British Airways Strategy: Maximize Market Edge Case Study

Introduction - BA's Competitive Growth: Strategic Analysis

Understanding and responding to the macro-environmental elements are crucial for the achievement of any company in this area of business strategy. For the report chosen organization is British Airways, it is an important worldwide airline that served as linking individuals and destinations for a long time.British Airways has become known for its wide route system, first-rate service to customers, and innovative products and services, and it is recognised as an example of quality and stability in the field of aviation. The macro-environmental implications for British Airways' corporate approach are carefully investigated in this report, which also examines the company's internal strengths using methods like the VRIO and SWOT analyses. It analyses market research techniques, strategy models, and tactical objectives in greater depth, offering British Airways a thorough road map for strengthening its competitive position.

LO1 - Macro-Environmental Analysis

P1. Applying PESTEL frameworks to analyse the impact and influence of the macro environment on an organisation and its strategies.

PESTEL Analysis 

Political: Including all airlines, British Airways is greatly influenced by political aspects like regulations, legislation, and stability in government. British Airways might be adversely affected by political developments like the Russian attack on the Ukrainian nation due to fluctuations in the cost of fuel (Park and Mithas, 2020). Unrest in politics and terror may additionally result in more rigorous safety regulations, resulting in an effect on both business expenses and customer satisfaction.

British Airways has to continue to employ adaptable strategies with the goal to react rapidly to changes in politics. Routes might be varied in order to prevent politically hazardous regions, and enhanced security features could be acquired to guarantee safety for travellers without substantially increasing costs.

Economic: British Airways' revenue is greatly affected by economic factors such as growth in GDP, rate of inflation, and currency exchange values. Economic difficulties may lead travellers to invest less on trips for pleasure, and this has an impact on the airline industry (Kitonyi, et.al, 2020). Furthermore, British Airways' operational expenses are greatly affected by the cost of fuel as a consequence of international advancements, which is having an effect on how profitable they are.

British Airways may employ innovative pricing tactics, giving concessions during downturns that increase demand, and minimise risks to the economy. Furthermore, despite deviations in the cost of fuel, operating costs can be stabilised by insuring the costs of fuel or purchasing aeroplanes that are energy-efficient.

Social: It mainly includes social views, demographics, changes in behaviour, and developments in culture. British Airways confronts an environmental issue as cruising becomes increasingly attractive since it is pleasant and stress-free. To successfully modify its offerings and advertising campaigns, the airline needs to understand changing customer tastes and behaviours.

For a deeper comprehension of changing customer tastes, British Airways may spend money on market analysis. Considering the increasing number of options like voyages, providing innovative vacation experiences, reward programmes, and personalised amenities may attract in and retain customers.

Technological: Technological advances might have a bearing on this industry. British Airways may boost efficiency in operations and consumer satisfaction by adopting cutting-edge innovations in aeroplanes, booking structures, and service to customers (British Airways PESTLE Analysis, 2023). Risks such as system problems are real, as proven by situations like the two Boeing 737 Max disasters. A careful balance needs to be drawn between keeping safe and keeping up with technologies.

British Airways ought to undertake expenditures in modern technologies which include advanced control systems for flight and powered by artificial intelligence support bots. Furthermore, in order to ensure the reliability and safety of a company's technological platforms, comprehensive testing and regular modifications are necessary.

Environmental: For airlines, ecological sustainability is critically essential, particularly in regard to the release of carbon dioxide (Buye, 2021). To decrease the impact on the natural world, British Airways has to conform to environmental requirements and make expenditures in fuel-efficient aeroplanes and environmentally conscious procedures. The company's greatest problem is figuring out a way to reconcile responsibility for the environment with its commercial success.

To cut emission levels, British Airways may make investments in newer, less expensive airliners. Strategies for boosting sustainability involve setting recycling systems into position, limiting plastic that is only used once, and researching alternate fuels. Furthermore, they are able to inform consumers about these campaigns, thereby boosting their opinion of the company.

Legal: Legal factors include particular to an industry regulations and rules. British Airways has to abide by laws regulating jobs, safety, and commerce abroad. The business activities and tactics of the airline could also be significantly affected by regulations and rules pertaining to consumer rights, safeguarding information, and antitrust rules.

In order to stay up with developing laws, British Airways must employ strong legal departments. Also important is creating sure that employees receive sufficient instruction in complying with law. To avert legal challenges, preventive measures are crucial, such as anticipated legislative developments and changing laws appropriately.

In order to overcome any challenges the PESTEL aspects on hand, British Airways must implement flexible and adaptable corporate approaches. It is essential for staying informed on political changes, economic patterns, social norms, innovations in technology, regulations regarding the environment, and regulatory requires. British Airways may establish adaptable tactics which ensure long-term development and satisfaction for clients by actively confronting such obstacles.

LO2 - Internal Environment and Capabilities

P2. Conducting an internal environment and capabilities assessment of an organization using appropriate frameworks.

VRIO Framework

Value: British Airways offers an assortment of crucial resources and abilities. Its wide route networks, excellent reputation for quality, and skilled employees all substantially enhance its value (Zhang and Graham, 2020). The airline has a competitive advantage owing to its long presence in the market, which has helped it build consumer loyalty and confidence.

Rarity: Certain of British Airways' facilities are unique and hard for rivals to imitate. The business possesses an uncommon edge over rivals in this market because of unique deals, landing privileges at key airports in general, as well as certain developed technology (VRIO Framework: What it is, Tips & Advantages, 2023). The limited supply factor gets worse since other businesses are unable to obtain these resources.

Imitability: Although certain of its possessions are valuable and relatively rare, British Airways problems with imitability. Competition has difficulties reproducing specific characteristics including brand reputation (Jackson and Tozer, 2020). Fortunately operational efficacy and standards for customer service are partially reproducible, thus constant creativity is necessary to have an edge over the competition.

Organization: A key aspect is the manner in which British Airways organises its skills and materials, particularly its highly skilled employees, innovative fleet and operating rules and regulations. A focused consumer organisational environment, strong leadership and regular training initiatives are important elements to ensuring its long-term viability.

SWOT Analysis

Strengths: British Airways maintains an excellent brand which is popular throughout the entire globe for dependable and outstanding customer service. The airline's international reach is broadened by its expansive route network, which links it with numerous places (British Airways SWOT Analysis, 2023). The staffs at the business offer an exceptional amount of knowledge, which makes a significant contribution to successful operation and excellent service to clients. Customers additionally profit from unique agreements with accommodations, rental car businesses, and additional airlines.

Weaknesses: The travel company continues to meet challenges including high operational expenses brought on by maintaining a large fleet and complying with tough security standards (Morrell, 2021). British Airways has the latest technology, but it may prove challenging to maintain with the fast-changing tech sector. Service interruptions resulting from workforce problems including past occurrences have had an adverse effect on the airline's image for reliability and security.

Opportunities: Irrespective of issues, British Airways has several opportunities for growth & success. There's extensive of opportunity for growth and increased revenue in the growing worldwide tourism sector. Incorporating innovations in technology may boost company performance and satisfaction with customers, bringing up new opportunities for difference. 

Threats: British Airways is continuously at risk from severe rivalry, particularly given the context of the continued existence of low-cost operators and other important carriers. Decreased demand for travel may come from economic crises and downturns that can impact the airline's sources of income. Furthermore, establishing continually changing regulatory settings is a problem that requires an extensive amount of agility, especially whenever it comes to environmental rules and regulations.

LO3 - Market Sector Analysis

P3. Determining appropriate management tools to analyse a given market sector for organisation and inform strategy.

Businesses like British Airways must strategically analyse specific markets given the ever-changing nature of the airline industry. The structure of the Ansoff Matrix presents a useful structure, while strategies included in the matrix Product Development, Market penetration, development and diversification. Among all of these, Market Penetration comes out as an essential strategy.

British Airways emphasises increasing its footprint in the present markets as a part of the company's market penetration approach. Pricing strategy represents one of the major approaches. British Airways may bring in consumers who are price-conscious yet maintain hold of those who are loyal by offering inexpensive fares and special rewards. The airline can additionally modify the routes and schedules for flights according to times of high demand, guaranteeing the highest seat availability. Another important aspect of British Airlines' strategy for market penetration involves enhancing the consumer experiences (Basheer, 2020). The airline could boost satisfaction among consumers while promoting repeat business as well as favourable recommendations from others by making investment in excellent service to clients, on-board services, and fast boarding processes. 

Rewards programmes promote continued travellers and encourage the brand's image by offering benefits like earlier boarding as well as access toa private lounge. Furthermore, customised attractiveness can be developed through effective marketing techniques that have been directed to specific market sectors, bringing in an assortment of customers. British Airways may draw prospective clients through advertising its offerings and special promotions on online platforms. Lastly, Market penetration makes it simpler to develop efficient client retention programmes. British Airways promotes connections that last by providing exclusive benefits for frequent travellers and long-term clients. These programmes for loyalty improve market share generally by recruiting prospective clients while maintaining current ones satisfied.

Informing strategy: By employing market penetration as a strategic technique, British Airways has the capability to enhance its present operations and amenities and increase its share of the market. British Airways may improve its offerings to improve customer satisfaction and commitment by completely comprehending the demands and tastes of its consumers. This strategy's utilisation of information to make decisions is a key element. British Airways knows about consumer behaviour by carefully analysing information about clients, travel patterns, and feedback (Raji, et.al, 2020). These understandings are valuable since they help the airline identify frequent routes for travelling, peak times of year, and customer preferences. With this insight, British Airways can develop precise advertising initiatives, distribute assets efficiently, and manage its airline timetables.

LO4 - Strategic Objectives

P4. Devising appropriate strategic objectives, based on the outcomes of analysis for the organisation to inform strategy

Strategic Objectives 

• To increase 15% loyalty among clients within the upcoming year. 
• To improve 40% well-timed arrival of flights in the next six months. 
• To increase 20% the Bookings Rate of Conversion within the third quarter. 

Justification: Regarding British Airways, its defined SMART objectives are essential since they will have an immediate effect on the airline's performance in operations, client fulfilment, and income growth. In order to establish an engaged clientele that produces repeat business and passionate suggestions, it is necessary to boost loyalty to customers by 15%. Increased client retention not only guarantees revenue from current consumers but also reduces the costs related to recruiting new clients, thereby boosting profitability over the long term. It is essential to raise the rate of on-time arrival to 75% in six months since it directly influences the happiness of clients. Punctual flights offer an excellent perception of the company by improving consumer happiness, encouraging confidence, and avoiding delays. 

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Furthermore, the airline's capacity to adjust to modern consumer behaviour will be shown by a rise of 20% in its online reservation conversions rate in the quarter that's to come (Bratton, et.al, 2021). A successful online booking procedure not only brings in prospective consumers but also lowers the operational expenses caused by conventional booking methods. Likewise, it improves the possibility of profit by capturing more of the online marketplace. Together with each other, these objectives enhance British Airways' devotion to customer service, excellence in operations, and flexibility in the competitive airline sector, contributing to sustained expansion and dominance in the market.

P5. Applying a range of models, concepts or theories to interpret and devise strategic planning for the organization.

Bowman’s Strategy Clock Model 

Bowman's Strategy Clock is beneficial for British Airways, Bowman’s strategy is about the in-depth and simple-to-use planning tool that offers choices for positioning in the marketplace depending on cost and perceived value. The strategy comprises High Cost/Low Value, Low Values/Standard Price, Low Value/Low Value, hybrid form, differentiation, Targeted Differentiation, High Cost/Standard Product, and Low Cost/Low Value (Introduction to Bowman’s Strategy Clock, 2023). The company falls under the Low Value/Standard Price because it is appropriate for the organization. 

Earlier, the company placed emphasis on Low Value/Standard pricing position according to Bowman's Strategy Clock in the framework of British Airways requires offering transportation services at comparable price in the market without substantial difference. This approach matches with an offering for price-sensitive consumers while preserving efficiency in the extremely competitive airline field. British Airways has to lower its operational costs in order to concentrate on its high Value/Standard Price balance (Iruthayasamy and Iruthayasamy, 2021). According to Strategic Clock, with an aim to improve brand image or market share, British Airways is focusing on maximizing the perceived value of services. For this purpose, the company is trying to differentiate its products from competitors. The company’s main focus is on offering high-quality services to the travellers which make their experience memorable. In accordance with Porter’s generic strategies, the main focus of British Airways is on differentiation. Consequently, by designing products or services innovatively, that cater to customers’ needs; firms can get a competitive edge over rivals. Effective employee management, simplified grounds offerings and efficient handling of fuel are crucial for operation. British Airways may preserve competitive prices for tickets and attract travellers with limited finances by minimising expenditures. British Airways additionally has the ability to optimise connections and schedules for flights through the application of its large network system and operating expertise. Airlines could additionally cut operating expenses, allowing affordable prices while preserving revenue, by making the best use of the present fleet's capability and utilising environmentally friendly technology. 

Continuous research into the market is crucial in this approach. The pricing approaches of competition along with consumer tastes and demand from the market must be monitored by British Airways. According to Strategic Clock, by making well-informed choices in response to changing customer preferences and trends in the market, the airline is able to preserve the legality of its low-value/standard-price item in an environment of competition. Strategic cooperation and partnerships may further reinforce this point of view. Partnerships with accommodations, tour companies, or other providers of services may end up in full vacation packages which bring in more consumers seeking cheap travel possibilities.

 Porter’s Generic Strategies

According to Porter’s generic strategies companies have three essential strategic options at their fingertips in order to acquire an advantage over their rivals. Leadership in cost, differentiation, and concentration are these. By applying the Cost Leadership plan, British Airways intends for the position of the lowest-cost manufacturer in the aeroplane business. British Airways strives to reel in a range of clientele, especially cost-conscious tourists and corporate customers, by decreasing its operational expenses while offering affordable rates. 

British Airways has to streamline its business processes if it intends to be successful at cost leadership. It involves proper fuel administration, which is crucial in the aircraft company especially because of the fluctuating price of fuel. Route organising, maintenance of aircraft, and crew planning utilising modern technology may all end in substantial operational expense reduction. Cost-saving measures include purchasing new, environmentally friendly planes and organising beneficial deals with providers. Beyond aircraft transportation, activities might be improved more effectively. In sectors like purchasing tickets, grounds offerings, and handling of baggage, British Airways may utilise lean methods. Using self-service kiosks, web registration, and automated execution of repetitive tasks enhance the efficiency of operations while reducing labour costs (Porter's Generic Competitive Strategies (ways of competing), 2023). Applying maintenance prediction technology additionally assures that planes are in excellent condition, minimising downtime and the cost of repairs. Engaging in training staff members it improves operational effectiveness while additionally improving relations with clients. A productive team can finish employment faster, reducing waiting periods and increasing output. Additionally, allowing workers to suggest improvements to procedures creates a culture of constant optimisation, resulting in further savings in expenses. Utilising the scope and size of economies is important. British Airways is competent to centralise administrative duties, share personnel throughout paths, and negotiate for decreases in significant purchases. The travel company lowers the average price for every unit by spreading its fixed expenses over greater output while maximising the greatest use of its resources that are already present.

P6. Designing a strategic management plan, by applying appropriate strategies to improve competitive edge and market position based on the outcomes.

A well-organized framework for generating plans for strategy is presented by the SOSTAC concept. British Airways might develop an exhaustive strategy utilising this model to improve its competitive advantage and position in the market. 

Situation: 

Strengths: British Airways offers a strong worldwide network, talented personnel, and a good reputation. Such benefits offer an overwhelming foundation for operational endeavours.

Weaknesses: Spending careful consideration to the substantial operational expenses, possible labour problems and the continual demand for improvements in technology.

Opportunities:  The industry has enormous possibilities for growth and increase in revenue, especially to the expanding travel sector, advances in technology and developing markets.

Threats: the aeroplane industry includes strong competition, downturns in the economy, and regulations relating to the environment.

Objectives: Setting particular, SMART targets will assist in acquiring an advantage over rivals and improve standing in the market. Example includes increasing retention of customers by 20% in the year that follows and cutting the cost of operations by 15% during the ensuing two years.

`Strategy: Investing in lavish in-flight facilities, customised offerings and intuitive electronic interfaces for enhancing the client experiences. By developing distinctive travel deals, unique collaborations and reward programmes that bring in and attract customers. By using innovative technologies, preventative care, and maximised operations, companies could boost efficiency in operations (Kumar and Anuj Thapliyal, 2022). To decrease operational costs, strike advantageous agreements with vendors, make use of efficiencies of scales, and obtain energy-efficient aeroplanes.

`Tactics: Create personalised advertising efforts that emphasise the distinctive goods and affordable prices of British Airways. To appeal to a broader demographic, make use of social networks, digital marketing, and cooperation with travel influencers. In order to attract prospective clients and keep those who already exist, offer special rates and promos.

Action: Develop appraisals that boost staff training programmes, make investments in technological advancements and boost the customer experience. Maintain a watchful eye on the effectiveness of the flight times and schedules (Kabeyi, 2019). Develop appealing trip package by negotiating relationships with luxurious accommodations, car rental agencies, and attractions for tourists.

Control: Setting up key indicators of performance (KPIs) like revenues from passengers per mile travelled and satisfaction with client levels. Examine information regularly to evaluate the achievement of goals. To discover more regarding consumer tastes and market developments, do polls of consumers and research on the market.

Collect feedback from stakeholders, staff members, and users. To gain insight about the preferences and views of clientele, use focus group discussions, interviews, or surveys. While opinions from stakeholders may pinpoint outside forces affecting the firm, employee input may shed light on operational obstacles. Make use of the feedback to adjust plans and techniques as needed.

British Airways might develop a plan for strategic management that enhances both its competitiveness and its marketplace positioning through the application of the SOSTAC model (Kretschmer et.al., 2022). The airline can develop a distinctive brand voice, draw in a broad spectrum of consumers, and increase client loyalty by using cost management and Low Value/Standard pricing in addition to concentrated techniques and activities. British Airways has the capability to respond to evolving market conditions and competition due to continuous surveillance, examination, and feedback processes. This supports sustainable development and achievement in the cutthroat airline business.

Key performance indicators also referred to as KPIs, are measurable statistics which demonstrate the extent to which a firm achieves key objectives. These indicators provide an accurate depiction of goal achievement and are employed to evaluate success over an allocated time period. Specific to the industry and organization-specific KPIs may reflect an array of variables, such as but not restricted to revenue growth, client satisfaction, financial results, completing project rates, and any other essential indicators that fall in line with the company's overall objectives. They are essential assets to assess efficiency, form defensible choices, and encourage advances inside the context of an organisation. By doing a comparison of sales, profit and customer base-related KPIs with actual outcomes BA can find deviations. Meanwhile, by taking corrective measures on time organization can get the desired level of outcome or success. 

Conclusion

By concluding the report British Airways receives valuable insight and feasible plans from this analysis in order to strengthen its edge in the marketplace and position in the marketplace. British Airways may additionally survive in the difficult airline surroundings, but it can also survive therein by focusing on its strengths, repairing its weaknesses, chasing opportunities, and minimising threats. British Airways' business objectives have been kept in step with the changing requirements of the world economy due to the successful combination of market research, strategic thinking, and adaptable management processes. British Airways' constant relevancy as well as success in a competitive sector is guaranteed through the incorporation of adaptable plans, market understanding and innovative approaches. It also sheds light on the diverse strategies which have been described by Bowman’s strategy clock Model, and Porter’s Generic Strategies. British Airways has the ability to fly to greater high places, promoting long-term viability, expansion and customer pleasure in the decades that follow with a strong awareness of its environmental variables and a strategy roadmap customised to its particular demands.

References

Books and journals 

Basheer, A.A., 2020. Advances in the smart materials applications in the aerospace industries. Aircraft Engineering and Aerospace Technology, 92(7), pp.1027-1035.

Bratton, J., Gold, J., Bratton, A. and Steele, L., 2021. Human resource management. Bloomsbury Publishing.

Buye, R., 2021. Critical examination of the PESTEL Analysis Model. Project: Action Research for Development.

Iruthayasamy, L. and Iruthayasamy, L., 2021. What Is Business Strategy? Understanding Business Strategy: Confusion and Consensus, pp.1-25.

Jackson, S. and Tozer, J., 2020. A vision for data science at British Airways. Impact, 2020(1), pp.15-19.

Kabeyi, M., 2019. Organizational strategic planning, implementation and evaluation with analysis of challenges and benefits. International Journal of Applied Research and Studies, 5(6), pp.27-32.

Kitonyi, S., Kibera, F., Gathungu, J. and Yabs, J., 2020. Effect of The Macro-Environment Factors On the Relationship Between Firm Resources and Export Performance of Small and Medium Scale Manufacturing Enterprises in Nairobi City County, Kenya. DOI: https://doi. org/10.19044/esj, p.v16n28p173.

Kretschmer, T., Leiponen, A., Schilling, M. and Vasudeva, G., 2022. Platform ecosystems as meta?organizations: Implications for platform strategies. Strategic Management Journal, 43(3), pp.405-424.

Kumar, S. and Anuj Thapliyal, S., 2022. How can British Airways better utilize management information systems to address its organizational weaknesses? Central European Management Journal, 30(3), pp.387-391.

Morrell, P.S., 2021. Airline finance. Routledge.

Park, Y. and Mithas, S., 2020. Organized Complexity of Digital Business Strategy: A Configurational Perspective. MIS Quarterly, 44(1).

Raji, I.D., Smart, A., White, R.N., Mitchell, M., Gebru, T., Hutchinson, B., Smith-Loud, J., Theron, D. and Barnes, P., 2020, January. Closing the AI accountability gap: Defining an end-to-end framework for internal algorithmic auditing. In Proceedings of the 2020 conference on fairness, accountability, and transparency (pp. 33-44).

Zhang, F. and Graham, D.J., 2020. Air transport and economic growth: a review of the impact mechanism and causal relationships. Transport Reviews, 40(4), pp.506-528.

Online

British Airways PESTLE Analysis, 2023. Online. Available through https://pestleanalysis.com/british-airways-pestle-analysis/

British Airways SWOT Analysis, 2023. Online. Available through https://thestrategystory.com/blog/british-airways-swot-analysis/

Introduction to Bowman’s Strategy Clock, 2023. https://getlucidity.com/strategy-resources/introduction-to-bowmans-strategy-clock/

Porter's Generic Competitive Strategies (ways of competing), 2023 <https://www.ifm.eng.cam.ac.uk/research/dstools/porters-generic-competitive-strategies/#:~:text=The%20two%20basic%20types%20of,leadership%2C%20differentiation%2C%20and%20focus.>

VRIO Framework: What it is, Tips & Advantages, 2023. Online. Available through https://www.questionpro.com/blog/vrio-framework/