The organization that has been chosen is British Airways and British Heart Institute. British Heart Institute was founded in the year 1961 by a group of medical professionals with an aim of funding research on the cardiovascular diseases. They also educate individuals about reducing the potential risks of Heart diseases and support those who are suffering from heart diseases. British Airways plc. Is an International Airline with the largest fleet size in UK and its parent company International Airline group is one of the leading airline groups of the world. It was incorporated in the year 1924 as Imperial Air transportation Ltd. In London. They are famous for providing comfort and premium services on board to their customer across 70 different countries worldwide (IAG, 2017).
British Heart Foundation is a non-profit organization with a vision of creating a world where no one dies prematurely from heart diseases. It is a company limited by guarantee, incorporated in London and their board is made up of 14 trustees who govern the operations of British Heart Foundation (BHF, 2017). Their donation amount for the year 2016 was £ 91,036,000 (The guardian, 2016). British Airways is a public limited company and the company is governed and managed by its CEO Alex Cruz. The parent company British airways, IAG recorded an operation profit of 2.5 billion euros in the year 2016 (Smout, 2017).
Unlike British airways, the British hear foundation operates only in UK and conduct research activity so as to prevent and fight heart diseases. They work mainly on donations. On the other hand the British Airways has marked their presence in over 70 countries and provide premium flying experience to customers to earn profits. Also, British Heart institute has been the biggest funder of the research on cardiovascular disease but British Airways has a very strong competitor Ryanair.
PESTLE Analysis is analytical tool used by an organization or marketer to identify the external factors that affects or may affects the operations of an organization. Pestle stands for political, economic, social, technological, environmental and legal factors. Pestle analysis of British Airways is as follows:
Political Factors: The major political factors that affect British Airways are political instability in the country arising due to various terrorist activities. In the year 2016, March there was an attack on Brussels airport which heavily impacted the flying operations of British Airways and it heavily impacted the share prices and revenues of IAG in that quarter (BBC, 2016).
Social Factors: British Airways have created a distinct identity in the minds of travellers due to their long haul flights that provide a memorable customer experience on board. Though their cost is a bit high as compared to its competitors such as Easy jet and Ryanair but they ensure premium travelling experience to its customers.
Legal Factors: British Airways remain continuously in the limelight due to frequent cabin crew strikes for a fair pay deal. This creates a legal obligation on them and directly affects their public image (BBC, 2017). They were also charged for spying on their crew members that was ethically wrong and they had to pay a compensation of £1m to union members (Cusik, 2015).
The biggest threat to the legacy of British Airways who is ruling the UK’s airline market since nearly four decades have been facing a strong competition from Ryanair. Ryanair is Dublin based low cost airline who is giving a strong face off to British airways in terms of cost and capacity. In 2015, Ryanair increased their capacity by 13 percent as compared to British Airways who just increased by 4 percent (Morris, 2016).
Perception: The British Airways have been perceived as a premium airline service that provide a luxury customer experience during travelling but Ryanair as budget friendly airlines have captures the travellers market. Also Ryanair provides more services such as more legroom as compared to British Airways during short haul flights (Paris, 2017). British Airways is often preferred by business travellers.
Motivation: The reason for travelling in airlines is due to the urge and desire to travel places. Travelling and exploring is the biggest motivation of an individual when they travel. The airlines should make the journey of individual memorable by providing them a customer delight. Ryanair has been doing this quiet efficiently by providing them quality services at affordable cost. British Airways is famous for their business class and club class which may not appeal to travellers.
Subculture: As discussed above the services provided by British Airways focus on business travellers. They are famous for their premium and executive club class which means business travellers or occasional travellers. They do have economy class but the services provided Ryanair easily out passes British Airways services.
Reference Groups: An individual’s decision of availing the airline service is much affected by its reference groups comprises of friends and relative who have travelled in the airlines.
Culture and social class: The service of Ryanair is often availed by middle class travellers. Business class or elite class travellers irrespective of the services and price offered in the Ryanair will prefer to travel from British Airways because of brand premium status.
Earning profits is not the only thing but earning it ethically is what is required. There are several issues in British Airways that are needed to be addressed.
- Safety of passengers: There are number of instances of past that directly pinpoints the safety issues in British Airways. In 2015, British Airways plane crash landed at Heathrow airport risked the lives of many passengers. The reason was over speeding (Gysin, 2015).
The major advantage of following proper safety norms during the time of landing and take-off, the organization can ensure customer retention and customer trust in the brand again.
The disadvantages can be cost involved in training the pilots and meeting additional safety requirements.
- Cost: Each competitor is fighting hard in order to gain a cost advantage. Due to the dominance of low fare flights like EasyJet and Ryanair, British airways have cut down their services such as check-in bag age fare, discontinuing free meals and not providing enough lavatory papers (Trend, 2017). British Airways are known for their premium services but these issues will directly impact on their brand image. The disadvantage will be it will not be possible to deliver premium services at economical prices.
If the organization resolves these issues the major advantage will be customer loyalty towards brand. They will not switch to some other airlines, what holds them is the quality services offered at great price.
- Fair pay to employees: Crew members going on a strike for a pay is quite common in British Airways. In the year 2016, they earned unexpected profits due to low fuel prices, the employees wants a fair share from the profits. The advantage of this will be uninterrupted flights and higher customer satisfaction. The disadvantage will be, it is not necessary the demands of the crew are reasonable and it may cost the firm.
Globalization is a process of investing in a business opportunity outside the home country. The major drivers of globalization are:
- Expansion in new market segment
- Cost Advantage
- Competitive Edge
Qatar Airways is a gulf carrier which is headquartered in Doha has increased their stake in British Airways parent company, IAG. Qatar is the largest shareholder of IAG has entered into a joint business venture of sharing cost and revenue on services between London and Doha (Katz, 2016). The motive behind entering into this Joint venture is to improve the frequencies of flights and their schedule. This pact was signed in 2016 and came into the effect from October, 30.
- Expansion into new market segment: By tying up hands both Qatar Airways and British airways have grabbed an opportunity to exploit each other’s market. British Airways will be able to expand its operations in countries like Pakistan, Iraq, and Ethiopia etc. and on the other hand Qatar Airways will be to explore cities in UK and continental Europe (Ambrose, 2016). Hence the customer base for both the airlines will expand and the brand image of both will increase in the airline industry.
- Cost advantage: Expansion is a very costly process. When a firm decides to enter into a new market it requires the complete knowledge of customer segmentation and demand expectations etc. But for both the airlines the road had become easy. By sharing codes and operating in new destination has cut down the cost of entering into the new market. Also it gives the potential passengers of both the flights to access the new prices of both the airlines and grab a great deal.
- Competitive Edge: British Airways is facing a very strong competition from the low budget airlines EasyJet and Ryanair. By entering into a joint venture, both British Airways and Qatar have strengthened their brand image from its competitors.
Ambrose, J. 2016. Qatar strengthens ties to British Airways with flight sharing deal. Retrieved from https://www.telegraph.co.uk/business/2016/09/28/qatar-tightens-ties-to-british-airways-with-flight-sharing-deal/ on 4 April 2017.
BBC. 2016. BA owner IAG slows growth plans after Brussels attacks. Retrieved from https://www.bbc.com/news/business-36167287 on 4 April 2017.
BBC. 2017. BA cabin crew to stage a new seven-day strike over pay. Retrieved from https://www.bbc.com/news/business-39074816 on 4 April 2017.
BHF, 2017. Who we are. Retrieved from https://www.bhf.org.uk/about-us/who-we-are on 4 April 2017.
Cusik, J. 2015. British Airways 'spying' scandal: How the world's most famous airline spied on its own staff. Retrieved from https://www.independent.co.uk/news/uk/home-news/british-airways-spying-scandal-how-the-worlds-most-famous-airline-spied-on-its-own-staff-10076738.html on 4 April 2015.
Gysin, C. 2015. Boeing 777 that crash landed at Heathrow is one of the safest aeroplanes in the world, say experts. Retrieved from https://www.dailymail.co.uk/news/article-508869/Boeing-777-crash-landed-Heathrow-safest-aeroplanes-world-say-experts.html on 4 April 2017.
IAG, 2017. About us. Retrieved from https://www.iairgroup.com/phoenix.zhtml?c=240949&p=aboutoverview on 4 April 2017.
Katz, D.B. 2016. British Airways Forms Joint Business With Investor Qatar Air. Retrieved from https://www.bloomberg.com/news/articles/2016-09-28/british-airways-signs-joint-venture-pact-with-investor-qatar-air on 4 April 2015.
Morris, H. Ryanair poised to overtake BA as biggest UK airline. Retrieved from https://www.telegraph.co.uk/travel/news/ryanair-set-to-overtake-british-airways-as-uk-top-airline/ on 4 April 2015.
Smout, A. 2017. BA owner IAG reports profit rise, share buyback. Retrieved from https://uk.reuters.com/article/uk-iag-results-idUKKBN1630MA on 4 April 2017.
The Guardian, 2016. Britain's top 1,000 charities ranked by donations. Who raises the most money? Retrieved from https://www.theguardian.com/news/datablog/2012/apr/24/top-1000-charities-donations-britain on 4 April 2017.
Trend, N. 2017. Where now for beleaguered British Airways, your favourite airline – but for how much longer? Retrieved from https://www.telegraph.co.uk/travel/comment/british-airways-identity-crisis-where-now-for-the-airline/ on 4 April 2017.