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Overview of British Airways

Question:

Discuss about the Depth Knowledge of British Airways.

British Airways is considered as one of the prevalent top airlines globally.  It is the biggest airline in United Kingdom employing around 40,000 people and convoy of over 280 aircrafts with its head office in Harmondsworth. On 25th August, 1999, the company completed 90 years in the business. Truly regarded as favourite airlines globally, it serves around 35 million cups of tea to around 40 million customers yearly and began its journey in the airline industry with only one commuter (Direct Traveller, 2015). The airline has its central hub at London Heathrow and covers around 170 places in over 70 countries around the world (Media Centre British Airways, 2016). The company has its main operations in US and Europe.

In today’s scenario, airline industry is facing numerous changes and challenges which requires constant modernization and development. However, British Airways have been running successfully but is lately facing solid competition from competitors such as Lufthansa. Government guideline refusal, intermittent oil prices, natural catastrophe, information technology breakdown, safety issues are some of the problems faced by the company. The business strategy followed by the said organization is of service distinctness which is attained with superior passenger services. The airlines long term vision is of becoming prime quality airline worldwide. To be quality consumer’s first choice in extensive route destination, fulfilment of consumer needs, and expansion of profits through innovative income ways are the goals of the company. The airlines advantage that helped it in becoming the leading market stakeholder lies in its excellent services and geographical expansion through availability of flights in several countries worldwide. The company made huge profits of around $15.9 billion in the year 2010 (Dhall, 2017). British Airways has done tremendous efforts in sustaining itself in the market despite of the challenges. However, the company faces some tactical development issues regarding internal possessions, individuals who should be part of decision making and with the external surroundings. The company follows ANSOFF MATRIX which deals in market diffusion and expansion and product growth and diversification and is currently following red ocean strategy (Sinjini, 2017). It also follows five product strategies of core product, basic product, expected product, argument product which provides extra value to its customers.

The said airways has made a potential groundwork with a huge gain of 1,473 million pounds in the year 2016 (British Airways Plc, 2016).In the same year, increase in yearly reported profit of around 65% was achieved owing to reduced fuel costs and increased demand by the International Airlines Group. The said group which resulted as a merger of British Airways and Iberia in the year 2011 reported an increase in operating profit from 1.39 billion euro in the year 2014 to 2.3 billion euro in the year 2015 (Powley, 2016). The objective of the company is earning at least 15% return on capital and 12-15% effective yield margin. For the achievement of the same, it has projected that by the year 2020; almost 99% of the extensive plane will have to substituted or reconstructed. Overall advancement in customer service with instalment of Wi-Fi services is projected. Further, investment of funds for further advancement of technology is also anticipated (Dudovskiy, 2016). Despite of continuous strikes, the company is still earning profits.

Current Challenges in the Airline Industry

On the basis of the above strategies and performance of the company, it is clear that all the business and marketing strategies adopted by the company are effective and efficient which is clear from the success of the company despite of certain issues faced by the company.  The directors of the company are liable to prepare reasonable fiscal statement in accordance with the appropriate accounting policies. Duly observance of intense instruction imposed by government is required. Adequate safety ways are required to have a competitive environment. Instability in fuel and exchange rates also affect company’s performance. With the mounting rates of unemployment, the company possess the advantage of negotiating power. The company has constructed Plan 4 which is fabricated on four principal tactical grounds namely customer, operations, efficiency and people. Taking care of modernization and maintaining elevated standards of services and giving customers wide range of varieties to choose from, running its operation securely, consistently and correctly, to manage its capital and becoming more cost efficient and correct utilization of its workers are the main focus areas for British Airways. Customer is the topmost priority and for the satisfaction and enhancement of the same, consistent funding is projected of putting up of Wi-Fi across all airlines.

The company has been successful in forming a balanced set of performance meters for their business which are both monetary as well as non-monetary. This balance scorecard has helped them to find out their flaws and improve upon the same. As a critical part of the planning which would help the company achieve its targets, the board determines the yearly targets for every KPI. The BSC is one of the main methods which help in the formulation of strategies and implanting the same. British Airways has been able to succeed in the airline industry simply because of the BSC followed. Each and every department of the company used the said technique so as to achieve its goal. They conducted SWOT analysis which helped them understand their strengths and weaknesses and the opportunities as well which they should take care of and also learnt the weaknesses of the other competitors which they took advantage of to succeed in this industry. With regards the monetary part, balanced scorecard has been helpful for the company as it ensured eradication of wastes which in turn took care of the financial performance automatically. British Airways scorecard comprises of its vision and mission, internal approach to business including its partners and shareholders and performance. Customers and employees satisfaction and financial stability which is achieved after applying all these forms a part of the balanced scorecard of the company. Hence, keeping in mind its goals and interests of its customers, shareholders, operations and its employees it can and has achieved its standing in the industry.

Business and Marketing Strategies of British Airways

At the end, from the above facts, findings and implications of findings, we conclude that with the aim of becoming the world’s largest quality airlines, the company is at the right track in terms of profitability and customer satisfaction. However, to maintain so it is required to fulfil its key performance indicators which are in terms of fiscal standing of the company, customer’s satisfaction, vigorous operations and ethical work environment. Since the company has projected to make huge investments in innovation and technology, it is liable to perform well in terms of finances. Company’s success is well established from its operating profits which is clear from the fact that company goal of attaining 10% operating gain projected in the year 2002 was accomplished in the year 2007/08 (British Airways Plc,2009). Hence, it should make consistent efforts for maintaining its dominance by financial stability.

 Second way of assessing company’s performance is through client commendation. This recommendation provides an insight to the company how well satisfied their passengers are and also affects probable profitability as this would show how they are promoting the brand by recommending them to others. Hence, it is highly recommended to correctly analyze customer suggestion. Implementation of healthy operations of the business is also recommended which is measured by the promptness of the flights to leave. This not only ensures adherence to timely operations by the company but also saves company a lot of cost which would be high in case of delays in flight. Employee review, their satisfaction and consideration of their opinion matters a lot to an organization. Strict adherence to rules and regulations set by the company and continuously involving them and drawing their opinions through various means is also highly recommended and the airlines is taking correct steps to follow them in order to maintain its success and to improve its performance in future. Also, the company should follow blue ocean strategy to maintain its dominance in the field.

References:

Direct Traveller. (2015). 6 Facts You Didnt Know About British Airways.  Retrieved from https://www.directtraveller.com/blog/6-facts-you-didnt-know-about-british-airways/

Media Centre British Airways. (2016). BRITISH AIRWAYS FACT SHEET. Retrieved from https://mediacentre.britishairways.com/factsheets/details/86/Factsheets-3/33

Dhall, R. (2017). A review of the marketing strategy of British Airways and its effectiveness. Retrieved from https://www.academia.edu/7763431/A_review_of_the_marketing_strategy_of_British_Airways_and_its_effectiveness

British Airways Plc. (2016). Annual Report and Accounts Year ended31st December2016  Retrieved from file:///C:/Users/hp/Downloads/British%20Airways%20Report%20and%20Accounts%20year%20ended%2031%20December%202016.pdf

Powley, T. (2016). Low fuel costs lift profits at British Airways owner IAG. Retrieved from https://www.ft.com/content/38c54aea-dc68-11e5-98fd-06d75973fe09?mhq5j=e7

British Airways Plc. (2009). Our Key Performance Indicators. Retrieved from https://www.britishairways.com/cms/global/microsites/ba_reports0809/pdfs/KPIs.pdf

Sinjini, S. (2017). Strategic management of British Airways. Retrieved from https://www.academia.edu/20111286/strategic_management_of_British_Airways

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