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Business Environment Analysis Of British Airways

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Importance of Business Environment

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Introduction:

The British Airways is one of the largest and most profitable organisations not only in the United Kingdom, however also in the world. The British Airways is conducting its business since 1972. Thus, to maintain a sustainable position in the competitive market, they are able to apply many successful methods. Maintaining the business environment is one of them, the business environment is crucial for almost every organisation whether it is a profitable or unprofitable company. Thus, The British Airways concentrated in this matter by maintaining both the internal and external environment of the organisation. In this study the purpose of the organisation, the nature of their business and the global factors that have assisted the company to shape the business is evaluated.

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LO1:

1.1 Identifying the purpose of different institution:

Mainly three types of organisations are there in the business market public, private and charitable organisation. However, the objectives or the purposes of these three organisations are very different from each other.

The main motto of all the public sector institution in the United Kingdom is to concentrate less on the profit margin and serving more to the people of the country. For an example, the fire service department in the UK focuses on the entire problem related to the fire and rescue service. Mainly the head of the institution is the government and they think of the service first the profit ratio for them does not matter that much (Balmer, 2012, p.1064). However, they have their own rules and regulations and the third parties do not have any rights to interfere with the terms and service of the organisation.

On the other hand, the private organisation’s objectives are to some extent opposite to the public sector organisation. Earning as much profit as they can in a single financial year is their main objective. In addition, they do not tend to forget to give quality service to their customers. The head of the private sector institution is generally an individual or a particular group of people. The British Airways is one of the leading private sector organisations in the world. In the year of 2015, they made revenue of almost 11,000 pounds alone and this was made possible by only providing a good business environment to their internal and external stakeholders (Britishairways.co.uk, 2017). The British Airways has their own policies in the organisation; however, they have certain limitation made by the government before implementing some new policies in the organisation.

1.2 Factors in which the institution meets the need of stakeholders:

The stakeholders of The British Airways play a huge role in the development of the institution. Generally, two types of stakeholders are there in the organisation one is internal and other is external stakeholders.  Conducting and maintaining the position of a successful business is not an easy factor for The British Airways, in every step they needed to meet the standards of each stakeholder to make their service effective (Markides, 2013, p.314). The stakeholders of The British Airways do not only mean the employees or the investors of the institution. It also means their valuable customers and their needs come among the top priorities of The British Airways.

The organisation applies different policies and strategies to satisfy the requirement of the stakeholders. Managing the internal stakeholders that consist of the employees, different managers, senior executives, the company allocated a skilful human resource team that one of the major duties is to solve their major and minor issues. The company tries to organise many monthly and weekly meetings, where they know about their expectation and even they do not hesitate to take any suggestions that would benefit The British Airways (Cameron and Whetten, 2013, p11). The company tries to give a handsome monthly salary to all their employees and schedule proper work timing so that the workers would be able to balance both their personal and professional life. The British Airways knows applying these policies would benefit their company in many ways.

On the other hand, there are external stakeholders; their works are inter-connected with the duties of the internal stakeholders. Thus, The British Airways does not ignore their responsibilities towards the external stakeholders. The shareholders, suppliers and even the creditor’s falls in the external shareholder's list, thus, the importance of their contribution could be judged by the position of the stakeholders. Satisfying their needs The British Airways tries to convey their organisational objective to them as much and as often as possible, this helps them to ignore any future conflict. In addition, the regular meeting with them also helps to fulfil their demands and queries.

1.3 The duties of the institution and strategies to meet the standards:

The British Airways is growing day by day and as a result, their responsibilities are increasing. The responsibilities might vary in maintaining the economic or social environment, where in one hand they needed to think of making a profit and on the other hand, they needed to think about their duties to the customers (Scott and Davis, 2015, p.19). In the matter of the economic environment, The British Airways needs to make a harmony between the customer's and organisational needs and it is solely based on the performance of the institution.

In this scenario, The British Airways needed to provide a service that would help them in a long-term business procedure. A service that not only would satisfy their stakeholders need, however also work for the benefit of the company. Thus, to make it possible The British Airways tries to deliver the flying packages and services that are more affordable and attractive than the products of their fellow competitors. This procedure assists The British Airways to bring new customers and make more profit. The markets share prices and even market shares play a huge role in maintaining the economic standards of the organisation.

On the other hand, the other strategies that help them to meet the standards are their social responsibilities towards the people. The another name of it is the human capital, thus, to maintain it in a proper manner The British Airways tries to treat their employees in a right manner, in addition, it also makes them productive in different ways (Minoja, 2012, p.710. The British Airways is conducting business worldwide that means they need to meet the criteria according to the need of people from the different region of the world. In addition, the environmental issues are also one of the key responsibilities of the British Airways, where they try to minimise their ecological impact in different areas whether outsourcing the raw materials or in the production procedure. The company tries to protect the water and land resources as much as possible. This also assists them to increase their business valuation.

LO2:

2.1 The procedure in which the economic system allocate the different resources:

The economic system and the resources of The British Airways are interrelated with each other. In the scenario of The British Airways, it is a complicated process, as it is a huge organisation and millions of funds are invested almost every day in the business. For the reason, it is necessary for the company to choose their resources carefully, as only their resources would be able to provide them with a strong economic structure (Davis, 2014, p.199).  The price factor plays a crucial role in making the decision what to produce and whom to provide the service. The most popular service in The British Airways automatically diverts in generating more profit for the institution. In the matter of the mixed economy, where most of the countries deal with both private and government sectors, The British Airways focuses on the market that could be able to provide them with a trustable resource to make a sustainable economic system in the institution.

Sometimes the choosing the resource or allocate it with their economical system comes as a challenging matter, as in the year 2008, when the UK encounter with the recession the economy system of the country shrinks by almost 7%. In that scenario, The British Airways experiences high negative budget deficit or in the year of 2011 when the UK witness a major snowfall experience then The British Airways faced many challenges to maintain their economic sustainability. In this matter, the organisation changes their resources, investment percentage and even their service packages according to the need (Lee and Zomaya, 2012, p.271). In this scenario, The British Airways decreases their average flights on a regular basis. Not only has that The British Airways tries to maintain an average profit by introducing themselves to the new resources that could be their new investors or creditors.

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2.2 The effect of the fiscal and monetary policies in the institution:

The fiscal policies of a nation refer to the tax rates that the government determines and the monetary policies have the relation with the monetary committee of the nation like the currency bureau or the main bank of the nation. The changes in any of these elements determine the business of The British Airways. For an example, the fuel duty increased in 2013, as a result the organisation was bounded to change their business packages. In the year of 2014 the personal allowance was hiked from almost 500 pounds to 10,000 pounds, as a result the people in the country got more buying power and this worked for the favour of the organisation as the customers of The British Airways has more disposable money to buy services from the organisation (Borio and Zhu, 2012, p.240).  On the other hand, there are fluctuation in the business cost and the effect of the changes in the inflation rate, if the prices of all the goods and service go up then it sometimes gets complicated for The British Airways to keep up with their customers. In this case, The British Airways take different policies to deal with the situation.

The current interest rate is almost 0.5% in the UK for the last two years, thus The British Airways did not need to make particular changes in this sector (Caa.co.uk, 2017). As it is a airways industry if they take funds then they did not need to pay them extra money in return. Following the fiscal and monetary policies, The British Airways decided to invest almost 115 million pounds at the UK’s Heathrow airport in the coming years. However, all the changes they made all considering the demands and requirement of the customer, colleagues and even the partners.

2.3 The effect of the competition and regulatory mechanism in the British Airways:

The competition and regulatory mechanism play a huge part in the business of The British Airways. The competition in the market makes the organisation forced to apply different policies and services for their customers. Almost every day different competitors are arriving in the market and they are coming with many attractive products and services. Thus, it is very difficult for The British Airways to make a sustainable business and organise their products and services so that they do not lose their existing customers (Costantini and Mazzanti, 2012, p.141). In addition, The British Airways also concentrates on making new customers so that in near future they remain in the competition.

The British Airways does all these things maintaining the regulatory mechanism developed by the government so that there would be no discrepancies in their rules and regulation. Many critics said that the regulatory mechanism brings limitation in doing business. However, The British Airways adjusted it very professionally where they not only able to cope up with their competitors, however, they are able to bring a good amount of profit in the organisation. Thus, it could be evaluated that the competition in the market might come as a major challenge to The British Airways; however, the organisation was able to manage it professionally.

LO3:

3.1 Describing the impact of market structures on finalising the business decisions of cost and output

Market structure can be explained in terms of the characteristic features of the UK market. It has been noticed very clearly that structure of the market determines the behavioural approach of the business organisations to a large extent. In other words, market structures represent the total number of business firms that sells similar products and services. As opined by Scheffler et al. (2016, p.568), market structures can be categorised into the monopoly, oligopoly and perfect competition. Monopoly can be defined in terms of the presence of only one seller who sells its goods and services in the existing market without any rival manufacturers. Oligopoly is the market structure where there is an existence of few manufacturers who are selling identical products and services in the same market. In this context, it can be stated that competition is quite higher in the oligopolistic market.

In a case of perfect competition market structure, there are many producers and sellers in the market without the monopolistic components. In this context, it can be commented that cost of the goods is not staying within the control of the manufacturers and sellers. British Airways is a perfect example of perfect competition market structure. As stated by Haynes (2015, p.39), the determination of the market price is done through the balance between the supply and the demand in a particular market period. According to the present scenario of the UK market, the owners of the British Airways should focus on fixing up the costs of the fares of the flight after conducting a thorough analysis of the demands of the consumers. Apart from this, the popular organisation of United Kingdom should focus on improving the quality of consumer service which is capable of increasing the consumer loyalty and rate of customer satisfaction.

3.2 Explaining the means by which the market forces gives a shape to the responses of the organisation

According to (Haynes (2015, p.39), the change observed in the demand and change in the supply is considered to be an important factor in shaping up the responses of British Airways. Demand and supply in the existing market of UK are responsible for determining the cost of British Airways. It has been observed that there are four major kinds of market forces such as quality, Cycle time, Consumer satisfaction, and fiscal Viability.  It is essential for the managerial section and higher authorities of this popular airline of United Kingdom should give importance on developing these key indicators because these are determinators of boosting the overall profit percentage of the respective company. As opined by Ardichvili et al. (2012), p.415), market forces are responsible for making the organisation to improve its sustainability in the competitive market of United Kingdom. The advanced usage of technology in the present scenario of society is creating a demand among the customers of British Airways regarding standard quality customer service and cheaper fares.

In addition to this, there are fickle consumers who are constantly demanding for new and advanced customised responses from the owners and workforce of British Airways. With respect to the current scenario of the competitive market of United Kingdom, the employers of the respective organisation should put lay emphasis on improving the sector of customer service by quickly responding to their queries. It should give importance on resolving the complaints of the service- users. Apart from this, the owners of British Airways should focus on providing flexible responses to the customers of the existing market of UK. Besides, modifications need in the working practices of the managers by refining the policies of British Airways.

3.3 Judging the ways of shaping up of the behavioural attitude of the chosen organisation by the business environment and cultural environment

In accordance with the opinion of Ho et al. (2012, p.433), organisational culture creates a direct impact on shaping up the behavioural approach of British Airways by enhancing the productivity of the respective organisation. Therefore, the consumers want more luxury and comfort during their journey in British airways. However, by building a strong culture within the working environment of the respective organisation, it is possible to meet the satisfaction level of the consumers.
The internal culture of the organisation refers to the values and ethics of the respective organisation whereas the external culture refers to the commitment of the employees of the organisation. It is required for the British Airways to maintain a consistency between the internal and external culture and both the cultures should be kept in proper alignment with the business goals and objectives.

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From the perspective of the business environment, it has been observed that competitors of British Airways such as Virgin Atlantic are providing the relaxable journey to its consumers in the short- haul destinations. Therefore, the employees of British Airways who belongs to the short- haul destination department should be rewarded with promotions and salary hikes. This approach will help these employees to stay loyal towards the particular business organisation of United Kingdom.  However, the productivity and profitability of the British Airways will get enhanced in the due process. Along with this, improved customer service and good communication are capable of increasing the level of satisfaction among its customer base. The initiative taken by British Airways to provide cheaper rates to its consumers who do not possess any checked luggage is enhancing the possibility of adding more users of United Kingdom. In this way, the business environment and cultural environment is responsible for shaping up the organisational behavioural attitude (Afonso and Sousa, 2012, p.4454).

The macro- environmental factors of the business environment of British airways can be explained in terms of political, economic, social, technological, legal and environmental factors which are briefly discussed in this particular study.

Political factors:

It has been observed in the current scenario of the political condition of UK, the incident of terrorism at Brussels airport has caused the declination of 1.5% in terms of share pricing. The business practices of the respective airline got hampered because of this particular incident which took place in March 2016. There are other factors like increasing rate of lobbying in the domestic market of UK and growing demands of trade unions are causing hindrances in the working practices of British Airways (Britishairways.co.uk, 2017).

Economic factors:

According to the statistics of 2015, the fuel cost of British Airways has been observed with a declination by £ 484 million, in comparison with the statistics of 2013. This figure showcases the fact that the business organisation got benefitted due to the declination in the cost of fuel. However, the drastic fall in the oil costs since past two years resulted in the lowering down of the rate of the corporate consumers (Chen and Simchi-Levi, 2012, p.782).

Social factors:

Consumers of UK want a relaxable and secured journey from the British Airways. The Economic recession has made the UK consumers become more conscious about the reasonable pricing of the flight fares that are offered to them by British airways (Doh  et al. 2012, p.22).

Technological factors:

With the advent of new technology, it has been observed that self-service automated check- in machinery was placed at the terminals of Heathrow Airport so that passengers get their boarding passes quickly. Along with this, the official website of this international airline provides online check- in facilities to the passengers of British Airways.

Legal factors:

It should be noted that the business practices of this popular airlines are being controlled in a progressive manner. The preferences of the controls differ from issues that are associated with infrastructure and capacity of slots. The needs of modern security and environmental requirements are considered by this particular airline.

Environmental factors:

It has been observed that the airline industrial sector is facing challenges from the change in the climatic conditions of United Kingdom. Therefore, it is required for this particular air is to adjust with the change in the climatic conditions of UK by restricting the radiation and decreasing the rate of emission of poisonous gases.

Conclusion

From the above discussion, it can be concluded that business environment helps to increase the efficacy of the work performance of the employees thereby increasing the workflow of the business organisations of United Kingdom. In addition to this, the proper understanding of the business environment helps the business firms to enhance the overall profitability and broadening the business activities in both the domestic and international market.

References:

  • Afonso, A. and Sousa, R.M., (2012). The macroeconomic effects of fiscal policy. Applied Economics, 44(34), pp.4439-4454.
  • Ardichvili, A., Jondle, D., Kowske, B., Cornachione, E., Li, J. and Thakadipuram, T., (2012). Ethical cultures in large business organizations in Brazil, Russia, India, and China. Journal of Business Ethics, 105(4), pp.415-428.
  • Balmer, J.M., (2012). Strategic corporate brand alignment: Perspectives from identity-based views of corporate brands. European Journal of Marketing, 46(7/8), pp.1064-1092.
  • Borio, C. and Zhu, H., (2012). Capital regulation, risk-taking and monetary policy: a missing link in the transmission mechanism?. Journal of Financial Stability, 8(4), pp.236-251.
  • Britishairways.co.uk. (2017). Book Flights, Holidays & Check In Online | British Airways. [online] Available at: http://www.britishairways.co.uk/ [Accessed 7 Feb. 2017].
  • Caa.co.uk. (2017). Civil Aviation Authority. [online] Available at: https://www.caa.co.uk [Accessed 7 Feb. 2017].
  • Cameron, K.S. and Whetten, D.A. eds., (2013). Organisational effectiveness: A comparison of multiple models. US: Academic Press.
  • Chen, X. and Simchi-Levi, D., (2012). Pricing and inventory management. The Oxford handbook of pricing management, 12, pp.784-822.
  • Costantini, V. and Mazzanti, M., (2012). On the green and innovative side of trade competitiveness? The impact of environmental policies and innovation on EU exports. Research policy, 41(1), pp.132-153.
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