to wider variety of passengers as well as clients. In addition, the company also tends to hire skillful and knowledgeable employees and consider operational research to perform better by their personnel and staffs. British airways also see to it that they have strong customer orientation as well as customer satisfaction from their expertise in passenger and clients areas. In order to be recognized globally, the airline company also uses online marketing approach to reach international clients easily through online booking and reservation and their employees of the company in line with their engineering or information technology department as well as the research and development team has enabled the company to consider the use of information technology as part of their global market approach.

Weaknesses

            Conversely, even if British Airways have their competencies and strengths, they also have some weaknesses. One of their weaknesses in the market is in terms of their shortcomings in terms of marketing strategy (Porter, 1998) to help in reinforcing their competitive standards and to have loyal clients and the lack of some skills in market schemes to attract more clients.  The limited and confined knowledge of simulation development (Robinson, 1998) as well as software development, which is lost through high degree of internal staff moves as well as their Incapacity to select efficient software which tends to result in complexities and complications in enhancing specialist airline software.

 Opportunities

The opportunities of different organizations are also important to identify so that the management will have a guide on their future operations. One of the opportunities is the accessibility of immense airline services pose a great opportunities to use it properly. Aside from this, the global transformations and changes can also be considered as an opportunity for the British Airways to work with. The capability of the virtual reality and the use of modern information technology could give a new utilization for simulation, gaining network software and share expertise by special interest professionals which can also serve as a good opportunity for the competitiveness of the company and lastly, the trends in information technology can give greater changes and opportunities to different business domains like British Airways.

Threats

            Business, specifically British Airways is also affected by environmental threats, impacting the major operations and competencies of the business. One of these threats is the threat of having a centralized and bureaucratic system leading to poor decision-making and the orientation on domestic and national issues poses significant threat affecting their global operations. And lastly, the aspect of globalization which can be a strength and opportunity but can also be a threat if not to be vigilant and keen of its treachery and tricks including the technological changes and clients’ behavior changes can also be a threat if interpreted wrongly. In terms of market trend, existence of low-fare and low cost airlines affects operations of companies like British Airways. It is said by O’Connell and Williams (2005: 272) that “the ideal situation and phenomenon for passengers would be to have an integration and combination of low fares (at no-frills airline levels) and some of the full service products provided by the incumbent airlines.

PESTLE Analysis

            Other environmental factors that affect the company will be discussed through the use of PESTLE analysis which stands for political, economic, social, technological, legal and environmental factors. In terms of political, it can be said that restricted operations limit the expansion of British Airways and this should be given attention since it will involve the monopoly of other nations in terms of airline industries. In addition, in line with political benefits, the bilateral agreements that all members of alliances in which British airways belong can be used by the company and the regulations of European Union as well as air flight regulations of the United States of America’s federal government can also have political affect in the country.

In terms of economic factors, the capability of European market to outstrips demand, resulting to rate wars as well as conflicts that equates to lower yields for industries. In accordance with economic factor, , the alliances can result to a greater manipulation and manoeuvring in terms of capacity which results in reduction of competition and enhance revenues. The code sharing airline industries will have the chance to split costs as well as enter the markets and provide services but this can lead to having less aircraft at airports, hence less space are needed. It is said that in terms of the current economic situation, the financial crisis also affects yield and revenues of British Airways.

In social aspects, it is said that this element is robust and solid from an employer staffing aspects. British Airways as well as its alliances can reduce costs by using only one airline’s staff. In addition, cultural diversity of the social network is considered because of international operations and the social issues attached to these international operations may affect air flight operations of the company in a way that it might lessen number of passengers to travel.  Changing behaviour of the passengers who are now looking for a low-cost airline but provides excellent service also affects the current position of the British Airways.

            Another important factor to consider is the technological factor. Technology in the airline industry is very expensive and fast moving; hence, alliances can give chance and prospects for British Airways for having joint ventures when it comes to technological aspects In addition, information technology, specifically the internet can help the company to become more accessible and available 24/7 and software and other network enhancing technologies can help the company become competitive in the market place.

Legally speaking, there are existing regulations as well as laws which need to be considered and followed. Such laws restrict or permit any operations and actions to be done by the company. The laws ensure that the people do what is just and right for the sake of the employees, customers and the entire market.  Since it is a global company, British Airways make it sure that the management (David, 2001) that they follow legal structures of the countries they are operating in. For instance, the European Union’s Deregulation with the aviation market enables the airline industry to make their own decisions in terms of market access, capacity as well as fares (Shaw, 2004: 53). It is said that prior to the deregulation, airline industries had always been constrained and restricted by governments that controlled where airlines can fly, and aspects of their product planning and pricing policies” (Shaw, 2004: 51).

            In line with environmental aspect, the global environment become more conscious of building a better future and environment for the sake of the people. Thus, companies like British airways are doing things to make sure that next generation will have cleaner and greener environment.   In this regard, the company also adheres to their corporate social responsibility by considering charities and events for the benefits of environment.  The management also joins environmental protection campaign by sponsoring events and other movements.

Conclusion

Based on the analysis above, it can be said that the British Airways’ management should have enough and adequate knowledge regarding the happenings in the internal and external environment of the business. Such is also considered to determine the needs of their clients for a safer and quality airline services. In this regard, strategic management through proper planning, organizing, leading, and controlling needed by British Airways.  Through this, the management will also be able to counter the negative effect of the internal and external environment factors like globalization, technology, innovation, diversity, and ethics.

Reference

British Airways Plc – SWOT Analysis (2008). www.marketresearch.com. Retrieve July 13, 2009.

British Airways Management (2006). www.thinkingmanagers.com. Retrieve July 13, 2009.

British Airways SWOT Analysis (2006). www.coursework.info. Retrieve July 13, 2009.

David, F.R. (2001). Strategic Management: Concepts and Cases. 8th ed. Prentice Hall, Inc: Upper Saddle River, NJ

O’Connell, J.F. and Williams, G. (2005), Passengers’ perception of low cost airlines and full service carriers: A case study involving Ryanair, Aer Lingus, Air Asia and Malaysia Airlines, Air Transport Group, College of Aeronautics, Cranfield University, UK, published in the Journal of Air Transport Management, 11 (2005) 259-272

Porter, M. E. (1998). What is Strategy? Harvard Business Review, November-December, pp.61-78.

Robinson, S (1998). ‘Developing A Simulation Strategy for British Airways OR.’ Proceedings of the 1998 Winter Simulation Conference. United Kingdom

 

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