Business Strategy of Ba
British Airways group consists of British Airways Plc and there are also a number of subsidiary companies such as British Airways Holidays Limited and British Airways Travel Shops Limited. The cargo service offered by British Airways is the worlds fifth- largest cargo airline and transports over 740 million kilos of freight, mail and courier largest cargo airline and transports traffic each year. 1. 1 State the mission, vision, objectives, goals and core competences of your chosen organisation Mission: British Airways has shown that redefining the vision, and making sure it is successfully carried out throughout the organisation are keys to corporate success. As competitors become aware that service mattered and geared their processes to suit, British Airways has leapt forward again, now defining its target as being the „undisputed leader” in world travel”. Vision: Our corporate responsibility vision is to become the world’smost responsible airline, and we have developed guiding principles that describe what we are doing to achieve this goal. Objectives:
Meeting the rising expectations of our customers remains central to our strategy of transforming British Airways into the world’s leading global premium airline. Our investment in our staff, our fleet and our facilities are all about making sure we provide the very best in customer service. We want all of our customers to enjoy a premium service at every point of their journey, whenever and wherever they travel with us. 1. 2 Describe three issues involved in strategic planning in your chosen organisation Internal problems: * Bad worker relations history Dependability and trust * Modernization & modification External Problems: * Open Skies accord * Environmental consciousness * Worldwide economic crisis * Lesser cost competition Business level strategy problems: * Improving on People process: is highly recommended. Currently, BA has drafted policies to harmonise relations between management and union employees. * Environmental issues and strategy: This strategy is recommended. For instance, BA plans to collaborate with Solena of the United States to turn waste in London to Bio-kerosene. Technological strategy: is an important pursuit. However, BA must get it right the first time else, mistakes will damage its brand image. Currently BA has invested in Information technology by employing highly qualified information systems personnel. * Market segmentation: To achieve this, great innovation is required to beat Virgin Atlantic at their game to avoid resource wasting. Investing in new routes in the East will create new revenue. BA is currently targeting market niches in China and India. * Broadening of service base: is a worthwhile strategy.
Business Strategy of Ba Essay Example
Some risks/disadvantages still present, for e. g. terrorism in the Middle East but benefits outweighs costs. 1. 3 Select two different planning techniques which you could apply to your chosen organisation. Planning techniques: * BCG (Boston Consulting Group) Matrix: The BCG matrix is a corporate portfolio analysis tool that provides a graphic representation of an organization that is used to scrutinize the different businesses involved in the portfolio on the basis of the related market share and industry growth rate. * PIMS:
The PIMS (Profit Impact of Market Strategy) of the Strategic Planning Institute is a large scale study designed to measure the relationship between business actions and business results. The project was initiated and developed at the General Electric Co. from the mid-1960s and expanded upon at the Management Science Institute at Harvard in the early 1970s; since 1975 The Strategic Planning Institute has continued the development and application of the PIMSresearch. PIMS today is much more than the research study from which it originated.
PIMS is * a database of business strategies, used to generate benchmarks and identify winning strategies. * a set of data-derived business strategy principles to guide strategic thinking and strategic measurement. * a methodology for diagnosing business problems and opportunities, and for measuring the profit potential of a business. * Stakeholder mapping is a collaborative process of research, debate, and discussion that draws from multiple perspectives to determine a key list of stakeholders across the entire stakeholder spectrum. Mapping can be broken down into four phases: 1.
Identifying: listing relevant groups, organizations, and people 2. Analyzing: understanding stakeholder perspectives and interests 3. Mapping: visualizing relationships to objectives and other stakeholders 4. Prioritizing: ranking stakeholder relevance and identifying issues The process of stakeholder mapping is as important as the result, and the quality of the process depends heavily on the knowledge of the people participating. TASK 2. 2. 1 Select an organisational audit for your chosen organisation: SWOT analyzis: Strenghts
The most obvious strength for BA is the fact that they are the largest Air Line in the UK and third one in Europe after Lufthansa and KLM l Air France joint venture. As per BA strategy they are a member of “One World ” which includes lots of other giant in the industry such as Qantas and Cathay Pacific . London is one of the most busiest hub for international travelers and BA can take great advantages of using Heathrow and Gatwick as it’s base . Particularly after moving to the new terminal 5 which is one of the most sophisticated terminals in Europe.
British Airways has always tried to keep it’s average fleet age lower than other competitors and currently maintaining 10 years . In addition, BA has purchased two of Boeing Dreamliner to be used for frequent destination and Airbus A380 for using the long journeys . British Airways brand name and it’s professional crew could be considered as one of their most important factors which helps them to keep their competitive advantages over the other competitors. Having a strong customer loyalty program through the frequent flyer schemes can be considered as strengths . Weaknesses
British Airways has been plagued by difficulties in recent years. The Association of European Airlines reports that BA is the worst airline fo r lost and delayed baggage, losing over twice as many bags as the average. They are also the worst airline for punctuality of short/medium haul flight departures and arrivals and ranked 17th out of 21 airlines for long haul delays. Many of BA’s problems st em from being based at London Heathrow airport which has become crowded and subject to delays. In 2007 Heathrow was voted the world’s least favourite alongside Chicago O’Hare in a TripAdvisor survey.
The opening of their new terminal, Heathrow Terminal 5 was heavily criticised by politicians, unions, airlines and passengers as an operational disaster. Hedging fuel price is one of the effective tools for avoiding surprises , however ; British Airways has not invested in hedging enough. British Airways has not realy differentiated itself with low cost careers. It is almost impossible for BA to compete on price and therefore. Opportunities Purchase of new aircrafts means more routes and services could be provided .
With airplanes such as A 380 BA would be able to have more frequent flights to the popular destination and probably put hands on new destinations. The low budget career which is a threat can be seen as opportunity as well , BA has tried to cut expenses to be able to compete with low budget air lines which means BA is utilizing it’s resources in a more efficient way. The general the demand for flights has increased substantially and it is going to grow. Threats One of the major threats to all Air Lines including British Airways is high oil prices which has effected their profitability is a big way.
Low Cost Careers are another threat to British Airways. Environment concern could be another threat if BA or in general Air Line industry does not find an alternative for fuels. Open sky policy could be a burden for British Airways . 2. 2 Select an environmental audit fro your chosen organisation PESTEL Analyzis Political & Legal Factors Post 9/11 there has been a lot of security concerns regarding travel by air. This has led to a tightening of security at all departure and arrival points for most major airlines.
The UK has been a major target for terrorism in the few years after 9/11 due to its involvement in the ‘war against terror’ therefore all commercial airlines operating out of the UK have been facing business challenges to make sure their flights are safe yet are able to generate enough profits to keep flying. There have also been terror attacks in London with numerou s bomb scares at airports and travel hubs such as the underground rail -tube network. This has also led to stringent measures for passenger profiling before anyone flies to any of the UKs major airports.
This further places and economic burden on airlines such as British Airways who would like to maintain profits. In the UK, the Civil Aviation Authority has given the approval to London’s Heathrow Airport to charge Airlines 15. 6o more from 2008, but in turn would like to see its security procedures run smoother and faster to prevent delays. Some airlines, such as the British Airways who operate out of all major UK airports will find this decision favorable as opposed to competitors. Economic factors The rising price of oil and fuels has been affecting airlines such as British Airways in a big scale.
They constantly have to monitor and review their pricing in light of the price of crude oil. With per barrel pricing hitting as high as 130USD per barrel, passengers have to cancel vacation plans because air travel is becoming expensive month on month. The oil price coupled with the price of the dollar is becoming a restrictive factor in promoting trans-continental business and tourism thus creating a slow -down in the world economy in general. The euro-dollar exchange rate currently favours European travelers which means that all in-bound flights from the US will not be operating at optimal capacity.
According to IATA, 28 million people world wide are employ ed in the airline industry, a number which is set to grow to 31 million and above by the year 2010. However, the rise in oil price is further placing an economic burden on airlines to cut costs and therefore BA has to lay off workers while streamlining to run their operations more efficiently to remain competitive against other carriers. Technological factors Innovations in IT and communication have helped airlines operate in a more streamlined and economically efficient model. The introduction of online ticketing and check-in has reduced operational costs to a great extent.
BA recently also has decided to “cut out the middle-man” and allow all passengers to avail the same discounts available from travel agents even if they booked directly from the airline. This however has resulted from an increase in technological investment in the form of call centres and IT automation for most processes that were previously carried out by travel agents. In todays business world, everything is dependant on reliable IT systems coupled with the customer who is more IT savvy and needs to be able to make a booking l reservation instantly online.
BA have invested heavily in making sure that they are able to offer the same value added services to their passengers. Today 76o of all journeys booked on BA are via e-ticket. This number is up 40o from 2003. In-flight entertainment and communication have also been adopted by all major airlines including BA. Most of their international aircraft are equipped with the capability of offering, email, fax, and office automation functionality. “On demand” In flight movies, music and games has also been introduced in some of their newer aircraft. Social Factors
Air travel has been seeing a major social transformation over the last few years. Air travel was primarily booked for business travelers looking to get to their destinations quickly. However, with the growth of gl obal tourism and holiday travel, air travel is now being used as a method of transporting people around the globe as peoples spending power and affluence has increased. The introduction of low budget airlines in Europe aimed at low income earners has also triggered a big growth in passenger numbers looking for short weekend breaks.
Cultural Factors BA is positioning itself to be a global airline so should consider all religious and cultural implications in their marketing and promotional campaigns around the world. The worlds population is becoming very globalised and therefore BA should focus on recruiting people from various backgrounds and religions to reflect its ambition in becoming a global airline. 2. 3 Explain why the stakeholder analyzis and strategic positioning are important within your chosen organisation Stakeholder analysis
The analysis of the stakeholders in conflict resolution, project management and business management, the identification of individuals and groups in the process, which does not affect the loss or the proposed action, and sorts them according to their impact on the basis of the action and the effects will be on them. This information to assess whether the interests of the parties involved in the project plan, policy, program, or other measures must be considered. Stakeholder analysis is an important part of stakeholder management. Strategic positioning:
Its intended objectives and approach the situation. Most business leaders to develop a well-thought out strategic position and take significant steps to make it clear to employees that any of the companies declared to actively communicate the company’s goals. The key to successful analysis and company * Brand Reputation As the reputation of the brand is very important in this industry, the BA target market leadership based on the achievement and maintenance of extensive customer base undisputed recognition. It also helps to BA customer loyalty in the long term * Economies of scale
The continuous expansion and the purchase of BA scalable and effective in increasing the fleet every resource optimization. In addition, the BA will help reduce average unit costs. * Cost Control After the expansion, economies of scale in production and to save maintenance costs. BA will help you better financial position and the lower end of the threat of new players in the long term. Product Positioning In addition to the Boston matrix British Airways in business with regard to the positioning of short-range and long-range * Long-distance (Star Business) Short-range (Cash cow business) Long distance: but it is a growing market requires large investments in power and expand market share Short: a great-great situation means that BA profitable competitive position Analysis of Key Stakeholders * Customers Grouping customers a wider travel and more seats, the difference is positive, the customers like them, which is available in several product features and revival-end. Cost leadership welcomed all to reduce costs, which can cause a drop in prices. * Industry Authorities
This allows the controller to the driver in this industry. The Fusion can work with, and easier to run, discrimination did not play as them, cost leadership welcomed them, as it is to save costs by example. * Shareholders Association of more opportunities for them to higher dividends and risks; differentiation means more business opportunities and revenue. Cost management control positive financial performance, which is directly linked to the dividend in the future. 3. 1 Describe how your chosen organisation could undertake the following strategies: MARKET ENTRY STRATEGIES:
British Airways is targeting Asia, South America and the African routes as part of its strategies to grow the airlines’ revenues. Post financial crises and September 11 terrorist attack have seen most airlines fold up, merge or review their routes to stay in business. The BA has signed many strategic alliance contract with different airlines. For example: Iberian, Quantas, American Airlines. With this alliances they can reduce their costs on service of every each route. SUBSTANTIVE GROWTH STRATEGIES: Strategy to win greater market share, oriented at the expense of short-term profit.
Four major diversification growth strategies, product development, market penetration and development. LIMITED GROWTH STRATEGIES: This strategy can also facilitate new areas not currently served by the airlines. These areas can be identified by conducting market research to provide an idea of ?? the market, which includes a map of airline service. DISINVESTMENT STRATEGIES: * Turnaround strategy: Turnaround strategy and business practices designed to protect the loss of companies. The financial, commercial, social, or from a business perspective, the turnaround strategy can be defined as follows.
Twists and turns in its business strategy, which will take place (provided) to deal with the loss (patients) companies such as increasing losses, lower return on capital and the continued decline in the value of their shares. Finally, in a scientific point of view, given the definition below. Turning Strategy analytical approach to determine the main reasons for the failure to resolve the cause of the loss-making company. * Divestment strategy: Terms used by a sense of alienation workforce reduction strategies, which reduce the scope of their activities. Precipitation usually involves the removal of part of the company.
The company decides to sell, close or spin-off of the strategic business unit is a division or product line. This step is often the final decision to terminate an independent, unprofitable, or unmanageable operations. * Liquidation: Lenders are trying to eliminate the most possible money owed ?? to them. They are the first priority, you sell. Pay the creditors, shareholders will receive, what’s the preferred shareholders priority to shareholders. 3. 2 Predict an appropriate future strategy for your chosen organisation * MARKET ENTRY STRATEGIES * Discover new possible markets * Build a new low-budget service as part of company TURNAROUND STRATEGIES * Really proper investigation in the BA business and stop every wasting and cancel every part of the company what makes loss * Re-negotiate every contract with the suppliers and workers if it is possible * The turnaround strategy should make at least enough resources for the market entry strategies * SUBSTANTIVE GROWTH STRATEGIES * Keep our product in the best service, best environment, best quality 4. 1 Convert strategic plans into operational reality in your chosen organisation MARKET ENTRY STRATEGIES Discover new possible markets 1. BA is a company around the world with offices around the world.
The leaders of the BA offices should make a report about the neighbour countries. 2. Possible report sample: * Country: * Economic system: * Population: * Every statistic about the flying traffic of this country: * Airport system: * Political system: * Feasibility report of a new office and service of this country * Relationship with the government 3. Evaluate the reports 4. Build a new office and create new services (routes) in this countries if it is possible and could make profit 5. Advertisement Build a new low-budget service as part of company 1. Analisys of the aviation market: * Short routes Percentage of the costumers in the short routes per companies 2. Analisys of the cost of flies (less service, less price, ?? higher profit?? ) 3. Analisys of the costumers and passangers requirements 4. Analisys of the possible number of the new costumers with a low-budget flying service 5. Analisys of the possible number of the lost costumers with a low-budget flying service 6. Evualte of the datas 7. Decission: * New company * New services 8. Advertisement TURNAROUND STRATEGIES Investigation: 1. Find a really good cost analyst company 2. Evaulate the result 3.
Create a new system according the result Re-neogitiation: 1. Analysis of the contracts (suppliers, workers, leaders) 2. HR department evaulate the results 3. Negotiation of the possible new contracts with the union (make an agreement) SUBSTANCE GROWTH STRATEGIES Keep our product in the best service, best environment, best quality 1. Feedback reports from the costumers (continouosly) 2. Possible feedback report: a. Quality of our service: b. Quality of environment: c. Improve suggestions in service: d. Improve suggestions in environment: e. Any other suggestion: 3. Evaulate the results in every 3 months . Make changes according the results 4. 2 Identify resource requirements you would need to implement a new strategy within your chosen organisation Resources: Discover new possible markets * human: * project manager * office leaders of foreign country`s offices * analyst team * trainer team for the new offices and new employers * PR specialist * finance: * project manager could be an experienced member of the R&D team (no extra cost) * office leaders (no extra cost) * analyst team could be an independent market analyst company * trainer team (HR department – no extra cost) PR specialist * Other costs: * travel costs * building costs * cost of permit to operate in the new country Build a new low-budget service as part of company * human: * analyst team could be an independent market analyst company * management (no extra cost) * new company * cost of permits * cost of adverts * cost of PR * cost of new brand uniforms, logos, …. * new services * no significant extra cost * cost of PR TURNAROUND STRATEGIES Investigation: * human: * analyst team * management * finance: * analyst team could be an independent „costcutter” company * management (no extra cost)
Re-neogitiation: * human: * analyst team * HR department * management * finance * analyst team could be an independent „costcutter” company * HR department (no extra cost) * management (no extra cost) SUBSTANCE GROWTH STRATEGIES Keep our product in the best service, best environment, best quality * human * Feedback report maker (member of PR team) * PR team analysing * finance * Feedback report creator (no extra cost) * PR team (no extra cost) 4. 3 Select a strategy used by your chosen organisation and propose targets and timescales which you would use to monitor its implementation.
You are required to present your answer in a Gantt Chart Gantt Chart: A Gantt chart is a type of bar chart, Henry Gantt developed in 1910, which is the schedule for the project. Gantt charts illustrate the start and finish dates of the terminal elements and summary elements of a project. Terminal elements and summary elements comprise the work breakdown structure of the project. Some Gantt charts also show the dependency relationships between activities. Gantt charts are used to display, as shown in the current schedule percent complete status of shades and a vertical “TODAY” line.
Discover new possible market: Activity| Predecessor| Time estimated| Expected time(Opt + 4Norm+ Pess)/6| | | Opt. | Norm. | Pess. | | 1. Report making| | 45 days| 60 days| 90 days| 63 days| 2. Evaulating| 1. | 30 days| 45 days| 60 days| 45 days| 3. Build new office (employing, training)| 2. | 60 days| 90 days| 120 days| 90 days| 4. Create new routes (permits, contract wirh suppliers, airport contract)| 2| 105 days| 120 days| 135 days| 120 days| 5. Advertisement| 2| 180 days| 180 days| 180 days| 180 days|