British Airways was started in 1974 as a result of merger between two airlines, British Overseas Airways Corporation (BOAC) and British European Airways (BEA). BA is known to be one of the Leading Airlines in the world.
We will write a custom Essay on British Airways specifically for you
301 certified writers online
By the year 2001, the company had approximately 360 aircrafts and operates in ninety seven countries covering 270 destinations. BA owns stakes in other airline companies such as Australia’s Qantas and Iberia from Spain.
Business within the global market demands a great change within the operational and management practices of international business companies. Management team should ensure maintenance of excellent working conditions within companies.
They should have the ability of creating new business models for the purposes of satisfying current human needs and at the same time for profitability purposes.
Implementation of up-to-date business plan and appropriate business models ensures change in image of business companies. Great level of confidence and creativity is required for the purposes of achieving the expected financial goals.
SWOT analysis of British Airways Company
|British Airways Company|
British Airways was faced with the threat of terrorism, since there was plan to shoot down any aircraft in space. The company was also faced with financial problems with the prediction of low revenue growth within successive years.
This would be as a result of political instability within the Gulf and economic downturn which would affect international traveling. These shortcomings gave the management of the airline very hectic time leading to loss of working esteem amongst workers.
British Airways Company was previously known to comprise of highly motivated staff. The merger of BOAC and BEA created some administrative and operational conflict amongst the staff leading to poor service provision.
The two different cultures from the two airline companies could not merge easily. This is since each of the airlines served different class of passengers jeopardizing the culture of working as a team.
There was pronounced blame-game amongst workers since no one was accountable for the poor services rendered (Vedpuriswar 1). There was sign of intense internal politics caused by the presence of massive workforce.
Reward system also involved lots of politics since employees were rewarded based on political affiliations instead of performance measures.
The management team within BA Company kept on changing CEOs due to reform issues. This signified instability on corporate culture from within the company. The CEOs barely served for five years, Bob Ayling served for four years but failed to achieve on the implementation of the reform agenda.
This was especially on cutting costs and creating conducive working environment for workers. Rod Eddington on the other hand concentrated on empowering the staff and maximizing costs on premium travels. The existing war within the Middle East threatened BA operations in 2003.
Politics were as a result of serious communication gaps existing across the organization and the authoritarian kind of management.
Get your first paper with 15% OFF
At the same time the structure of the airline Industry within Europe tends to offer high priced services to consumers, ignoring the plight of the middle and low income earners.
There’s need to consider consumers from all market segments through offering of affordable, cost-effective and quality services to various destinations covered by BA. Such like considerations requires thorough restructuring of the various companies within the airline industry.
Customer services within viable market niches needs to go beyond consumer expectations and cover wide population segment.
The British Airline industry suffered a lot due to its unfairness in dealing with work force and consumer prices. Expansion and success of BA is basically based on comprehensive business plans and financial models.
Part of the success also lies on BA’s ability to spend higher percentage of its operations on air which automatically results into profitability based on the level of efficiency.
The nature of BA’s organizational structure was of prime importance since it determined the nature of communication, delegation of duties ensuring good social and interactive environment. (Vedpuriswar 13).
British Airways at some point implemented the strategy of sharing its profits amongst all the employees which provided a good incentive for motivation.
However, the previous strategy provided by ‘Survival plan’ on cutting down on employee salary increment and any other leisure activities could have easily led to demotivation (Vedpuriswar 7). The major challenges within the airline industry are high competition and high operation costs.
The other challenge as outlined was availability of massive workforce that the company was unable to support efficiently. However, BA ensured that all employees receive quality training enabling professional execution of duties.
Previously all employees including pilots were considered to operate within the same level as any other employee including managers. Such consideration at some point led to unrest situations amongst the pilots (Vedpuriswar 9).
Installation of modern technology facilities enabled easier communication and also encouraged freedom of expression amongst employees.
The new management structure encouraged bottom-up style of management, where junior employees executed their duties with minimum interference from the top management team (Vedpuriswar 10).
The management team ensured existence of cooperate culture which encouraged team work and integrity within workplace. The kind of positive attitude created within the work environment focused on customer-oriented services is capable of ensuring high productivity levels.
The issue of reducing the workforce occurred on several occasions during recession periods. However, this was a good initiative capable of cutting the cost on operations. The idea of giving more attention on prime class of service within the flights and inclusion of on-line services assisted BA in improving the customer base.
Other measures undertaken to cut the costs included reduction in coordination activities with other airline companies.
As portrayed from their management strategies British Airways prefers strengthening of good employee relationships rather than forming unions. However, recruitment should be done based on professional qualifications and integrity of character.
This enables easier implementation of training programs and also ensures maintenance of discipline work environment.
The company’s integral culture has been maintained through organization of behavioral trainings and team building outings. Employees are considered crucial part of the company, hence recruitment and promotion activities done based on credentials and not political affiliations as previously experienced.
Alternative Courses of Action
In order to save BA from the spiraling losses and bankruptcy, King introduced ‘survival plan’ which was stemmed with tough immediate measures.
One of the actions was downsizing the workforce, freezing salary increment, reducing the number of destinations as well as closing two engineering bases within a year. The plan also aimed at causing massive cuts on administrative duties (Vedpuriswar 5).
Setting of an aggressive marketing team, assisted on the issues of marketing and customer services. The change in the management structure necessitated efficiency in communication across departments and coherence between operational activities and services rendered.
Profit sharing program was also introduced for the purposes of motivating employees. Besides, the staff had to undergo thorough training in order to boost corporate culture and management practices (Vedpuriswar 5).
Taking employees through trainings such as Putting People First (PPF) and Managing People First helped improving the corporate culture since employees were able to work with positive attitude and treat fellow workers with respect.
This action also helped in building new leadership skills and stable managerial behavior (Vedpuriswar 7). Team building workshops were organized, installation of feedback programs undertaken.
BA through the leadership of Ayling worked on creation of new image brand for the airline company which replaces the traditional designs.
Expansion and renovation plans included renovation of terminal at JFK airport, improved of entertainment services, offering on-line services and entering into partnerships with other airlines (Vedpuriswar 9).
In place of workers union within the Company, efficient channels of communication were created. This was provided by proactive communication team acting as a voice between management and subordinates.
The team was endowed with the responsibility of setting salary scales and also putting personnel management into check.
On the other hand diversification of skills is necessary and leadership tactics of the management team. Various means can be invented for the purposes of dealing with economic downturn; this includes forming joint ventures with discount airlines.
Evaluation of Alternatives
The operations of British Airline to different destinations of the world market including Middle East brought to consumers affordable alternative means of travel. Stiff competition from other established airlines requires thorough review of BA’s structure for the purposes of capturing both high and low market segments.
In addition to sharing of profits, the management should think of granting employees the opportunity of buying shares from BA’s stock. This would ensure high level of employee satisfaction and hence help in improving the nature of the social environment within the workplace.
Such culture of rewarding employees’ inputs based on their innovative and creativity offers conducive environment for invention. Transacting business with single plane manufacturer for long periods of time and reducing fuel consumption levels assist in cutting down expenses.
The management should adhere to the proposals on recruiting based on individual’s professional qualifications. At the same time the art removing bureaucratic hierarchy helps in efficient management practices.
The company requires installation of modern and sophisticated equipment to assist in operational practices. The issue on cost of fuel can be tackled by hedging and sealing contracts from the various suppliers.
Lots of emphasis should be placed on enriching internal culture in order to counter the wave on economic crumbles and other external pressures.
Reports reveal that Airline companies stand as some of the multi-million companies providing their shareholders with reasonable returns originating from massive asset background. Airline companies especially British Airways is identified as one with strong and liquid balance sheet.
Most of the achievements can be attributed to the nature of their facility expansion, increasing trend in customer base and the company’s policy and strategy concerning acquisition of properties.
The aggressive nature of BA management team and acquisition policy remains a threat to the rest of the companies within the airline industry.
However, environmental threat presents one of the potential operation risks the company since they have to regulate their level of carbon emissions based on different policies laid by companies.
British Airways can as well utilize the long-term growth strategy based on its strong operational performance as well as potential acquisitions. The company’s growth profile and assets makes it outstand as one of the leaders within the industry.
Conclusions and recommendations
The culture within the workplace determines the level of success of the Company. Emphasis should always be placed on marketing activities and customer care services. Success of BA as a Company could be attributed to excellent management tactics derived from frequent trainings and also professional marketing principles.
The growth was evident after implementation of reasonable organizational structure and reinforcing the communication channels including marketing strategies. Such programs ensured increased earnings per share on an annual basis.
Maintenance of a corporate culture encouraged mutual co-operation amongst employees hence providing avenues to high performance levels.
Airline industry despite being capital intensive venture is also considered to be highly risky. This shows that efficient operation within the industry requires higher margins for proper running and maintenance of equipment.
The rising demand for airline services, calls for quality and efficiency in management and marketing strategies. Conclusively, even though there seems to be significant increase in profitability of BA Company, improved customer-oriented services is constitutes big percentage of the margins.
The lucrative margins makes the stocks of Airline companies more appealing to investors, hence call for high productivity levels.
Vedpuriswar, AV. British Airways: Leadership and Change, ECCH Collection, Hydershad: ICFAI Knowledge Centre, 2003.