Importance of external factors Essay

In an shaping on that point ar several operators becharm the growth and slaying of the organisation. There be some factors which are influence the governing body can be dominateled by the counseling save some factors are beyond the organisation management control. The factors which are controlled by the organisation known as ingrained factors and factors which are beyond the management control known as external factors such as Political, economical, social and technical factors.Political Factors For BA political factors are very pregnant for stage contrast growth. As this company is operating(a) around the human being and involved in air transfer, countrys political tension can hamper its popular operation as well as the revenue income. economicalal economical factor is a nonher important factor for such company. As still air motivate is expensive, mountains ability to travel and economic conditions should be considered when planning for BA. As an example BA faced a huge way out when the European recession started.Technological Total note related to BA is based on the technology. As the air institutionalise sector is too competitive, all companies are everlastingly ready to grab the in the raw technology as a gift for their potential customers. So, as leading company BA always has to consider the technological factors within its stock.Expectations of a stakeholdersStakeholders include those individuals, groups, and other memorial tablets who have an interest in the actions of an organization and who have the ability to influence it. The stakeholder approach systematically integrates executives concerns about organizational strategy with the organizations interests in grocerying, human resource management, public relations, organizational politics, and social responsibility. This integrative perspective assumes that an effective organization strategy requiresconsensus from a plurality of key stakeholders about what it should be doing and how these things should be done. The level of stakeholders expectations are depends on the various factors and types of stakeholders in a company. Considering all afcts BAs stakeholders expectations are stated belowo Risk management of the company,o Technological lurch within the company,o Financial and economical performance of the company,o Environmental and ethical engagement,o Contibution to social, cultural and economical,o Policy for the proximo external and internal factors,o Program to address any negative impact,o Future break-dancement and goals.Major changes in the external environmentAs a company in air hose sector BA is operating and has legion(predicate) offices around the world. So the socio-economic factors regardless of geographic areas can be a good factor fro its strategic planning process. For example, BA had closed their all operation and office from about of south Asiatic countries due(p) to the continuous loss. The main reason for that loss was eco nomic bad conditions in that area. Like this many another(prenominal) socio-economic factors can be the major issues for BAs strategy making. During the political tension in middle-east many people ignored to travel with BA, which ca employ a huge loss for its yearly revenue. Another important change that could take up BAs strategy is legal issues. BA faced various legal obligations in different countries that played a huge impact on their future staretgy. Many countries has different rules for their airline sector and BA has to follow those rules to operate its fleet in those countries.A SWOT digest of BA can be included here to evaluate its possible major changes in external environment. reservoirity1. Merger and Acquisition 2. Opensky agreement, 3. Strong brand image 4. Expansion of fleetWeakness 1. Cost of management, 2. diminish profitability 3. Labour strikeOpportunities1. Emergence of invigorated securities industry, 2. Increased travel demarcation in europe, 3. Economic restoration,Threats 1. Raising fuel cost, 2. Changing of consumers behaviour, 3. Unstable political issues worldwide.PESTEL compendiumIn order to measure victor in airline industry, en external environmental analysis is very important. This PESTEL analysis result inform the BAs position in the market, particularly in terms of competitors and how it assessing to meet its current and future challenges.FactorKey PointsImplications for BAPolitical1. Heavy regulations,2. Increased security due to past attacks.1. ossification is essential,2. Sufficient security measures should be in place.Economic1. Global Economic Crisis,2. Oil price is not stable,3. UK consumer saw largest decline in spending.1. Possible reduction of business travel.2. Directly affecting the BAs cost base.SocialTechnological1. UK has an aging population,2. Increasing unemployment.1. Online user normally use comparison site.2. Online arriere pensee and reservation becoming more popular.1. Potential opport unity for growth as older person entrust spend more time in holiday.2. Increased minting power for new employees.1. Increased bargain power for both parties.2. Must ensure that BAs remain up to date.Ethical1. to-do pollution control2. Cancellations of flight and baggage loss.1. New legislation,2. Such ethical issues could have a deadly effect on reputation if left unresolved.Legal1. Collusion and price fixing.2. Open skies agreement.1. Restriction on mergers will have an impact on BAs proposed alliance with American Airlines.2. Opportunity for BA and its competitors to freely transport aircraft between the EU and US.Task 2Analyse the effects of current business planAny organisation has to have a detailed plan for their business. This plan determines the mission and resource of that organisation. The strategic planning team develop this business plan for the organisation. By assesing this plan any stakeholder or other external entities can get idea about the type and area of bus iness. There are many tools for analysing the effects of such plan over the organisation. These analysis tools includes SWOT Analysis, Value Chain Analysis, ushers Five Forces Analysis etc. To consider the effects of business plan on BA, author will use gatekeepers Five forces tool here.British Airways- market position, by Porters Five forcesForceStrength1. Competitive Rivalryb. BA caters for other flights,c. There are very small diffrentiation between BA and other competitors in terms of pricing,d. compendious Haul market is more fragmented by small players.2. Power of Suppliera. Only two suppliers for aircrafts,b. BA dependent by sole supplier of fuel to the airport.3. Power of Buyera. For long haul, customers has no choice most of the time,b. Availability of flight and seats are not enoughc. Price normally changes according to demand.4. Threats to new Entrantsa. Competitive Environment,b. spicy regulatory requirements,c. High cost requirements.5. Threats to substitutesa. Ver y few direct closed substitutes,b. Short Haul flight Euro Star or Ferry,c. Long Haul flights No notable substitutes.HighHighMediumHighLowCurrent Market poistion of BAIn startegic manageemtn various tools are use to probe the current market position of any organisation. These tools are proven technical analysis tools in management sector. The analysis tools that mostly used for the market position analysis are BCG Matrix, GAP Analysis, biography Cycle Analysis, Market Share Analysis etc. In order to undertake the BAs current market share analysis as asked in the course work, author here used two tools. These are below,BCG matrixFigure 1 BCG Matrix (Source Emerald Insight 2012)British Airways had a abundant market share and low growth in last few years. It is evident that, they did not direct any big investment either in their fleet or increasing the destination, which could make them cash cow. In recent, they changed their staretgies and concentrating on increasing fleet as well as expanding the geographical market. BAs another big strategic decesion was merger with Liberia which finally done on the end of 2010. This merger will help to subjoin BAs revenue as a one of the top in the avaiation inductry. By doing so, BA will not only generate the large cores of money they will in like manner consume large amount of money per year. Therefore the cash in every direction about nets out. This kind of activities proves that British Airways is becoming a Star but in slow process. Product/ return life cycleIntroduction StageBy the 1920s Britain had a lot of airline companies but due to strong competition many private British air postmans were compel out of business. In 1923 all these companies merged to form a single british international air carrier called the olympian Air transport. Meanwhile, the british airways, had begun to impose a big threat and competition to imperial air transport which resulted in the formation of the British Overseas Airways Cooper ation was make (BOAC) that later combined with the BEA and 2 small companies formed the British Airways (BA) Growth StageThe growth can be easily marked by the creation of the concorde into the BA. In 1985 British Airways was made a public limited company. In February 1987 the privatization was finally consummated when 720.2 zillion shares of British Airways stock were sold to the public for one meg pounds. Expansion of fleet and routes were even more noticeable after mergers with other carriers like Bcal (British Caledonian). Due to the expansion of BA, another carrier Laker Airways were also forced out of business. This marked how dominant BA was turning out to be in the air carrier sector. Maturity StageThe BA mergers assured the dominance of the carrier in the home market full for the time being. During this stage alliances and mergers made/attempted by BA with other carriers in different markets were legion(predicate) Aliiance with Aeroflot in Russia to create Air Russia .Attempted merger with KLM royal dutch airways. Broke down due to valuation of the two firms. Purchased 25% of Qantas airlines in Australia. Gained 49.9% of the French, TAT European Airlines. Started a german carrier called Deutsche BA with 49% ownership.Evaluate the competitive strength and weaknessAccording to Jhonson (2008), a value chain analysis is undertaken when a authentic approach to develop competitive advantage has made. In here, in order to analyse the British Airways competitive advantages, value chain analysis has done.Figure 2 Value Chain Analysis (Source Emerald Insight 2008) Value Chain AnalysisPrimary activities within value-chain analysis are the ones that directly affect the business within short period of time and their affect is easy to monitor. They are inbound logistics, operations, operations, outward-bound logistics, selling and gross revenue, and post-sales serve. Inbound logistics. Goods received from company suppliers are referred to as inbound logisti cs. Competitive advantage is achieved in inbound logistics stage of the business by BA through establishing on-going relationships with suppliers, sophisticated system for stock control and professional training that has been accredited by UK City and Guilds (BA Press Office, 2008) Operations.Generally, operations stage of the business involves preparing goods and services to be sold to customers. BA has a range of competitive advantages in operations part of the business through offer its customers increased security for their luggage, offering quick check-in services and also offering some services such as ticket bookings and booking of other services online. Marketing and sales are considered to be one of the main grounds for gaining competitive advantage and usually is utilised by many companies fully. Competitive edge gained in marketing and sales by BA involvemarketing activities not only to customers, but also to all stakeholders of the company. Also, BA senior management la rge amount of budget for marketing and sales initiatives for the company.Task 3Strategic options for British AirwaysIn order to develop strategic options for an organization using modeling tools, author here used Ansoff matrix. Here is the discussion with this tool. The Ansoff implies business growth either by marketing new or existing products in existing or new markets (Shaw 2011, 83).Market PenetrationAlthough BA already has presence in the existing market it is veneering stiff competition. For example, in the short haul market, rapidly saturating with budget airlines, BA lost 1 billion in revenues by end of 2009/2010 financial year. The major options currently are 1) Improving on people processes including bag handling 2) Further investment on information technology especially on network bookings (British Airways 2010, 58)Market developmentMarket development strategy focuses on non-buying clients in already currently targeted segments and focuses on new customers in new segmen ts (Angwin, Cummings , Smith 2011, 73). BA is trying to regain some business class customers from Virgin airlines and other competitors.Product developmentProduct development entails the process used to mystify new products into the market. For example, BA introduced a new in-flight entertainment system in the Boeing 777-300 ERs in 2010 and the First Cabin, a sophisticated ne cabin that offers customers the chance to work, recreate, eat and sleep (British Airways 2010, 67).DiversificationDiversification is a business strategy that attempts to increase profitability by introducing new products in new markets. Formation of alliances is a relatively new trend in new markets, for instance by collaborating with Indias Kingfisher airlines, BA will increase destination connections and improve flight schedules (British Airways 2010, 76).Selection of the most viable strategic optionsThe best way of doing this is by eliminating the least viable options to remain with the most viable options . Renovation of brand image British Airways already possesses the advantage of having a globally recognised brand name (Buckingham 2011, 13). Introduction of complimentary services basically requires the diversion of capital funds to implement. Currently, it does not significantly enhance Product development (Ansoff) (Punzel 2011, 32).Diversifying into other transport markets- Diversification is currently not a priority relative to other more beneficial strategies (Punzel 2011, 32). tack chain migration As part of diversification (Ansoff), this is also not a viable strategy at this time (Belobaba, Odoni, Barnhart 2009, 67).Options for future organisational strategyThrough market segmentation , companies divide large heterogeneous markets into smaller segments that can be reached more efficiently with products and services that match their unique needs.(kotler, 2009) British Airways has divided it market segmentation into different variables. There are number of variables involved in consumer market segmentation, alone and in combination. These variables areGeographic variablesDemographic variablesPsychographic variablesBehavioral variablesOccupation- British Airways give extra benefit for High secern .Some of the benefits like Club Card. Income- People who are into business class can travel in British airways as airfare are very high. Nationality In british airway all different kind of nationality travel.