Modulecode: |
BMAF004-20 |
Moduletitle: |
IntroductiontoBusinessandManagement |
Assignment: |
S1.GroupPresentation (Face-to-face presentations will be taken in week 11, 12 and 13 by Module Lecturer) |
Wordcount: |
3,000 |
Contributiontomodulemark: |
100% |
Moduleleader: |
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Assessmentoutline(fromthemodule specification): |
InyourgrouppresentationyouwillanalysethetheoriesandmodelsrelatedbusinessandmanagementforaUKbasedbusiness. |
Student ID: |
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Student Name: |
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Table of Contents
3. Key weakness and strengths of British Airways 11
4. Organisational structure of British Airways 13
5. Discussion of the current issue that British Airlines is experiencing and Recommendations 15
1. Introduction
British Airways (BA) is the flag carrier and largest airline of the United Kingdom which was established in 1974 with its headquarters located at Waterside, London (British Airways, 2024).
This group presentation will focus on British Airways to explore the suitability of the business environment and the organisational structure of the company.
Speaker notes
In March 31, 1974, the first flight of British Airways took off that started the journey of providing high-quality air travel. The airline offers a range of services across its network including short-haul and long-haul flights to destinations across Europe, North America, Asia, Africa, and the Middle East. The company has grown to become one of the world's leading airlines that is renowned for its extensive global network, commitment to service excellence, and innovation in air travel.
2. PESTEL Analysis
PESTEL Analysis is a strategic management tool that is used to analyse and evaluate the external macro-environmental factors that could affect an organisation (de Sousa and Castañeda-Ayarza, 2022).
The corruption index of the UK was observed at 73 points in 2022 which has plummeted to 71 points in 2023 (Trading Economics, 2024).
Positive
The UK government may engage in bilateral agreements or trade deals that could open up new markets or improve access to existing ones for British Airways.
Speaker notes
The overall political stability of the UK allows continued investment in critical infrastructure like airports and air traffic control systems. British Airways can benefit from improved facilities and technological advancements that enhance operational efficiency and passenger experience. The UK generally has a well-established regulatory framework for aviation even with concerns related to corruption. British Airways can leverage existing regulations and standards to ensure safety, security, and compliance which could create a stable operational environment.
Negative
It indicates that corruption is on the rise in the UK that can have negative influences on British Airways. This trend can create an environment where bureaucratic inefficiencies, bribery, and regulatory challenges become more prevalent. British Airways might face operational hurdles, delays in regulatory approvals, or increased costs that are associated with handling a more corrupt environment. Corruption can lead to unpredictable costs and potential financial losses as the airline may encounter higher expenses related to compliance or inefficiencies in its operations that will affect the profitability of the brand. Furthermore, political instability and corruption can result in frequent changes in policies and regulations which can create an unpredictable business environment for the company.
Economic
About 11.1 per cent was the inflation rate of the UK in October, 2022 which has received a significant reduction to 2 per cent in June, 2024 indicating a cost stabilisation of services and goods (Statista, 2024).
Figure 1: Inflation rate in the United Kingdom
(Source: Statista, 2024)
Positive
This decline can lead to lower operating costs for British Airways as expenses related to fuel, maintenance, and other operational inputs become more manageable. Lower inflation typically means increased disposable income for consumers as passengers will have more disposable income to spend on travel. Hence, British Airways will immensely benefit from this due to the boost in demand of travelling which will also boost the revenue of the organisation. British Airways can more effectively manage pricing strategies and avoid drastic fare increases that might deter passengers due to the lower rate of inflation. This stability in pricing can attract more customers and enhance competitive positioning in the aviation market. Economic stability provides a favourable environment for British Airways to invest in fleet expansion, technology upgrades, and service improvements. This can enhance the competitive edge and long-term growth prospects of the brand that will be beneficial its market ranking.
Negative
About 3.9 per cent was the rate of UK’s unemployment in November 2023 which has escalated to 4.1 per cent in July 2024 (Trading Economics, 2024).
It shows the inability of the citizens in the UK to invest in leisure activities like travel, as they will not be able to create appropriate income for themselves. Certain segments of the population may remain financially constrained which will influence the overall travel demand and affect the revenue for British Airways. Thus, it would significantly affect the operations of the company, as they will not be able to maintain their position within the market. Moreover, underlying inequalities of the economy might be present that could have an impact on the consumer behaviour.
The gross domestic product per capita in the United Kingdom decreased to 33257 British pounds in 2023 from the 33497 pounds observed in the year before.
Figure 2: Gross domestic product per capita in the United Kingdom from 1955 to 2023
(Source: Statista, 2024)
Positive
Despite the decrease in the per capita income, the brand can optimise its services by providing tailored travel packages that are more affordable and fulfil the requirements of the customers.
Speaker notes
British Airways can explore market segmentation strategies to target different consumer segments despite the GDP per capita decrease. The organisation can leverage its loyalty programs to retain and attract customers by offering incentives and rewards that appeal to frequent travellers and those who are looking for value-added benefits. British Airways can prepare for future upswings by investing in strategic initiatives and strengthening its market position.
Negative
This decline in disposable income can result in decreased consumer spending on non-essential items like travel. British Airways might experience reduced demand for both leisure and business travel as individuals and businesses will start to cut on discretionary expenses. A decrease in GDP per capita may reflect broader economic uncertainties or challenges that will reduce the confidence of the consumers. It will affect the travel decisions and lead to reduced bookings and revenue for British Airways. Consumers might become more cost-conscious and seek cheaper travel options due to this decrease. Thus, British Airways may face increased competition from low-cost carriers and passengers might be more inclined to choose budget-friendly travel alternatives. It will impact the market share of the airline as economic downturns will shift the priorities of consumers and the preferences of travel.
Approximately 94.8 per cent was the rate of internet penetration in 2020 that has experienced an increment to 95.3 per cent in 2021 and remained same in the 2022 (Statista, 2024).
Positive
British Airways can leverage digital connectivity to enhance the customer experience due to the higher percentage of internet penetration.
Speaker notes
This includes offering advanced online booking systems, mobile apps, and personalised digital services that can streamline the travel process for passengers. British Airways can use digital platforms for real-time updates, promotions, and customer service which can help to improve engagement and satisfaction of the customers. As high rate of internet penetration will facilitate the development of better channels of communication with the customers, British Airways can perform operations that are more profitable. The widespread use of the internet allows British Airways to collect and analyse vast amounts of data on customer preferences and operational performance.
Negative
The high rate of internet penetration means that consumers have access to a wide range of digital tools and platforms to compare and book flights. The risk of cyber security threats will experience a significant rise due to the boost in the internet penetration rate. British Airways must invest in robust cybersecurity measures to protect sensitive customer information and maintain trust of the customers. Data breaches or cyberattacks could lead to financial losses and inflict damage to the reputation of the airline. Moreover, the reliance on internet-based systems for operations, booking, and customer service can introduce potential vulnerabilities to the organisation. Any technological disruptions or system failures can affect operations and customer experience of the company.
An environmental goal has been set by the UK government where it is expected to acquire net zero emissions of carbon by 2050 (SGI, 2022).
Positive
Numerous customers are prioritising eco-friendly travel options due to the growth of environmental sustainability’s global awareness.
Speaker notes
British Airways can capitalise on this trend by promoting its commitment to reducing carbon emissions and attracting environmentally conscious travellers. The company can enhance its brand image and customer loyalty by positioning itself as a sustainable airline within the industry. Hence, British Airways can actively contribute to the global fight against climate change by aligning with the net zero carbon emission goal of the nation’s government. This commitment not only enhances the airline's reputation but also ensures its long-term viability in a world where sustainability will increasingly define industry standards.
Negative
This puts significant pressure on British Airways to comply with stricter environmental regulations of the UK government. Implementing carbon reduction initiatives, such as adopting greener technologies, sustainable aviation fuels, or carbon offset programs; can lead to increased operational costs. Achieving net zero emissions requires substantial investments in new aircraft technology, infrastructure, and alternative fuels. British Airways may face challenges in accessing affordable and scalable solutions that meet regulatory standards while maintaining profitability of the company. British Airways may need to adjust flight routes, implement fuel-efficient procedures, or adopt lighter materials to reduce carbon emissions. The need to reduce emissions may lead to fewer flights or capacity constraints on short-haul routes as the airline will strive to minimise its carbon footprint. This could limit the brand’s service offerings and impact customer convenience if alternative transportation methods become more viable in the market.
The government of the UK provides legal support and rights to its citizens that includes legal aid, work disputes, discrimination, and consumer advice (GOV.UK, 2024).
Positive
The legal framework surrounding work disputes and discrimination ensures that British Airways will maintain fair and transparent employment practices.
Speaker notes
Compliance with these laws will help to foster a positive workplace culture which will improve employee satisfaction and morale. A well-protected workforce can result in better productivity and lower turnover rates that will benefit the overall operations of the brand.
Negative
The government of UK’s provision of legal support and rights related to employment practices means British Airways must strictly comply with labour regulations. This includes adhering to employee rights, workplace safety, and fair wage practices that will ensure equal rights are provided to every staff of the organisation. However, the violation can lead to costly legal battles, fines, and reputational damage for the company.
3. Key weakness and strengths of British Airways
Key Strengths of British Airways
Strong Brand Reputation: British Airways (BA) is one of the world’s most recognised and trusted airlines which is known for high-quality service, reliability, and safety standards.
The long-standing reputation of the organisation allows it to attract both leisure and business travellers to it (Page and Connell, 2020).
Speaker notes
Global Network and Alliances: BA has an extensive global network with flights running in various destinations including over 65 nations all around the globe (British Airways Media Centre, 2023). It indicates the huge network and reach of the company that has the potential to generate a huge amount of revenue every year.
Interrelation with external environment
The UK’s political stability supports continuous investment in critical infrastructure like airports which aligns with British Airways' strength in maintaining a global network and alliances.
Key Weaknesses of British Airlines
High Operating Costs: As a legacy airline, BA has higher operating costs compared to low-cost carriers (LCCs) that include costs associated with its labour, aircraft maintenance, and premium services.
Interrelation with external environment
The rise in corruption introduces challenges such as delays in regulatory approvals and higher operational costs which would exacerbate the high operating costs of British Airways.
Speaker notes
Increased corruption can also affect the airline’s ability to maintain its strong brand reputation as it may encounter bureaucratic inefficiencies that would affect the service quality of the company.
Labor Disputes: One of the staff of British Airways has dropped a rating of 2 out five stating numerous cons of the organisation (Glassdoor, 2024).
Figure 3: Employee review of British Airways
(Source: Glassdoor, 2024)
Thus, it shows that BA has faced multiple labour disputes with unions over pay, working conditions, and employee benefits. Strikes and industrial action have negatively impacted operations and customer satisfaction in the past.
4. Organisational structure of British Airways
British Airways operates with a hierarchical organisational structure that allows clear lines of authority, efficient decision-making, and effective coordination of its global operations.
The structure incorporates various elements of functional, divisional, and matrix structures which ensure that the company can address both global market needs and operational efficiency.
Figure 4: Org Chart
(Source: The org, 2024)
Speaker notes
A hierarchical structure is followed by the organisation where authority and decision-making are distributed in a top-down manner. Senior executives at the top make strategic decisions while middle managers and front-line employees handle day-to-day operations and tactical decisions. This allows initiating control over processes and ensuring compliance with regulatory and service standards in the aviation sector. The top-Level Management includes the CEO, the Board of Directors, and key C-suite executives like Chief Financial Officer and Chief Operating Officer with the CEO being Sean Doyle (British Airways Media Centre, 2024). They set the strategic vision for the airline, such as expansion into new markets, fleet management, or sustainability initiatives. Middle-Level Management includes departmental heads and regional managers who oversee specific operational areas like marketing, customer service, finance, or flight operations. These managers ensure that strategies are implemented correctly across all functional areas and regions of the company. Supervisors and team leaders are responsible for executing operational tasks while ensuring employee performance aligns with the policies of the organisation.
British Airways also implements certain elements of a matrix structure for specific projects where employees from different departments and functions collaborate on tasks related to project management. For example, the Sustainability Initiative may require collaboration between the Operations, Finance, and Marketing departments to fulfil the commitment of British Airways to net zero emissions by 2050 (British Airways, 2024). Employees report to both their functional heads and the project manager overseeing the initiative that helps to ensure seamless operations. The matrix approach is especially useful in managing cross-functional projects where rapid innovation and collaboration are needed to address challenges like technological upgrades, fleet expansion, or sustainability goals.
5. Discussion of the current issue that British Airlines is experiencing and Recommendations
British Airways (BA) is currently experiencing significant challenges related to labour disputes and employee dissatisfaction which have adversely affected its operations, reputation, and customer satisfaction.
Out of five, the company has received a rating of 3.6 based on 3461 reviews of its staff which shows the low morale of the employees (Glassdoor, 2024).
Figure 5: Employee reviews
(Source: Glassdoor, 2024)
Speaker notes
These disputes often centre on issues such as pay cuts, working conditions, benefits, and job security which can lead to frequent strikes and industrial actions. Some workers are giving the airline a low rating due to perceived issues like inadequate pay, long hours, and insufficient benefits. This labour unrest creates operational disruptions, customer dissatisfaction, and increased costs for the airline.
Problem Solving Approach
The root cause of the labour dispute stems from the following factors:
Inadequate Compensation: BA's employees feel that their compensation packages are not aligned with the level of work and responsibility required. This is further boosted by the airline’s attempts to cut costs in light of its high operating expenses.
Poor Working Conditions: Employees have raised concerns about demanding work hours, lack of proper rest, and job insecurity which contribute to low morale of the employees.
Insufficient Communication: There is a perception that the management does not engage effectively with employees during periods of change which could lead to a breakdown in trust.
6. Group Solution and Recommendations
Review and Adjustment of Compensation Packages: Conducting a market analysis will help to ensure BA’s salary and benefits are competitive with other airlines and industries (Harvey and Turnbull, 2020).
Compensation should reflect the skills and experience of employees as well as the increasing demands of their roles.
Speaker notes
Introducing profit-sharing programs where employees can benefit from the company's financial successes will be effective. This will foster a sense of ownership and align employee interests with the company’s profitability.
Improvement in Working Conditions: Offering more flexible work schedules and ensuring that employees will have sufficient rest between flights or shifts will not put extra stress on their minds. This is especially critical for flight crews and ground staff who are often subjected to irregular hours.
Strengthening Communication and Employee Engagement: Establishing an employee relations task force that can act as a bridge between management and staff will ensure open lines of communication regarding any changes in company policies, compensation, or work conditions. British Airways can also conduct regular employee surveys to gather feedback and understand the concerns of its staff directly which can help management address grievances before they escalate into disputes.
Enhancing Employee Morale through Recognition Programs: Implementing formal recognition and reward systems will allow to acknowledge outstanding contributions by employees. Whether through employee-of-the-month awards or bonuses for excellent performance, showing appreciation for staff efforts can significantly improve morale of the staff. It can promote team-building activities that strengthen relationships among employees and between staff and management. Creating a supportive and collaborative work environment can reduce workplace tensions among the employees.
Investing in Automation and Technology: British Airways could invest in automation and AI-driven tools to streamline administrative tasks and it would allow employees to focus more on service delivery and improving the passenger experience. Deploying technology-driven scheduling systems can better allocate employee shifts will help to ensure proper workload distribution and minimise burnout (Blake, 2023).
6. Conclusion
In conclusion, the analysis of the external environment of the UK displays that the nation has both threats and opportunities for British Airways.
They align with the core weaknesses and strengths of the organisation that can affect the overall performance of the company.
Speaker notes
It can be concluded that the ongoing labour disputes and employee dissatisfaction of British Airways present significant challenges to its operations and brand reputation. Addressing these issues requires a comprehensive approach focused on enhancing compensation, improving working conditions, fostering open communication, and investing in employee well-being.
7. References
Blake, S. (2023) Management Preconditions to Mitigate Virtual Employee Burnout: An Innovation Study. University of Southern California.
British Airways (2024) Explore our past. Available at: https://www.britishairways.com/content/information/about-ba/history-and-heritage/explore-our-past (Accessed: 16 September 2024).
British Airways (2024) Planet. Available at: https://www.britishairways.com/content/information/about-ba/ba-better-world/planet#:~:text=We're%20committed%20to%20achieving,in%20newer%2C%20more%20efficient%20aircraft(Accessed: 20 September 2024).
British Airways Media Centre (2023) Iberia joins British Airways and Qatar Airways to expand the world's largest airline joint business. Available at: https://mediacentre.britishairways.com/pressrelease/details/17303 (Accessed: 16 September 2024).
British Airways Media Centre (2024) Sean Doyle - Chairman and Chief Executive. Available at: https://mediacentre.britishairways.com/factsheet/details/254#:~:text=Sean%20Doyle%20was%20appointed%20Chief,career%20as%20a%20financial%20analyst.(Accessed: 20 September 2024).
de Sousa, G.C. and Castañeda-Ayarza, J.A. (2022)‘PESTEL analysis and the macro-environmental factors that influence the development of the electric and hybrid vehicles industry in Brazil.’ Case Studies on Transport Policy, 10(1), pp.686-699.
Glassdoor (2024) British Airways. Available at: https://www.glassdoor.co.uk/Reviews/British-Airways-Reviews-E3462.htm (Accessed: 16 September 2024).
Glassdoor (2024) British Airways. Available at: https://www.glassdoor.co.uk/Reviews/British-Airways-Reviews-E3462.htm(Accessed: 20 September 2024).
GOV.UK (2024) Your rights and legal support. Available at: https://www.gov.uk/browse/justice/your-rights-legal-support (Accessed: 16 September 2024).
Harvey, G. and Turnbull, P. (2020)‘Ricardo flies Ryanair: Strategic human resource management and competitive advantage in a Single European Aviation Market.’ Human Resource Management Journal, 30(4), pp.553-565.
Page, S.J. and Connell, J. (2020)‘Visitor attractions.’ Tourism, pp.187-215.
SGI (2022) Environmental Policies. Available at: https://www.sgi-network.org/2022/United_Kingdom/Environmental_Policies (Accessed: 16 September 2024).
Statista (2024) Gross domestic product per capita in the United Kingdom from 1955 to 2023. Available at: https://www.statista.com/statistics/970672/gdp-per-capita-in-the-uk/ (Accessed: 16 September 2024).
Statista (2024) Inflation rate for the Consumer Price Index (CPI) in the United Kingdom from January 1989 to July 2024. Available at: https://www.statista.com/statistics/306648/inflation-rate-consumer-price-index-cpi-united-kingdom-uk/#:~:text=The%20UK%20inflation%20rate%20was,11.1%20percent%20in%20October%202022. (Accessed: 16 September 2024).
Statista (2024) UK internet penetration: percentage of population using the internet in the United Kingdom from 1991 to 2022. Available at: https://www.statista.com/statistics/468663/uk-internet-penetration/ (Accessed: 16 September 2024).
The org (2024) British Airways. Available at: https://theorg.com/org/british-airways(Accessed: 20 September 2024).
Trading Economics (2024) United Kingdom Corruption Index. Available at: https://tradingeconomics.com/united-kingdom/corruption-index (Accessed: 16 September 2024).
Trading Economics (2024) United Kingdom Unemployment Rate. Available at: https://tradingeconomics.com/united-kingdom/unemployment-rate#:~:text=UK%20Jobless%20Rate%20Down%20to,below%20market%20forecasts%20of%204.5%25.(Accessed: 20 September 2024).
8. Appendix
