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British Airways Report


Introduction

This report gives a comprehensive overview of the business organization processes of British Airways (BA). Several aspects of the organization’s structure, including the structural style, management style, leadership style, motivation style, organizational design, organizational control structures, and the organizational culture constitute this analogy.

This assessment will be an interesting analogy of British Airways because the company experienced managerial and leadership changes in the recent past.

For a long time, British Airways has been the national flag bearer of the United Kingdom (UK). The airline is the largest airline in the country, based on its fleet size and international presence. It operates in 160 destinations around the globe and has a market presence in more than 70 countries (Ganesh 1999, p. 269).

BA’s inception occurred after four small and large airline companies (BOAC, BEA, Cambrian Airways, and Northeast airlines) merged (Meyer 2007).

Before 1987, the government ran British Airways, but in the same year, it was privatized as part of the British government’s efforts to seize control of most of its national corporations (McGowan 2011, p. 3). After the privatization, British Airways was able to expand its operations to new locations and new market segments.

Currently, the airline is part of the one world alliance, which is an association of several airline companies including American Airlines, Cathay Pacific, Qantas and Canadian airlines (Meyer 2007). British Airways also operates under the International Airlines Group (IAG) and its association with this business outfit marks its participation in the London Stock exchange.

Company Structure

British Airways is a public limited company with three subsidiaries: British Airways city flyer, open skies and British Airways World cargo (Plunkett 2009). The BA city flyer is a franchise of BA and operates a domestic fleet of airlines in the European market (from the London city airport) (Plunkett 2009).

The subsidiary carries passengers, cargo and mail. Open skies is also a fully owned subsidiary of British Airways with operations in France and America. The subsidiary started operations in 2008.

Though Open skies was rumored to offer only business class services (during its inception), it also offers economy class (which later upgraded to premium economy class in 2009) (Plunkett 2009). The subsidiary is however not part of the one world alliance (which its parent company (BA) is a member of).

Since the aviation market is a competitive industry, BA was motivated by internal changes in the business environment (changes in consumer tastes and preferences) and external forces (competition) to transition its ownership from a government-run corporation to a private-run corporation (Raktabutr 2007).

For example, since BA was a government-run company, it was difficult to change its travel fares according to the market environment.

In this regard, it was difficult for BA to compete with its rivals. This transition (from government to private ownership) marked the main legal change for BA but it also set-forth a series of other organizational changes such as organizational culture changes, corporate culture changes, mission statement changes as so on..

Model Application

Lewin’s change model is widely applicable in BA’s company transition from a government-run organization to a private-run entity. As noted in previous sections of this paper, the transition from a government outfit to a private organization marked significant changes in the company’s structure.

Lewins model explains that, organizations often undergo three stages of transition: “unfreezing, movement and refreezing” (Cummings 2008, p. 23). These stages have different effects on the organization and their employees. British Airways underwent the three stages.

In the unfreezing stage (as a response to market changes), BA had to unfreeze its operation patterns which were characterized by strong government control. This was a strategy formulated by the organization’s management to manage change.

The second stage of Lewin’s model (movement stage) also occurred in BA’s transition because the organization’s management was determined to disseminate its ideas to lower-level employees.

To support this transition, BA introduced a new set of programs such as the employee bonus system and the opening of a new airport terminal at the company’s main operating hub (Heathrow) to synchronize employee tasks with the management’s vision.

The company also invested a lot of money in purchasing a new training facility at Chartridge house to improve the synergy between the company’s management and its employees (Raktabutr 2007).

The last stage of Lewin’s model is the refreezing stage. BA transition is characteristic of this stage because it tried to cement its new organizational changes by creating a new behavioral system to support the changes. For instance, a new performance appraisal system, which was designed to recognize employee excellence (concerning customer service and marketing), was established (Raktabutr 2007, p. 12).

By implementing these changes, it was expected that the company’s employees were going to be motivated to implement the new organizational changes to receive monetary rewards.

To complement these changes, BA introduced new symbols that were printed on employee uniforms, company aircrafts, and other public places of display to symbolize the company’s new commitment (customer service). The motto “we fly to serve” was part of the new changes adopted by the company during this transition (Raktabutr 2007).

Leadership Control Styles

Due to the sheer size and extent of BA’s operations, BA’s leadership has often practiced the autocratic leadership style (Northouse 2009). This autocratic leadership style is the main reason for BA’s poor performance between the year 1996 and the year 2000 (Raktabutr 2007).

In fact, BA’s shares plunged by close to 40% during this period (Raktabutr 2007). Basic company values such as customer quality and service excellence eroded because of this leadership style as well. However, with the overhaul of BA’s operations, the company is now synonymous with the transformational leadership style.

The company’s CEO, Willie Walsh, first introduced this leadership style because previous systems and procedures were not effective (Rivers 2010, p. 2). Some of the operational changes mentioned in previous sections of this study highlight the changes made by Willie Walsh after he took over the leadership of the company.

The rigid hierarchical leadership structure reduced to reflect the CEO’s vision of operating an efficient company. BA’s hierarchical structure is now very simple. It only has one level of distinction between the top-level management and the bottom-level management (Raktabutr 2007).

This management structure supports the company’s transformational leadership style because it has made it easy to pass down the CEO’s enthusiasm of the organization to bottom-level employees. This management framework has also made it easy for the company’s CEO to have a “detail team” to help him realize the organization’s vision.

After evaluating the transition from the autocratic leadership style to the transformational leadership style, we see that BA’s leadership transition is explained by the contingency theory of leadership. The contingency theory explains that prevailing environmental factors determine the type of leadership style to be adopted.

According to the contingency theory, there is no leadership style, which is suitable for one organization (Rivers 2010, p. 2). Different situations demand different leadership styles. It is also from this basis that the contingency theory explains that organizational success does not only depend on the leadership qualities but also the loyalty and performance of the followers (plus the environmental support).

BA was initially operating in a highly rigid environment dictated by little or no competition and a lot of government control. This situation supported the autocratic leadership style. However, when the market liberalized and the company was privatized, the company’s leadership style changed to transformational leadership (Rivers 2010, p. 2). This transition is explained by the contingency theory as described above.

How Management and Leadership Styles Affect the Direction of the Business

BA’s management and leadership styles are bound to affect the direction of the company because they are the main wheels behind the efficiency and productivity of the company. Furthermore, the realization of BA’s organizational goals highly depends on the leadership and management styles of the company (Management Study Guide 2008, p. 1).

Considering BA operates in a highly competitive industry, there needs to be constant innovation and improvement of customer service. These elements require a constant change of operational processes but considering BA is a large organization, initiating change may be difficult.

It is at this point, where management and effective leadership need exercising to ensure the company implements such changes. This analogy presents a guiding role for management and leadership styles because managers and leaders show the rest of the employees where the company is heading (Management Study Guide 2008, p. 1).

Through effective management and leadership, employees are bound to get the confidence to undertake their tasks and ultimately realize the organization’s goals. This confidence materializes best if leaders and managers show the subordinates that their roles are crucial for the organization.

Furthermore, optimum productivity occurs if management shows the lower-level employees how they can achieve such goals. Complementary to this role is the role of leadership and management to build morale among employees (Management Study Guide 2008, p. 1).

A high morale materializes if a sense of cooperation develops between the employees and the management. Leadership styles and management styles create this synergy.

Comprehensively, an organization’s direction is outlined by its leadership or management styles because both aspects determine the productive levels of the organization. In addition, an organization’s leadership style is likely to improve an organization’s level of competitiveness because it defines the blueprint of where the organization should be (viz-a-viz its competitors).

Company Culture

Types of organizational Culture

Depending on the nature of organization, different companies adopt different organizational cultures. Tharp (2009) observes that there are four main types of organizational culture: collaborative, creative (adhocracy), control and competitive (market) cultures.

The collaborative culture is a friendly and open type of culture. This type of organizational culture is very inclusionary and it perceives leaders as mentors or parents of one big extended family.

In this type of culture, group cohesion is paramount and relationships are forged for long-term benefits (Tharp 2009, p. 7). Teamwork, participation and cohesiveness are also highly emphasized in this type of culture because there is a strong concern for people.

The creative culture lays a lot of emphasis on innovation and risk taking because the philosophy of “thinking out of the box” is highly emphasized. Individualism is also encouraged and success is measured by being a leader among many (Tharp 2009, p. 7).

The control culture is different from the creative and collaborative cultures because it defines a highly structured form of interaction between employees and their bosses. There is also a lot of emphasis on rules and procedures because stability is perceived to be the ultimate goal of organizations that adopt this culture (Tharp 2009, p. 7).

Finally, the competitive culture focuses on job completion. There is a lot of push from leaders that run organizations that adopt this culture because the ultimate goal of such organizations is job accomplishment. The idea of winning is a major unifying factor for employees and managers (Tharp, 2009, p. 7).

BA’s Organizational Culture

After understanding the above leadership styles, it is important to note that, BA applies the competitive organizational culture. The competitive organizational culture was adopted after the company was privatized. BA’s emphasis now lies on being the best airline company in the region.

For instance, after privatization, BA changed its corporate mission objective from “safety” to “competition”. This is a response to the competition in the aviation industry. Now the company focuses on being effective and high performing.

Similarities between BA and Secondary Data

Concerning the competitive organizational culture, BA’s organizational culture bears many similarities with secondary research information (regarding the competitive culture).

In books, it is mentioned that the competitive organizational culture emphasizes a lot on success and accomplishments while British Airways also strives to show that it is succeeding. For instance, the company now focuses on posting good profits (De-Witte 2000, p. 501).

This push to post good profits is part of a move to keep the company afloat, amid growing employee tensions and increased shareholder demands. Furthermore, existing literature outline that, leaders in organizations that adopt the competitive culture are hard-driving and demanding.

BA’s leadership exudes these traits because it puts a lot of pressure on its employees to show results. Part of the pressure emanates from past periods of failure, which have seen BA suffer significant losses in revenue.

Motivational Framework

BA uses financial rewards to motivate its employees. This motivational framework is mentioned in earlier sections of this paper where BA’s bonus program was introduced to cement the company’s operational changes by focusing on customer service and quality. This motivational framework defines the scientific management theory, which was advanced by Frederick Taylor (Waring 1994, p. 1).

The theory proposes that, people are mainly motivated by financial reward. The theory also maintains that, people are not naturally motivated to work, and they need rewards to boost their productivity.

Complementarily, Maslow theory of motivation also outlines BA’s motivational framework because it explains that workers strive to satisfy basic needs before they satisfy higher-level needs such as safety needs and self-actualization needs. Maslow’s theory categorizes worker needs on five levels as outlined below:

Maslow’s theory categorizes worker needs on five levels

(Waring 1994, p. 94)

Incidentally, these needs are often satisfied through financial upgrades. For instance, if a worker has already satisfied basic needs such as food, shelter and clothing, they need more money to satisfy the next level of need (safety needs).

This motivational dynamic therefore supports BA’s motivational framework because workers strive to improve their productivity to get more bonuses, and consequently satisfy higher-level needs. BA and the workers benefit here.

Conclusion

Weighing the findings of this report, we can see that BA’s organizational culture and processes are influenced by its transition from a government entity to a private entity.

However, BA’s new organizational culture (based on competition), is expected to increase the company’s odds of being an industry leader, as it was before. The competitive organizational culture (coupled with the company’s motivational framework) is set to increase the company’s profitability.

The scientific management theory seems to affirm this success because it lays a lot of emphasis on guaranteeing company success if an employee reward scheme is employed. BA’s organizational structures therefore outline the blueprint for its future success.

BA can improve its future profitability if it focuses on product innovation strategies to meet varying customer group demands. Most of BA’s competitors (such as Emirates airlines) are reaping huge profits from such strategic shifts. The product innovation strategy has also worked in other industries where a company understands its different customer groups and develops new products to meet these needs.

Finally, to improve the company’s profitability, BA needs to adopt more hedging practices. For instance, the unstable price of crude oil may significantly affect the company’s bottom-line. Hedging such a cost is likely to improve the company’s prospects of posting good returns. Such a strategy has worked with other airline companies such as Southwest airlines. BA’s success will be guaranteed in this manner.

References

Cummings, T. (2008). Organization Development & Change. London, Cengage Learning.

De-Witte, K. (2000). Organizational Culture. Michigan, Psychology Press.

Ganesh, G. (1999). Privatisation Competition And Regulation In The United Kingdom: Case Studies. London, Mittal Publications.

Management Study Guide. (2008). . Web

McGowan, R. (2011). Privatize This?: Assessing the Opportunities and Costs of Privatization. London, ABC-CLIO.

Meyer, S. (2007). Acquisition of EasyJet Plc. by British Airways Plc. London, GRIN Verlag.

Northouse, P. (2009). Leadership: Theory and Practice. London, SAGE.

Plunkett, J. (2009). Plunkett’s Transportation, Supply Chain and Logistics Industry.

Almanac 2009 (E-Book): Transportation, Supply Chain and Logistics Industry Market Research, Statistics, Trends and Leading Companies. London, Plunkett Research, Ltd.

Raktabutr, T. (2007). . Web.

Rivers, M. (2010). . Web.

Tharp, B. (2009). Four Organizational Culture Types. Web.

Waring, S. (1994). Taylorism Transformed: Scientific Management Theory Since 1945. London, UNC Press Books.

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