Strategic Management Report British Airways (Term Paper Sample)

Table of Contents TOC \o "1-3" \h \z \u 1.0 INTRODUCTION PAGEREF _Toc367196057 \h 41.1 Company Overview PAGEREF _Toc367196058 \h 41.2 Current Strategies PAGEREF _Toc367196059 \h 51.3 The Basis for Strategic Management Process PAGEREF _Toc367196060 \h 61.4 Stages of Strategic Management Process PAGEREF _Toc367196061 \h 72.0 EXTERNAL ANALYSIS PAGEREF _Toc367196062 \h 82.1 PESTEL Analysis PAGEREF _Toc367196063 \h 82.1.1 Political PAGEREF _Toc367196064 \h 82.1.2 Economic PAGEREF _Toc367196065 \h 82.1.3 Social PAGEREF _Toc367196066 \h 92.1.4 Technological PAGEREF _Toc367196067 \h 92.1.5 Environmental / Ethical PAGEREF _Toc367196068 \h 92.1.6 Legal PAGEREF _Toc367196069 \h 102.2 Porter's Five Forces PAGEREF _Toc367196070 \h 103.0 SWOT ANALYSIS PAGEREF _Toc367196071 \h 123.1 Strength PAGEREF _Toc367196072 \h 123.2 Weakness PAGEREF _Toc367196073 \h 123.3 Opportunities PAGEREF _Toc367196074 \h 123.4 Threats PAGEREF _Toc367196075 \h 134.0 Strategy Formulation PAGEREF _Toc367196076 \h 144.1 Difference between Corporate and Business Strategy PAGEREF _Toc367196077 \h 145.0 Porter's Generic Strategies PAGEREF _Toc367196078 \h 146.0 Advantages and Disadvantages of Related and Unrelated Diversification PAGEREF _Toc367196079 \h 166.1 Advantages PAGEREF _Toc367196080 \h 166.2 Disadvantages PAGEREF _Toc367196081 \h 167.0 Portfolio Analysis PAGEREF _Toc367196082 \h 178.0 STRATEGY FORMULATION THROUGH TOWS MATRIX PAGEREF _Toc367196083 \h 188.1 Strengths – Opportunities PAGEREF _Toc367196084 \h 188.2 Strengths – Threats PAGEREF _Toc367196085 \h 198.3 Weakness – Opportunities PAGEREF _Toc367196086 \h 198.4 Weakness – Threats PAGEREF _Toc367196087 \h 199.0 ANSoff PRODUCT MARKET MATRIX PAGEREF _Toc367196088 \h 209.1 ANSoff Matrix on British Airways Strategies PAGEREF _Toc367196089 \h 2210.0 BCG GROWTH-SHARE MATRIX PAGEREF _Toc367196090 \h 2310.1 Strategy Implementation on British Airways PAGEREF _Toc367196091 \h 2411.0 Strategic leadership PAGEREF _Toc367196092 \h 2511.1 Corporate governance: PAGEREF _Toc367196093 \h 25
EXECUTIVE SUMMARY
The main aim of this report was for the purpose of producing s strategic plan using theories of strategic management for British Airways that can be implemented over the next three year period. At the same time, being the United Kingdom's leader in airline operations, British Airways has faced an increase in competition over the last 10 years and thus has had to contend with an increasing amount of the market share being shared by more and more firms.
The report is carried out by first and foremost; analysing the current internal and external environment of British Airways. Through strategic evaluation several important recommendations that the British Airways can focus upon are suggested. These strategies play an important role in assisting the British Airways to regain lost ground in the current airlines market. There will an implementation of a combination of two strategies- namely the people processes strategy and a strategy that is focused on technological advancements.
The people processes strategy has been derived from a few industry sources that outline the Brirtish Airway's decline in terms of customer satisfaction. The technological advancement strategy coincides with the renewal of the British Airway's current fleet of aeroplanes and will further improve the overall experience encountered by the customers.
Part 1
1.0 INTRODUCTION
1.1 Company Overview
British Airways Plc, is the largest internationally scheduled airline in the United Kingdom. Apart from scheduled services, the British Airways is also engaged in the operation of international and domestic carriage of freight and mail, and the ancillary services (Datamonitor, 2008). British Airways has flights to more than 300 destinations along with codeshare and franchise partners- carrying close to 33 million passengers. With earnings of over 8.67 billion pounds sterling, British Airways also boosts of among the largest employee headcount in the United Kingdom with close to 42, 377 people.
Ever since the company was privatised in 1987, British Airways has continued to grow along with the rising competition in the airlines market over the years. Nowadays, the British Airways has successfully been labelled as one of the pioneering airlines in green technology adaptation and environmental friendly strategic decisions. The British Airways was already the first airline to be a part of the scheme of European countries reducing greenhouse gas emissions. Apart from the novelty improvements towards the ways in which passengers actually fly have also undergone huge revolutions thanks to the British Airways. Passengers printing their own boarding pass where initiated by the British Airways. Among the other initiatives that British Airways have been able to come up with include the company's on-going developments in the Heathrow airport which happens to be the United Kingdom's and one of the world's busiest airports.
The global economic collapse of 2008 has also affected British Airways in terms of revenue. However, with recent mergers and changes in air trade policies, the future for British Airways looks rosier and there are a lot of positive signs for British Airways both in Europe and the world market. British Airways annual reports have always stressed out of how much the company would like to become the "world's most responsible airline" and the development of the guiding principles along with careful strategic direction will definitely allow the goal to be achieved.
1.2 Current Strategies
The current strategies of British Airways are in line with the advancement that the mobile and computing technology is experiencing at current time. At the same time, the company is also focused on expanding its business operations to better serve increasing amounts of passengers due to the slight recuperation of the global economic conditions. Among the strategies that the airline currently undertake include
* Upgrading the customer experience through the introduction of mobile application services for business class customers. Along with that the company is also experimenting with enabling texting and mobile services for business class customers during on-flight hours.
* Modernising the current fleet of aeroplanes while offering new services.
* Managing a better cost base operation
* Increasing corporate responsibility through environmental performance and partnerships.
Despite the fact that British Airways also operates in certain non-commercial areas such as cargo, the primary focus of this report is centred on the scheduled passenger market which occupies the largest operational cost and revenue share for most major airlines in the air traffic market. The opportunities that exist in today's market for airlines in terms of scheduled passengers is the most and British Airways will definitely to focus strategic development that will take these markets into account.
1.3 The Basis for Strategic Management Process
Strategic Management is largely about the identification and description of strategies that management of a business can carry so as to achieve better performance and a competitive advantage for the organisation. An organisation is assumed to have competitive advantage if its profitability is higher than the average profitability for all other companies the same industry
Strategic management can also be termed as a bundle of decisions and actions which a manager should undertake and one that can decide the results of a firm's performance. A manager must have a thorough knowledge and analysis of the general and competitive organizational environment in order to make the right decisions. The management should conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats). They should make out the possible utilization of strengths, minimize the organizational weaknesses and make use of arising opportunities from the business environment and market while not ignoring the concurring threats. Strategic management is mainly about planning for the predictable nature of business and also the unpredictable side of it.
It is applicable to both small as well as large organizations as even the largest organisation can face competition and, by formulating and implementing appropriate strategies, the company can attain sustainable competitive advantage. When it comes to British Airways, simply being the leading air carrier in the Uni...