The environment & British Airways
Throughout this assignment I will look at the environment that British Airways operates in and try to critically analyse its current and past strategies. I will make full use of theoretical models and show how they can be useful to BA. It will also be beneficial to try to find areas in which they could improve which would result in increased profits and efficiency. British Airways is one of the world’s largest fleet airlines and the company runs routes covering almost every corner of the world. Traditionally the company’s strategy has been run in accordance with the design school.
This basically suggests that those at the top of the company are the ones who are making the decisions with little regard to the external environment in which they are in; they also have very little regard for what their customers’ actual needs are they simply believe that the customers’ needs are the product that they supply. One of the main and most influential critiques of this school of thinking is that the company does not know its own strengths and weaknesses so therefore can never truly be at its most competitive.
In the beginning of the 1980’s BA realised that they were experiencing difficulties with increased competition from other airlines. During the early 80’s their profits were falling dramatically. This made them realise that they had to change their management style. They didn’t make the transition to a new management style straight away but they did change their mission statement and put a lot of effort and innovation into implementing it. This is when the famous advertising slogan came into effect “the world’s favourite airline”.
The new mission statement stated that BA wanted to be the undisputed leader in world travel and they wanted to set new industry standards using better technology to ensure better and more competitive prices for their customers. Although we are now in 2003 little has changed in the mission statement, the most significant addition is the pledge to try and be more eco-friendly. From the 1980’s up to September 11th 2001 BA continued to enjoy growth both with their market share and in the stock market. They were offering full coverage of the world as well as a smaller low cost airline.
After the events of September 11th in the same way that other major airlines suffered financial difficulties BA did as well. The main problem BA suffered was that they were to slow to react in order to deal with the problems and they only started to begin the recovery program a year after the tragic event. Recent strategic changes have included measures such as decreasing capacity on many routes in order to ensure that there are never any empty seats (i. e. potential profit is maximised). BA has also sold their low cost airline “GO” in order to concentrate on the main airline.
BA is also trying to entice more business class travellers by implementing new seats in business and first class which turn into six foot beds. All these new changes have so far proved to be successful. BA claim that in the last quarter their passenger numbers have risen by 4. 5% and in the stock market their share price has started to rise again. In order to examine exactly how successful the BA strategy has been and will potentially continue to be it is essential to look at the company internally and externally.
To look at BA externally the opportunity and threats that it faces needs to be examined first. Since September 11th there are many new threats as well as many of the old threats that used to haunt BA. Due to the fact that BA was still in the design school of management they did not realise these until recently. The fact that they have now realised them is a promising sign as it appears the management style of BA is changing to a more modern approach.