Business environment is the most imperative aspect that consists of both external and internal factors. It enables management to assess the impact of these factors on performance of company. Present report is based on British Airways that provides wide range of services to large number of customers. It is the largest airline in term of fleet size, international flight and international destinations. Further, different types of organization have been described in the light of objectives of firm. Furthermore, impact of fiscal and monetary policy on business organizations have been explained which in turn help to achieve specified objectives of firm.
Purpose of different types of organizations
There are different types of organizations which provide wide range of services to large number of buyers. It consists of partnership businesses, public limited organization and sole trader. These all own different kinds of business in accordance with sent standards and regulations. Here, British Airways works in service industry which is basically provide air travel services to number of buyers (Aandy, 2012). The main objectives of service industry is to deliver services to customers in accordance with their requirements. In the same way other corporation are also performing their business activities like KingFisher, Ryan Air, and Emirates airline. These corporation make their contact with other industries such as hotel and tourists. Owing to this, customer base can be increased and overall rate of return of the firm can be increased in the marketplace. Furthermore, non-profit organizations are also there who work on the basis of charities and donations (Britton, 2007). They majority provide variety of services like medical, education and other related facilities which ensure well being of human beings. Apart from this, sole trader is the single business owner. He basically operates business at small level and ensure long run growth of the same by development and innovation (BRITISH AIRWAYS, 2015). In addition to this, partnership organizations work with integration of two of more people. The main motive behind all businesses except non-profit organizations to generate profitability and retain customers for longer time span (DeVries, 2011).
The public sector refers particular part of economic which is governed by states and every decision of the corporations operating public sector is highly influenced by government of the nation. On the other hand, private sector is that part of economic which is self governed and not controlled by state. Furthermore, private corporations are run by individual in order to maximize the profitability.
Mission, vision and objectives of BA and impact of challenges on stakeholders
The mission statement is the most important part for the future performance of the firm. It assists customers to perceive good quality of services of company and access them same in accordance with their requirements (Gnoli and Ridi, 2014). The mission of British Airways is to become the leader in the world of travel. Vision of company is to become most responsible airline of the travel world. the objectives of company is target on all passengers in order to retain them. Further company also has the main objectives is to provide good quality of services by using largest equipment, products and services. It enables corporation to become top choice for international flights for high class customers. Furthermore, the main objectives of British Airways to increase customer base and enhance the sales turnover. Apart from this, corporation also aim to create competitive position in the marketplace.
Stakeholders are the key decision makes who are directly or indirectly associated with the organization. Each and every decision of corporation is highly affected by the stakeholders. There are several stakeholders of British Airways. It consists of customers, suppliers, employees, competitors. Along with that, shareholders, local communities and government are also involved. However, company is facing various issues such as changing working practices, increasing cost of operation even in debt crisis. Further, strategic issue in planned merger with Iberia (Henderson and Kelliher, 2010). Owing to this, shareholders got huge loss as they have to suffer from low rate of return. Furthermore, at the time of debt crisis employees suffer from timely payment of wages. In addition to this suppliers affected due to over dues of amount. Similarly, customers were not provided services as peer the their requirements. It is because prices is continuously growing but demand is not met properly. Furthermore, shareholders need to access the financial statement of company and accordingly they must be involved in decision making process of the corporation. It is because shareholders make strategies to enhance their rate of return with high growth of company. Apart form this, shareholders strategies has direct impact on the performance of business because management need to incorporate their views in the decision making process. In addition to this, customers are directly engaged products and services. In this regard their preferences must be considered so as to enhance the sales turnover.
In addition to this, different stakeholders like employees, shareholders and customers as well as general community are provided good quality of services by taking into account specific need of all of them. Here, British Airways provide affordable services and also offer discount to customers so they can effectively enjoy the services. It facilitates to enhance their level of satisfaction. Furthermore, shareholders are having low return because of impact of several external impact on performance of company. However, management of British Airways put active efforts in increasing rate of return for shareholders. Similarly, expectations of generally community is also met by implementing corporate social responsibilities.
Responsibilities and strategies of British Airways to meet the stakeholders' need
The British Airways adopt several kind of strategies to meet need of different types of stakeholders. First of all employees are provided salaries on right time and they are also provided chance for their development and growth. It assists them to work better and contribute towards achieving long as well as short term objectives of firm (Kensler, 2007). On the other hand, changes have been made in services quality and ad-campaign. Further, strategic action as merger with Iberia was taken by British Airways. It leads to increase market share of the firm and improve the services quality. It assists employees to seek their own growth in the corporation. Furthermore, after implementation of strategic action, customers get good quality of services. However, it was critical phase for the corporation but it ensure long run growth of the same in the marketplace (Langford and et. al., 2005). In addition to this, management of British Airways provide detail information among shareholders and ensure inclusion of their views in the decision making process. Other than this, British Airways follows rules and regulations that are formulated by government. It proves to be effective to create competitive edge of the firm. Thus, corporation is able to give quick response to its stakeholders and give them higher level of satisfaction (Miller and Cross, 2009).
Role of economic system in allocation of resources
Economic system plays vital role in ensuring development and growth of nation. There three kinds of economic such as free market economy, controlled economy and mixed economy. The British Airways operates in mixed economy where both private and government control prevail in the country (North, 2010). It assist corporation to arrange resources accordingly and provide good quality of services to large number of buyers. Further, in mixed economy government sets environmental protection, employment standards and other related facilities. Owing to this, management of British Airways have to take care while employing human resources. By operating in mixed economy social cost decreases to a great extent. Here, British Airways has freedom to employees different types of resources but it must ensure that government regulations are also followed effectively (Pirttilä, 2008). Further, company also free to choose variety of services to be produced or sold the customers in accordance with their requirements.
On the other hand free market economy is another kind of economy wherein corporations have full freedom to products good and services and accordingly arrange for the resources. Government do not interpret companies' affairs. In addition to this, market prices of products and services varies according the demand and supply (Sloman, 2007).
In addition to this, controlled economy is another kind of economy wherein government control all the activities. It proves to be effective for proper supply of resources and provide benefits for the society. Owing to this, British Airways need allocate resources by taking into account rules and regulations of different countries where it operates.
Analyzing the impact of fiscal and monetary policies on business environment of BA
Fiscal and monetary policies affect business activities of an organization to a great extent. Fiscal policies are formulated by government in the form of taxation whereas monetary policies are governed by central bank by increased or decreased the interest rate. The fiscal policy is modified by government with making adjustment in its spending and tax rate so that it can manage development and growth of nation. On the other hand, control is done for money supply by government with implementation of monetary policies. For example, recent recession decreases prices of services which are being provided by British Airways (Streever, 2007). Owing to this company affected to a great extent as the ratio of loss has been increased. Further, recession decreases demand of services whereby sales turnover of corporation has also went down. Furthermore, BA was also not able to meet the need of different stakeholders. On the other hand, changes in fiscal polices like increasing corporate tax reduces profitability of the firm. However, in case of reduction in income tax rate company can get benefits. It is because customers can save disposable income which in turn increases demand of services (Wessels, 2012). Furthermore, changes in fiscal policies affected business in negative manner because shareholders were not getting expected rate of return. In addition to this, recession, inflation and deflation are related with monetary policies which affected overall economy of nation. However, its positive impact provides opportunity for growth and development of businesses operating in country (Besbes and Maglaras, 2009). Thus, negative changes in both policies affected performance of British Airways negatively.
Impact of regulatory, competitions policies and legal changes on British Airways
The regulatory and legal policies set the standards for management of an organization. Here, because of increasing chances of accidents due to terrorists threats, changes have been made in the regulatory policies. It shifted focus of management of British Airways in the direction of adoption of security measures. However, poor exchange rate impacted corporation in negative manner as the operating cost is keep on increasing (Bromley and Melton, 2012). Also, government is constantly increasing fuel prices that creates barriers in meeting demand of customers effectively. Similarly, new legislation have been formed for protecting environment and in case of non-compliance of these regulations government can take legal action against such types of firms (British Airways, 2015). However, BA is complying these regulations effectively in order to meet the future requirements of firm in an effectual manner. In this regard, management focuses on environment issues seriously and contribute towards safeguarding of general community (Casile and Blake, 2002). Furthermore, international policy “open skies” make it possible for corporation to easily operate in different countries. It aids to increase sales turnover. On other hand, rules and regulations related fair trade and anti-competitive behaviors are set by the government. For example, British Airways fined £270m for price fixing (BA fined £270m for price fixing, 2015). It depicts that anti-competitive behavior is never acceptable and government condemn the same as unethical practices of the firm. Therefore, British Airways has to bring important in the present working environment and run the business accordingly so as to ensure ethical conduct of business. In addition to this, companies Act 2006 specifies that all corporation need to rely on fair and ethical practices imposed by government of UK. Owing to this, British Airways consider regulation imposed by government and trade union of EU so as to ensure its long run survive in the marketplace.
Impact of market structure on pricing and demand of airline seats
There are several market structure where an organization operates. It consists of oligopoly, monopoly and monopolistic competition as well as perfect competition market.
- Monopoly market- monopoly market is that market wherein single seller run business and charges prices accordingly his own preferences. Further, monopoly market do not allow others to enter into market so that market can be controlled effectively (Ho, Wang and Vitell, 2012). The seller in monopoly market tend to put high prices for products and services. It facilitate to increase demand of services and increase overall rate of return of airlines.
- Perfect competition- perfect competition is another market where resources are allocated properly and fair prices are charged by the airlines. Also, company give importance to preferences of customers and modify the internal work environment in accordance with their choices (Lee and et. al., 2008). However, perfect competition enables British Airways to adopt appropriate strategies in order to beat competition and create strong position in term of quality of services. Apart from this, British Airways address issues of customers by taking feedback from them. It assists organization to deliver good quality of services and retain buyers for longer time span. On the other hand, firm plan for the development and growth of employees through which existing knowledge of buyers can be enhanced. Furthermore, shareholders of British Airways are invited in the board meeting so as to incorporate their idea in the managerial decisions.
- Oligopoly market- Under this market few numbers of large suppliers run their business. This market focuses upon quality of services to cover large market share. It enables British Airways to respond the increasing demand in positive manner and earn super normal products. The oligopoly market affected European airlines market in 1990s wherein many of the corporation merged in order to improve the performance of business (Malhotra and Hinings, 2010). For example, Liberia Airways and British Airways merged together in 2000 which in turn increase customer base and increase overall rate of return of the firm.
In addition to this, British Airways operate in the perfect competition marketing and accordingly adopt the pricing strategies to meet the expectation of different stakeholders. Furthermore, firm target buyers in accordance with its objectives and try to retain them for longer time span. As the British Airways operates in perfect competition where price is decided by number of corporations. Owing to this, British Airways cannot charge very high or low unless its services are unique from its competitors. It shows that, it is very important for management of British Airways to follow the rules and regulations of perfect competitive market and accordingly formulate its pricing strategies. Otherwise, overall performance of corporation get hampered.
Explaining the ways in which market forces shape organizational responses
There are different parties which affect operation of corporation to a great extent. It consists of competitors, government and customers. Owing to changes in policies and regulations, British Airways has to respond in the same manner by taking corrective steps on right time. For example, recent recession was problematic situation for the corporation that decreases demand of product and services and employees were also left dissatisfied. In this regard, management of firm adopted appropriate strategies to promote the products. Here, special offers which target large number of buyers (Mohan, 2000). It facilitates to provide salaries and wages to employees on right time so they can effectively contribute towards growth and success of the firm. Further, company also keep command on its research activities so as to assess the environment in an effectual manner. It leads to provide services in according the requirement of customers. Furthermore, British Airways also shifted its focus on ad-campaign as per the strategies of competitors. With the help of formulating effective promotion policies company gain attraction of customers and create competitive edge in the marketplace (Potter, Avard and Wilson, 2008). In addition to this, changing working practices also create dissatisfaction among workforces. This in resulted organization adopted effective retention policies which increase motivation level of employees. It assists corporation to increase number of customers and improve quality of services.
Furthermore, demand of air travel is very high but the corporation is not able to meet the same in an effectual manner. However, government is increasing prices of products and services. It is the major reason that crude oil and fuel prices are kept on increasing. Owing to this supply of the products is becoming the crucial task. However, British Airways is meeting need of users effectively. On the other hand, services are provided for all kind of customers as per the budget so as to enhance sales turnover and profitability both. Thus, high demand of products and services are met by British Airways through the effective plan and strategies.
Impact of working practices and cultures of countries on the performance of British Airways
The working practices and cultures of different countries affected performance of British Airways. It is because all nations have their own culture and method of doing business owing to this company need to cope up with the same. Further, corporation need to manage its employees according to the specific need of customers. In this regard, cultural diversity is taken into account so that employees can manage the work effectively (Reese and Newcombe, 2003). Further, employees are provided training in order to complete the task on right time. It give upward direction to business because customers requirement are addressed properly. For example, in case company operating in India then management must set low prices and need to focus on cultural diversity. It enables British Airways to increase the customer base and meet their requirement effectively. Furthermore, emphasis has been laid on the need of different stakeholders which determine long run growth of company with increased rate of return (Aandy, 2012). However, poor industrial relation was the major problem through which company was not able to cater need of customers and retain employees. At this juncture, management of company bring improvement in the workplaces by introducing effective conflict resolution methods. Also, workforces have been provided authority to share their complaints so as to resolve the same in less time. Similarly, effective communication techniques have been adopted to ensure proper interaction among management and employees.
Furthermore, PESTLE analysis is also one of the effective aspect to determine success of the firm company in future time span. For example, political changes in the party is the barriers thereby British Airways may face trade barriers in its growth and expansion. ON the other hand, economic crisis and tight monetary policy of UK government may decrease the purchasing power of customers. Owing to this, demand of services may go down which leads to reduce the sales turnover of the firm. In addition to this, changing life style of customers and their living standard has direct impact on the demand of services of British Airways. Apart from this, innovation in the technology made the promotional task easy for the company. This is because internet made it possible for organization to place the advertisement and books tickets of customers in easy manner. In addition to this, legal barriers like government restriction has negative impact on the performance of company. In addition to this, environmental issues need to be considered by management of firm otherwise its reputation can be hampered.
Impact of global changes in trade regime
The changing policies in trade regime has both positive and negative impact on British Airways. The expansion of corporation at international level is the crucial factor for the long run growth. However, British Airways was also making efforts to expand itself in the marketplace so as to increase customer base. However, several other organizations like WTO and international civil aviation forces barriers for the growth and development of corporation. However, free trade is allowed in some of the country but it is followed by set of rules of regulations (Britton, 2007). Owing to this, British Airways cannot go beyond its set limitations. Further, World Trade Organizations imposes several barriers by which actions can be taken against the unfair practices of corporations. For example, British Airways fined for price fixing. Apart from this, International Civil Aviation organization set the standard principles for operation of airline industry (Gnoli and Ridi, 2014). This in turn company need to bring improvement in its internal working practices. It leads to ensure ethical conduct of business. However, company need to face some barriers while ensuring its rapid growth.
Furthermore, globalization made it possible for company to enter into new market and enhance its scope in another countries. In this regard cultural diversity is the most important factor which is considered by company. It facilitates to give upward direction to corporation so as to increase customer base. Furthermore, political and economic condition of other countries affect performance of British Airways in negative manner. This is because company need to operate in other country in according that country only.
Impact of other global factors on British Airways
There are several global factors like political, legal and governmental which affect operation of British Airways. These factors highly correlated with the growth of the company. It is because changing political condition tend to affect business in negative manner. For example, change in political party arises need of changes in business those are operating at global level. Further, governmental pressure in the form of high tax rate also the negative impact (Henderson and Kelliher, 2010). Further, government propose several types of regulations like employment law, minimum wages and other related low for the expansion and growth of the firm. Apart from this, increases fuel prices also increases cost of production. It has direct impact on the profitability of British Airways. On the other hand, government is also working with services providers like employers, local authorities and training providers. These make it possible for corporation to get competent workforces who can effectively meet requirements of large number of buyers (Langford and et. al., 2005). In addition to this, personal allowance will be offered to low income people under 65 that aids to boosts demand of air travel. It contribute towards achieving long as well as short term objectives of BA.
Impact policies on travel, competition on British Airways
Policies formulated by European union affect the business of British airways o a great extent. The EU proposes several regulation for effective management of airline corporation in marketplace. Further, free trade is proposed by EU in order to expand business at global level and cover large market areas (Miller and Cross, 2009). Further, EU has aim to remove unemployment by promoting business to expand them sales at global marketplace. Further, competition and cultural policies are formulated by EU which facilitates British Airways to work in the specified areas. It leads to generate high profitability and meet demand of customers in an effectual manner. Similarly, European union supports effective work culture where employees can seek their personal growth. It contributes to creating competitive edge of the firm in the marketplace. Furthermore, polices of EU helps to boosts business in at global level and increase customer base (Besbes and Maglaras, 2009). This in turn helpful to create employment and provide good quality of services to large number of buyers. In addition to this, British Airways can create competitive edge with adoption of effective pricing policy. It facilitates to increase customer base and enhance the sales turnover as well as profitability of the firm. In addition to this, several policies has direct impact on the organizational performance which need to be considered. In addition to this, support from UK government for international trade makes it possible for British Airways to expand itself at global marketplace. Similarly, consumer protection legislation of EU depicts that British Airways will provide highest possible care to visitors or travelers. Also, European Commission is working to revise Regulation (EEC) 95/93 for effective allocation of slots of EU airports. At this juncture, cited organization oppose the same which in turn its performance get hampered. It shows that company need to follow the specified rules and regulation imposed by EU as well as UK government.
The aforementioned report concludes that British Airways need to adopt several strategies in order to reduce cost of operation and meet demand of customers in an effectual manner. However, company need to explore new market where it can target new segment in order to increase sales turnover and market share. It can also be said that, company must provide training to workforces in order to address issues of customers. It leads to boosts customers' level of satisfaction. Furthermore, special offers can be given to different segments like professional, students to attract customers. In addition to this, British Airways must focus on its planned investment in research and development. It proves to be effective to ensure certainty for the future business and create competitive edge of the same in the marketplace.
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