Executive Summary

This report has been performed in three different parts, where the first section is for outlining the background information and statistical viewpoints on selected industry and later on same for the company. Part 1 has been completed by selecting British Airways as the company, from the airline and tourism industry. Real-time data and statistics have been added properly to meet the criteria. Different analytical frameworks like PESTLE and SWOT have been included in part 2. Along with this, for measuring competitive advantage, Porter’s generic strategy has been used in this paper. Eventually, the importance of CSR in current business time and the role of effective leadership has been elaborated in part 3. Recommendation for greater competitive advantage has also been added in this paper.

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PART 1

Introduction

Business is affected by internal and external factors which simply create the business environment. Business is influenced by the global environment including some uncontrollable national or international factors which impact the organisational operations while affecting the demand and supply graph of the organisation. The aim of the report is to develop a greater knowledge of the organisational operations in a wider business environment. This report includes the micro and macro factors affecting the business of an organisation in the context of British Airways and identifies the needs and approaches of BA in performing CSR operations for greater business sustainability. The objective is to apply the PESTEL analysis framework to identify the external factors of the UK, which could directly or indirectly impact BA. Next is to reveal strengths, weaknesses, opportunities and threats of the company by applying the SWOT framework. . The next objective is to measure the competitive advantage of the organisation in the UK business environment by using Porter’s generic model. The importance of Corporate Social Responsibility will be discussed under this report and the leadership techniques of the organisation will be concluded. Tourism is an activity of people visiting new places and staying outside their common environment. The purposes of travelling may be different but it gives business to the tourism industry (Jaelani, 2017). According to reports, the tourism industry has a huge impact on the economy of the United Kingdom. This industry supports over 3.8 million jobs in the UK and contributes about £106 billion to the British economy (Séraphin et al., 2018). The tourism industry can be recognised by people travelling all over the world. This tourism industry gives entertainment to people who visit places as well as gives employment to a large number of the population. Many people are working in this industry and being one of the biggest industries, it is responsible for the economy of many countries. The tourism industry was started around the 17th century mainly in western Europe (Demunter, 2017). People travel for some travel motivations including food, shelter, water, safety. This industry also helps in the development of the infrastructures of host countries. It attracts the travellers to give visits to that place while increasing the interactions between different types of people. The tourism industry helps to build relations between people having cultural differences and differences in beliefs and religions. It is suspected that around 2025 the tourism industry of the United Kingdom will be worth around £257 billion which is around 10% of the GDP of the UK (Medlik, 2016).

COMPETITIVE STRATEGY TOOLS AND USES

British Airways, the largest international airline situated in Heathrow airport in London. It has a global partnership with US Air in the United States, European airlines and Qantas in Australia with a large number of employees. In 2019, BA was an employer to 42,322 people in the United Kingdom (Mills, 2017). British Airways services around 95 million passengers over a year (Rose, 2016). They have usage of 441 airports in 86 different countries and serve more than 1,000 planes in a year (Efthymiou et al., 2019). It has contributed to the UK’s GDP of over £10 billion in 2019. After the 1st World War, air services gained popularity with the advanced technology of aircraft. People start travelling to many places with airways influencing the airline industry as well as the tourism industry of the UK. At first, the airways offered their services from London to Paris and within five years it had started flying to Britain. In 1935, British Airways was formed from some separate private companies and after some time it grew as a whole company in the UK (Coller et al., 2016). British Airways has a mission of providing the best service to its customers and being the leader in the world travel industry. This airway has a large impact on the revenues of the economy of the UK government. As the annual report says, British Airways generated about 13.3 billion British pounds in revenue (Taylor et al., 2019).

MN2105 Consultancy Challenge 2

PART 2

PESTEL analysis

Elements

Factors

Impact

Political

● Brexit Policy

● High taxation policy

● Stable political environment

The Brexit policy is mainly the withdrawal of the EU from the UK. It creates some challenging situations for travelling (McConnell and Tormey, 2020). After this policy, airlines need to seek permission to fly to an EU country which impacts the business of British Airways.

The United Kingdom has a stable political environment which positively affects the business of organisations. Though the taxation policy of the UK is very high. According to the reports, the UK government received around £183 billion in income taxes in 2017/18 (Buckton et al., 2018). The huge taxation policy has an impact on the tourism industry as it increases the cost of the business.

Political

● Brexit Policy

● High taxation policy

● Stable political environment

Economic

● Less than 2% Inflation rate since last three years

● Excellent annual GDP growth rate

● The high income per capita

● COVID-19

Changes in the economic situations including inflation rates, exchange rates or GDP will impact the profits, revenue and sales of the tourism industry.

The GDP rate of the UK is over 1.4% offering great opportunities to the airways organisations including BA to maximise their profitability figure (Lee and Werner, 2018).

The inflation rate of the UK is less than 2% for the last three years, which could provide greater financial stability in the business of British Airways.

Per capita income concludes the income of individuals while identifying the standards of living for the population of the United Kingdom. The report says the UK had a GDP per capita of 42,943.90 USD in 2018 (Khan and Qianli, 2017). The UK has a high income per capita which gives a larger business to British Airways as people travel very often.

Though the coronavirus effects are very high on the tourism business of the UK. The UK government lost up to £22bn in the tourism industry due to COVID-19. It had a negative impact on British Airways as people felt fear of travelling. This reduces the business of airlines.

Social

● The population of over 66 million fellow citizens

● Developed societal condition

● Less crime rate

A huge population rate of the United Kingdom increases the business of the tourism industry in a wide business environment. According to the reports, more than 66 million people live in the Uk and it is suspected that the number will pass 70 million in 2031 (Pierce et al., 2020).

Changes in the lifestyle of people affect the demands of customers. So the British Airlines always tries to focus on their infrastructures in order to satisfy customers’ needs. Developed societal condition of the UK has a positive impact on the airline industry as well as the tourism industry.

Technical

● Digital Technology

● Technological infrastructure

In the airline industry, the development of digital technology brings better business to the airways. British Airways uses advanced technology in order to give service to the customers (Wang et al., 2017).

Technological infrastructure of BA is used to increase the engineering operations while satisfying the needs of the customers (Suau-Sanchez and Voltes-Dorta, 2019).

Legal

● Government policies

● Tourism act, 1969

● Health and safety act, 1974

● Equality act, 2010

Tourism act, 1969 provides the establishment of the British Tourist Authority and the Tourist Boards. This act is used for promoting tourism business to and within Great Britain (Sidorov, 2018). British Airways enlarges its business with the help of this tourism act.

Discrimination between employees has a negative impact on the business while decreasing the sales of the organization. The UK government-generated Equality act, 2010 on the organizations help to increase the business (Fell and Dyban, 2017). This act prevents employees of British Airways from any kind of discrimination in the workplace.

Environmental

● Environment Protection act, 1990

● Recycling of plastic products

The Environmental Protection act, 1990 makes provision for pollution control. It somehow hampers the business of British Airways as they have to follow many rules and regulations regarding environmental issues (Reid, 2016).

Recycling of plastic products and usage of eco friendly products within British Airways increase the brand value of the organisation in the context with BA.

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Environmental

● Environment Protection act, 1990

● Recycling of plastic products

Recycling of plastic products and usage of eco friendly products within British Airways increase the brand value of the organisation in the context with BA.

Environmental

● Environment Protection act, 1990

● Recycling of plastic products

Recycling of plastic products and usage of eco friendly products within British Airways increase the brand value of the organisation in the context with BA.

Strengths

British Airways has a strong and trusted brand image as the airline is the second largest UK based flag carrier airline (Adenan et al., 2018).
BA is one of the market leaders of the UK tourism industry. It had revenue of £13,020 million in 2018 (Tan, 2019).
Good service provider with better IT integration.

Weaknesses

British Airways has some employee issues which affect the business of the organisation.
Disruptions in services may arise from the strikes of cabin crew members of British Airways. Report says, around 1400 crew members threatened to implement a strike in July, 2017 and that leads to operational issues within British Airways (Tan, 2019).

Opportunities

- Introducing global operations with the help of advanced technology. As British Airways develops the usage of technologies within the organisation help to venture operations globally (Feng et al., 2019).
- New and developed marketing strategies of British Airways help in the business growth of the organisation while satisfying the needs
- Figure 1: Porter’s Generic Strategy model
- (Source: Islami et al., 2020)
- The British Airways uses the cost leadership strategy which involves gaining market profits while reducing the costs in various markets (Dvorak and Razova, 2018). This strategy allows the British Airways to increase the business in the tourism industry targeting the middle class, which includes the largest portion of consumers. They focus on affordability as reducing the cost price of air tickets in order to expand the sales. That brings uniqueness in the tourism industry and gives competition to its rivals. With the help of this strategy, British Airways gained strong brand value among customers and achieved targets by product’s affordability. British Airways often gives discounts and coupons over air tickets which attract customers hugely. It enlarges the business while competing with the market rivals of British Airways (Lohmann and Spasojevic, 2018).
PART 3

Importance of business ethics in today’s business environment
Ethics: Ethics are the moral principles that influence the behavior of an individual. Business ethics implies the ethical ideas which influence the business behaviour in the market. It has a huge importance on the business environment (Dierksmeier and Seele, 2018)
Business ethics impact on the decision making process of the organisation in the context with British Airways. For example, if the decisions of the organisation are of public interests, it increases the sales of the organisation. The ethical code of British Airways clearly states the responsibilities of the employees towards the organisation. Employees make decisions within a given period of time with the guiding principles of business ethics. The importance of business ethics in today’s business environment is it increases the profitability of the business while growing the moral values of the employees.
The link between ethics and leadership
Ethics and leadership have strong relationships within the organization in the context of British Airways. The leadership requires ethical practices in order to increase the competitive advantage of British Airways (Wall, 2018). The leadership will succeed if the leader follows ethical values within the organization to achieve a competitive advantage in the tourism industry of the United Kingdom.
Corporate Social Responsibility is a business model used to make the organisation socially accountable to its shareholders and customers (Verbruggen et al., 2019). This includes different ethical, economic and legal responsibilities maintained by the organisation in order to sustain in the respective industry. CSR or Corporate Social Responsibility is important for both customers and organisations (Haris and Purnomo, 2017). British Airways fulfils the economic responsibilities while maintaining customer needs. There are some positive impacts of CSR while creating a healthy workplace within the organisation. It helps in the improvement of the brand value and creates brand recognition in the industry. Corporate Social Responsibility increases the customer’s engagement with the organisation as it expands the moral values between employees. Employees are the assets to the organisation and CSR helps to make greater employee engagement and the result gives benefits to the productivity of the organisation (Cannon et al., 2020).
Though the Corporate Social Responsibility has some disadvantages also such as, it creates conflicts while achieving business objectives. CSR focuses on the people’s interests which sometimes causes conflicts for the organisation affecting today’s business environment.
The leadership styles of British Airways include ethical aspects.
British Airways follows an autocratic leadership style in leadership management. The Autocratic leadership style of British Airways is the main reason for the poor performance of this airline (Stuart, 2018). Leadership is mainly the art of influencing and managing people of the organization so that they will work willingly and enthusiastically in order to achieve business goals. The autocratic leadership style is dogmatic in nature and led by only the leaders without engaging the fellow members (Chukwusa, 2018). The autocratic leadership technique helps to expand the competitive advantage for British Airways in the tourism industry. With the help of a competitive advantage, British Airways can sustain itself in the market with its rivals. The main advantage of the autocratic leadership technique is that the decision-making process is fast in this method as there is only one person taking all the decisions. This method or style is most effective as the leader can take all the decisions without consulting with less knowledgeable employees (Chukwusa, 2018). Though this technique welcomes some unwanted situations within the workplace of British Airways. The employees are highly dependent on the leader and as a result, the performance of the organization decreases.
British Airways could achieve better results in business and leadership by improving the ethical values within employees and the entire business unit (Cote, 2017). An effective leader knows all the purposes of the business and tries to be unique in the respective industry in order to increase the competitive advantages.
Conclusion
This report discussed the factors affecting organisation in the context of British Airways in UK business environment. The main objectives are generating PESTEL and SWOT analysis of British Airways with respect to the tourism industry of the United Kingdom. In this report, the Porter’s generic model is used to know about the competitive advantage of the organisation and some recommendations are discussed to increase the competitive advantage in the market while increasing the ethical values among the customers.
Recommendation for increasing competitive advantages of British Airways
Firstly, British Airways has to glorify its strengths including a large number of employees, high brand image etc in order to improve the competitive advantage in the tourism industry. Though British Airways has a uniqueness in the UK tourism industry the internal employee issues affect the business of this airways. To achieve a competitive advantage among the rivals, British Airways has the prime focus of building great relations with employees. British Airways faces some future threats from the high-speed rail service of the UK. In order to overcome these threats, the airways have to improve the customer service. The main recommendation for British Airways is to make technological innovations within the industry. With technological development, British Airways should focus on internet usage in order to get proper feedback from the customers. Proper feedback from customers will lead the airways in the path of profit and productivity while gaining competitive advantages in the tourism industry of the United Kingdom. of customers (COUASME and GURGEY, 2016).

Threats

Huge competition from eastern airlines being the most important threat to the British Airways.
British Airways faces competition from the high speed rail service providers as they compete with the markets of airlines.
Another huge threat to the tourism industry is the coronavirus impacts. British Airways also faces some challenging situations due to COVID 19 as people oppose going out of their houses and that hampers the business of airlines (Hoque et al., 2020).

MN2105 Consultancy Challenge 2

Organization’s competitive advantage with Porter’s Generic Strategies

Competitive advantage is mainly the factor that influences the organization to provide better services than its competitors in the market. Michael Porter introduced these generic strategies for the organizations in order to increase the competitive advantage in the respective industry. With using Porter’s Generic Strategies the organisation’s competitive advantage can be concluded. These strategies are used to increase the competitive advantage of any organization in the context of British Airways. Porter’s generic strategies lead to three generic stages in order to gain a competitive advantage in the market (Islami et al., 2020). Firstly, Cost leadership strategy the organization tries to become a low-cost producer in the respective industry. A low-cost producer focuses on all the sources of cost advantage. This strategy can be implemented by reducing costs while maintaining the profits of the organization. The next strategy is Differentiation which concludes the uniqueness of the products or services provided by the organization. The organizations set their products uniquely in order to satisfy their customer’s needs. With help of this strategy, organisations can achieve uniqueness in the respective industry with a premium price. The last component includes Focusing on the narrow scopes within the industry (Hales and Mclarney, 2017). In the cost leadership focus, the organization finds the cost advantages in its target within the industry and in the case of differentiation focus, it makes differentiation in the target parts.

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