Strategic management consider as an art and science of evaluating, developing and executing appropriate decisions of company for achieving desired goals and targets. There are two environment factors of business such as internal and external which directly or indirectly affect on business operations and its functions. It is relevant criteria that can be used for assigning various tasks to the staff members for reaching with desired goals and targets. Also it is required for an organisation is to develop appropriate plan to carried out effective business operations towards right direction for gaining appropriate results. The assignment is based on which is largest airline service provider in the united kingdom. The airline is founded in Waterside near main hub at London Heathrow Airport (Wheelen and et. al., 2017). The main purpose of this project is to describe about strategic direction which are followed by organisation in the past 5 years. In addition to this, discuss about analysis of airline industry includes PESTLE and also critically describe about competitive advantages. There are various kind of strategies that can be used by company for completing different factors such as gaining competitive benefits and defend core business.
Strategic direction of British Airways in past 5 years
In this, there are various forms of strategies which can be used for performing specific task or business activity in better manner and also to gain potential results. In the case of British Airways, various effective and efficient methods that are useful for carry out different appropriate process to achieve desired goals and objectives. Along with this, there are different types of methods or tools that can be used by British Airways management while conducting various business activities or functions. British Airways is focus on providing effective services to their passengers at the time of travelling.
In the previous years, British Airways have used several school of strategies which has helped them in getting appropriate direction to perform their activities in an effective manner and eventually getting success in the marketplace as well (Gamble, Thompson and Peteraf, 2013). In relation to this, Mintzberg's 10 schools of thoughts provide their support to the managers of multinational companies so as to make exceptional business strategies for conducting the activities which are being conducted in the company. The school of thoughts are as follows :-
- The design school – Under this process, the main focus is on constructing of ideas and developing and designing new ideas as well. For applying this in an innovative manner, British Airways have to conduct an internal analysis with the help of SWOT analysis so that they can effectively match their internal strength with the opportunities of the market and make their strategies accordingly (Priem, Li and Carr, 2012).
- The planning school – In this, the management plans their strategies in a rigorous manner and further documented so that the company can start their operations fast and gain competitive advantage in the market as well. So, here British Airways will have to document their plan from start to finish so that it can be referred by company new decision is being undertaken.
- The positioning school – Under this process, the management makes their strategies by keeping in mind that they have to position their product at the top in the market and thus decisions are being made accordingly. In relation to British Airways, when they started their operations in market they were majorly focussing on grabbing customers and providing them ease and satisfaction so they are doing good study of market situation and then they can analyse the competition in the market place. Porters five force or value chain analysis can be undertaken for suitable positioning of services offered by British Airways.
- The Cognitive school – Under this process, a person's thoughts and information is being studied so that company can get to know that what is exactly going on in the minds of customers and how can that information be used while providing goods and services to their customers (Vogel and Güttel, 2013). If British Airways will implement cognitive planning approach of strategic management then they can get more connect with their customers in an improved manner and can carry a better placement for their services.
In addition to this, strategic direction of British Airways in the past years for growing and developing their business. This airline was mainly focus on their customers service and provide them appropriate facilities at each level of journey. The company provide quality based services and products to their passengers on all way or routes and make proper improvement in online services such as Wi-Fi for their enjoyment. The company was plan to expand their position in London through maintaining Heathrow Airport as a international class centre which directly impact on government strategies and policies. In previous years, British Airways was concentrate on satisfying their all passengers needs and wants which enhance the number of loyal customers.
PESTLE of Airline industry
The proper strategy is based on certain decisions that are need to be taken by higher authorities of an organisation. There are various strategic direction which are followed by company for gaining future opportunities and acquire competitive advantages. In this, strategic planing effect on firm in different ways where British Airways focuses on customer services and fulfil their all needs and requirements in proper manner (Goetsch and Davis, 2014). For analysing external environment of an organisation so PESTLE analysis is best suitable method for examining the internal environment situations. These are described as under:
- Political factors – British Airways is one of the largest international aviation which carry out more than 400 destinations in all over the world. The political stability and safety of population are the major aspects which mainly effect on this airline company. Along with this, massive rules and regulation from united kingdom authorities has became major issue for British Airways. Therefore, it is necessary for company is to follow the rules if firm has to continue such operations.
- Economical factor – In this, there are different economic factors such as inflation rate, currency exchange rates and whole economic climate in the UK that directly impact on British Airways performance. The another important factor of this airline is cost of fuel, since the Group are utilised around 5.6 million weight unit of jet fuel in the year of 2015.
- Social factor – As per the national statistic site, united kingdom has an aging people since the previous years. There are some possible opportunities rise as old generation are pass more time in leisure activities like worldwide travelling. In specific time, the unemployment rate is increasing so that can led to enhance the bargaining power as a manager (Morden, 2016). British Airway develop various schemes and policies which are best appropriate for all type of people.
- Technological factors – British Airways are enforce to invest large amount in research and development evaluation for faster the technological development and growth. Recently, they are mainly concentrate in the area of safety or security of airline services. The modern techniques and tools can be used by company for enhance engineering and all service quality of flights that are route towards gaining competitive advantages. For satisfy customers needs and requirements, an enterprise require to evaluate their external and internal condition which includes customers, market and their capabilities. Moreover, it require to evaluate and use to the dynamic and uncontrollable factors of an environment that should be operated (Bryce, 2017).
- Legal factors – The issues of merger will directly impact on British Airways proposed alliance with American Airlines. Identification of trade unions and certain action related to industrial for example, Cabin crew strikes are required if the company has withstand in the international market place. The appropriate and good staff members are necessary if British Airways need to ignore such industrial actions without any interruption in the business operation. The airline company need to follow all rules and regulation which has been develop by country government.
- Environmental factors – There are various environmental factors which are faced by British Airways such as noise, air, water pollution, land lake and waste management. At the same time, airline company has to engage with different environmental concerns such as change in climate. The government has begin to make rules and norms that required for airline company to bound the development of emission.
In the British Airways, there are different types of strategies which can be used by organisation of airline industry according to their needs and requirement for gaining higher competitive advantages. This includes various strategies and policies such as adopting new technologies and methods, improving packaging, concentrate on quality based products and many more. For instance, British Airways is largest airline organisation and also compete with some other international airline companies. They are focus on customer service and satisfying their all demand and requirements in better manner (Frynas and Mellahi, 2015). There are various competitors of British Airways in the market place such as Virgin Atlantic, American Airlines, Jet airways and Emirates. British airways main aim is to serve best and unique customer experience. The company conduct appropriate market investigation in each month for analysing their customers needs and wants as compare to Virgin Atlantic. For example, Virgin Atlantic provide good food in their flights which attract large number of people towards their services. This airline company improve their current growth and development. It has formed alliances and partnership for gaining competitive advantages among its direct competitors. They are adopting latest technologies and methods which can be used for improving business operations and functions in effective manner.
Probable scenario faced by British Airway within its exiting market domains
In this, there are various kinds of trends for launching in the current market place that will directly impact on company growth rate because most of the people will prefer advanced services or facilities (Barney, 2012). Apart from this, it is required for firm is to change their current strategy for gaining high growth and opportunities with the help of new trends so it will assist in maintaining existing position of British airways among competitors. There are certain probable scenario which can faced by this airline organisation that are described as under:
Intense competition – There are large number of rivals who are create issues and problems in the airline industry. Sometime they are develop certain barriers and conflicts among their staff members. The company need to make those strategies and policies which help them in deal with such tough competitors in effective manner. There is tough competition with local airlines, international airways and many other that shows British airways need to appear with fast pace and making more competitive.
Overcapacity – There are various number of flights of British Airways which are carry out business issues such as overcapacity. Most of the airline industry are struggle for get grip on immediate changes and various carriers has been to be adopt in slow while changing in economic environment (Godoy and Naidich, 2012). According to this outcome, British Airways has faces rock bottom fares and such fares are lead towards major income issue that are suffered from high fuel price.
Fuel factor – Fuel factor is the biggest challenge which are faced by British airways company in the modern world. The higher cost can led towards some airlines for imposing fuel surcharge on customers. The private owned airline sector does not face the challenges but still identify it is complex for tackle fuel prices.
In order to analyse the internal environment of the organisation in an effective manner, it is essential for management to conduct SWOT analysis, It will help them in understanding their organisation in a better manner and eventually can make use of it for designing strategies of company in longer run. The SWOT analysis is conducted below:
British Airlines is considered as one of the best airline in the world and in case of fleet size; this is considered as the largest airline in UK. They are flying over 170 destinations in more than 70 countries across the world. It was also the official airline partner of London 2012 Olympic Games (Langston and Lauge-Kristensen, 2013). This company is enjoying more than 90 years of experience in the airline industry since they are giving their service in this industry since many years. If the financial size and stability will be considered then it can be considered as the largest UK based airline. It is a very strong brand in the market as they are enjoying a strong back of UK government that helps them in making a strong player in the market. Also, they are having their own engineering branch to maintain its aircraft fleet along with separate maintenance centres as well. They are also techno-savvy since they are now doing most of their activities through online market.
Along with weaknesses, there are various kinds of weaknesses as well which the company have to face like there are various allegations on the company that they are over reliant on UK market since half of the income of airline is being generated from UK itself. Also, because of the strike which was generated by British Airways in 2017; there was a bitter pay dispute between the airline and Mixed fleet crew (Jenkins and Williamson, 2015). They have a large workforce which so collective bargaining is also happening in the company on regular basis and of there is any breakdown in the bargaining process then it has a negative impact on the performance of company.
Since the economy is developing on a faster rate along with improvement in infrastructure and tourism demand; this provides a huge opportunity for the airline industry to grow in market. In 2017, they have also announced that they are launching their new summer holiday routes e.g. Malaga, Palma etc. Also since they are having strong back of Government so the small players which are circulating in market gets removed easily due to high cost of competition present in the market.
Due to high competition, other companies started selling their products on discount which created a negative impact on the sales of British Airways. There are various times that the competitors have cost structure lower than British Airways for targetting budget travelling segment (McKiernan, 2017). They are also having threat from the rise in the fuel cost as it has the capability to decrease the profit margin of the company. Along with this, with the increase in competition in European market, situation may become critical for British Airways.
Mission and vision of British Airways
The mission statement of British Airways is “One destination desire to make sure customers flies confident that, we are actively responsible for take care of the world”. Organisation value define the acceptable standards that are govern the behaviour of a person within an enterprise. “Without any such values or beliefs, an individual will follow the behaviour or attitude which are line with their personal individual system”. Therefore, vision and mission statement of the firm provide strategic direction so that higher authority using such components for evaluating British airways performance and development of an organisation.
Strategic capabilities of British Airways
The business is driven with customer focus, creativity, effective services, resourcefulness. British Airways is having an diverse and inspired team which assist in making new and effective services. The customers are the major factor and capabilities which are provided by airline company to their people (Baumgartner and Rauter, 2017). They required to serve best quality based services or facilities to their customers, stakeholders and employees. British airways employees is important positive characteristics which strives to modern and excellent services to their passengers. Another strategic capability of airline company is to promote new and innovative services for their customers. In addition to this, most of the airline companies are make higher quality, effective design, appropriate properties, good advertisement which help them to gain higher position in the large competitive world.
Business Canvas model of British Airways:
It is also known as one of the best effective strategic management and various tools for formulating new or existing business models. Therefore, business canvas model is effective strategic chart along with elements for describing organisations customers, infrastructure, funds and value preposition. Along with this, it will assist firm for assigning their appropriate business activities or functions in better manner. British Airways business model develop with global premium airline strategy that define description about what they need to be achieved for gaining success, unity of working and many more. British airways rapidly modify and developing their products for their customers (Hitt, Ireland and Hoskisson, 2012).
The tough economic situation and major challenges related to industrial relation with British airways across in all over the competition and maintain their place in the market and also develop for cooperate with employees and colleagues. At the time of adjusting economic condition, the capacity of British airways need to monitor performance properly.
Strategic choice model to sustain competitive position of the organisation
For highly changing in the business' environment, there are different strategies and policies which are required by companies so they can easily sustain their competitive position in the large market place.
The another model of strategic planning is Ansoff matrix that can assist company manager for formulating and developing entire market area. In this, specific tool is used by firm for value revaluation which has been provided to target customers where they are deliver some guidelines which help British airways for gaining effective marketing goals and targets in better manner. The market grid are divided into four quadrants which are described as under:
Market penetration – It is that quadrants which recommend that market penetration are done by using current goods and services that assist in gaining higher competitive advantages for British airways company (Hill, Jones and Schilling, 2014). They are maintaining current products market share and drive out the major competitors within the market place should be restructured. The airline company required to enhance customer base with using loyal schemes.
Product development – This strategy define to generate advanced and new goods that are best suitable for the current market trends and satisfying all customers needs and wants in better manner. The company required to develop new and innovative goods which attract large number of customers in the market place. British airways is investing huge amount of fuel consumption for maintaining balanced in all over the world wide airline industry. Along with this, they are promoting different products and services among their customers which is useful communication method or tool for expanding licensing marketing therefore cover whole market in all over the world.
Market development – Ansoff matrix define to expand large market place beyond such in the current servicing can be sold. For developing new market, it is required for British airways company is to identify various customers needs and requirements related to capacity. Moreover, effective pricing and cost evaluation is required with references for surviving with their major competitors (Ginter, Duncan and Swayne, 2018). The main concentration of firm is to give high quality based services at reasonable rate for their customers. Apart from this, there is increment in risk for enter in the new market, so British airways need to conduct appropriate research on whole market area for analysing the current direction or action.
Diversification – This is that strategy which define delivery of new and innovative products for their customers within the market place. British airways provide differ services and facilities to their passengers as compare with their competitors. They plan for launching new type of seats which provide comfort to their passengers. Also they are developing and making smart technology which are environmental friendly. In this, diversification is called as high risk tactics where company has no thoughts about new market.
Another business strategy used by British airways:
BCG matrix – This strategy can be utilised for product portfolio administration and it will assist in giving various chances for gaining higher return on investment. There are four major aspects of BCG matrix are as under:
- Star – British airways European routes are determined as stars. There are approx. 21.35% market share with the capacity of 11,427,425 and its rating number in Europe is five.
- Cash cows – Ireland and United kingdom directions are the cash cows for British airways. Such are organisation most successful ways in the emerging market and also generate higher income rather than all other routes (Dezsö and Ross, 2012).
- Question marks – In this, china route can be considered as question mark with their growth rate. In the rising market, the path has desire for grow the effective market share and became star in upcoming time period.
- Dogs – British airways operations between New york and Amsterdam, Paris and Washington were failed for making profit.
Explain Strategic choice model
Strategic choice is appropriate concept which can be used for developing effective decision regarding business growth and development. This is continuous procedure which play an essential role in planned management. The model mainly focus on developing appropriate decisions which are suits the market condition whether their substance and timescale. Along with this, strategic choice model explain how to manage risks or uncertainties for developing decisions as political, procedural and technical (Dezsö and Ross, 2012). There are three key components that can be used for developing issues and doing working towards right decisions.
- The Judgement area
- The comparing area
- The uncertainty region that can be categorised into three types:
â—¦ Unsure to do with appropriate working environment
â—¦ Uncertainty for doing instructing values
â—¦ Uncertainties to do with affiliated selection
There are four modes of strategic choice:
- Shaping – The company management believe in providing appropriate structure of the business through people recognise some policies which assist in gaining high growth.
- Designing – The company planning manager design or prepare appropriate structure which are required factors and it will assist in developing effective business strategy.
- Comparing – In this, all designed strategies are compared with each other for highlighting their benefits and drawbacks.
- Choosing – At last, effective strategy is best one for select that assist British airways for gaining competitive advantages in certain time period.
Resource implications of selected strategy
There are different forms of resources which are necessary in strategic implementation procedure of the firm, manager need to evaluate effective resource which are required at the workplace. These are described as follows:
Human resources – Such type of resources are imperative for achieving all tasks or functions in better manner so that management need to make sure that their staff members has required skills or knowledge for making new services.
Financial resources – They have adequate availability of funds which assist firm for determining that appropriate amount which will spend in completing various business operations or its functions.
Marketing resources – It is required for company managers is to make effective communication with their passengers and also aware them about current services or facilities of British airways company (Dezsö and Ross, 2012).
Technical resources – As a airline industry, they required new and advanced technology according to the change in market situation so this will help them in increasing their growth and development in all over the world. British airways mainly focus on implementing new techniques and methods which help in gaining competitive benefits.
At the time of formulating such business strategy, it is required for company manager is to make sure about strategy in successful manner for meet with such standards that includes:
- Suitability – In any manner, whether the choice are correct respond for the company appraisal of their strategic position.
- Feasibility – Assess when the organisation has some resources which need to be carried out with strategy.
As per the above described report, it can be analysed that Strategic management consider as an art and science of evaluating, developing and executing appropriate decisions of company for achieving desired goals and targets. In the case of British Airways, various effective and efficient methods that are useful for carry out different appropriate process to achieve desired goals and objectives. The proper strategy is based on certain decisions that are need to be taken by higher authorities of an organisation. In the British Airways, there are different types of strategies which can be used by organisation of airline industry according to their needs and requirement for gaining higher competitive advantages. In this, there are various kinds of trends for launching in the current market place that will directly impact on company growth rate because most of the people will prefer advanced services or facilities. British Airways is having an diverse and inspired team which assist in making new and effective services.
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