Strategic Positioning And Environmental Analysis Of British Airways

Business Situation of British Airways

British Airways is one of the largest airline businesses headquartered in the United Kingdom. It is a subsidiary of the International Airlines Group (IAG). British Airways had a fleet of over 300 aircraft and provided service to more than 70 foreign locations. In 2019, British Airways faced a variety of difficulties and possibilities. British Airways profitably expanded in 2019. Many operational and strategic issues were also confronted, notably those brought on by Brexit. Brexit has had a significant impact on UK aviation industry, but the emergence of the Coronavirus exacerbated these issues (Borko, 2018). British Airways celebrated its centennial anniversary in 2019 as well as has shifted its strategic focus during the recent years in order to become a long-term sustainable brand. It intends to expand its worldwide influence by investing in a number of critical areas, involving technology, human resources, as well as customer experience (British Airways, 2021). The report will discuss the internal as well as external environment of British Airways by providing its strategic position in the market on the basis of which strategic recommendations will be provided to the company.

The limitations of the research include the aspect of cost and time within which the information is required to be collected by the researcher. Cost as a limitation in the form of costs so associated with the collection of various sources and dissemination of the collected information using various tools, here, it includes the use of books, websites, blogs, journals from which the information is being collected. Further, time being the constraint as the information pertaining to the report is likely to be collected within a limited time frame such that the information can be presented in detailed and comprehensive manner.

The researcher firstly identified the specific organization on the basis of which the whole report will be formed, thereafter, the researcher identified the various aspects of the report which included the discussion of business situation using history of the organization, company’s mission statement including the discussion of customer analysis. Thereafter for conducting the strategic evaluation such as SWOT, Pestle, Porter’s analysis, Ansoff matrix, etc. The research identified appropriate resources from where the  information can be collected to carry out the necessary analysis, thereby after the collection of information, the researcher has represented them by linking the information within the framework so identified which helped the researcher to carry out the research in comprehensive manner.

History

British Airways is one of the UK’s largest international scheduled airlines and is base is in Heathrow Airport. Along with scheduled flights, British Airways also operates international and local freight and postal transport and provides other auxiliary services. British Airways operates flights to over 300 locations via codeshare and franchise agreements, transporting about 33 million passengers. British Airways also has one of the largest staff bases in the United Kingdom, with close to 42, 377 employees (British Airways, 2021).

Since its privatization in 1987, the organization has grown in lockstep with the airline industry’s increasing competitiveness. Currently, British Airways has been effectively positioned as a pioneering airline in terms of green technology adoption and environmentally conscious strategy decisions. For many years now, British Airways has been a member of Europe’s effort to reduce greenhouse gas emissions. British Airways pioneered the concept of passengers printing their own boarding passes (Borko, 2018). As part of British Airways’ efforts, Heathrow Airport is now being redeveloped by the corporation, making it the busiest airport in both the UK and the globe.

Strategic Evaluation and Analysis

British Airways’ earnings have also been impacted by the worldwide economic meltdown of 2008. The recent Covid-19 pandemic outbreak has affected the airline operations but they have managed to overcome those challenges using strategic management.  Nonetheless, with recent acquisitions as well as improvements in air traffic laws, British Airways’ future appears brighter, and there are several good indicators for the airline in both Europe and the global market. To reach its stated purpose of being the “world’s most responsible airline,” British Airways has consistently said in its annual reports that it is committed to developing its core principles and a well-defined strategy plan to make this a reality (British Airways, 2021).

The mission of British Airways is “To guarantee that our customers travel confidently, knowing that we are all working together to care for the world in which we live.” Additionally, the corporation aspires to “be the unchallenged global travel leader for the next millennium.” Apart from that, the company is committed to giving the finest possible service to its passengers and establishing itself as a premium airline (British Airways, 2021).

British Airways’ vision statement states, “Our corporate responsibility vision is to become the world’s most responsible airline, and we have set guiding principles to guide our efforts,” taking on a variety of corporate duties that help define its mission. British Airways vision is to make a difference in the world, by being consideration of the welfare of the people, by offsetting carbon emissions from domestic flights and aiding local communities both within and beyond the United Kingdom (British Airways, 2021).

British Airways Values are to its customers by ensuring their safety and achieving their level of satisfaction and by incorporating diversity among their operations, processes and their employees. British Airways promote the importance of embracing different cultures and beliefs via their products and services. Their main aim is to be number one and create the best experiences for its customers in terms of ticket fare, affordable airlines, travel itineraries, etc. (British Airways, 2021).

British Airways’ present initiatives coincide with the rapid advancements in mobile as well as computing technologies. As the global economy slowly improves, the airline is likewise focusing on expanding its operations to better service the growing number of customers. Customers can choose from 4 distinct service packages offered by British Airways to fit their needs and budgets. British Airways specifically targets four consumer categories with its four service tiers: economy, premium economy, executive, as well as first class.

British Airways has categorised the market according to a number of demographic factors, including income, gender, age, and education. For competing with low-cost carriers, British Airways has implemented a price strategy that is designed to appeal to a broader variety of customer demographics. Segmentation of the market may also be accomplished by an examination of client lifestyles and attitudes. Based on the purpose of their journey, British Airways has divided its clients into two groups: those who travel for business and those who do so for leisure. British Airways has rewarded consumers with high-quality food and drink, ample seats, as well as polite on-board employees (British Airways, 2021). British Airways has divided its domestic flights in the United Kingdom as well as Europe by location and passenger density. For instance, in places where people rely on air transportation, more local and international flights are scheduled. British Airways does not involve marketing strategies as the cheapest airline, as other airlines do. The group has mostly concentrated on urban regions, which are home to the majority of company owners. The British Airways brand is well-positioned, and customers are satisfied with the company’s offerings. The most important component in British Airways’ success is the attractive placement of its products and services. The long-term success of British Airways depends on the successful positioning of its goods and services (Nicolini and Salini, 2006).

Internal Environment of British Airways

There are various operating structures of an organization, upon which different responsibilities are established so that operation of the company is carried out effectively, as such British Airways uses its business innovation model (Davenport, 2013). The company also focuses upon upgrading the customer experiences by introducing technological developments such as including the use of mobile applications, enabling texting and mobile services on flight. Also, the company focuses upon the modernising their new fleet of airplanes, by forming a better cost-effective operation. The company has taken an interest in corporate social responsibility with environmental partnerships and performance. British Airways will certainly focus on strategic expansion that takes these markets into consideration (Taylor et.al, 2019).

British Airways segmentation, targeting, as well as positioning identify certain persons within the potential customers in order to provide its service packages. Segmentation entails categorizing the population according to

traits, while targeting entails selecting certain segments found by segmentation in order to sell items. Positioning is referred to as the process of assessing the marketing mix which is most appropriate and suitable for the target client segment (Karami, 2017).

To achieve long-term development, it is critical for British Airways to focus on improving the perceived value of its services among current and prospective consumers within the target market (O’Neil, 2018). Customers’ perceptions of value may be raised successfully by British Airways’ top-level marketing management by maintaining strategic customer connections across all segments, as well as applying creative and innovative thinking to numerous business operations.

Strategic Management is primarily concerned with identifying and describing the many strategies that a company’s management might use in order to improve its performance and gain a competitive edge. If an organization’s profitability exceeds the industry average, it is deemed to have a competitive edge (Eden and Ackermann, 2013).

Additionally, strategic management is defined as a collection of decisions and activities that a managers must take and that can influence the outcome of an organization’s performance. Essentially preparing for both the known and unforeseen aspects of company. It is relevant to both small as well as large firms, since even the largest can confront competition and, by developing as well as implementing proper strategies, can achieve a durable competitive advantage (Hanke, 2016). Considering the case of British Airways, merely being the largest airline in the United Kingdom with government support will not be enough to withstand the growing threat of newer rivals offering no changes air in transportation at a lower price (O’Neil, 2018).

By conducting the SWOT analysis of the company, the company can thereby form strategies for the enhanced level of customer satisfaction and success of the British Airways (Helms and Nixon, 2010).

Strength-

British Airways’ strengths include its long history of reputation for offering superior customer service as well as its premium worldwide brand. One World Alliance and the IAG Group, both of which are profitable strategic alliances, give access to a greater network of airports, superior technology, and a larger passenger database by way of code-sharing arrangements (British Airways, 2021).

Weakness

British Airways’ primary drawback is that it has high number of operational expenses than the majority of its competitors, including its low-cost rivals, as a result of its massive fleet operations. This is accelerated further by the company’s differentiating strategy, built around quality, innovation/value added services, as well as great customer service. When it comes to labour concerns, the airline has a long history of pilot and cabin staff strikes that have delayed operations and cost the company huge amount of money (BBC, 2019). Also, with respect to the COVID outbreak, restricted movements and negative of economy has affected the revenue levels of the company (BBC, 2020).

External Environment of British Airways

Opportunity

British Airways has a lot of room for improvement in its area of employee relations because of its history of bad ties with its workforce. Additionally, there is a possibility for growth in the short-haul sector through the formation of the appropriate strategic relationships with low-cost budget airlines that specialise in such routes. Also, with the strategic implementation of several strategies, company can recover from the revenue loss caused during the pandemic (British Airways, 2021).

Threat

British Airways continues to face major threats from shrinking market share and rising intrusion from low-cost competitor like the Ryanair and EasyJet. Another significant hazard is the Covid-19 epidemic, that has significantly restricted international travel and general human migration (BBC, 2020). A worsening recession due to the pandemic is also expected to have an effect on firms’ and consumers’ disposable income. The present social trend of meeting as well as attending social gatherings online using popular platforms such as Zoom, may also have a longer-lasting impact on the necessity of travel, reducing both domestic and international travel as well as flying costs.

PESTLE analysis, which explains the macroenvironment’s influence on the market, enables stakeholders in any business to identify existing gaps in a variety of political, economic, social, technical, environmental, and legal dimensions. The PESTLE analysis is an effective strategic tool for product creation, sales strategy, plan implementation, and organizational planning. It ensures that the businesses’ performance is consistent with the outward effect of changes (Cummings and Worley, 2014).

Political

The regulations and political climate of the different markets in which British Airways operates have an impact on the airline. Anti-terrorism security legislations and air control regulations have been implemented following the 9/11 terrorist attacks as well as the London bombing attacks in 2001 and 2005, respectively, which need compliance. Changing passenger immigration processes for flights between the UK and EU nations and the delays and immigration issues that may develop as a result of Brexit Britain’s exit from the EU may potentially affect corporate operations (Bamber et.al, 2013).

Economic

An airline like British Airways is impacted by the general state of the economy and the amount of disposable income that individuals may spend, particularly on discretionary purchases. Individual and corporate passengers who were affected by the 2008 economic crisis favored low-cost solutions that gave greater value for money. In addition, fewer people are travelling now than there were prior to the crisis. Although a weaker pound may attract visitors to visit the UK, the increased costs of the airline’s international operations are anticipated to be a substantial consequence of the lower value of the Pound Sterling’s strength in respect to the Euro and the US dollar. The price of fuel is yet another crucial economic element that has a significant impact on its profitability (British Airways, 2021).

Social

British Airways flight demand is impacted by social trends like tourism and holidays that necessitate individuals travelling to different cities or countries. Even more importantly, clients are now able to readily compare flight rates from several operators because to the widespread availability of the internet. The Covid-19 pandemic has led in a suspension of some flights and the shutdown of the airline’s operations at Gatwick airport, as well as a social isolation (BBC, 2020). 

Strategic Recommendations

Technological

British Airways’ online booking system and its check-in services rely heavily on technology as part of its operating strategy. In addition, it provides the clients with a wide range of convenience, flexibility, and personalized flight services using mobile app technologies that consumers may use at any time (Bamber et.al, 2013).

Legal

With regards to air industry legal difficulties, these are important to consider. British Airways must adhere to regulations since failing to do so might result in significant fines and damage to the company’s reputation. Besides operating regulations, British Airways is also affected by labor rules. The firm faced a major problem in 2019 when pilots went on strike. It was necessary for the company to accept the compensation after it lost its legal battle to prevent the planned strike (BBC, 2019). 

Environmental

British Airways makes a thorough effort in reducing the impact of their operations on the environment. The parent firm of British Airways, the IAG group, has established a zero-carbon-footprint goal for the corporation. It was determined that net CO2 emissions will be reduced by at least 20% by 2030. It will be one of the top corporations to offset its carbon emissions if its major focus is on an environmentally advanced way (British Airways, 2021).

Porter 5 forces model will help in analyzing the competitive forces of the British Airways. This will help the company to form strategies to gain competitive position in the market (O’Neil, 2018).

To get a competitive advantage over the competition, organizations might choose one of Porter’s three general tactics. Cost Leadership, Differentiation, and Focus are the three methods. Two types of focus strategies exist: one that emphasizes cost and the other that emphasizes differentiation. In order to maintain a competitive edge over the competition, a corporation must practice “cost leadership” by developing goods and services that are lower in cost than those of the competitors (Lin and Hsin-Mei, 2010). A corporation must distinguish its products as well as services in such a way as to generate a unique and desired product that accomplishes its own market segment or hinders rivals’ products as well as services for being distinctive and non-imitable. In contrast, focusing on a certain niche market requires a product or service that stands out from the competitors (Hanke, 2016). Companies can choose whether to focus on cost-minimization in a focused market or product/service differentiation in a focused market by dividing the focus approach into cost focus and differentiation focus. Using Porter’s generic approach, it can be seen that British Airways focuses on the whole market. British Airways has a strategy that combines focus and distinction. With the inclusion of extra services, British Airways has gained a competitive edge over its rivals because of the efficiency of its service delivery process (Monczka et.al, 2015). 

Companies may use the Ansoff growth matrix to analyzes their products and their market expansion strategy. In relation to market penetration, it is possible for British Airways to acquire market share by re-evaluating and re-branding its business practices and its overall image. Even though it may seem counterintuitive, it is possible to grow market share by going above the minimum standards for environmental protection. For example, British Airways may benefit from the fact that business class customers are the most profitable area of its customer base, as well as the fact that the amenities required by business class passengers cannot be matched by low-cost airlines (Belobaba et.al, 2015).

Limitations of the Research

The product development phase of British Airway will be a technological one. Improved level of integration of mobile computing devices like tablet PCs, cellphones, and laptops would be a value-added service if internet connectivity was made available on flights (Moreno-Izquierdo et.al, 2016). Value-added services like concierge services, vehicle rental and hotel booking as well as minor services such as appointment scheduling and route mapping for foreign guests will be included in the product offering (Hanke, 2016). For British Airways, diversification and market development can be combined. Substitute services, like as ferries or cruises, will have to be developed to meet the same standards as British Airways’ reputation. It would also be beneficial to expand the service range by boosting the number of regular flights to major Asian countries such as China and India (O’Neil, 2018).

Conclusion 

From the above analysis it can be concluded that there has been a lot of rivalry in the airline sector. Businesses in the field face a lot of competition from similar businesses. Thus, it is critical to know the organization’s strategic stance. According to the research, British Airways’ strategic analysis yielded a number of noteworthy discoveries for the company.

Customers and suppliers were found to be outside the control of the company. All in all, the organization’s performance was erratic. The organization’s income rose as the number of passengers increased. As a result, the organization’s revenue has decreased during the past few years. When it comes to consumer marketing, British Airways should not be completely relied on technology-based campaigns and thereby look to other avenues. However, British Airways should keep in mind that a sizable segment of the senior population still uses the traditional offline means of booking tickets and checking in for flights today. It is time for British Airways to reassess its strategy and begin focusing more on the needs of its corporate clients due to the emergence of business sector worldwide.

Despite this, budget passengers constitute the majority of air passengers, and they are also a part of the most fascinating market in air travel. In a highly competitive industry, such a product’s growth is easily attainable since buyers are becoming more aware of the various advantages that different airlines provide. It would be a mistake for the corporation to overlook a market that is both large and lucrative, even if it does not demand much attention from the organization.

In developing countries and growing markets, the company has a lot of room for growth. The corporation should implement tactics to decrease competition, particularly from low-cost providers. Instead of focusing just on United Kingdom, the global market requires that the corporation diversify its geographic area instead. Also, the company’s primary concern should be the well-being and safety of its employees. To ensure customer happiness, the organization must be client-focused and offer services that are always available. In order for a organization to be successful, it must incorporate the current trends and related products.

References 

Bamber, G.J., Gittell, J.H., Kochan, T.A. and Von Nordenflycht, A., 2013. Up in the air: How airlines can improve performance by engaging their employees. Cornell University Press.

BBC News (2019) British Airways pilots strike for second day over pay. https://www.bbc.co.uk/news/business-49625303 [Accessed 21 November 2021]

BBC News (2020) Coronavirus: BA reaches deal to suspend thousands of workers. https://www.bbc.co.uk/news/business-52130021 [Accessed 21 November 2021]

Belobaba, P., Odoni, A. and Barnhart, C., 2015. The global airline industry. John Wiley & Sons.

Borko, S. (2018) 10 Years Later: How the Travel Industry Came Back From the Financial Crisis. https://skift.com/2018/09/14/10-years-later-how-the-travel-industry-cameback-from-the-financial-crisis/.

British Airways (2021) British Airways Invests To Boost Customer Experience for All. https://mediacentre.britishairways.com/pressrelease/details/86/2017-228/8421 [Accessed 21 November 2021]

Cummings, T.G. and Worley, C.G., 2014. Organization development and change. Cengage learning.

Davenport, T.H., 2013. Process innovation: reengineering work through information technology. Harvard Business Press.

Eden, C. and Ackermann, F., 2013. Making strategy: The journey of strategic management. Sage. Graham, A., 2013. Managing Airports 4th Edition: An International Perspective. Routledge.

Hanke, M., 2016. Airline ECommerce: Log On. Take Off. Routledge.

Helms, M. M. and Nixon, J. (2010) ‘Exploring SWOT analysis – where are we now?: A review of academic research from the last decade’, Journal of Strategy and Management. Emerald Group Publishing Ltd., 3(3), pp. 215–251. doi: 10.1108/17554251011064837.

Karami, A., 2017. Corporate strategy: evidence from British Airways plc. In The Changing Patterns of Human Resource Management (pp. 46-64). Routledge.

 Lin, C. and Hsin-Mei, L. 2010, “Maker-buyer strategic alliances: an integrated framework”, The Journal of Business & Industrial Marketing, vol. 25, no. 1, pp. 43-56.

Monczka, R.M., Handfield, R.B., Giunipero, L.C. and Patterson, J.L., 2015. Purchasing and supply chain management. Cengage Learning.

Moreno-Izquierdo, L., Ramón-Rodríguez, A. B. and Perles-Ribes, J. F. (2016) ‘Pricing Strategies of the European Low-Cost Carriers Explained Using Porter’s Five Forces Model’, Tourism Economics. SAGE Publications Inc., 22(2), pp. 293–310. doi: 10.5367/te.2016.0551.

Nicolini, G. and Salini, S., 2006. Customer satisfaction in the airline industry: the case of British airways. Quality and Reliability Engineering International, 22(5), pp.581-589.

O’Neill, B., 2018. Developing future leaders at British Airways. In The Photofit Manager (pp. 72-89). Routledge.

Taylor, P., Moore, S. and Byford, R., 2019. Cabin Crew Conflict-The British Airways Dispute 2009-11.

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