PART A

LO1: Analyse the impact and influence which the macro environment has on
an organisation and its business strategies

The business strategy is a plan needed for achieving the desired objectives or goals of a
company. This type of planning helps in doing a long-term business for any organisation.
British Airways had done a three year plan that will help in the improvement of the
experiences of customer, for controlling the costing as compared to the other airways, the
plan will help in the growth of economic development as well as fulfilling the needs of the
customers and finally it will help in setting the goals for facilitating the common people as
well as the environment (Karami 2017).

The development of business strategy consist of two parts: strategy formulation and
strategy implementation. In strategy formulation, the company set goals and work out a
strategic plan to achieve these goals. Strategy implementation is about developing the
necessary tactics to achieve the already formulated goals. So, if British Airways decided to
expand and grow its business through flights to new destinations, then this is a decision made
during strategy formulation. But with what kind of airplanes to fly there, what are the tickets
price and how many times per week, is a decision of strategy implementation. Strategic
implementation is usually achieved via the design of the organisation, the works of its
employees, its control and many other processes in the company.

Whatever is the strategic plan, to be successful, it must be a rational strategic process.

 Fig. 1: Rational Strategic Process

Source: (Jarzabkowski and Kaplan, 2015)

This process includes three stages:

1st stage is Strategic Analysis:

✓ Set a Mission and Vision.

✓ Set an aim
✓ Establish objectives.
✓ Analyze internal, external and stakeholder appraisal using various analyzing tools.

2nd stage is a Strategic choice:

✓ Generate strategic options.

✓ Choose an acceptable strategic choice based on the already done different analysis in the
1st stage.

3rd stage is Strategic Implementation:

✓ The already chosen plan will be implemented.

✓ Review and control the strategic plan will be done as well, as these are mandatory
components for the successful business strategy.

Mission: The mission of the British Airways is to make their ride so comfortable that it will
make sure about the customers so that they can feel comfortable as well as safe whenever
they are flying.
Vision: The vision of the British Airways is that they want to be known as the most
responsible airline of the whole world and for doing they had already developed some
principles which help to achieve the goals.

Aim: Growth and development of British Airways, as well as reduction in competition over
the next three years.

Objectives:

• To estimate the position of British Airways.

• To analyse the effect of the internal, external environment, expectations of stakeholders,
company’s capability and analyse the level of the competition of British Airways.
• To choose and implement a suitable and feasible Strategic Growth Plan for British
Airways.

Analysis:

To analyse external and internal company’s environment is one of the main part of each
business strategy.

External factors analyses for British Airways includes Opportunities and Threats of
SWOT analysis and PESTLE analysis and will be highlighted below:
SWOT Analysis:

Table 1: SWOT Analysis

Strengths: Weaknesses:
• Image of the brand and good reputation. • Low changes in innovative technologies
• Company size (Stewart and Rogers 2017).
• UK market leader • Not good level of IT security
• Alliances as well as partnerships • Possible strikes of the employees
• Customer loyalty • High ticket prices
• The team provides good service

Opportunities:
• The quality of the system can be Threats:
increased. • Environmental pollution caused by the
• Competitors might fail to provide emission of carbon dioxide from the
reliability. flights.
•
• They can establish their services in
The economic crisis in the global market.

emerging markets. • Completion of the other airline

companies to provide services on the low
• Attract new and younger customers
cost.
• To cover new attractive destinations-
• BREXIT.
finding new market niches.

Source: (Stewart and Rogers, 2017)

Opportunities:

British Airways is a company with traditions. The traditions are a good strength but to keep
its leadership position the company must to take advantage of any opportunity for
development and improvement, to have a look into the future and to think about how to get
better. The aviation market is a continuous race, challenge and highly competitive.

To increase the quality of the system with new technologies; to attract new and younger
customers with promotions, discounts and to provide the best global connectivity for them;
to cover a new attractive destinations and looking for a new market niches for example:
Asia Pacific market and increase in trans-pacific cargo; to establish their services in the
emerging markets providing a good quality of services on good prices are some of the
opportunities for BA.

It's very important British Airways to monitor and analyze their competitors. To do SWOT
analysis of the competitors as well, so doing this the company will be able to react off the
changes, to turn their weaknesses into its own strengths- this will be a big opportunity as
well.

Threats:

As the Threats are external factors, British Airways can't change them but have to know
more about the external environment because it influences a lot of the business and global
business market. Has to be very sensitive to every external change to be able to react
adequately and to find an alternative way to reduce any negative impact.

BREXIT is a big challenge for British Airways. The company will lose customers because
the people from EU will can't travel without visas. To compensate this, the company has to
establish its services on the new markets and must to provide them with suitable prices.

The economic crisis reduces customer, and they will look to travel with the low-cost airlines
despite the lower level of service. So the company have to react of this with lower ticket
prices and try to keep a good quality.

Proper planning, Business strategies and monitoring are critical for continuing development
and growth of the company.
PESTLE Analysis:
Table 2: PESTLE Analysis
Political
• Strict rules and regulations control the
management of airlines.
• Increase in the security system due to
the terrorist activities of the past.
• Joint venture with the trade union had
also put some effect on the Airways.
Social
• Increase in the older population will
help British Airways as they want to
spend their leisure time travelling.
• Increase in unemployment had led to
travelling of the people to major
countries for the job (Fallon 2016).
Economic
• International crisis on the economic level
had reduced the level of the business.
• The recession has affected a lot as the
companies are reducing their cost of
travelling and also using teleconferencing as
a source of communication.
• Declination in the prices of fuel
Technological
• Customers are visiting the sites that compare
the prices led to the awareness of the
consumers, and along with that, the
bargaining power had also increased.
• Online booking services are mostly used by
the customers as well as the airline company
so that they can remain up to date with the
advancement of the technologies.
Environmental

• Regulations that control noise as well Legal

as energy had come into force which
• British Airways had to face various
may increase the costs of operation.
problems due to the merged venture along
with trade union.

Environmental

Legal

• Due to the growing of the airports and

limitation in the free land had led to a
significant loss due to difficulty in the
expansion. • The legal rules, as well as the regulations on
the rights of customers and the employees,
• Cancellations of flights due to bad
had adversely affected the company.
weather and loss of baggage of the
customers.

Source: (Fallon, 2016)

LO2: Assess an organization’s internal environment and capabilities

Internal analysis for British Airways includes Strengths and Weaknesses of SWOT
analysis, Stakeholder analysis using Mendelow’s Matrix, analysis of strategic capabilities
using the McKinsey’s 7S model and VRIO/VRIN framework.

Strengths and Opportunities of SWOT analysis: (see Table 1 on page 7)

Strengths:

The company is a huge organization which establish a strong and recognizable brand from
its reputable history. UK market leader and one of the largest world airline companies.
British Airways is in Top 20 UK’s best customer brand.

BA provides a very attractive and effective customer loyalty scheme. Their "On Business"
loyalty program is very successful. There the business depends on their number of flights
with BA receive points. These points they can use for various rewards: discounts for hotels,
express rail tickets or reward flights (Nichel Anderson, 2018).

Partnership across the Atlantic. Here the company is partnered with other world leading
airline companies such as Iberia, American Airlines, Finnair and many more. The aims of the
Alliance is to make the international flights easier for the passengers and to improve their
satisfaction.

British Airways is a member of "One world “Alliance. This Alliance guaranteed the best
service for their customers when they were changing flights all around the world. Also, the
passengers can receive quick and adequate support and help in any travel situation.

The other partnerships are: with Japan Airlines, Qatar Airways, franchises- the independent
airlines that use BA brand.

Weaknesses:

The company need to do more investments in new technology especially integrate them on
the board. The lack of adequate implementation of new technologies in the business will lead
to the company's inability to meet the needs of its customers; BA will not be a competitive
player in an ever-changing global market. Especially nowadays, when new technologies and
their implementation are the main points for the success of every business, BA can't afford
the luxury to stay passive in this.

The hacking scandal from the 2018 year when over 380.000 customer's personal data was
stolen, clearly shows that the good level of IT security is absolutely essential. As a result of
this criminal attack the company suffered a lot of losses, and the trust in it declined.

Employee strikes are always probable for any business, and British Airways is no exception.

The cabin crew strike in the 2017 year because the cuts are evident for this. The results of the
strikes are absolutely negative for every aspect of the business. The cabin crew are the face of
the company and the first people which the customers meet when they fly with the airline.

To reduce the risk of strike BA must do prevention in this direction. Stay close with Trade
unions and to conduct timely negotiations with them; frequent meetings with the managers;
feedback from the employees; making quicker and adequate decisions from the top; provide
proper training.

Although the high quality and excellent customer service which British Airways provide, the
high ticket prices are one of the main reasons for fewer customers and not attractive for new
ones. Ticket price depends on many factors as government taxis and regulations, airport fees,
fuel cost and etc. The company should try to make promotions, discounts, also as a big fuel
user BA can negotiate with the fuel suppliers to reduce the prices.

STAKEHOLDER Analysis:

To analyse British Airways Stakeholders will be used Mendelow’s Matrix. Using this tool,
the stakeholder groups will be analysed based on their Power (the ability of influence of the
organisation) and Interest (how interested they are within the organisation).
 Table 3: Mendelow’sMatrix

High Interest-High Power Low Interest-High Power

Competitors Customers
Employees Government
Suppliers Media
Shareholders

High Interest-Low Power Low Interest-Low Power

Internet providers Donations
Creditors and Financial institutions Local community

Source: (Created by Author)

 ❖ Stakeholders with High interest-High power:

They are key players, and the company must engage them closely.

• Competitors– British Airways has direct and indirect competitors.

The direct competitors are any airline companies which flying on the same routes as BA.
Also, the low-cost airlines are an aggressive market player and can affect the company's
decisions and strategic plan.

The indirect competitors are the top world airlines that provide non-direct flights.

According to recent studies, the main competitors of British Airways are Virgin Atlantic,
Lufthansa, Emirates and Jet Airways.

Alternative transports like cars, trains, buses, ferries are also indirect competitors for BA. For
example destination to Paris from London. BA provide flights on this destination, but many
people are travelling by alternative transports because it is a short distance.

• Employees– to work for a brand as British Airways is pride and honor for every
employee in the company.

All employees have the security of income ( even this as the results of company's cuts have
strikes), a safe and comfortable working place, job satisfaction, a lot of opportunities for
developing and acquiring new skills and knowledge ( BA provide many training courses),
excellent status.

• Suppliers

The main BA suppliers are Boeing and Airbus. Other are online travel agency, fuel
companies, catering (food and drink) companies and airports as well.

• Shareholders –The stability and financial success of the company is the main
point for all shareholders.

Shareholders are the proprietors of the business. They hold the privilege to choose the top
managerial staff who deal with the business; this shows how great investors are and that it is
so vital to keep them ready regarding BA. The company need to keep investors close and
inside its internal circle by giving them distributed budgetary proclamations and a yearly plan
among different methods for announcing and furthermore joint effort. Investors have gotten a
reasonable rate of profit for their speculations so far with profits rates running from 2.25% up
to 12.8% from 1987 up till 2008.

Shareholders are important as they have the ability to coordinate the organization's vital
arranging and administration. An educated investor is the best visionary, organizer and
evaluator an association can rely on. BA have to including them always by offering
consistent input on arranged systems, keeping execution in-accordance with desires,
examining imaginative theories and giving knowledge into everyday working encourages
them to remain associated monetarily, if not physically.

❖ Stakeholders with Low interest - High power:

The company must keep them satisfied by meeting their needs.

• Customers – Customers are the main source of profit for British Airways.

The company try to keep the existing customers and the same time have to attract new ones
by price, promotions and good quality.

Customer loyalty is vital to characterizing BA prosperity.

• Government – The Government with various European, Domestic and International

legislations have a high impact on the BA. The fees which and the amount that the
company and passengers have to pay are imposed and enforced by the legal regulator.
• Media – Has an impact on the image of the company. Media has big power and can
influence the opinions and decisions of the people. British Airways has a good
relationship with Media.
❖ Stakeholders with High interest – Low power:

The company have to keep them informed and to show consideration.

• Providers are of internet service on-air.

• Creditors and Financial Institutions.
❖ Stakeholders with Low interest – Low power :
• Donations and Local community – British Airways support a number of cultural,
sporting and charitable activities. BA is a socially responsible company and good
 corporate citizen. Also, the company has a policy of donating to registered charity
organizations.

Stakeholders must play the main role in setting up the needs and goals of the company and
sanitation activities keeping in mind the end goal to guarantee significance. It is imperative
that all of them are associated with the advancement of risk and not simply coordinate
recipients of an activity.

When the company is planning a strategy on which Stakeholders to include into the decision-
making process and how to convey, collaborate and connect with them, it is advantageous to
discover more about different groups and types of Stakeholders.

Significance implies the need given to fulfilling partners' needs and interests from being
associated with the outline of the strategy and in the task itself with the goal for it to be
fruitful. At the end of the day, this is about how imperative or fundamental is it that specific
partners are included (World Agroforestry Centre 2003).

All Stakeholders could appear to possess the various power, or they might have various
interest. Some Stakeholders can hold a lot of power than others, and few of them can have a
lot of interest. Despite the varying Power and Interest, British Airways should not ignore any
of them, because all of them influence on the different way of the business and on the future
development and strategy for growth of the company.

Strategic analysis:

Development of the people-As the unemployment is increasing nowadays, so it is very

necessary British airways must stimulate, support and develop the employment strategies.
Along with this, the airways must develop the handling of the baggage as well as reducing
the delay in management. The customer service must be increased for reconstruction of the
brand image. In addition to this, the development of internet facility will improve the
relations of the customer with the airlines.

Environmental position - It has been seen in the PESTEL analysis that the concerns of the
environment are increasing day by day, so it is very important to plan a strategy which will
help in improving the environmental condition such as the change in climate.

Enhancing Technologies - The capabilities of the technological system of an airline must be

increased according to the choice of the customers. The development of in-flight service will
help in improving the overall performance of British Airways and will increase the profit.
The introduction of internet facilities on the flight will help to increase the number of
passengers in boarding an airplane.

Fig: 2 McKinsey’s 7S model as a management tool.

Source: (Ford and Eisner, 2016)

Strategy - British Airways follows the strategy of differentiation and service. Especially the
differentiation in the service through extensive reliability on digitalization as well as
information Technology leads to the high level of customer satisfaction (Ford and Eisner
2016). Another important element that BA might go with could be an aggressive international
market enlargement under business strategy where the strategy would allow respective airline
company to fly more route dozen in number than before.

Structure- International airline group is the owner of British Airways, the largest of the
airline group in Europe. The organizational structure of British Airways is hierarchical time,
and it reflects that it is the biggest in the airline business. Being largest airline owned by
International Airline Groups in Europe that also owns Vueling, Iberia and Aer Lingus, might
utilise de-layering initiative into BA organizational structure as part of the cost-cutting
measure under a wider range.
Systems- Organizational systems of British Airways is far apart from the standard set of other
airline business. The system of the British Airways is the system for recruitment and
selection of employees, quality control system, the system for appraisal of performance and
system for handling of the complaint. In addition to these British Airways also maintain some
specific program related to the industry such as checking system of passengers, handling
system of baggage, and system for entertainment during flight.

Staff - British Airways always tends to hire the proper members for their staffs that are
service oriented and will provide the proper service to the customers. The segment refers to
diversity and number of personnel available in the respective organisation to effectively meet
the organisational objective and goal within the scheduled time.

Skills- After the hiring of the stuff they are properly trained so that they become experts in
providing proper services to the customers with the help of their own particular skills. Skilled
and experienced workforce within an organisation would help in delivering better quality and
standard services to its potential customers. More skilled workforce betters organisational
performance.

Style- British Airways always try to maintain their services of staff as well as the
management at the systems in a proper way show that the customer gets satisfied with all of
the facilities that are being provided by them. Effective interaction and communication
between employees at the different organisational level under delivering effective leadership
style and quality performance would allow organisations to achieve the objective in a much
efficient manner.

Shared values- The British Airways have their own principal values and norms that are
accepted within the organisation. This will help to fulfil the mission of the Airways so that
the customers can get a comfortable ride while flying. Context to mission and vision of the
organisation, it should focus on delivering higher quality and better services than rivals to
maintain a competitive edge and offer value to products/services.
Analysis of strategic capabilities using the VRIO/VRIN framework:

VRIO Framework will help to understand the advantage of British Airlines very easily. It
consists of the following factors

Value - The human resources of British Airways is very valuable and food inexperience.
This airline provides good information to all office staff for improving their skills without
extending any of the money (Evans 2015).

Rareness - British Airways provides a strong demand for their services which leads to the
success of the airline.

Imitability- The position of London is a resource for British Airways which cannot be
imitated very easily since it is the capital city of the United Kingdom.

Organisation - There is cooperation between all of the management and the staff of the
British Airlines which has reduced the costing as well as increases the efficiency of service.