Strategic Business Analysis of British Airways: Impact & Planning Assignment Sample

Introduction 

Business strategy refers to the strategic measures that are taken by company to create value for an organization. This strategy is important for the organizational success and its overall growth as well. Effective business strategy provides worth to their stakeholders and helps in gaining competitive advantage in a dynamic business arena. It lays more emphasis on developing competent plan of actions or changes which company wants to implement in their organization. For this project, British Airways (BA) has been selected, a largest and well-known airline company of UK which was founded on 25 August, 1919. British airways is headquartered in London and now owned by international airlines group (IAG). It offers largest fleet size to passengers and offers 183 destinations in different types of locations. It also listed on London stock exchange and the FTSE 100 index. This report will provide deeper insight about the extent to which macro environmental aspects impact business operations. Further, it will develop understanding about the concept, theories and models associated with strategic planning or management. 

LO1

P1. Applying appropriate frameworks to analyze the impact and influence of the macro environment on a given organization and its strategies

The impact and influence of macro environment on British Airways is important to understand in the airline company’s context and its business strategies. The macro environment (external factors) has significant impact on the operations of British Airways. It refers to the factors like political, economic, social, technological, legal and environmental.

Political factors: It includes regulations, policies, taxation, interest rates etc. A British airway is a famous airline company regulated in large sector of United Kingdom. The political decision of government that are related to aviation and airline industry such as taxation policy, safety guidelines and trade contracts can affect the airline. The major changes in relation with international airlines affect the routes or ways and entrance to markets (British airways PESTEL analysis, 2022).  The uncertainty of political factor and cyber security threats can decrease the demand of passengers and need high security measures. The policies and guidelines of government create an impact on British airways, for example, Brexit create instability over market and impact the airline operations of Europe (Bocken, et. al, 2019). It affects British airways operations and they need to make change in their environment to fulfill varied market demands. British airways has to prepare new strategy in which they have to adjust their routes, maintain new safety standards and rules, because of the political changes.

Economic factors: Economic factors include downfall and fluctuation in demand because of inflation in economy. The inflation in rates can affect the economic cycle of British airways and decrease the demand of passengers. Due to high inflation rate, increasing fuel price of aircraft also affects business operations. Hence, British airways need to manage its cost effectively to deal with the economic issues. British airways earn revenue in different currencies so the decrease in fluctuation rates can impact their performance. The rising of fluctuation rate affect the fuel price and economic downturns decrease the demand of passengers. The British airways need to develop effective strategies to control the economic factors like create a fuel-efficient aircraft to overcome this issue.

Social factors: These factors like demographics, social trends and consumer pReferences. The change in age, income, gender, and choices of passengers can influence the British Airways strategies of marketing and route decisions. The social trends can influence the British airways demand of air travelling like choices of cabin, first and premium class (Sreenath, Sudhakar, and Yusop, 2019). The rising of environmental issues can impact the British airways company, they need to adapt sustainability practices in their management and focus on reducing the carbon emissions. By following sustainability they can achieve more profitability in future and more passengers. British airways require to follow new changes in their business according to the new customer trends and preferences to overcome the impact of social factor on organization.

Technological factors: Technological factors can impact the British airways by making fuel- efficient crafts and develop a new technology in aviation sector. The dependency of British airways on technology sometimes creates cyber-security threats. It improves the efficiency of operations of aviation sector.

Legal factors: Legal factors like rules and regulations related to aviation sector impact the British airways operations. The changes in labor laws such as safety and security of workers can impact the pricing of British airways. British airways have to cooperate with laws to overcome the impact of legal factors.

Environmental factors: Environmental factors like natural disasters, flood, pollution, carbon emissions and footprints can impact the British airways performance. They need to adapt eco-friendly practices to overcome this impact. For this they have to invest in low emission vehicles.

LO2

P2. Assessing internal environment & capabilities assessment of British Airways

The British airways internal environment and capabilities are an important part of its operations. The British airways internal environment includes such factors of organization that affect the performance and effectiveness of airline management. These factors are British airways business structure, resources, culture, and procedures. 

The British airways organizational culture focus on fulfilling the needs of their customers or passengers. They ensure safety in their flight and maintain hygiene in washrooms or other places of flights. The culture of British airways is separate from other flights, they ensures customer satisfaction and provide a premium class delivery to its customers (British Airways SWOT analysis, 2023.).  The organization structure of British airways has many channels and divisions that control the operations and activities of British airways Airline Company and give a significant impact to its communication lines and productivity (Granulo and Tanovi?, 2020). Management and leadership skills are very important to play a role in high level management in controlling of employees. These are the vital skills that a management need to complete its operations and tasks. Leadership and management skills help in shaping the internal environment of organization by its genuine efforts for business development. British airways leaders and management team decide the policies and guidelines of business that must have to do follow by all staff members.

The British airways follow technology in its internal environment to drive its functions like reservations booking, operations handling and providing services to customers. The British airways adopt new technologies in their internal processes to ensure their profitability and make innovations in their work to gain a competitive advantage in market. The British airways follow sustainability practices in its operations to reduce the harmful effect of carbon footprints, carbon emissions, excessive pollution and wastages. The use of sustainability in airline can improves its processes and gives more eco-friendly benefits (Fainshmidt, et. al, 2019) British airways can attract more environment conscious passengers by its unique eco-friendly idea.

SWOT analysis OF British Airways

The capabilities of British airways contribute in its success and overall growth and show the strengths and weaknesses of airline industry.

• Global and wide network: British airways have a wide network across many cities and provide various destinations for travel. It is connected with many routes and offer seats or cabins to a large community of customers of various locations.
• Unique brand image: British airways have a strong brand image in market that and a trusted airline company for many passengers. Passengers are loyal to British airways because of their high quality services and safety protocols.
• Top in Fleet management- British airways is a number one airline company in fleet offering, and maintain passengers of different market segments and classes. The fleet they offer are short haul, medium haul and long haul.
• Premium Customer services: The British airways offer premium customer services like business class cabins. Medium class cabins, fresh meals and in- flight services to passengers (Golfetti, Napoletano, and Cichomska, 2021). They provide better customer services to attract more potential customers and improve the customer satisfaction.

VRIO

VRIO analysis is an internal framework of organization that helps in evaluating the internal resources and capabilities.

• Value: The British airways provide value to its passengers by their global route network and strong brand image. The global route network serves a wide range of community of customers and connected with many cities. The strong brand of British airways provides quality services and safety to its passengers.
• Rarity: The rare resources of British airways like global partnerships and relations with international airlines give a competitive advantage in market. The relations provide rare opportunities like of code transfer and joint ventures are difficult for other airline competitors to compete.
• Imitability: In the context of British airways, operational expertise and customer loyalty programmers are hard to replicate by other airlines. The executive club program of British airways help in earn trust and loyalty of customers and the operational work include baggage handling that are difficult for competitors to imitate.
• Organization: Company organizes its operations and resources effectively that help in gain a competitive advantage in market (Fuertes, et. al, 2020). The British airways manage a large aircraft fleet and run them according to the current market demand. The experts of British airline like its pilots, cabin crews, employees and their skills provide quality services to passengers.

LO3

P3. Determining appropriate management tools to analyze market sector for an organization and inform strategy

To analyze the effective strategy in aviation sector for British airways, McKinney 7s framework is a valuable tool. The framework contains 7 elements that are analytical for obtaining success in organization. 

Strategy: The strategy of British airways contains important elements like its vision, mission, policies, values and competitive advantage factor. The British airways evaluate their strategies and plans to implement it in the processes and check how it works in the aviation sector. 

Structure: The structure of British airways describes their organization’s divisions, departments, lines and units that are organized and connected with each other to run functions smoothly. The organizational structure needs proper control to understand the gaps. The British airways have to consider weak points of their structure to make changes in them (Baxter, 2019). The structure the British airways implement is according to the strategies they plan or not.

Skills: The skills include components like knowledge, skills, and abilities that must be present in every employee of British airways to perform its day to day activities and responsibilities. The British airways have to check the skills and capabilities of their employees, cabin crews, engineers, and pilots to find out the talent that aviation sector needed. 

Staff: The British airways have to analyze the organization requirement to fulfill the emerging needs. They have to check how many persons are needed in organization and what task will be given to whom. The British airways scan their values and culture for recruiting and hiring new persons.

Style: The style is decided by top level management of British airways to drive their business effectively. The style contains manners of behaving, actions, and interaction. They have to ensure that their management style is matched with their goals, values ad culture.

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Shared values: The goal of British airways includes its mission, vision and values. The British airways need to analyze the goals that are aligning with sustainability, technology and security factor or not.

Systems: The British airways have to analyze their internal and external systems to know about the mistakes or problems. The internal system includes operations, technology and infrastructure of organization (Gorb, et. al, 2022). The analyzing process helps in improving the procedures or systems.

To achieve competitive advantage in aviation sector by making a strategic plan for British airways need to analyze the whole framework of airline industry. The porter five force analyses is a good model to identify the strengths and weaknesses of industry (Porter five force analysis, 2023).  The porter five force analyses have five competitive forces that shape the aviation industry and give a competitive advantage in market.

Threats of new entrants- British airways invest its most of money and time in technology to enhance the customer experience and functions, and the rare landing place at London Heathrow airport makes British airways unique from other airlines (Pereira, Lohmann and Houghton, 2021). These specialties of British airways create barrier for new entrants.

Bargaining power of suppliers- The British airways make healthy relations with many suppliers to gain a competitive advantage in market and to reduce the dependency on specific suppliers. The British airways have many options for the buying of airplanes and their maintenance it saves their money and buying parts of airplane in bulk can reduce their costs and provide a good deal.

Bargaining power of buyers- The British airways main focus is on providing quality services to passengers to gain customer loyalty. They invest in digital technology to offer online bookings and good travel experience to customers and gain a competitive advantage in market.

Threat of substitutes- British airways work on expansion of their brand image by adding more travel services like vacation trips, premium class services, and business trips to passengers. They can invest in sustainability and green logistics practices to reduce the threat of substitutes.

Competitive rivalry- British airways have to invest in operational activities and increasing the quality of its products or services to differentiate them with other airlines to gain a competitive advantage in market (Cao, 2022). They have to maintain their brand image and develop strategies for pricing to improve their operational efficiency.

LO4

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

Boston Consulting Group (Bcg) Matrix

Question marks: The question marks have high growth rate but low market share means they are new in market and have a chance to grow at high level. British airways have to invest in marketing and advertising and expand their services of airline to reach more potential customers. They have to understand the needs of travelers from a specific destination or route to serve services according to them.

Stars: The stars have high growth rate and high market share. The British airways fly from the big cities routes so they have a great chance to making high money. The British airways can make their routes more amazing and offer great services to customers to earn more money and success.

Dogs: The dogs have low growth rate and low market shares means they are not perform better. The British airways need to adopt new routes to make more money and cut the costs because some routes that British airways follow where foot traffic is low and it contains cost and resources that are getting wasted.

Cash cows: The cash cows have low growth rate and high market share. The route that British airways use doesn’t grow much because many peoples are flying from this route (Kaspers, et. al, 2019). Therefore, they need to change their route that saves their money and excessive costs.

By doing theoretical assessment following objectives have been drafted:

• To increase market share by 25% at the end of second quarter. 
• To build and sustain competitive position over rivals. 
•  To increase sales by 20% till the end of a year. 

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

The British airways strategic planning contains a roadmap or direction to achieve the goals or aims of the airline industry. The strategy of British airways is to analyze the field or functions that are not working properly to make improvements in them and foster eco-friendly practices in their aircraft to attract more environment conscious customers. To make a strategic roadmap plan for British airways, strategic mapping model is required to use.

Financial approach- The British airways focus on the the revenue, profits and costs to achieve the financial objectives and sustainability performances of organization. British airways make new routes where customer demand is on high level and connect with international airlines to expand their operations. They adopt new technologies in their aircraft to minimize the costs and control the operational costs by using eco-friendly practices. British airways increase their profitability by offering more seats to business class customers.

Customer approach- The customer approach of strategic mapping model focus on passenger satisfaction, providing good value services to customers and build trust with British airways. The British airways enhance their productivity by collecting travel feedbacks from customers about their journey experience and use this feedback to develop company’s operations and functions. They develop a mobile app for online bookings and other services to build trust with passengers (Benzaghta, et. al, 2021). This app creates value for customers and they can easily operate them from anywhere.

Internal process approach- The internal process approach work on the basis to upgrade the efficiency of main operational procedures of British airways. The British airways invest in advanced aircraft system maintenance to decrease the downtime of airline. They conduct training programs for employees to increase their productivity and communication skills so they can offer better customer services. The British Airways use sustainability and green logistics practices in their aircraft to reduce the carbon footprints and carbon emissions on earth.

Learning and growth approach- The learning and growth approach pay attention on the learning capacity and innovation adaptability of British airways. The British airways launch training and development programs for their employees for their development. They focus on employee’s well fare and promote multidisciplinary functional training. They encourage many technologies like AI tool, block chain technology, and cloud computing in their aircraft to improve flight services (Phadermrod, Crowder and Wills, 2019). They create a positive environment in their airline to encourage more employee engagement in their operational work and services.

P6. Designing a strategic management plan to improve competitive edge and market position based on the outcomes

For making a strategic plan for British airways, using the SOSTAC framework is useful to prepare big strategies and help to improve the competitive edge in aviation sector. It includes situations, objectives, strategy, tactics, actions and control.

Situation analysis: Situation analysis contains both internal and external analysis of organization. In internal, British airways identify its strengths and weaknesses, capacity and abilities of aircraft, customer’s viewpoint and experiences. Britsih airways check the performance of its operations to evaluate the current strategies performance and find in which area of aircraft, Improvement is needed. External analysis of British airways focuses on the market trends and competitors and applies pestle analysis to analyze the external environment factors.

Objectives of British airways: The objective of British airways should be specific, measurable, achievable, relevant and time-bound and based on the discovery of situation analysis. The specific goal and measure of British airways is to level up their profits by 20% in the upcoming three years. They have to improve their punctuality performance by 95%. They increase their customer satisfaction by 15 points in the two years.

Strategy: The British airways have to develop an effective strategy to achieve this above mentioned objectives. They can use sustainability practices in their work to reduce the harmful effects on environment. They expand their services like offer premium class cabins, in fight entertainment and fresh meals to provide better customer services (Gareche, Hosseini and Taheri, 2019). They invest in environment friendly technologies to reduce carbon emissions and find new routes in big cities area to increase profits and growth.

Tactics: The British airways need to adopt best tactics to implement these selected strategies. To minimize the cost and downtime of aircraft, British airways have to invest in high technologies of maintenance. They collaborate with international airlines and make partnerships with them to expand their growth of company in various routes and for smoothing of their operations and functions.

Actions: The British airways have to take actions for decided tactics with responsibility. The British airways give special trainings to their employees to provide better services to passengers. They hire data experts in their airline jobs to understand the customer preferences and choices. They have to set multipurpose role teams in their departments to enhance the fuel efficiency and improve routes.

Control measures: The control measure includes a monitoring system to control the actions and do adjustments where it goes wrong. British airways have to check its financial data and performance daily to verify revenues. They have to check their punctuality with real time tracking systems (Haseeb, et. al, 2019). They are require to take feedbacks periodically from customers about their journey experience and services.

Conclusion 

In summary, The British airways use PESTLE and SWOT analysis to identify its internal and external environment strengths and capabilities which help in prepared a new strategic plan to compete with other airlines group. In this, the British airlines use sustainability practices and digital technology to expand their services among various customers. They made relationship with international airlines to explore new routes in big cities and collaborate with different suppliers to decrease their maintenance cost of aircraft. The British airways main focus in this report is to providing good quality to customers to earn their loyalty and invest most of their money in digital technology to make advancement in their career growth.

Refrences 

Books and Journals

Baxter, G., 2019. A strategic analysis of Cargolux Airlines International position in the global air cargo supply chain using Porter’s Five Forces Model. Infrastructures, 4(1), p.6.

Benzaghta, M.A., Elwalda, A., Mousa, M.M., Erkan, I. and Rahman, M., 2021. SWOT analysis applications: An integrative literature review. Journal of Global Business Insights, 6(1), pp.55-73.

Bocken, N., Strupeit, L., Whalen, K. and Nußholz, J., 2019. A review and evaluation of circular business model innovation tools. Sustainability, 11(8), p.2210.

Cao, D., 2022. Business-to-Business omnichannel marketing plan for high-end company: case company: Addcomposites Oy.

Fainshmidt, S., Wenger, L., Pezeshkan, A. and Mallon, M.R., 2019. When do dynamic capabilities lead to competitive advantage? The importance of strategic fit. Journal of Management Studies, 56(4), pp.758-787.

Fuertes, G., Alfaro, M., Vargas, M., Gutierrez, S., Ternero, R. and Sabattin, J., 2020. Conceptual framework for the strategic management: a literature review—descriptive. Journal of Engineering, 2020, pp.1-21.

Gareche, M., Hosseini, S.M. and Taheri, M., 2019. A comprehensive literature review in competitive advantages of businesses. International Journal of Advanced Studies in Humanities and Social Science, 8(3), pp.223-240.

Golfetti, A., Napoletano, L. and Cichomska, K., 2021. A Framework to Understand Current and Future Competences and Occupations in the Aviation Sector. Transformation of Transportation, pp.213-226.

Gorb, O., Dorohan-Pysarenko, L., Yehorova, O., Yasnolob, I. and Doroshenko, A., 2022. Boston consulting group matrix: Opportunities for use in economic analysis.

Granulo, A. and Tanovi?, A., 2020, September. The advantage of using SWOT analysis for companies with implemented ITIL framework processes. In 2020 43rd International Convention on Information, Communication and Electronic Technology (MIPRO) (pp. 1656-1661). IEEE.

Haseeb, M., Hussain, H.I., Kot, S., Androniceanu, A. and Jermsittiparsert, K., 2019. Role of social and technological challenges in achieving a sustainable competitive advantage and sustainable business performance. Sustainability, 11(14), p.3811.

Kaspers, S., Karanikas, N., Roelen, A., Piric, S. and Boer, R.J.D., 2019. How does aviation industry measure safety performance? Current practice and limitations. International Journal of Aviation Management, 4(3), pp.224-245.

Pereira, B.A., Lohmann, G. and Houghton, L., 2021. Innovation and value creation in the context of aviation: a Systematic Literature Review. Journal of Air Transport Management, 94, p.102076.

Phadermrod, B., Crowder, R.M. and Wills, G.B., 2019. Importance-performance analysis based SWOT analysis. International journal of information management, 44, pp.194-203.

Sreenath, S., Sudhakar, K. and Yusop, A.F., 2019. SWOT Analysis of Solar PV Systems in Airport Environment. Int. J. Emerg. Technol, 10, pp.1-7.

Online

British Airways PESTEL analysis. 2022. 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/ >

PORTER five force analysis. 2023. Online. Available Through. : <https://www.porteranalysis.com/porters-five-forces-model-of-british-airways/ >

SWOT analysis of British Airways. 2023. Online. Available Through. : < https://thestrategystory.com/blog/british-airways-swot-analysis/>