Providing British Airways Plc with a strategic plan

Providing British Airways Plc with a strategic objectExecutive summaryThis essay is occasion for the purpose of providing British Airways Plc with a strategic plan to apply e reallyplace the nearing future tense. British Airways is the UK market place place leader in the Airline industry. It has faced ever-increasing contender over the past 10 years resulting attritionin their market piece. The report commences by analyzing the unseas unmatchabled internal and external environment of British Airways. Through strategic evaluation we urinate suggested that BAs focus on their primary(a) help delivery to refurbish their militant benefit within the industry. This get out require applying a grouping of two strategies a ordinary processes scheme and a schema pore on expert intermitment. The public processes system was a consequence from a number of industry basis demarcating BAs duty tour down in node fulfillment. The technological development dodge corresponds with the novelty of BAs aircrafts and get out further improve on the whole consumers satisf action mechanism.IntroductionThe chief(prenominal) aim of this report is to direct British Airways strategically using the current strategic post of the friendship and the internal and external environment. After analysing the companys stupefy twain externally and internally using leave tools, a last-place design is bring ind giving a set of strategic options to the company. Finally an appropriate strategic option is evaluated and the methods of implementation ar discussed.British Airways is the UKs largest intercontinental airway. In addition to scheduled service, BA is affianced in the process of multi bailiwick and domestic help carriage of cargo and parcels, and additional services. In association with code sh atomic number 18 and franchise piece of musicners, BA fly to much than 300 destinations, and carried more than than 33 million passengers, earning over 8.7 billion in d ineros in 2007/08. Employee tribe in March 2008 was 42,377 people. After being privatised in 1987, BA has been a competitor in the market and has held a place oecumenical.In the recent, BA has been named the worlds first respiratory tract to take part in a device to shrivel greenhouse gas emissions in 2002 and to allow passengers to print online embarkment passes in 2004. Willie Walsh became Chief Executive of BA in 2005. He has focused the company through the completion of Terminal 5 at Heathrow, amongst different new initiatives. In spite of world(prenominal) economic down BAs future as an international business organisation, looks promising.Current StrategyThe company uses 5 strategic goals for the year 2009/10. They be basically to be the first excerpt airline for the long squeeze amplitude guests, to deliver an outstanding customer service at each and every point, to grow their survival in key spheric cities, to gain a leading position in London, to meet their cu stomer needs and to improve their margins through new tax revenue streams. Long haul premium customers are considered to be their key to their profitability. They go forth use their deep understanding of what is required to be their airline of pickax to drive the design choices on product, network and service. They pass on in addition fight back a strong presence in the cargo economy and picayune haul segments, which play a critical supporting role.Their customer-facing staff leave be passionate about delivering outstanding customer service. They are plan to build through a revolution in the way they lead, carry and reward, so that all customers, on all routes and classes, enjoy a premium experience. They will induct both in improvements targeted at premium customers, much(prenominal) as service readying, and in those benefiting all customers. They aim to provide the outperform global connectivity for customers. They will build their presence in the top global cities , either directly or through their expanding network of airline partnerships. disdain the fact that the established global cities much(prenominal) as London and late York remain critical, they will place a special emphasis on developing their position in the global cities of tomorrow. London is the worlds biggest and nigh competitive international air market. Ensuring Heathrow remains a world-class hub vital comely to give them a strong London animal to serve the largest international long haul markets. To support this, they will look to influence brass policy decisions, and work with the airport owners on the continued development of the infrastructure.1. away AnalysisThis section indicates the external environment of BA as it is very necessary for an airline industry to remain updated about the external environmental factors. It also highlights the position of the industry, its competitors, and its capabilities to meet the current and future challenges.1.1 PESTEL Analysis1 .1.1 semipoliticalHeavy regulation from the UK government has been a major challenge to the company. Hence, it is substantive for BA to comply to the finds if the company has to continue operations. Moreover, since the government has increased earnest due to past terrorist threats, sufficient security mea reliables should be in position to en confident(predicate) consumers self-belief and competitive advantage should be maintained.1.1.2 Economical due(p) to global economic crisis, world product is projected to just over 2 percent in 2009. The value of Pound has begun to slide especially against the Euro. possible reduction in the amount of business travel as companies are cutting embodys and using alternative means of communication such as teleconferencing. Hence BA is vulnerable as an UK operating airline to a poor exchange rate. Oil prices aim been declining by 50 % since their peak retreating to 2007 levels. Decline in fuel price will on the face of it strengthening o f the dollar changeability in oil prices and exchange range will directly affect BAs cost base. UKs consumer spending had its sharpest decline for 13 years surrounded by July and September 2008. Hence at that place is an expectancy of more intense competition in the near future.1.1.3 SocialAccording to the national statistics online, The UK has an aging population since the past decades. Potential opportunities whitethorn arise, as fourth-year generations have more epoch to spend on leisure activities such as international travel. At the like time the increase unemployment may also led to increase in the dicker power as an employer1.1.4 TechnologicalA recent survey discovered that 34% of online clients plan to use price comparison sites more in 2009. This clearly reveals that there is an increase in consumer awareness and therefore bargaining power of the same may also increase. Online booking services and check-in is fitting frequent in the airline industry. Hence BA must ensure that they occlusion up to date with these technological progress at the same time as avoiding becoming overly reliant, as this may separate authentic consumer markets (i.e. the elderly) who dont feel contented using such technology.1.1.5 Environmental/Ethical recent legislation is being implemented every year. Due to tighter environmental rule the operational costs may increase each year for the company. Hence, BA should be aware of both Noise pollution controls, and energy drug addiction controls. Due to limited land and for growing airports involution is difficult. Further expansion at Heathrow is difficult as it may affect the Londons agricultural area. Due to this the company should concentrate on limited capacity aircraft and effective practice of capacity. Failure to implement an incorporated environmental strategy could lead to an uncomplimentary effect on the BAs reputation and income. Cancellations of flights and loss of baggage, such ethical issues could have a electronegative effect on reputation if left changeful1.1.6 LegalLimitations on mergers will have an impact on BAs proposed shackle with Ameri do-nothing Airlines. Recognition of trade unions and industrial action e.g. Cabin crowd strikes are necessary if the company has to withstand in the global market. peachy employee relations are essential if BA wants to avoid industrial action and interrupted operations. Open Skies Agreement is a colossal opportunity for BA and its competitors to freely transport aircraft between the EU and US.1.2 Porters flipper ForcesIt is imperative to meditate the competitive nature of the airline industry to measure the position of BA. The Five Forces tool will be facilitate BA to distinguish strategic decisions in assign to increase the effectiveness.1.2.1 Competitive ambitionBA provides frills for both long haul and short haul flights. Within long haul there is a little isolation between the BA and their early(a) competitors, in terms of pr ice and service contribution. The short haul market is more uneven with many small competitors. Strengthening of competitors has increased the competition. target competitive rivalry is severe, e.g. Virgin Atlantic has a website opposing the proposed strategic coalition of BA and AA. Hence it is found that BA does not pay back in its sector due to its competitors.1.2.2 Power of SuppliersBA is benefited by a high bargaining power since there are two aircraft manufacturers. The repair supplier of fuel to the airport is being permanently stopped by the company. The existing users get the top priority in landing slots fit in to their historic rights. Trade unions help BAs employees by providing them collective bargaining, in order to increase their bargaining power. Hence the power of suppliers does not affect the BAs dexterity in the means of its suppliers.1.2.3 Power of BuyersThe company is found to be more concentrated on its suppliers than the buyers. This is because they have a very little bargaining power. Enhanced usage of lucre has enlarged the awareness and interface between the customers.1.2.4 Threat of New EntrantsHigh environment regularity requirements and high crownwork cost requirements are the new main barriers to the company. The failure of new airline companies such as XL and Zoom is likely to discourage new entrants1.2.5 Threat of SubstitutesThere are a few direct substitutes for short haul flights such as euro star and ferries. No notable substitutes can be found for long haul flights.2. Internal AnalysisIt is promptly main(prenominal) to analyse the internal environment in order to create the adequate strategies.2.1 Resources and Core CompetencesIt is derived that a companys competitive advantage and superior surgical process is calculated from its independent capabilities. The pick based view emphasizing BAs resources and competencies is summarized below.2.1.1 ResourcesThe company runs 245 aircrafts covering over 550 destinations. Additional services such as BA Holi long time The London Eye Company, has been a fruitful resources for the company. The company is well weaponed with an International Customer Database which helps them to keep track on the latest customer information. Partnerships Alliances with one world including American Airlines, increase the companys wealth against the resources. Sole find to LHRs Terminal 5 is a huge boon to the companys stain image. BA is renowned globally as a reputable brand, resistant by its long-lasting survival within the Industry2.1.2 CompetencesThe company has its own training of ground school, flight simulators, and cabin safety training which holds the favourable part in its core competences. The company holds the capability to fly and handle passengers safely on different routes (Open Skies). Their subsidiarys aircraft never have more than 64 passengers per flight, with one flight attendant per twelve customers. They also hold the name as the first UK airline k nown as a training pore by the City Guilds, educating all cabin crew with NVQ Level 2.2.2 deck up Analysis2.2.1 StrengthsBritish Airways is a well-reputed brand name that has happen upond constancy and article of faith from its customers. Modern culture enables BA to take full benefit of technological developments such as, online sales, in house check in. BA has a worldwide geographic exposure with excellent communication with strong international coalitions.2.2.2 WeaknessesBA has however to have recovered from events such as the Iraq war, the 2001 and 2005 terrorist attacks because of its dependence on international air travel. But the hazard still remains. BA continues to have enormous debts. Recent job cuts may have a ruinous effect on BA as in the past this self-denial effect has resulted in understaffing and industrial exploit in 2004 and 2005.2.2.3 OpportunitiesThe increase of meshwork usage worldwide is likely to further expand BAs online customer base Value-added and pioneering flight services such as sleeper services, will take up more customers as customer prospects are heaving. The current UK government hassles Heathrow as a worldwide gateway and proposes a third short trail and sixth terminal be opened by 2020, which will also promote BAs brand image.2.2.4 ThreatsLow-cost airlines continue to benefit from strong growth and power in the market and new entrants and the probability of them being issued with long-haul licenses could create a further hazard to BAs market share. The continuing increase and summercater in fuel prices may threaten them with regards to not attaining a profit margin of at least 10%. Customers are still wide-awake of the threat of repeated terrorist attacks. With the increase of rivalry in the low-cost airline market, more companies may focus their strategy on high note and hence increase the direct opposition for BA.3. Analysis of Strategic preferences found on the scrutiny performed the five roughly viable st rategic options will now be measured further in terms of aptness, adequacy and viability3.1 Strategic Option 1 Development to People proceduresThe study highlighted the most recent negative attention both internally and externally. The Resource found View and SWOT are identified as BAs public criticism for poor customer service and impediment management and disapprovals following a number of unhelpfully handled employment associated cases. A people progression strategy may re attain brand image and stakeholders self-assurance.3.1.1 AptnessLooking at the current economic environment, unemployment is increasing. Therefore, the hazard of industrial action and acquiescence are less possible at this time. BAs current strategies are to stimulate, employ, support and develop employees, together with recuperating baggage handling and delay management. Enhancement in net usage, with more consumers and self-governing services reconsidering and contributing feedback. Better customer relat ions may improve such systems.3.1.2 AdequacyStaffs and consumers are expected to invest high interest into the growth of their relations with the organization due to the negative past experiences. Skytrax emphasizes that customer relations is an important measure for consumers when selecting airlines, increasing the future of high profits.3.1.3 ViabilityThe Resource establish View shows an global consumer database. Admittance to such information could help BA in market research and customer relationship development based on conclusion. The industry and organization is super combined, and are likely to increase support from this exterior body when strategically increasing employee relations.3.2 Strategic Option 2 Enhanced Environmental Position.As recognized within the PESTEL analysis, environmental concerns are becoming increasingly important. An involuntary strategy as a result could be suitable to construct an improved environmental place and go beyond the requirements of para meters such as the climate change.3.2.1 APTNESSBA profits from a resonance brand image which would be further imposed by this strategy. This would rag sure that BA remains a strong global contender by making sure they are meeting changes in socio-economic actions. Customers are becoming more environmental responsive and this strategy would at least make plastered that BAs market share is not negotiated if competitors go in a parallel direction.3.2.2 ADEQUACYChanges in customer choices point out a sharp anxiety for the environment. Therefore this strategy is short risk, especially when link with a low scale of uncertainty. In addition, this strategy will make sure that BA is recognizing and meeting customer demands.As the necessities of environmental rules are repeatedly increasing, it would be valuable for BA to be the first hauler in the industry and make changes prior to any of its competitors.3.2.3 VIABILITYAssets may be better engaged elsewhere, as spending in environmentalst rategy may not increase profits. BA must be certain that it will be able to winnerfully follow such a strategy as if it would not succeed it would be open to public enquiry which could break its current strong brand image.3.3 Strategic Option 3 Enhanced Technological Position.The technological capabilities of an airline is increasingly move consumer choice of airlines, from both holiday and business fliers. Better development of the in-flight services will improve their overall service, increasing long-standing profits.3.3.1 APTNESSThe in-flight entertainment comforts need to be greatly enhanced and belong more consistent. This will guide to a long-term development in the number of passengers. numerous of BAs major competitors are beginning to bring in basic lucre facilities on selected flights. Therefore it is in its importance to keep up with the rivalry and surpass it by bringing in internet access on all flights. BA is at present on a service of one flight from London City Airport to JFK, New York. BA also needs to contend with other modes of travel, which already have internet capabilities. By applying the strategy, BA can refresh its image even as maintaining conventional principles.3.3.2 ADEQUACYWide-range testing has found the internet connection to be consistent, with loss of connection only taking place for a pas de deux of seconds during unfavorable weather conditions. Project set upment takes only 3 days per plane.3.3.3 VIABILITYPossession of the operations is less expensive and more dependable than the toss away Connexion service offered by Boeing. BA has a sagging resource in the technology section needed to apply this strategy. BA must implement this technology first time effectively otherwise, it will catch serious denigration and could mess up its long-standing image4. Conclusions and RecommendationsOn the examining the strategic options it has been determined that before growth strategies are followed BA should concentrate on protect ing its current market place and attaining elementary service class. Based on this the people progressions and technological development strategies are believed most suitable for performance.British Airways remains vigilantly hopeful about its future prospects. However, it is sure that significantly more work lies further on if the airline is to accomplish their goals. The FSAS plan integrated by BA resulted in substantial cost savings, and also raised funds to repay debts. The objective of the FSAS plan was to achieve a 10% functioning margin and hence more recent cost cuts and job losses have been made by the chief executive officer in order to achieve this.In air travel, the fact of success or failure depends on peripheral factors, with BA suffering earnestly in the consequences of the 2001 and 2005 terrorist attacks, the war in Iraq and the worldwide economic slowdown. However, the one most important external factor is the cost of fuel. Fuel costs are continuing to rise and th is is likely to both corrode income and hoist prices for BA. wage increase prices could rest BA in a detrimental position, particularly tending(p) the continued fame of low cost airlines.The CEO must understand that the important growth area for BA is likely to be in value-added services. In some parts, BA found that it could improve consumers experience while deducting costs, such as in its rising up of online sales. Other value-added services are likely to see mid-priced flights being improved, as air travel persists to become more competitive.On the whole, BA must continue to endeavour to reduce costs and improve customers and employee fulfilment.