TASK 7.

0 PESTLE
Political
The political environment in which airlines work is very directed and supports the travelers over the
airlines. This is a result of the way that the worldwide aeronautics industry works in a domain where
traveler security is fundamental and where, the prior inclinations towards monopolistic conduct by the
airlines have made the political foundation fatigued of the airlines and henceforth, they have depended on
more tightly regulation of the operations of the airlines. Further, the worldwide flying industry is likewise
described by deregulation on the supply side significance more rivalry among airlines and regulation on
the interest side importance travelers and fliers are in a position where they can press for more civilities
and low costs.

Economic
The worldwide carrier industry never truly recouped from the fallout of the 911 attacks. Added to this was
the drawn out subsidence in the wake of the dotcom bubble bursting. The other weakening variable was
the changes in the cost of oil due to the Second Iraq War and the consequent spike in oil costs just before
The Great Recession of 2008. This last perspective or the continuous worldwide financial lull has implied
that the officially battling airlines now need to fight with declining traveler movement, rivalry from
minimal effort bearers, high flying fuel costs, work requests, and taking off support and working expenses.
Every one of these elements have made the airlines misfortune making and inclined to insolvencies and
conclusion since they can no more bear to run their operations beneficially. Obviously, this has
additionally brought about more noteworthy combination among the airlines as they look to influence the
efficiencies from the economies of scale and the cooperative energies from the merger with different
airlines.

Social
In the late years, the rise of the Millennial era into the purchaser class has implied that the social changes
of an era used to qualification, moment delight, and all the more requesting regarding administration has
brought about the carriers balancing their expenses with the expanding requests from this fragment.
Added to this is the resigning of the Baby Boomer era that has brought about the aircrafts losing a
lucrative wellspring of salary. Next, the profile of the passengers has changed with all the more monetarily
minded passengers and less business class passengers who like to influence on the enhanced
correspondence offices to lead gatherings remotely as opposed to flying down to meet their business
accomplices

Technological
In spite of the fact that the airline industry utilizes technology broadly as a part of its operations, they are
constrained to the aircraft and the operations of the airlines barring the ticketing and the distribution
perspectives. This has incited numerous specialists to approach the airlines to make utilization of the
advances in technology for the front office and the client confronting capacities too. At the end of the day,
the innovative changes must be adjusted to incorporate portable advances similarly as ticketing,
distribution, and client administration are concerned. Further, online networking must be utilized by the
airlines to guarantee that the visitor social and mechanical changes don't go by the airline industry.

Legal
As of late, the quantity of lawsuits against airlines from both clients and additionally laborers has gone up.
Further, the controllers are being stricter with the airlines, which imply that they are presently
progressively careful about their systems, and completing their procedures when they are completely
persuaded that they are not damaging any laws. The "one-two punch" of expanded regulation and more
costly lawsuits separated from the legitimate framework getting to be narrow minded of postponements,
security issues, and different angles has just served to uplift the fears among the airlines as every single
move of theirs is being examined.

Environmental
With environmental change entering the social consciousness, travelers are presently tallying their carbon
impression with the outcome that they are currently all the more earth cognizant. This has brought about
the airlines being compelled to receive "green flying" and be more receptive to the worries of the
environmentalists. Further, the social obligation activities are turning out to be more maintained and
more under investigation as customers and activists turn a basic eye towards the airlines and their
corporate social obligation.

TASK 8.0 Porters Five Force Analysis

Porter's five forces is a vital device in examining the aggressive way of the aircraft business with a specific
end goal to survey the position of British Airways in the business sector. In the meantime, the
investigation will empower British Airways to settle on key choices keeping in mind the end goal to
expand benefit.
Strength
High

Force/Threat
Competitive Rivalry
British Airways caters for both long and short haul flights. Within the long haul there
exists little differentiation between BA and its competitors in terms of pricing and
service offering.
The short haul market is more fragmented with many small players
Direct competitive rivalry is fierce with Virgin Airlines. Virgin Airlines were
aggressive in which the company goes to all lengths to oppose any move by the
British Airways in mergers

High

Consolidation of competitors has also increased competition.

Supplier Power
There exists two major aeroplane manufacturers (Boeing and Airbus) with high
amount of competitiveness. This equals high bargaining power
British Airways are restricted with a sole supplier of fuel to the airport
Priority of landing slots is given to historic rights of existing users
British Airways employees use collective bargaining through trade unions in order

Medium

to increase their bargaining power.

Buyer Power
Low concentration of buyers to supplier mean the buyers have little bargaining
power
Increase internet usage has amplified awareness and interaction of customers

Low

Lowe cost carriers are seeing surge in buyers due to economic conditions
Threat of New Entrants
Significant barriers towards new entry. Environment is too competitive. There are
also high capital costs requirements.
Barriers to exit are in place which deters new entrants.

Low

The failure of recent airlines such as Xl and Zoom is likely to deter new entrants.
Threat of Substitutes
There exist few direct substitues
Short haul flights (Eurostar and Ferries)
Long haul flights (no notable substitutes)

9.0 Market and Critical Success Factors (CSF)

British Airways has long employed a multi-channel distribution strategy. But as one of the airlines
involved in new distribution capabilities by IATA under the particular development, it became
increasingly clear that the transition to the NDC standard would allow the airline to be more effective in
its product distribution through third party channels. (David ,2011)
The new markets that are opening up for BA are making the long haul fights more in line with the
business overall strategy and to check if the short haul flights are profitable by any means. The new
markets which will present to be open for
1.) Approach new long haul flight routes.
2.) Strategies the use of short haul flights which are not profitable.
3.) Since there is tough competition from low cost flyers, those markets should be tapped using a different
line of safety which will be appealed by the passengers.
Apart from that he key success factors for BA will be as follows,
Differentiation
Airline companies tend to differentiate by providing advanced services. For example, providing the
aircraft with the latest technology, such as wide seats, e-ticketing (as mentioned in 5 porters section) will
attract customers and distinguish the company among other companies.
Strong brand name
Obtaining a strong brand name plus building a base of loyal customers are the carriers' companies most
concern. It guarantees that customers will stick with the strong brand name company and ignore any
attractive offers from other competitors. Some airline companies utilize some techniques to have a retain
customers, such as offering a flyer mile to win a free ticket if the points were completed. (ex: American
Airline)
Alliances
Airline industry is moving toward establishing alliances between companies. This will let companies to
share resources via linking their networks to build a wide base of customers, develop services and increase
number of routes. Additionally, it results in sharing experience and decreasing the operation costs. Ex.
British Airways is a member of largest airline alliance known as One world.

(Stern , 2013)

Relations with supplier

Airline companies must build a strong relation with suppliers by setting long-term contracts with them.
Such relations will benefit the airlines companies, because this will keep them in the safe side even if there
was any change in the pricing strategy (ex. increasing costs) in the future as there is a contract between
them.

10.0 Opportunities and Threats

Opportunities

British Airways rise in the Skytrax quality system is an important marketing area that the
company can use to boast international image
Most competitors have been forced to exit the market due to the high cost of competing
and the struggle of the global economy.
Reliability in terms of service delivery is still an issue that is faced by most of British
Airways competitors.
Emergence and increasing prominence of new markets such as budget travelling.

Threats

The Open skies agreement has provided a fair competition for most smaller airlines
while also increasing the competitiveness through removal of restrictions on
international routes for all airlines.
Environmental awareness that has constantly risen amongst most consumers is
increasing the pressure on British Airways to reinvent energy policies and apply strict
regulation on flight schedules during off-peak seasons to adopt environmental
regulations.
The global economy has still not shown clear signs of completely recovering from the
turmoil of 2008. The reflection is evident on the dropping value of pound against the
Euro.
Reducing operational costs among competitions is making it hard for British Airways to
settle on previous strategies for profit margin.

11. Strategic Organization of BA

From the Opportunities and Threats analysis conducted earlier, it is essential that British Airways look at
a couple of the strategic options to be further pursued; so as to allow the company to both continue
moving in the right direction and to improve on any drawbacks they are facing in their current set-up. For
the right strategic options to be identified, a TOWS matrix will be suitable for the formulation process.
For the strategic options identification, two strategies will applied through the use of the TOWS matrix
tools. The first strategy will use British Airways internal strengths and applying it with their external
opportunities and threats. This will allow for the company to use its strengths to improve the companys
external factors. The second strategy will consider the weakness in the company with the external factors
like opportunities and threats to eliminate underlying weaknesses in the company.

In terms of market penetration, British Airways can actually gain market share through renovation and
modernisation of business approaches and the brand image as a whole. At the same time, improving
environmental stance by actually going beyond minimal requirements in environmental conservation to
actually increase the measures will also drive market share. By placing segment focus strategies, British
Airways can actually derive from the fact that profit margins from business class passengers are the
highest for the company and the fact the services that business class passengers require cannot be
replicated by budget carriers makes it even more possible. (Kyrgidou, 2010)
British Airways product development phase will involve technological advancement. Introduction of
internet access on flights along with improved integration of mobile computing peripherals such as tablet
PCs, smartphones and laptops would be a value increasing service offering. Complementary services such
as concierge services, car rental, hotel booking and even smaller services such as appointment scheduling
and mapping of routes for foreign tourists would be value added bonuses in the product offering. (Brown,
2005)
Diversification and Market Development can be formed together for British Airways. The company will
need to diversify into substitute services such as ferries or cruise with the same level of quality that is
recognizable from the British Airways brand name. At the same time, increasing the number of scheduled
flights with primary focus on large Asian economies such as China and India would increase the service
offering ranges.

12. Identification of possible future strategies

As explained above in section ultimate section of part one, the strategies that will be operated British
Airways a hybrid forum of competitive and product-market strategies will be implemented in order to
establish , quickly and vehemently , market share for the planned concept. .
At inception, under the competitive strategy a differentiation strategy will be pursued , in order to show
case the values of our services likewise showcasing the services offered by BA more attractive to the
consumer. Since the certain routes does not have direct competitor locally then it will be easier to
showcase the aforesaid strategy of differentiation, this will make believe the true potential of BA and
similarly it will establish a feeling in the industry as a whole that the products and services offered are
truly unique and therefore achieve a strategic goal to make the market close to assuming a monopoly.
In order to establish and follow a differentiation strategy the products and services of BA can only be
gained showing distinctive characteristics present in our products and services , the characteristics thus
showcased will ascertain the clients into truly understanding the potential of our services and persuade
clients/consumers into purchasing our products. (Roa, 2009)

13. Screening of options suitability, acceptability and feasibility

Once a clear picture of the firm and its environment is in hand, specific strategic alternatives can be
developed. While different firms have different alternatives depending on their situation, there also exist
generic strategies that can be applied across a wide range of firms. Michael Porter identified cost
leadership, differentiation, and focus as three generic strategies that may be considered when defining
strategic alternatives. Porter advised against implementing a combination of these strategies for a given
product; rather, he argued that only one of the generic strategy alternatives should be pursued.
(Mintzberg ,1996)
Implementation
The strategy likely will be expressed in high-level conceptual terms and priorities. For effective
implementation, it needs to be translated into more detailed policies that can be understood at the
functional level of the organization. The expression of the strategy in terms of functional policies also
serves to highlight any practical issues that might not have been visible at a higher level. ( Sweeney, 1994)
The strategy should be translated into specific policies for functional areas such as:
Marketing

Research and development

Procurement
Production
Human resources
Information systems
In addition to developing functional policies, the implementation phase involves identifying the required
resources and putting into place the necessary organizational changes(Snyman,2004)
Control
Once implemented, the results of the strategy need to be measured and evaluated, with changes made as
required to keep the plan on track. Control systems should be developed and implemented to facilitate
this monitoring. Standards of performance are set, the actual performance measured, and appropriate
action taken to ensure success.(French ,2009)

Dynamic and Continuous Process

The strategic management process is dynamic and continuous. A change in one component can
necessitate a change in the entire strategy. As such, the process must be repeated frequently in order to
adapt the strategy to environmental changes. Throughout the process the firm may need to cycle back to a
previous stage and make adjustments.

References
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March 2016].
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19
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M.T.,

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