Introduction
The world of business is constantly evolving, and organisations must be able to adjust to the changing environment to remain competitive. This is particularly true for larger organisations such as British Airways (BA). BA is a global airline established in 1974 and based in the United Kingdom (British Airways, 2022). It is the largest airline in the UK based on fleet size and international passengers carried, and the second largest airline in Europe. It operates services to over 170 destinations in 70 countries (British Airways, 2022). In 2020, British Airways employed over 40,000 people and generated an annual revenue of £13.2 billion and a net income of £108 million, making it one of the leading providers of air travel services (VisitBritain, 2021; Statista, 2023). It is a world alliance member with codeshare agreements with several other airlines. It also has a significant presence on the world’s top 10 busiest international routes (GOV.UK., 2023). The study of a business’s external and internal environment, global reach, and stakeholder involvement helps the organization make strategic decisions and remain competitive in the market. This essay will discuss the importance of environmental analysis, globalization, and stakeholder concept in businesses, using British Airways as the case study.
Environmental Analysis
Environmental analysis studies all external factors that can impact a business’s performance. One of the most commonly used environmental analysis tools is the PESTLE (Political, Economic, Social, Technological, Legal, and Environmental) analysis. Political: The country is a stable democracy, and its political system has a long-standing history of providing a stable and secure environment for businesses to operate (Quezada et al., 2019). Economic: Economy is one of the most dynamic and influential in the world. With a highly developed consumer market, the UK provides a favourable environment for businesses to sell their products and services (Benzaghta et al., 2021). Social: The country is home to a diverse and multicultural population with various cultures and beliefs (Lock, 2020). This cultural diversity has enabled BA to develop customer insights that can be used to create customer-centric products and services.
Technological: It is one of the most advanced countries in technology. This has allowed the company to provide its customers with innovative products and services (Kotler et al., 2016). Legal: It has a comprehensive legal system designed to protect businesses from unfair competition and ensure a level playing field for all organizations (Cavusgil et al., 2020). Environmental: The country is committed to reducing its environmental impact and reducing its carbon emissions by 2050 (Le Thanh et al., 2023). This has allowed BA to develop sustainable practices that can be used to reduce its environmental impact.
Table 1: The PESTLE analysis summary
Another crucial environmental analysis tool is the SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis. Strengths: BA is one of the world’s largest and most successful airlines. It has strong brand recognition and a loyal customer base (Quezada et al., 2019). Weaknesses: BA has a relatively high-cost structure, which can be a disadvantage in a highly competitive industry (Jobber & Ellis-Chadwick, 2019). Opportunities: It has an opportunity to expand its presence in emerging markets where demand for air travel is increasing (Slack & Brandon-Jones, 2018). Threats: BA is exposed to a range of risks, including the increasing cost of fuel, the changing regulatory environment, and the emergence of new competitors.
Table 2: Shows the SWOT matrix of the company
Analysis of Globalisation
Globalisation is a process that involves the integration of economic, political, social, technological, and cultural aspects of a given society. According to Brassington & Pettitt (2013), globalisation is defined as the growing interdependence of countries resulting from the increasing integration of trade, finance, people, and ideas in the global economy. Globalisation has been a significant factor in business for some time now. It has enabled businesses to expand their operations into new and different markets, providing easier access to resources, customers, and business opportunities (Atrill & McLaney, 2019). It has been a significant factor in BA’s success, as its global network of routes has allowed them to benefit from the increased demand for air travel.
The advantages of globalisation for British Airways (BA) include access to new markets and customers, as well as access to cheaper labour and more efficient production processes. This has allowed BA to expand its operations and increase its profits (VisitBritain, 2021). Additionally, globalisation has enabled BA to tap into a larger pool of resources, allowing them to be more innovative and competitive (GOV.UK., 2023). British Airways has further benefited from globalization by increasing its customer base and connecting to new destinations worldwide.
However, there are also some disadvantages of globalisation for British Airways. Increased competition from other airlines has put pressure on BA to lower their prices, which has reduced their profits (Jobber & Ellis-Chadwick, 2019). Furthermore, globalisation has made it easier for other airlines to enter the market, making it more difficult for BA to maintain market share (Stevenson & Marintseva, 2019). Additionally, globalisation has exposed BA to more regulations and restrictions from foreign governments, making it more challenging to provide customers with the required services (Hollensen, 2020). To navigate these challenges, British Airways must adopt a global mindset, adapt to local markets, and continuously innovate to stay ahead of the competition.
As a result of the COVID-19 pandemic, British Airways has been forced to change its globalisation strategy. BA is responsible for ensuring that its employees are protected from the effects of the pandemic and provided with the resources they need to remain safe while performing their jobs. The company has had to reduce its flights and the number of staff to reduce expenses (British Airways, 2022). Additionally, BA has had to reduce its prices to remain competitive and attract new customers (Arnold & Lewis, 2019). Furthermore, the company has had to focus more heavily on digital technologies to provide customers with the best possible experience while travelling.
To effectively implement globalisation, organisations should consider Yip’s globalisation framework. Yip’s framework comprises four elements: strategy, structure, systems, and people. In terms of strategy, British Airways should focus on identifying the right markets, setting clear goals and objectives, and creating value (Slack & Brandon-Jones, 2018). In terms of structure, BA should ensure that they have the proper organisational structure in place to ensure that they can effectively and efficiently manage their global operations (Kotler et al., 2016). Additionally, BA should ensure they have suitable systems, such as information, process, and human resource systems (Stevenson & Marintseva, 2019). Finally, BA should ensure they have the right people in place to manage and lead their global operations.
Stakeholder Concept Analysis
The stakeholder concept has become increasingly important in businesses in recent years. The stakeholder is defined as any individual or group with a vested interest in the success of a business and can influence its operations or outcomes (Cavusgil et al., 2020). This definition implies that stakeholders have an interest in the business and can have an influence, either positive or negative, on its performance.
BA has various stakeholders, each with different interests and influences. For instance, the government has an interest in the airline’s financial performance and has the power to impose taxes and regulations on the business (Arnold & Lewis, 2019). Suppliers are another key stakeholder group, as they provide the airline with essential goods and services for its operations (Stevenson & Marintseva, 2019). Banks are significant stakeholders because they provide the airline with capital and have the power to influence its operations through loan agreements (Drury, 2018). Employees are a key stakeholder group, as they are essential for the airline’s operations and are interested in their wages and working conditions (Whittington et al., 2017). Finally, management is a key stakeholder group, as they are responsible for making decisions and setting the direction of the airline.
The Power Interest matrix is a tool for visualising the influence of different stakeholders on a business. It plots stakeholders in four categories based on their power and interest in the business. The categories are High Power/High Interest, High Power/Low Interest, Low Power/High Interest, and Low Power/Low Interest (Eden & Ackermann, 2021). The High Power/High-Interest category comprises stakeholders who have the power to influence the business and have a high level of interest in the business (Eden & Ackermann, 2021). These stakeholders are usually the government, customers, and financial institutions. The High Power/Low-Interest category comprises stakeholders who have the power to influence the business but do not have a high level of interest in the business. These stakeholders are suppliers, media, and regulators (Eden & Ackermann, 2021). The Low Power/High-Interest category comprises stakeholders who do not have the power to influence the business but have a high level of interest in the business (Eden & Ackermann, 2021). These stakeholders are usually employees, unions, and activists. Finally, the Low Power/Low-Interest category comprises stakeholders who do not have the power to influence the business and do not have a high level of interest (Quezada et al., 2019). These stakeholders are usually the local community and competitors.
The corporate responsibility of British Airways towards its employees is to provide a safe and healthy work environment, to pay fair wages, to provide benefits and incentives and to respect employee rights. BA is also responsible for promoting diversity and inclusion in the workplace. The COVID-19 pandemic has significantly impacted BA and its employees. The airline has had to make significant changes to its operations to remain viable, and these changes have impacted its employees. The airline has had to reduce the number of flights it operates, which has led to job losses and pay cuts for many employees (Lock, 2020). The airline has also had to implement safety measures to protect its employees from the virus, such as providing personal protective equipment and increasing cleaning measures.
Conclusion
In conclusion, in today’s globalized and complex business environment, the importance of environmental analysis, globalisation, and stakeholder concept in businesses cannot be underestimated. This is especially true for global organizations such as British Airways. Environmental analysis, globalization, and stakeholder concept are essential to modern business strategy. By studying the external and internal environment of the business, businesses can make informed decisions that enable them to remain competitive in the market. Additionally, globalization has created opportunities for businesses to expand into new markets, while the stakeholder concept ensures businesses remain accountable to all their stakeholders. For British Airways, these concepts have played a critical role in shaping its operations and success as a global airline. Through environment analysis, the company can identify opportunities and threats presented by changes in the external environment. Globalisation has enabled British Airways to expand its operations and access new markets. Lastly, the stakeholder concept ensures that British Airways meets its stakeholders’ needs while remaining profitable and socially responsible. By balancing the needs of its stakeholders, adapting to global trends, and analyzing its environment, British Airways has become a leading player in the airline industry, connecting people and cultures worldwide. Therefore, these concepts should be embraced by all businesses to achieve success.
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