Business Strategy

Post-Module Assignment

NAME: LUKMON SUMOLA

STUDENT NUMBER: D09118896
 Questions Answered

Section A: Analysis
Complete a SPECCTRE analysis and 5-forces analysis of the international airline business. Evaluate
the attractiveness of the segments of the business in which British Always operates

What are the main factors affecting the profit potential for British Airways? How and why do these
factors affect competitors in ways that are different (Positive or negative) from British Airways?

Using the SWOT analysis, summarise the current competitive position and potential of British
Airways.

Section B: Strategy Formulation

Using the TOWS matrix, convert the SWOT analysis into a set of strategy options open to British
Airways for the 2010 to 2013. Which of the four alternatives do you consider the most appropriate
for British Airways, and why have you selected this option?

State (a) What you believe ought to be the key objectives and performance measures for British
Airways for this period and (b) the reasons why you have selected these objectives and measures.

List the programme headings that make a cohesive strategy for achieving these objectives, explain
how you have derived these from preceding analyses.

Section C: Management of implementation

Explain how you could communicate your selected strategy within the British Airways organisation,
bearing in mind that it is a global airline with employees throughout the world.

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Introduction
The airline industry was deeply affected by the recent global economic crisis which spurred many
customers to seek for better value for money, and continuous growing of internet online shopping
experience presented opportunistic choices than ever before. The war or insurgencies in oil
producing countries accelerated the oil prices, coupled with government tax increment as caused
much consolidation in airline industry.

These variables have caused collapse of many companies, some airline companies form merger
while some are completely absorbed by another airline. Companies are forced to revisit their
strategy, as customers are more discerning, can shop around for better prices, look for good quality
services at low price, surf online relentless for superb bargains and offers. The company that have
unique value innovation that could perform activities in a different way to competitors, that render
premium service at low price will survive the game.

This reading are in threefold, Firstly, I intend to analyse the internal and external environmental
forces affecting airline industry, how these factors affecting profit potential of British airways and
competitors in a way different from British airways. Secondly, to analysis strategy options available
for British airways for the period 2010 to 2013, the four set of strategy I considered most appropriate
and reasons for selecting these strategies. To list the main objectives and performance measures for
British airways and the reasons for selecting these, and to list programme headings that make
cohesive strategy for achieving these objective and explain how I have derived these from the
preceding analysis. Thirdly, to explain how to communicate these selected strategy to British airways
employees all over the world.

British airways profile

The British airway is the UK’s largest premium airline, operated international and domestic
scheduled air services for passengers, freight, mail and ancillary services. It ranks ninth in the world
in total number of kilometers flown and the third in international kilometers flown.
It operates from London with greater presence at Heathrow, Gatwick, and London City airport. It
flies about 32 million passengers in 2009/10 to more than 300 destinations worldwide, and carried
760,000 tonnes of cargo to various destinations all around the world, and had 238 aircrafts in service
as at March 2010. In 2009/10 British airway group revenue was £7,994 million, group loss before

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tax was £531 million, and group operating loss was £231 million. Passenger traffic accounted for 86
per cent of this revenue, while 7 per cent came from cargo and 7 per cent from other activities.

Airline industry environmental analysis

The environmental changes create opportunities and treats for an organisation. It is essential to
constantly analysis how these factors are changing now and how they are likely to change in future
and anticipate how to influence those changes. There are many concepts and techniques that can help
organisations to mitigate external environmental factors, a generic framework such as SPECCTRE
analysis acronym for social, political, economical, competitors, customers, technology, regulatory,
and environmental combined with 5-forces analysis can provide useful starting point for strategic
analysis.

Generic SPECCTRE framework

Fig. 1 depicted the comprehensive list of external environmental forces affecting industries, these
factors are changes driver that create threats and opportunities within the environment organisations
operates. Understanding of these forces is essential to survival of any organisation, it helps to focus
on what is important or not.
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Source: Adapted DIT MSC in supply chain management, course manual (2010/11)

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SPECCTRE Analysis of airline industry
The following are the comprehensive lists of external environmental forces of SPECCTRE analysis
influencing airline industry:-
SPECCTRE
Major Forces
List
Obese passengers
Perception of certain ethnicity
due to Terrorism
Social Security issues due to
terrorism
Student holyday period
Price sensitivity among wider
demography
Any change in government policy might have positive
Change of government policies or negative impact.
Government spending cut
Government environmental
taxes
Political
Passenger Duty charged
Government support for
national carriers.
War and insurgent in oil
producing countries.
Variation in foreign exchange.
Economic High interest rate
Global economic deterioration
High government tax
Variation in oil price
Competitors High competitive market
Implication on Airline Industry
The obese increase amount of fuel consumption
especially in US where there are high numbers of
overweight adult.
Certain ethnicities are considered high travel risk due
to 9/11, this impact on travelling.
High security measure have to be in-place to ensure
consumer confidence on travelling
There are high increases in family travel during student
holiday period, putting attractive holiday package to
boost revenue.
The unemployed adults are more price sensitive due
low disposable income.
Consumer tight spending to strictly control household
budget.
The high increase in environmental tax implication on
revenue
The passenger duty changes add on the flight cost
which has to be paid by passenger might discourage
travelling.
Government support give the national flag carrier
financial backing.
The implication of war and insurgent on oil price as in
the case of gulf war and Egypt mass uproar which
skyrocket oil price.
Fluctuation in currency impact on profit.
The cost of borrowing higher or lower impact on
revenue.
The effect of decrease in disposable income due to
global economic downturn impact consumer spending,
less business and leisure travel.
Various aviation tax charged effect on airline fare
which might reduce numbers of airline passengers on
short-haul.
Continuous variation in oil price due to unexpected
occurrence effect on profit.
The high intensity of the rivalry driven the price down,
making it difficult for some company to compete on
price
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Continuous grow of no frill
operators
High Speed train operators
Euro-bus and ferry services
operators.
Customer are more savvy and
discerning
Customers
Spoil with choices
On-line booking and checking-
in
Fuel-efficient technology
Technologies Video conference and Voip
communications
Airport check-in kiosk
Various Regulations e.g. EU-
Regulatory
US Open Skies agreement etc
Climate change, e.g Volcanic
Ash; Severe Weather
Condition e.g Snow Storm
Environmental
CO2 emissions and Aircrafts
noise
Source: Adapted from (2010/2011) DIT MSC Supply Chain management, Strategy module manual.
Porter’s 5-Forces analysis of airline industry
The Porter’s 5-forces framework deal with external factors influencing the business environment in
which organisation operates, it essentials to understand the dynamism of five interactive factors. Fig.
2 depicted Porter’s 5-Forces analysis of airline industry.
The global recession intensify the market as price
become order quantifier, increase number of no frill
operators in respond to economic situation, threat
market share of existing operators in this segment
In short-haul fast speed trains operators are taken
market shares, e.g. Eurostar
The competition coming from euro bus and ferry
operators and similar operators around the world.
Customers are more price sensitive and judgemental,
they constantly compare price for better bargain. The
high bargaining power of consumer due to awareness.
Customers are spoiled with choices; there are many
airlines to choice from.
Cost reduction through do-it-yourself, and customer
convenient, reduce airport congestion
High fuel-efficient technology potential to reduce cost
effect on profitability.
The emerging usage of video conference and VOIP
application group video functionality impact on
business travel.
The administrative cost reduced by mounting airport
check-in kiosk, and improved inflow of passengers less
congestion.
The impact of changes in regulations effect on airline
industry favourable or unfavourable
Fight cancellation as a result of storming weather
condition impact on airline revenue.
The environmental pollution impact on community,
government imposes variety of environmental
regulation which might increase operation cost.
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 Source: Adapted from (2010/2011) DIT MSC Supply Chain management, Strategy module manual.

Threat of new entrant

New entrants and existing carriers from the Middle East, Africa, and India pose possible threat. If
these carriers could offer quality services at rock bottom price to attract larger customer base not
targeted by the market leaders, such move could threat premium segment profitability. The airline
industry is capital and labour intensive business, if the initial starting finance could be sourced with
little interest rate, low cost of borrowing might encourage more entrants, at the same time airplane
can be leased or rent.

Bargaining power of suppliers

The industry is dominated by two major airplane manufacturers, the Boeing and Airbus and the
airline industry is highly fragmented at present. The market is duopoly in nature which gives more
power to the two airplane manufacturers. There is hyper-competition between both companies but
the airline carriers would want both companies to remain in business because the livelihood of airline
business depends on manufacturer to deliver fleets to carry passenger from point A to B fuel
efficiently and safely.

If there is no law or regulation to prevent acquisition or merger of Boeing and Airbus, combined
synergy from such acquisition or merger might impact profit margin in the industry. Any increase in

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flight maintenance parts supplied by Rolls-Royce etc, the extra cost will be past to airline carriers
which in essence will threat profit margin.

Bargaining power of buyers

The economic downturn, increase in tax rate, and government cutting on spending spurred many
customers to become price sensitive. They constantly look for premium service at low price,
rigorously compared flight fare of one carrier to another before purchase flight tickets. The
customers are savvier and discerning than ever before they can search for better bargain at
reasonable price, the bargaining power of buyer is high, no switch cost and customer are not loyal to
particular brand in this industry.

Threat of substitutes
The impact of threat pose by substitute is low in airline industry, the main substitutes to airplane are
high speed trains specially suitable for short-haul within region. The shipping liners will threat
profitability in long-haul transportation of goods. The usage of video conference, and VOIP software
among business executives reduced number of business travellers

Competitive rivalry
The airline industry have low profit margin which further intensify hyper-competition among
carriers, every carrier fight toothlessly to retain their part of the pie. The legacy airliners like BA,
Lufthansa etc find it difficult to compete on price with no-frill airliners like Ryanair etc. The
companies that remain profitable in the airline industry are those carriers that could create value
innovation, render reasonable service at lower price, and play the game slightly different than the
competitors.

Market attractiveness analytical tools

There are few tools used to determine market attractiveness such as the Boston matrix, Ansoff's
matrix, GE matrix etc basically determined industry market attractiveness on factors such as Market
Size, Market Growth Rate, Industry Profitability, Competitive Rivalry etc. Fig. 3 depict simply
analytical tool of Boston matrix which classified market into four categories, Stars, Cash cows,
Dogs, and Question marks, based on market share and market growth relative to competitors. The
higher market share a product has or the increase in product market growth the better for the
company, the rates of market share and growth is of interest to many players in the industry as it
represents the level of attractiveness of the market.

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 Fig. 3 BCG Matrix
High

Question ? Stars

Market Growth

Dogs Cash Cows

Low
Low Market Share High

Source: Adapted from (2010/2011) DIT MSC Supply Chain management, Strategy module manual.

The attractiveness of market segment British Airways operate

The airline industry market growth is low, and British airways increasingly faced fierce competition
result in market share erosion. There is decline in market demand for premium segment which is the
most profitable in British airways business portfolio, due to external environmental forces impacting
business, exacerbates market growth. The British airways is operating at loss, although earn high
revenue, the passenger flight business unit is a CASH COW in a weak position, migrating gradually
to DOG as a result of loss market share.

The financial outlook of the airline industry is gradually changing because economy is returning to
normal, but the no-frill segment of the business remain more profitable especially on short-haul. Fig.
4 illustrate British airways premium segment life cycle as it decline as the result of low demand,
although the outlook of global economic is improving. The economic upturn will improve growth,
and a deployment of strategy extension to counter decline will return British airways to profitable
growth.

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 Fig. 4 British airways premium segment life cycle

Effect of strategy extension to

Premium life cycle counter decline

Time

Source: Adapted from (2010/2011) DIT MSC Supply Chain management, Strategy module manual.

The main factors affecting the profit potential for British Airways
The airline industry is exposed to external environmental factors that inhibit profitable growth, those
forces affecting profit potential of British airways are:-
• Competitors Factors.
• Economic Factors.
• Bargaining power of buyers
• Cabin crew strike
• Regulations

The effect of external environmental forces on competitors

The Positive or negative effect of external factors on competitors in comparison to British airways
can be summarised as follows:-
Competitor factors
Expansions of no frill carriers globally threaten profitable growth of premium airline such as British
airways, although competition from high speed trains operators, Euro-bus and ferry services
operators have little impact on British airways as it operated mainly long-haul but this could
significantly impact profit margin of no-frill airline. Some competitors have cost structure that lower
than British airways or supported by their government.

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Economic Factors
Currency variation significantly affect British airways operation due it global present, but currency
variations have little impact on profitability of budget airlines operating within euro zone. The
British airways saved 2.7 billion between 2004 and 2009 from fuel hedging; some of their
competitors might not benefit such huge money at this period. The economic recession present
significant opportunity for no-frill airlines, while cost decline in numbers of business travel. British
airways carried substantial dept that need refinance, of which their competitor might carry less or
negotiate better interest repayment.

Bargaining power of buyers

Customers are more discerning and price sensitive due to global economic meltdown, they are
caution of spending and are more attractive to low fare airlines which cause erosion in profit margin
of premium airlines like British airways.

Labour Union
The constant strike action by labour union significantly impact British airways profit due to the legal
cost accrued on court cases filed by cabin crew trade union and dissatisfied customers. This affects
competitors slightly different to British airways.
Regulations
Open-skies agreement between countries present opportunity to expand but competition remain
limited for British airways in certain international routes due to restriction on numbers of flights that
can operate, and regulation countries tend to favour the country flag carrier to other airline. The
ambition to expand routes to such country is limited.

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The British Airways SWOT analysis
The SWOT analysis enables British airways to make strategic decisions by combined evaluation of
internal factors of strengths and weaknesses with the external factors of threats and opportunity.

Strengths

Strong brand name

Excellent customer service

strong global market positioning

network and alliances

diverse customer base

Innovative.

Learning culture.

Sufficient liquidity.

Well trained and knowledgeable staffs.

Fuel-efficient aircrafts.

Weaknesses

Heathrow has no spare runway.

Disconnected with employees.

Management team lost focus.

Order and obey culture.

Poor decision making.

Annual loss 2009/10, £231m.

Employees adamant to change.

High % of lost baggage.

Flight cancellation to small size.
Opportunities

Increase demand for flight within China.

Expansion of civil aviation in India.

Airline industry generates USD 408
billion in global GDP.

Merger, alliances, and joint venture.

Open Skies agreement.

Global economic recovery.

Acquire no-frill

Threats

High Regulations.

Cabin crew strikes.

Competitors.

Terrible weather conditions.

Oil dependency and fuel price.

Currency fluctuation.

Act of terrorism.

Economic recession.

Customers bargaining power.

Interest rates variations.

Source: Adapted from (2010/2011) DIT MSC Supply Chain management, Strategy module manual.

Summary of current competitive position and potential of British airways

The List of SWOT analyses carry different weights. The most influential factors impacting British
airways business among the SWOT analysis are ranked highest to lowest, and prioritised the highest
on the rank. The following summarised competitive position and potential of British airway in form
of weighted SWOT.

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 British airways-weighted SWOT

Strengths Opportunities

Strong brand name 4
Increase demand for flight within 4

Excellent customer service 3 China.

strong global market positioning 1
Expansion of civil aviation in India. 4

network and alliances 2
Airline industry generates USD 408 3

diverse customer base 3 billion in global GDP.

Innovative. 4
Merger, alliances, and joint venture. 5

Learning culture. 4
Open Skies agreement. 4

Sufficient liquidity. 5
Global economic recovery. 3

Well trained and knowledgeable 3
Acquisition of no-frill carriers 3
staffs.

Fuel-efficient aircrafts. 4

Weaknesses
Threats

Heathrow has no spare runway. 2
High Regulations. 3

Disconnected with employees. 3
Cabin crew strikes. 4

Management team lost focus. 3
Competitors. 4

Order and obey culture. 2
Terrible weather conditions. 2

Poor decision making. 4
Oil dependency and fuel price. 4

Annual loss 2009/10, £231m. 4
Currency fluctuation. 4

Employees adamant to change. 3
Act of terrorism. 1

High % of lost baggage. 2
Economic recession. 4

Flight cancellation to small size. 1
Customers bargaining power. 3

Interest rates variations. 2

Source: Adapted from (2010/2011) DIT MSC Supply Chain management, Strategy module manual.

The British airways is a strong brand, although the company report annual loss of £231m in 2009/10,
but enter the recession financially strong. To maintain British airways strong market position which
was under threat due to economic downturn, low demand in premium flight, and customer
bargaining power, strengths in fuel-efficient aircraft and superior customer services will improve
competitive position.

The company liquidity strengths could exploit possible opportunity in acquire low cost no-frill
airline to counter competitors route by route in the European market. Although the company high oil
dependency and variation in oil price create major threat but the continuous oil and currency hedging
minimise exposure to these risks. British airways potential strong financially, if the cabin crew union
constant threat resolved, and the management team refocus on key objectives and reinforce those
objectives, the company will return to profitable growth.

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The British airways TOWS matrix framework
The TOWS matrix systematically matches the external environmental forces of threats and
opportunities impacting British airways profitability with the internal factors of strengths and
weaknesses, and base strategic options for 2010/13 on the relationships identified. The following
table summarised conversion of SWOT analysis to TOWS matrix.

British Airways TOWS Strategic Options

Strengths (S) Weaknesses (W)

Opportunities (O)

Increase demand for flight
within China.

Expansion of civil aviation in
India.

Increment of $609.3 billion
2013 in airline industry
global GDP.

Merger, alliances, and joint
venture.

EU-US Open Skies
agreement.

Global economic recovery.

Acquisition of no-frill carriers
Threats (T)

High Regulations.

Cabin crew strikes.

Competitors.

Terrible weather conditions.

Oil dependency and fuel
price.

Currency fluctuation.

Act of terrorism.

Economic recession.

Customers bargaining power.

Interest rates variations.

Strong brand name.

Excellent customer service.

Strong global market positioning.

Network and alliances.

Diverse customer base.

Innovative.

Learning culture.

Sufficient liquidity.

Well trained and knowledgeable
staffs.

Fuel-efficient aircrafts.
SO Strategies

Selective investments move for
Asia, and middle-east market.

Focus on excellent service
delivery.

Capitalise on EU-US Open Skies
agreement.

Optimised aircraft and route

Strategic acquisition of low cost
no-frill carriers for European
market.

Expand through partnership,
merger, and alliances.

Join star alliance for strategic
benefits.

Innovation to capture market share.
ST Strategies

Invest in fuel efficient fleet.

Reinvest shareholder’s dividend
back to business

Enhance security

Customer value Innovation

Retrenchment

Hedge foreign currency and fuel
price.

Contingent capital security.

Heathrow has no spare
runway.

Disconnected with employees.

Management team lost focus.

Order and obey culture.

Poor decision making.

Annual loss 2009/10, £231m.

Employees adamant to change.

High % of lost baggage.

Flight cancellation.

Business segment.
WO Strategies

Return to profitable growth as
global economy fully
recovered.

Resolve issues with union.

Improve flight cancellations,
and baggage delivery service.

Improve relationship with
staffs.

Selective move to china, India,
middle-east, and US market.

Enhance customer service at all
level.

Refocus on company’s
objectives.

Cut cost to minimise financial
loss.
WT Strategies

Effective risk management

Expand runway to create
more capacity.

Use contract staffs for back-
up in-case of strike.

Lease flights instead of buy.

Sell less fuel efficient
flights.

Launch massive promotion
in target markets.

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Strategic Options
It is essential to evaluate the varieties of alternative strategic choices available taken external
environmental implications and internal capabilities to considerations. The business environment is
uncertainty and astatic, it constantly changes. The environmental dynamism means we have to
constantly revisit our strategy to stay ahead of the game.

Strengths Opportunities (SO)

The strategic options considered most appropriate for British airways for 2010/13 within the TOWS
matrix is the Strengths opportunities (SO). It enables British Airways to use the internal strengths to
exploit the opportunities in light of the risks. The opportunities and the associated risks have to be
thoroughly evaluated, the threats cannot be ignored, but need to build defence mechanisms to keep
threats at bay and overcome weaknesses.

Selective investments move for Asia, and middle-east market

The Asia aviation market is growing at high rate especially in China and India, China expects to
grow at average rate of 17.2% annually while India domestic market is growing at about 20% and
double-digit rates internationally. If regulations permit, British airways should target Kingfisher
airline in India and Spring Airlines the best low cost carrier in china for equity stake or possible
acquisitions to enter these markets. The middle-East is another emerging market. The investments in
these markets have to be approached with caution, but the risk worth taken by British airways to
return to profitable growth.

Focus on excellent service delivery

British airways have strong brand equity of which excellent customer service is associated with.
Superior customer services go beyond high decorum and courteous it includes all package in
delighting customers. The company have to improve service offering to regain customer’s
confidence, improve customer’s experience, minimise lateness, and improve luggage delivery
services etc. There are still customers out there willing to pay premium fare for superior services,
British airways have to reach-out to these targeted group to sustain market position.

Capitalise on EU-US Open Skies agreement.

EU-US Open Skies agreement presents opportunity to operate in US airline market. It allows
any EU carriers to fly from any point to any destination of their choice in USA without any
restrictions on pricing or capacity, it allow US carriers to enjoy the same. The agreement
altered competitive landscape on transatlantic routes. It is an opportunity for British airways

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to make transatlantic investment in the USA airline industry and could use the opportunity to
operate transatlantic flights from outside London base.

Optimisation of aircraft and route

The investment in fuel-efficient aircraft will reduce aircraft fuel consumption and offer
environmental benefits in form of reduction in CO2 emissions to the air, and minimisation of
aircrafts noise. British airways need to optimise their routing system to capitalise on ongoing
liberation in global airline industry, as the bar on regulations continually lower. The enhancement of
the routing system will enables British airways to further spread their tentacles to exploit those
routes they have not been operating, which might bring financial benefit in the long run.

Expansion through acquisition, merger, alliances, and joint venture

Investment in no-frill airline will improve market share and profit margin in the long run. Evidence
in investment in BA CityFlyer a new entrant to no-frill carriers and acquisition of OpenSkies a low
cost long haul carrier operating from Paris to America. The merger with Iberia airline and joint
venture with American Airlines benefit British airline through economic of scale, cost reduction,
capacity and load factor enhancement, and improve service offering.

British airways key objectives

The British airways series of key objectives to be completed by 2013 are as follows:-

To return to profitable growth

The company needs to urgently return to profitable growth to sustain the business. In doing so,
British airways need to attract more passengers and make unpopular cost reduction and restructure
decisions. The company have to slash operational costs, sell trouble business within business
portfolio, and reduce unnecessary expenses to survive, as the survival of British airways is at stake.
The company have to carry staffs along by reiterate it objectives and reinforcing them.

To expand global present

The global airline industry is growing especially in Asia and middle-east, due to deregulation and
open Skies agreement. Selective investments move in these markets region will create another profit
stream for British airways. The airline industry is in transition, consolidation is growing, British
airways needs to build new global partnerships and alliances to expand and return to growth.

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To continue meeting customer’s needs.
British airways have to create customers value innovation to please the targeted customers, in the
market segment it operates. There is need to improve internal customer relationship between workers
union and management. The focus should be to continually provide outstanding customer service
because there are few customers globally willing to pay extra money for superior services, even
among those passengers travel on economy. The excellent services culture associated with the
British airways is a difficult to copy competitive advantage, should exploit this competitive edge.

Remain market leader and invest in fuel-efficient aircrafts.

To remain market leader, British airways needs to constantly create attractive business propositions
and service offering that customers will value. The market leader set the bar that others follow, a
new investment in fuel-efficient aircrafts will improve operation efficiency, and present opportunity
to optimise the current route by increase frequency of service and diverse to other route.

British airways key performance measures

The key performance measures recommend for British airways at this time are combinations of
financial and non-financial performance measures.

Liquidity Ratio
Before embark on implementation of strategic options suggested, the financial health of British
airways needs to be considered. The current ratio evaluates financial performance of British airways,
how the company convert current assets to cash in order to fulfil financial obligations. The quick
ratio, evaluate how British airways are meeting short-term obligation with the company most liquid
asset. The inventory to net working capital, the amount of British airways cash tied on inventory.
These ratios are interested for the investors, shareholders, potential lenders because these ratios have
impact on amount of working capital and ability of British airways to meet current dept payment.

Gross profit margin

The gross profit margin will illustrate British airways financial health by reveal the amount of cash
left for investment and still yield profit. British airways need to return to profitable growth, there is
urgent need to control the company overhead and convert sales to immediate cash to facilitate the
company strategy options.

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Return on total asset
The return on capital employed will measure the earning power of various investment made. The
investment in new fuel-efficient aircrafts returns over the course of years, and investment in other
elements such as, gate and ticket counter at the new airport destinations as a result of expansion.

Customer satisfaction
The customer satisfaction performance measures will highlight area to improve in the company
service quality, such as response time for queries, onboard catering, low flights cancellations,
baggage rates, and missed connection.

Passengers Load factors

The passenger load factors enable British airway to measure capacity utilisation, and operation
efficiency in comparison to competitors because high capacity factor have positive impact on
profitability.

The programme headings

Return to profitable growth

Reduce waste within British airways through cutting cost of activities that create no value to
customers.

Reinvest shareholders dividend to reduce bank interest rate

Financial improvement
Expand global present

Route by route expansion

Acquisition, merger, joint venture and consolidation

No-frill airline investment

Enter China and India market

Capitalised on OpenSkies agreement
To continue meeting customer’s needs.

Improve cancellations

Optimise baggage delivery rate

Create value innovation

Enhance lateness

Improve seat load

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Continuous providing quality customer service
Remain market leader and invest in fuel-efficient aircrafts.

Operation efficiency

Less noise and reduction on CO2 emissions

First to market in innovation

Experience curve acceleration

Strategy communication

The company like British airways that spread in nook and corner of the world are presented with
mammoth logistic challenge when it comes to communicating organisation strategic intents, deciding
strategic decisions is one thing, communicating it is another thing. The advent of information and
communication technology make communication easy for most organisation’s CEO, the like of
video conference, VOIP, etc served the purpose of communication and visual mechanism instead of
travelling long distance.

The first step in communicating the British airways strategy is to consider which stakeholders to
inform and how the messages should be composed, different message goes to British airways
shareholders, key customers, suppliers, and employees. The employee communication is vital and
most challenging since the employees are the one to carry out the strategy, they need to embrace the
strategy as the bases for new growth initiative for the future of British airways. To Cascade the new
strategy top down need superb strategic communication mechanism.

The strategy team need to invite the regional representatives to British airways headquarter, they are
to be briefed of the new direction British airways intent to pursuit, and participate in new strategy
workshop to gain valuable insight and clarification of objectives. Upon completion of the workshop,
the company have to unveil the new British airways strategy in a worldwide conference to be visited
by many British airways most senior personals. The regional representatives have to report directly
to British Airways CEO as the leader of the strategic team for progression of the strategy within their
various regions.

The next step is for the regional representatives to cascade the strategy down the organisation
regional structure. Each regional representative has to organise conference to introduce the new
organisation strategy to various country managers, in the conference, the video of the British airways

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CEO with the member of the strategy team have to be showed talking to the conference participants
in detail of the new strategy and reiterate the important of the strategy to the organisation profitable
growth.

The last step is for the country managers to inform their workers of the new direction the British
airways will be taken, they need to engage the employees directly for them to know what the new
strategy mean to them and to know possible operational change it will bring. The country manager
has to invite all staffs to meeting. In the meeting, the video of the CEO played asking the entire staffs
to promise their support for the new strategy. In essence, strategy communication is not the end-point
of strategy making process, it needs constant feedback to stakeholders.

Conclusions
The global economic meltdown significantly affected many businesses, weakening the financial
sectors in facilitate loan. The airline industry was significantly hit by loss of passengers which
spurred many airlines to consolidate, divest, or be acquired.

Reference
DIT MSC supply chain management course manual, 2010/11
British Airways (LON:BAY), viewed 10 Feb, 2011,
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Airline and Aviation Industry News, viewed 15 Feb, 2011

<http://www.airlinenewsresource.com>

Airline Leader, ISSUE 3 | DEC ‘10 – JAN ’11 Viewed 5th Feb,
2010<http://www.airlineleader.com/pdfs/Airline%20Leader%20-%20Issue%2003.pdf> by

Brancatelli, J 2010, ‘Willie Walsh and the Airline Factory’ viewed 12 Feb, 2011
<http://www.portfolio.com/business-travel/2010/03/24/willie-walsh-wages-war-on-british-
airways-flight-attendants/#ixzz1Cu35UM5M>

Airline Industry Overview. Viewed 4th Feb, 2011

<http://www.aviationexplorer.com/airline_industry_overview.htm>
Is Bigger Better for Consumers, viewed 12th Feb, 2011
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Glenn, C 2010, Is That Airline Ready For Lift-Off? Viewed 14th Feb, 2011
<http://www.investopedia.com/printable.asp?a=/articles/stocks/07/airline_stocks.asp>

Michael, M 2010 ’Global Economic Prospects for 2010 and 2011’ viewed 13th Feb, 2011
<http://www.iie.com/publications/papers/mussa0410.pdf>

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British Airways, viewed 14th Feb, 2011
<http://www.trueknowledge.com/q/facts_about_british_airways>

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