Business Environment

Introduction To Business Environment

Business environment refers to those internal and external factorswhich affects business function. It means that what all factors any business possess to work efficiently in order to achieve goals (Dave, 2012). The environment of business which includes both internal and external factors which determines business to run efficiently. In this report, British Airways analysis has been done to know the mission, vision, goals and objectives of company. The organization fulfils all needs and responsibilities to meet the objectives of different stakeholders. The impact of fiscal, monetary and competition policies on British Airways. The importance of international trade to the business organisations and which market forces helps

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LO 1 Organizational purposes of businesses

1.1 Purposes of different types of organisation

The purposes of different types of organization which includes public organisation, private organisation and non- government organisations. These all organisations serve the public for different purposes and help in different ways to maximise the needs and wants (Miller and Cross, 2009). Public organisations play an important function in serving the people and not earning profits. They serve general public to make them feel and utilise all the necessities and don’t want to make profit out of it. In order to this private organisations serve public for the main reason of making profits. Their main purpose is that to satisfy the people and through that earn revenues and become leader in that segment by defeating all competitors. The last type of organisation is non- government organisation whose main aim or purpose is to do welfare of public and not with the motive of earning profit.

They serve people to do welfare and make them feel better. British Airways is an organisation which is private organisation which serves people to make them satisfied and earn profit. While satisfying the customers they earn profits so to have maximum revenues and make people feel better (Johnson, 2010). The business environment of British Airways should be best both internally and externally so that it makes their customers feel pleased. The main purpose of private businesses is to make profits to sustain in such a competitive environment and to become leader.

1.2 To meet the objectives of different stakeholders

The business helps in meeting the objectives of the stakeholders to make a good relationship between both of them. If the company involves itself in understanding their stakeholders which ultimately make the business to raise their profits. Various types of stakeholders include customers, shareholders, employees and competitors.

Customers- In any company customers play an important role in earning profits and have their impact to manage the company properly. Customers are the main source of existence of any company (Lee, 2005). British Airways should make such strategies to keep their existing stakeholders loyal to them and try to make such policies which helps in attracting new customers as well.

Employees- They has the best power to run any business successfully and make it a growing and developing organisation. Any business can become successful only when its employees are loyal towards the growth of business (Armstrong, 2005). British Airways should satisfy their employees which will result in achieving overall goals of company. All the set goals should be attained effectively by employees and earn maximum returns. The staff of British Airways should be given proper remuneration time to time for easy access of work.

Competitors- British airways are the leader in UK airlines industry with the highest turnover. But it should continuously adopt new and better strategies to compete with competitors and become a market leader. It should make good decisions to remain at top and do not get affected from low cost airlines which tries to capture their market.

Shareholders- British Airways should have a strong bond with their shareholders who help them in earning success of company (Charles and Smith, 2008). They should be given good dividends when business is making profits. They should be asked to give their opinion in making changes in company and deciding new strategies.

1.3 The responsibilities of an organisation and strategies to meet them

The organisation has the responsibility to meet different needs of stakeholders and try to satisfy them by adopting various strategies. Customers of British Airways should be given such facilities that they remain loyal to use their services which satisfy their needs. The customers should be given better quality services to make them feel luxurious and comfortable. Airways should try to fulfil all the requirements of their clients which will help them in sustaining and remain the leader in the industry (Conner, 2010). They should be given different schemes and offers so that customers get attracted and instantly use the services of Airlines. They should be remained cost effective so that it helps in increase in customers and defeat competitors. Through all such facilities customers should feel satisfied and accordingly business will also expand.

The employees of British Airways should remain satisfied to better serve the organisation. They should be given proper rewards and benefits which satisfy them and helps in increasing their morale. They should be given good working environment so that it helps in low retrenchment and strike rate which will help in achieving objectives of British Airways. They should be given flexibility in their working culture so that it will help in easy access of targets and make them feel better (Wales, 2009). They should be given fair treatment and good relationship with their management to understand their wants. Shareholders should be given proper dividends whenever there is increase in profitability of company. They should be informed about the financial success of company so to have more interest in company which will help in growing Airlines business.

They should be given a chance to play their part in decision making process so to have better quality workforce which can lead the business in easy availability of goals and objectives (Henderson and Kelliher, 2010). Shareholders are the lifeline of the business so to have them for a longer time and continuously increasing them which helps in increasing profitability of business. Competitor’s objectives to be achieved by organisation should be such that they should use fair practice towards each other. They should not cheat them by charging different prices or change in policies which directly affect competition.

LO 2 Nature of national environment in which business operate

2.1 Economic systems help to allocate resources effectively

Economic systems is a way in which national environment allocates resources effectively to use goods and services in the business (Telkamp, 2012). Different types of economic systems are there like mixed economy, free economy and command or planned economy. British Airways includes mixed economy to operate its business effectively in the national environment which means that it manages its business according to market conditions because market is very competitive and complex. There lay various other competitors with different pricing strategies to compete in business environment. In mixed economy system it allows private economic freedom which helps in deciding the prices or other capital investments. But in accordance with it government also interferes in economic activities of company.

Free market economy in which government do not involves itself in decision making. Business can privately make their decisions to allocate their resources effectively. British Airways can use different offers to attract their customers by providing better quality services (Waikar and Nichols, 2007). They can operate their business and helps allocating their resources effectively to earn maximum profits. In command or planned economy business is regulated by government rules and regulations. In this government makes all decisions and helps in allocating resources effectively. British Airways operates in a mixed economy market in which all the decisions are made by private owners according to the market conditions. It helps in deciding competitive prices to sustain in market.

2.2 Impact of fiscal and monetary policies on British Airways

The businesses get affected by fiscal and monetary policies and involve various changes in their policies. Fiscal policy means through which government adjusts its spending and expenditures. Monetary policy explains the money supply in economy from various businesses to increase the flow of money in economy. British Airways is negatively affected by fiscal policies which increases it expenditures in the form of paying more taxes. The conditions of the market should be controlled that it should not affect company fiscal policies (Vendel, 2013). Company has to pay more taxes to government to properly run the airlines and make business. It results in decrease in profits because of paying more taxes to government. If they have to pay less tax to government they can save much amount and spend that in increasing or expanding business like infrastructure and hiring more employees.

Monetary policy impacts British Airways by spending huge amount of money in giving interest to banks in the form of short term loans. Company spend their money in paying high bank interest otherwise they can invest that amount to achieve more customers and satisfy them. Competition arises and due to that increase in fare rates will lead to low demand by customers. It also negatively affects British Airways by spending their money in the loans taken by them (Huettinger, 2006). This will impact the company by increasing their expenditures and less saving. In this policy government decides various other rules and regulations which companies haveto follow to safely run business.

2.3 The impact of competition policy and other regulatory mechanisms

The impact of competition policy on British Airways is negatively affected because it has wide number of competition among them. Main competition of British Airways is with Easy Jet and Virgin Airlines. There are various competitors present in market to compete with each other (Pourdehnad and Smith, 2012). These issues in companies make them use unfair practices and unfit methods to advertise their companies and adopt various other strategies to increase their market share. The regulatory authority has to keep close watch on the activities performed by companies. They have to see that companies use fair practice or strategies to achieve market share. To become the leader company should offer low pricing strategy to its customers to get more customers from their competitors.

Government applies various rules and norms on these companies to meet the standard of quality and service which affect companies by having negative impact (Horner and Swarbrooke, 2006). British Airways compete in market with other companies in having low prices and fulfilling other standards of quality and environmental issues to better serve their customers. British Airways has to follow all the rules and regulations stated by government to have a safety environment for their clients and they should use better competitive strategies to lead the market. Regulatory mechanism should be strong enough to keep the records clear to see the positive behaviour of companies in following the rules and policies.

LO 3 Behaviour of organisation in their market environment

3.1 market structures determine the pricing and output decisions of business

Market structures defines that there are various market present for the organisation to operate their business. Market share defines the pricing strategy and other main features of any company to decide it and run business (Pirttilä, 2008). The different types of markets are Oligopoly market, duopoly market and perfect competition market. British Airways follows perfect competition market which means that it has to decide its prices and other strategies better from their competitors.. Company has to give low prices to their customers to attract them and better facilities to grab more market share. British Airways has to follow perfect competition in which there are many competitors present which gives tough fight in price and other factors. In perfect competition company cannot increase in prices and other decisions to compete in market.

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They have to use such strategies to have more loyal customers and to use such strategies through which it can defeat its competitors. Perfect competition is a market structure in which companies have tough competition among each other and they have to maintain their prices and other quality standards to fulfil the needs of clients (DeVries, 2011). In the competitive market company uses such promotional tools to attract their customers and give them good prices and services. Business has to adopt tactics to remain in the market and treat their existing loyal customers with new customers as well.

3.2 The way in which market forces shape organisational responses

Organisational responses towards market forces should be positive to have technology improvement, customer satisfaction and have good economic condition. Business should be able to invest a good amount in having innovative technology to serve their customers better. It is very important for companies to have better technology products in this competitive market. They should be able to give better quality services to their customers and proper safety conditions to make them satisfy. British Airways has to make a plan to adopt better quality technology which is different from their competitors (Quinn, 2010). It all depends on perception of people which changes person to person. Some people think that it is costly to travel from Airlines and accordingly it creates air pollution as well.

Companies have perception which is directly attached with the behaviour of consumer which means that their purchase decision towards particular industry (Harrison, 2013). The company has negative impact on financial soundness of company because people opt less to travel from airlines. Business suffers from recession and financial crisis and which affects it badly. At the time of recession in UK companies has to keep their fares low so that they can have more customers who are willing to travel and use their services. Market forces play a vital role in shaping the organisational responses to make their products best from other competitors and give best quality services at competitive prices.

3.3 Business and cultural environments shape the behaviour of British Airways

The cultural environment helps British Airways in achieving its goals and objectives easily. Because it affects the working environment and have good cultural practices to achieve targets (Sloman, 2007). Culture of UK varies from other countries because it has different culture which possesses uniqueness and friendly nature which understand each other and helps them in achieving targets. Culture of any country helps as a promotional tool to increase their business and perform their task effectively. People in UK works as a team to achieve targets easily and have effectiveness in achieving targets. Working culture of different countries is different from each other and they complete their work accordingly in effective manner. People should possess good knowledge and skills to work efficiently and performs the business operations. British Airways contribute maximum to improve their working culture and achieve targets.

All the factors helps British Airways to include youth in their operations which can achieve competitive targets easily and can help companies making profits (Klueber and O’Keefe, 2013). They can use such unique strategies which can help companies follow their work culture which can help them increase in earning. UK environment is well versed with their culture so that companies can have high profitability while working with them.

LO 4 The significance of global factors

4.1 Significance of international trade

International trade play an effective role which has to be increased in the terms of exchange of goods and services from one country to another. Through adopting such policies British Airways can increase their customer base and can have high purchasing of tickets and can earn more profits (Wessels, 2012). The businesses have more opportunities to grab and become international leader in Airways industry. It helps in expansion of market with increase in number of competitors. It helps them increase their brand image and goodwill in the market to beat their competitors with having increased technology products. It is benefited by the factor that it can expand its operations in new market and can experience new strategies to new customers. It can benefit British Airways so that to expand its market and have more growth opportunities to increase in better quality services and environment.

4.2 The impact of global factors on British Airways

British Airways can be affected from various global factors to have an impact in the decision making of company. Political factors should be strong which helps the company should not get affected by any terrorist attack and company should work according to customers. Economic factors of British Airways help the company to have an impact of recession. Company should decrease their prices to become more profitable. Social factors involves that people has to get employment opportunities and customer should have sufficient amount of money to buy the tickets (Kew and Stredwick, 2005). To become the leader in the market they should satisfy their customers and earn more profits. Technological factors should be innovative to compete in the market. British Airways should be efficient enough to serve their customers better.

4.3 The impact of policies of the European Union

European policies have an impact on British Airways. The company should adopt such policies which makes fair practices while competing with its competitors. The two European Union policies which affect British Airways are competition policy which means that it ensures that company should adopt fair practice while competing with its competitors (Johnson, 2009). Competition should not affect the company negatively and it has to maintain its growth opportunities. Cultural policy means that it helps in improving the cultural policy which has to be appropriate by legislation. The company should protect its employees which help in achieving objectives effectively.


Business environment means that all the internal as well as external factors which have an impact on the business environment. In this report various types of organisation has been stated and British Airways comes under private organisation whose main motive is to earn profits through satisfying its customers. It shows responsibilities of all stakeholders towards their organisation to fulfil them. The role of fiscal and monetary policy on the business activities which have direct impact on company. Business has to fight with its competitors to remain sustained in the business environment. British Airways should develop its unique plan to grab more customers and satisfy loyal customers to remain with company.


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