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Current Position of the British Airways Essay

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Updated: Apr 5th, 2022

Introduction

British Airways commonly known as BA is one of the most renowned flight service operators in Europe. Located in the UK, the flight services use the Heathrow airport to carry people and cargo within and outside Europe. BA makes international flights and the company derives credibility from many years of service irrespective of the scandals it faces and accidents. In business, stakeholders develop a workable strategic plan that equally highlights crisis management. Within the UK, the flight offers services in Waterside in London. British Airways operate in several continents including Africa, the Americas, Asia, and the Middle East. British Airways is a result of the merger between British European Airways and British Overseas Airways Corporation among other minute airline entities in 1974 (Berenbak & Lanser 2002). Since then, British Airways adopted mergers and acquisitions as the main strategy of expansion within the European market and at the international level. After thirteen years of operation as a public organization, a private owner acquired British Airways changing its operations. The 1990s marked a period of capitalization and industrialization. Privatization became a normal thing because it helped in creating job opportunities for people while helping in economic growth. This paper intends to explain the history of British Airways, its current position and its future after a comprehensive assessment of PESTEL factors.

British Airways

In 1974, British Airways rivaled British Caledonian forcing the company to leave ownership to a private investor. The main idea was to help the firm grow independent from government policies and bureaucracy. This enabled the firm to explore other continents peaching tents in the US and Africa among other places. It continued with mergers and acquisitions enabling it to pair with Iberia Airways over a decade ago. When companies form mergers, the one with the largest share in the deal retains the name. The same happened in 2011 enabling British Airways to retain its name. Some organizations have strict policies disabling the greatest shareholders from retaining the original name. 16 years ago, British Airways could not retain names from Oneworld Alliance whose constituents merged with British Airways. The merger made the group of companies the third most affluent airline companies in the world generating about £560 million as annual turnover in 2011. Even though British Airways owned the largest share within the merger, it could not claim that it owned the stakeholders completely. British Airways is the second largest provider of domestic and international airline services in the UK. It also transports mail, cargo, and passengers within and outside the country in addition to other States. British Airlines lost its first position to a competitor equally in the private sector in 2008. Most people access the services of the company at Heathrow even though other private airports including Gatwick, Manchester, and London City Airport among others (Berenbak & Lanser 2002).

Industry analysis

The airline industry remains very competitive in Europe and the rest of the world. Hawker Siddeley Trident, Virgin Atlantic, Caledonian, and Air France are rivals for the available consumer base. All of them trade shares in the London Stock Exchange and they keep improving, which threatens the existence of British Airways. The airline industry serves people at the domestic and international levels enabling the involved stakeholders to profit from the booming business (O’neill 1990). In the early 19th century, people associated planes with the most affluent individuals in society. Until now, airlines are more of a necessity as opposed to luxuries. The demand for planes is very high prompting companies to expand the industry while other people equally have private jets. In the UK, most companies use Heathrow including Virgin Atlantic and this increases the amount of competition faced by British Airways.

Organizational stakeholders

Stakeholders represent a group of people who take interest in British Airways including workers, employers, competitors, the media, and sponsors. The workers in the firm include the pilots, air hostesses, cabin crew, and receptionists at Heathrow among others. British Airways ensures that they live and work in an excellent environment and the company pays for the mortgages acquired by their workers. In addition, employees have trade union representation at the British Airline Pilot Association, which offers non-partisan intervention when labor conflicts ensue between the company and the staff (Prassl 2011). Another group of stakeholders includes the sponsors who purchase British Airways shares from the London Stock Exchange Market. In a recent report, the shareholders requested the firm to pay them dividends to compensate for the years they worked with the firm. Shareholders are important for British Airways because they build a good reputation for the firm enabling it to acquire new customers and to increase its profits. When shareholders dissociate with a firm, the bad reputation leads to consumer defection, and this affects profitability. The renowned stakeholders associated with the firm include Iberia, Oneworld Airlines, Cathay Pacific, Qatar Airways, Etihad Airways, American Airlines, and Canadian Airlines.

Competitors are also stakeholders in the industry that influence the performance of British Airways in the target market. Currently, the company holds third place after Star Alliance and the Sky Team (Berenbak 2002). The group of airline companies strives to provide the best services to consumers through mergers and acquisitions because this strategy helps it in dealing with competition. Suppliers are also important to British Airways including companies that provide spare parts for its Boeing planes. Other companies offer shipping services while others offer human resource outsourcing services. British Airways deals with suppliers by increasing their bargaining power while reducing the bargaining power of consumers. Other suppliers provide fuel services to the planes while outsourcing firms provide food to the employees of British Airways. Customers are the last group of stakeholders and they are the passengers. They board different planes and pay different amounts depending on age, plane type, and class. This company has flights from Singapore, Qatar, the US, and America enabling it to acquire a large consumer base in comparison to other rivals.

SWOT analysis

Strengths and weaknesses

Strengths and weaknesses represent internal factors that organizations can control. The greatest strength of the company is an established brand name since its inception. Through its corporate affairs, the company wins public goodwill easily enabling it to strengthen its already established image. The company managed to attain the standards after establishing excellent corporate relations with the relevant stakeholders. The company advertises its products through celebrity endorsements, which increase public appeal. In addition, the company has its own engineering firm, which reduces the cost of consulting experts. This also enables the company to planes because the engineering branches in Glasgow, Cardiff, and Prestwick provide customized services to each plane (O’neill 1990). However, the company also has weaknesses including the high costs of its tickets to various destinations in comparison to other competitors. Inability to settle on a particular tag line since its inception confuses consumers. However, the company can handle the weakness. In 2001, Lufthansa became one of the most admirable airline service providers because of its tagline.

Threats and opportunities

Threats and opportunities are external to an organization even though they directly influence organizational placement in a conditioned setting. Uncontrolled factors such as climatic conditions influence the safety of passengers. Sometimes the weather departments predict weather differently making it impossible for the company to determine the right weather to travel, which could change over time (Rolfe 2002). This might cause accidents for the firm, which it deals with in different ways. Sometimes accidents occur due to technical hitches and this affects the ability of passengers to use the flight. In such a situation, the reflective model by Gibbs applies. The cycle below summarises Gibbs’ school of thought.

summarises Gibbs’ school of thought.

Analysis

According to the illustration, companies have a reason to reflect on their current position while reflecting on a sustainable action plan that would change their situation forever (Black & Plowright 2010). The engineering firms might not be the only solution to the manufacture of excellent Boeing flights that have a low propensity for accidents.

PESTEL factors

Rolfe et al (2001) focus on a network of natural factors within the environment that influence business operations for most firms. The author provides an opportunity for a researcher to assess the prevailing condition of an organization, the things that the firm would do to improve, and needs for the future. For each action an organization takes, there is a consequence and British Airways only strives to achieve the best by avoiding threats and focusing on opportunities.

Political

On the political platform, British Airways enjoys good political relations in the country and other States enabling it to invest in almost all continents across the world. The only political problem it deals with includes internal conflicts of mergers and labor relations (Prassl 2011). Consequences of the same include image daunting shareholder withdrawal to other firms. For instance, in reparation to Virgin Atlantic, British Airways spent over half a million euros and this affected the political stability of the firm. In handling the same, British Airways manages merger issues by allowing each firm to retain its name. In 2008, the company acquired companies in Oneworld Airlines, but it allowed each of the acquired firms to have their original names. The political strategy helps British Airways in reinforcing relationships with its partners (Black & Plowright 2010). This enables it to win goodwill from the public and to progress in the future. Communication coupled with other subtle tactics often helps the firm in solving its political problems and the same applies to how it addresses accidents to the public. The company attorney plays a significant role in legal representation while its corporate team communicates consistently to the public. In the future, the company will have to formulate ways of handling its political issues so that they will not become threats. This includes setting up a media-monitoring unit that assesses public sentiments towards the firm in order to the management to make relevant changes before scandals occur. Finally, the firm should establish a uniform management structure so that managers would not introduce personal management plans into an existing company.

Economic

Economic recession is the worst thing that could happen to an organization. When inflation occurs, the purchasing power of consumers reduces and this affects financial returns for the firm. After 2008, British Airways faced a financial crisis between the major Global Financial Crisis (GFC) in 2009. This forced the company to form mergers with Oneworld Airways and Iberia. Iberia owned the largest shares of 45% while British Airways had 13.5%. British sought ways to maximize its profits in order to remain relevant in the merger. In 2010, it became the largest shareholder and attained public goodwill enabling it to acquire stability even after the recession. A new leader, Bob Ayling helped the company survive the crisis by saving over 700 euros in a year. In the future, British Airways should identify global outreach as opposed to physical acquisition or merger, which is very costly (Industrious times at British Airways and Ryanair 2004).

Environmental

Many rivals within the competitive environment are very careful about green living. Virgin Atlantic has green businesses promoted by its green buildings, protection of animals, and conservation of trees. British Airways strives to use jet fuel that has the least amount of greenhouse gas emissions that would destroy the environment. In the future, the company should participate in campaigns against global warming (Roberts 2009).

Conclusion

In summary, British Airways’ placement in the competitive UK market forces it to adopt realistic objectives that would help it acquire the largest consumer base. In addition, it could improve its technology in order to match the laser technology in the development of safety measures for flights. With such an opportunity, it would be easy for the firm to retain consumers while acquiring new service users.

References

Berenbak, J., & Lanser, A 2002, ‘ The structural design of the “British Airways London Eye” (Zum Tragwerksentwurf des “British Airways London Eye”)’, Stahlbau, vol. 71, no. 4, pp. 285-288.

Berenbak, J 2002, ‘The “British Airways London Eye” the greatest observation wheel in the world (Das “British Airways London Eye”)’, Stahlbau, vol. 71, no. 4, pp. 278-284.

Black, P. E., & Plowright, D 2010, ‘A multi-dimensional model of reflective learning for professional development’, Reflective Practice, vol. 11, no. 2, pp. 245-258.

‘Industrious times at British Airways and Ryanair: Winning the battle for the skies’, 2004, Strategic Direction, vol. 20, no. 4, pp. 4-6.

O’neill, B 1990, ‘The top-flight initiative at British Airways – Part 1’, Executive Development, vol. 3, 2, pp. 60-67.

Prassl, J 2011, ‘To Strike, to Serve? Industrial Action at British Airways. British Airways plc v Unite the Union (Nos 1 and 2)’, Industrial Law Journal, vol. 40, no. 1, pp. 82-91.

Roberts, 2009, ‘Encouraging reflective practice in periods of professional workplace experience: the development of a conceptual model’, Reflective Practice, vol. 10, no. 5, pp. 633-644.

Rolfe, G 2002, ‘Reflective practice: where now?’, Nurse Education in Practice, vol. 2, no. 1, pp. 21-29.

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