In today’s globalized and highly competitive environment it is essential for organizations to maintain appropriate business environment. It can be define as an internal as well as external factor which might affects the whole business operations of an organization. There are various strategies through which company can easily enhance their sales and maintain their dominant market share (Chris, 2000). All the functions related to the employees, customers, management, supply and demand can be highly affected by the internal as well as external factors of company. Further, the present study is based on the British Airways which is the leading flag carrier airline of UK. They provide quality services to their customers on more than 170 destinations. This study helps in identifying cultural, economic and regulatory environment within which a British Airways operates. It also gives appropriate information about the significance of all these and other global factors that shape national businesses.
1.1 Purpose of different types of organization
Organization: An organization is a group of people who together in order to achieve a single objective. There are different types of organizations which are operating several business functions for different purpose. Further, different types of organizations as well as their purpose can be easily defined as follows:
Public sector organizations: This sector is one of the largest sectors of any economy. It involves national as well as local governments and their different agencies (Marangos, 2013). The main objective of these firms is to promote commerce, arts, science as well as different religions. These firms are highly beneficial for the whole community as they can use several resources in an appropriate manner.
Public sector organizations: It is those firms which are owned by individuals. By owning this company they can posse’s higher personal growth. It helps them in enhancing their skills as well as capabilities. These types of firms are very fruitful under which equal profit among different partners will be shared (Shaikh, 2010). The major purpose of public sector organizations is to enhance the growth rate of company by increasing their sales.
Non profit organizations: It is a group which is organized for the purpose other than generating profits. These types of firms are highly concentrated towards identifying and fulfilling the demands of targeted audience. In order to develop and grow they can organize various development programs.
BA is one of the leading flag career airlines which are operating under several countries. British Airways is a public sector organization which is highly focused with maintaining their sales by attracting huge base of customers.
1.2 Mission, Vision and Objective of British Airways
BA’s mission statement is to create a mindset of their customers that they always be safe on ground or in air. Another most important aim they want the customers to feel safe and confident when they fly with BA. They always want to be updated with the latest technologies.
British airways wants to expand their globally by serving its quality services to high number of passengers. They want to become the leading flag carrier airline company and generate higher revenues.
The objective of any organization is divided into two parts i.e. short term as well as long term objectives (Britton, 2009). This is set for the better future as well as increasing market share of company. BA has divided its objectives into three areas i.e. global, premium as well as airline. In this area, global is focused with attracting more number of customers towards their business function as well as leisure travel. On the other hand, premium area provides a guarantee that all consumers are receiving high quality services. Moreover, airline provides different aviation services
Short term objective of British Airways:
Short term objectives of BA are to make its presence worldwide by retaining their consumers. They want to serve different passengers on different routes.
Long term objective of British Airways:
Long term plan of BA is to expand its leading position by serving their consumers globally. With the help of this, they can enhance their market share as well as sales.
1.3 Responsibility of British Airway to its Stakeholders
Stakeholders are individuals or the group of individuals which helps in achieving the target of company. There are different responsibilities of BA towards all its stakeholders. Employees are responsible for producing high quality products so that they can easily attract more number of customers (Young, Pollack and Wallace, 2010). In order to maintain this concern BA needs to provide proper training to all their workers so that they can perform effectively. In addition to this, customer satisfaction is another most important concern of BA. There are several challenges faced by various companies due to the increasing needs and demands of customers. It is becoming difficult for organizations to complete their consumer’s needs. For this, all the stakeholders need to utilize all their resources more effectively. There are different responsibilities of BA towards all its stakeholders such as: Employees need to be feeling motivated so that that they can perform all their tasks in an effective manner. Needs and demands of consumers required to be fulfilled so that whole market share can be enhanced. Further, BA needs to provide timely amount to their suppliers for all their raw material. Due to this, Suppliers feels satisfied and provide appropriate services to the BA so that they can take several future decisions appropriately. Moreover, they are also responsible for maintaining environmental concern for all their local community. Due to this, several initiatives are taken by BA so that they can protect the environment from various aviation issues such as waste, noise pollution etc. In this way, it can be stated that with the help fulfilling all their responsibilities towards its stakeholders BA can easily enhance maximum profit. They need to give proper concern towards the health and development of their employees. There are several ways through which employees feels motivated and easily achieve their target (Myer, 2004). It helps them in enhancing their market share as well as consumer base. In order to deal with conflicting situation they must need to adopt better leadership style under which such types of situations do not arise at a time. They need to maintain friendly working environment so that all their employees work together in order to achieve similar target.
Stakeholders are the most important part of any organization. They can people or a group or people which serves higher contribution for the betterment of company. They can be customers, employees, suppliers, government etc.
Key Stakeholders of British Airways
Some of the most common stakeholders which help BA to achieve their goals and fulfill their objectives are as follows:
Employees: They are the most important and essential part of BA as they helps in retaining as well as attracting higher number of customers (Lall and Taye, 2005). Current they are operating more than 40,000 employees around
Customers: With the help of these stakeholders company can easily achieve their target market and enhance their sales. They are the major stakeholders of BA and it is essential for them to serve high quality services to their consumers.
Government: Different activities and rules are developed by the government of country and it is essential for BA to follow all such rules (David, 2000).
Suppliers: They play a most important role in BA as it helps them in selecting appropriate raw material as well as future expenses. Airbus and Boeing are the common suppliers of BA which helps the company in making their global presence.
Further, it can be stated that stakeholders of BA are highly affected by several factors such as changing demographics and shifting travel patterns. In addition to this, highly challenging environment as well as recession time in country might affect the whole process and business operations of BA.
2.1 Economic Systems that attempts to allocate resources effectively
One of the most important tasks of any organization is to allocate all their resources more efficiently as well as properly. Under this, there are various economic systems that help in appropriate allocation such as:
Mixed Economic System: With the help of different activities both private as well as public enterprises are allocated their resources (Dwivedi, 2009). BA is one of the largest and fastest growing airline industries. Government allocates them all their resources in an appropriate manner.
Command economic system: In this type of economic system government takes several initiatives. They use to take several decisions rather than the free market determines what to produce.
Free market economic system: In this type of economic system, private sector is highly involved in managing different resources. Different private firms need to decide their product pricing as per their consumers’ needs and demands. With the help of appropriate pricing they are able to attract more number of customers and easily generate higher revenues as well as market share.
Centrally planned economic system: In this type of economic system resources are allocated by the government (Pryor, 2005). They can make higher control on what needs to be produces by company. With the help of this, appropriate distribution of products must take place.
With the help of above given different economic system company can make and effective allocation of resources. These are the most common and appropriate ways through which government can made an attempt to allocate resources appropriately.
2.2 Fiscal and Monetary Policies Challenges faced by British Airways
Policy can be defined as a set of procedure adopted by government in order to make whole work done principally. It can also be define as a set of policies and guidelines adopted by an organization to reach its long-term goals. In today’s globalized world there are several challenges faced by British Airways. Due to the fiscal and monetary policy that is imposed by government BA might leads to face several problems. Fiscal policy can be defined as a government spending policies which highly affects the overall macroeconomic conditions. one of the major problems which can be faced by BA is related to the taxes that may impose on the airline charges (Klapper, 2009). These are represented by the fiscal policy under which government as well as several other agencies may impose heavy duties and charges on the ticket rate. Except ticket rates there are various charges such as subscription and fee, VAT, tax etc. It might leads to decrease the satisfaction level of customer. The recent economic session has highly affected the overall prices of products. Due to the decreasing and lower demand of consumers company is reducing their sales as well as market share. Further, it is essential for them to go through the needs and demands of their customers. One of the major challenges for BA is maintain their fuel prices due to the increasing government rules and regulations as well as taxes. For this, BA requires to increase their fare charges due to the increasing fuel charges. It comes under the fiscal policies developed by government due to which BA is highly decreasing their number of customers (Pryor, 2005). In addition to this, monetary terms highly affect the overall interest rate of company as well as their purchasing. For this, they need to increase their product pricing so that they are not able to attract more customers. It is considered as a major challenge faced by BA. Moreover, it can be stated that BA needs to manage their business operations more effectively in order to follow all the policies appropriately.
2.3 Impacts of Regulatory, Competition policies and Legal changes in British Airways
There are various policies formed by government due to which overall business operations of company might get affected. The overall business environment of BA is facing huge and increasing competition due to the changing regulatory bodies.
Competition policies help to prevent individual firms from having excessive market power. There is huge impact of competition policy and several other regulations on BA’s activities such as legal changes in British Airways. Due to these changes the whole business operations of BA get highly affected. As a Public Limited Company, BA has been impacted by regulatory, competition policies and legal changes in the airline industry. They need to determine the effective competition within the global air transport markets (Marangos, 2013). In order to maintain changing regulatory bodies it is essential for BA to take several steps through which they can retain their customers. With the help of this, they can easily enhance their sales as well as market share.
As per the source of competition law in UK, competition act 1998 has been presented which determines the framework for dealing with restrictive business practices. However, it is useful for BA to maintain their competitive position in the market. There is another option, fair trading which has been presented in the past years. It is the best part through which appropriate solution has been presented. It helps in reduction of booking payments done by travel agents for BA has not infringed.
Under the regulatory policies, CAA (civil aviation authority) has directly or indirectly regulates all aspects of aviation in UK. In order to go through the interest of passengers they have made appropriate endorsement and allow the monopoly to ignore its inefficiencies.
Liberalization presented better legal changes for company as it provides relaxation to company from previous strict regulations of Government. It provides several opportunities to different organizations through which they can become more customers friendly. It helps them in retaining their customers and attracting them towards their services (Nugent, 2006). Further, due to the increasing competition demands and requirements of customers are also changing. Due to the competition policy whole market situation as well as analysis business environment of BA gets affected. Further, all the above given policies affects business operations of BA in positive as well as negative way. Overall markets sales and growth of company highly affected by the legal changes takes place due to the changing norms of government.
3.1 Market structure of airline industry impacts the pricing and demand
Market structure can be defined as a number of firms which produces identical products. These are interconnected characteristics of the market which covers number and relative strength of buyers and seller. There are different types of market structure such as:
- Perfect competition
Further, market structure clearly determines the pricing and output decisions of business as it is all about the number of buyer and seller in the market. At the time of perfect competition market structure firm is having no choice but to charge the market price. All the business decisions as well as pricing decisions are made under the determining influence of agents in the markets. It can be evaluated that British Airways follows oligopoly market in which there are only few businesses that compete together. Further, there are varied ways because of which the whole operations of business can get affected. They must pay attention to the pricing decisions of competitors. However, every organization gets affected by the market price as whole market structure of British Airways affects the pricing and demands of airline business (Myers and Tauber, 2011). Thus, in order to maintain competition it is essential for firm to minimize their fare rates and attract clients. Because of such strategy, other companies will also reduce their fares so that competition can be given. For instance, if companies will not lower down their prices then it may result into shifting of clients from one company to other. Thus, it decreases the demand of their products and services and clients purchase the air tickets from other cheap cost companies.
3.2 The way in which market forces shape British Airways response
There are different players on the basis of which Samsung need to shape their organizational responses. They are facing competition from the existing players of the industry such as Atlantic airways, Thomas cook etc. Market forces can be stated that it helps business in analysing the demand and supply of firm. It also includes various other things such as pricing, competition, profitability as well as other promotional activities. In order to reach to the equilibrium point they must need to attain various strategies. It is a point where they can meet out their demand and supply needs. Here, supply can be determined as the amount of service which is provided by the firm to all its clients while demand can be stated as the number of products or services actually required by the clients. However, it is essential for business to reach equilibrium position through matching the demand and supply in order to attain client satisfaction. Also, it can be evaluated that both the factors i.e. demand and supply can affect the business responses in appropriate manner (Concklin, 2011). For instance, BA is required to enhance their prices of tickets when demand is high such as at peak season. Thus, with the assistance of this it helps firm to enhance their market share by attracting large number of people. Furthermore, if supply of varied products and services of BA is low and demand is high then business needs to reduce its fares and get more clients. In addition to this, it can be stated that there are several factors which affects the price elasticity of demand such as:
- The number of close substitutes of BA
- The cost switching between products
- The proportion of a customer’s income allocated to spending on the good
- Whether the services are subject to habitual consumption
- Peak and off peak demand
3.3 Working practice and culture of the country and its impact on BA
Culture of the country can be stated as the place where business operates and working practices might affect the business environment of BA. Thus, it is essential for country to change their culture towards environmental sustainability as business is facing exploitation of environment. Furthermore, one of the issues identified is that workers face problems of adopting the new culture and new work environment. However, British Airways operates in different countries and provide their services (vietor, 2015). Thus, because of such factor of globalization they might face varied fluctuations in their work culture. However, it directly impacts upon the working practices of workers and as a result of it they are not able to carry out their tasks effectively. Also, it has been assessed by the marketing team of BA that customers of different countries possess varied needs and requirements which might affect the overall business operation of firm. Thus, in order to solve the issue business is required to motivate the employees and indulge innovation and creativity in their organization while rendering services to attract and satisfy clients.
A macro factor that affects the business is as follows:
Political factors: These factors relates to the political stability of the country such as laws, taxes and political decisions. Further, political environment of UK is instable which might affects the BA in major ways that the planned expansion of Heathrow airport.
Economic factors: It has had a major negative effect on the passenger’s number of BA due to the less credit crunch. Less people are taking overseas holiday nowadays due to the increasing economic instability of country.
Technological factors: BA has managed to increase its customer satisfaction with the help of several advancements in the technologies.
Socio cultural factors: These are the factors which highly affects the overall business operations of the BA. Due to the changing consumer demands as well as global recession they are not able to attain higher sales. For domestic flights within Europe BA has managed to stay in competition with budget airlines like easy-jet or Ryan air. For this, they have charged more for their flights and provides better quality experience to its customers.
4.1 The significance of international trade to UK business
International trade is all about exchanging goods and services as well as capital internationally. There is a huge and increasing competition within the UK business and it is essential for organizations to take several steps in order to maintain this. International trade plays a most important role in the growth of any business (Nagel, 2012). For BA this is quite profitable and plays a significant role. Further, when organization trades its business domestically then countries requires limiting their potential. When BA is trading in other countries at that situation they are not able to receive positive response from countries residents (Nugent, 2006). Due to this the overall sales figure of company gets affected. The significance and importance can be assessed with the sales of British Airways. They have gained their income from the sales of products in UK around 30% of the UK gross domestic product. In addition to this, there are huge profits that must be generated within and outside of UK.
4.2 The impact of global factors on UK firms
There are several factors which might affects the overall business operations of UK firms as well as their sales and growth rate. Different types of global factors which affect the business operations of BA are as follows:
Political: It is considered as a most effective factor which highly affects the sales of British Airways. Different politics factors generated by the government of country such as increasing security norms (McGovern, 2014). It is the major concern with respect to the customer’s security as well as action against anti-terrorism. However, there are different type of policies developed by the country government on the basis of different needs and demands of customers.
Economic: Due to the economic condition of country whole business operations of the company is affected. At the time of economic downturn and recession time BA might leads to increase their fare charges. It decreases their consumer base for those who prefer low cost airline. Most of the companies can take opposite step at such situation so that they can retain their customers such as BA. In order to manage their business at such time, in the year of 1995 at economic downturn BA minimizes their fare charges (Shaikh, 2010). With the help of thus, they are able to enhance their sales at the time of economic downturn as well.
Social: These are the most common global factors due to which companies are suffering from higher competitive advantage and decreasing sales. Meet out the changing needs and demands of customers are becoming most crucial factors for BA. It changes according to the time as well such as: At the time of recession most of the people of UK are unemployed and at such situation they use to avoid air travelling. With the help of this they can save their money. After identifying the social global factors BA need to take several steps through which they can maintain overall competitive advantage and attract huge base of customers. They can lower down their cost and charges.
Technological: Due to the increasing technological change and advancements most of the services of BA get affected (Marangos, 2013). With the help of innovative technology BA can go through the appropriate advancements in their services. It helps them in providing quality services to their customers and satisfying the needs of customers.
4.3 The impact of policies of the European Union on BA
There is a huge impact of European Union Policies on the British Airways such as:
Inflation policy: In case of increasing interest the whole working of business might impact. In addition to this, it can be determine that at the time increasing interest rate companies are not able to take any type of loan or they cannot borrow any fund (Knill, 2000). With this, BA can control their credibility and protect them from paying high amount of interest. In addition to this, government need to make sure that there are no sudden rise in the prices. Increasing interest rate makes it more expensive and difficult for companies.
Employment policy: In EU there might be changes in their employment policy. Due to this company needs to change their varied kind of policies such as recruitment policy etc. Further, it is quite essential or BA to adopt some of the best employment policies through which their workers feels motivated and perform all their tasks more effectively. Government has also developed a new scheme named as “The new deal” under which people can get several opportunities. With the help of these opportunities people can enhance their skills as well as capabilities. It can be easily attained by attending several governments funded and sponsored employment programs. Through this, different workers of BA can easily gain their experience level.
Regional Policy: In the different region of EU, funds are available from the end of government just to support the region of high unemployment. With the development of more prosperous parts of the EU, jobs have been lost in other areas of UK.
From the above Business Assignment Sample it has been articulated that whole business environment of BA gets affected due to the several factors such as political, social, legal etc. There are different types of policies of EU as well as regulatory bodies, competition policies etc. affects the business operations of BA in positive as well as negative way. Company is highly focused with the business expansion. They can provide high quality services to their customers and easily enhance their sales.
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