Report on Understanding Business Strategies of Organization
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Introduction To Business Strategy
Managing change within the organization is a difficult task. It requires lot of concentration and preparation. Changes can bring resistance to change also and these resistance can arise from employees and people within the organization. The purpose of this assignment is to act as project management consultant for British Airways in order to address serious operations and quality concerns borne out of the debacle of Heathrow Terminal 5. This report will describe the need and factors driving the need for strategic change in British Airways. It will develop a project specification for implementation of quality change. The specification will describe the elements like resources, stakeholders, strategic invention techniques etc. The report will also produce a project plan to bring quality change in quality systems at BA. Further it will describe human resources and personal qualities which is most appropriate to implement the quality system. It will also discuss the methods of evaluation and monitoring the progress of the project. At last the report will end in discussing with the issues which arises during the course of project.
At present their business strategy contains many elements. Their vision is to become the airline of choice for longhaul premium customers. Their motive is to deliver quality service to customers and to achieve expansion in major global cities of the world. Customer recommendations, network punctuality and operating margin are their key performance indicators. After the evaluation of strategic position of British Airways, it is suggested that BA must have to adopt effective operations and quality management techniques. British Airways is the second largest passenger carried plane in Britain (Lakhal, Pasin and Limam, 2006). In 1972 Government of UK had established the British airways board to manage to nationalise corporation and two regional airlines. British Airways is the largest scheduled airline in united kingdom. There are some factors that create need for strategic change in British Airways. PESTEL analysis is the way through which these factors can be analysed. The word PESTEL stands for political, economical, socio-culture, technological, environmental/ethical and legal environment. Macro environment of British Airways can be analysed by this model, which includes :
Political Environment : political environment concerns with the way and the extent to which government influences strategic decisions of the business. Due to terrorist attack British Airways stopped flights to certain countries such as middle east. In 2012 Chancellor of UK had announced that VAT would be applicable on all “hot take away food” (Kumaraswamy, 2011). In 1996, European Competition Commission had blocked the virtual merger of British Airways and American Airlines, which results in reduction of BA's competitive power. While the incidents of 11th September air hijacking in United States and London Bombings on July 2005 make aware Air control and Security board to increase safety and anti- terrorism action. High rules and regulations imposed on Airlines just to ensure passenger that their journey will be safe without any freaking incidents like hijacking and bombings etc (Stonehouse and Houston, 2003). British Airways has to follow all these rules and regulations if it want to earn stable profit.
Economical Environment : Economic environment means those factors which are related to interest rate, economic growth etc. have significant influence on business. In 2008 because of global recession many UK based business get influenced. United kingdom face heavy financial crisis which Affects the British Airways. Share prices of British Airways rose up while at the same time prices of Oil also get increased. Cost of insurance of British Airways also rose up because of fear of terrorist attack. Exchange rates of UK also become weak which greatly affect the business of British Airways (Shenhar and Dvir 2013). Number of passenger get reduced due to cost cutting measure by both individual and business. This is how a economic environment become a important factor for strategic change in BA.
Social environment : Social factors refers to the demographic factors that includes population growth, culture etc. Through this factors operation of British Airways get influenced as downturn in the economy faced the country results in increase in prices of the air tickets. While at the same time rate of unemployment had increased so consumer became more price sensitive and looking for cheaper tickets. This condition bound British Airways to reduce its prices (Ramroth, 2006). Another incident was after 11th September Hijacking case British Airways has to cancelled its many flights and face financial crisis. UK has ageing population which can be a positive point for it because older people will be more willing to travel and long vacations at the same time.
Technological environment : Technological advancement take place in the economy, which influence the business decisions of British Airways. Most of the consumer go through the price comparison sites in order to get cheaper tickets because of recession period. Consumer also uses online technology to check ins (Lakhal, Pasin and Limam, 2006). While some older population is the same trends of offline checking. BA has to take care of these consumers in order to get technological advancement.
Ethical environment : Businesses have some ethical values within which they have to operate. Consumer becomes more environment conciousness and British Airways has to take care of environment friendliness approach. Noise pollution control, Energy consumption control are the new economic policies established in UK and British Airways has to follow this policies.
Legal environmentLegal environment also have significant influence on strategic decisions taken by businesses. Like in 2009, the open skies agreement take place which opens the door of opportunities for the British Airways, because they can freely transport aircraft between United States and Europe (Zu, 2009). Virtual merger of British Airways and American Airlines underwent with lots of legal formalities which became costly process for both of them and results in unnecessary distraction from main business.
T5 scandal was a major debacle for the operations of British Airways. It was related with ineffectiveness of luggage processing system. Company's several flights were cancelled and their passengers got frustrated because of the inconvenience faced by them. After analysing the case of debacle of Heathrow Terminal 5 of British Airways, it was observed that company is facing several issues with its luggage processing system (Aras and Crowther 2012). These include lack of training, lack of morale in employees, issues with coordination & integration, technical challenges etc. These problems are acting a barriers in meeting the strategic objectives of BA. Hence there is a need to bring changes in the luggage processing system for company to solve the above issues. So for that purpose, British Airways can implement a new baggage system of Crisplant who is a leading supplier of baggage handling system at the airports throughout the world (Bellgran and Safsten, 2009).
They offer highly integrated high speed, automated baggage handling system for regional and international airports worldwide by using latest proven technologies. Hence taking this consideration a project specification related to new system will be developed. This specification includes following elements.
Resources – In order to achieve change, there is a need of highly skilled manpower. Hence in order to develop this system, a Project Committee enclosed with quality experts and specialists will be appointed who will be controlling the entire project. Proper sources of funding will also be identified such as debt and equity financing (Bradshaw and Urquhart, 2015). Tools, equipments and other inputs needed to develop the new baggage processing system will be discovered. A project manager is appointed who will examine all project activities.
Involvement of stakeholders – These include customers, suppliers, employees, government etc. Customers or passengers will expect high quality service from this new baggage system because they are paying for it. Suppliers that is Crisplant expect that BA must make their payments on time and they can continue their business relation for a long period. Employees need adequate training to accept the new change and to avoid any resistance to change (Burlton, 2015). Government can show their interference in case of non fulfilment of some legal rules and regulations. BA can face issues in funding, if they do not get approval from lending institutions.
Strategic intervention techniques – While implementing the new system, techniques such as role playing, survey process, process consultation, team development etc can be used. Role playing is a approach through British Airways can train their employees in order to face the challenges associated with real life issues like Debacle of Terminal 5 etc (Cervone,2006). Under team development approach, company can organize debates, brain storming sessions, group discussions etc within their staff related to the implementation of new baggage processing system. Under process consultation approach, BA can appoint specialist and experts who can provide necessary training to airport staff through their experiences and knowledge (Dey, Clegg and Bennett, 2010).
Wider implication of planned quality change – Company can make use of quality management approaches such as Just In Time, Six Sigma, Committed leadership, Survey etc in order to manage the planned quality change. Six Sigma approach helps in improving the quality by recognizing and removing the causes of errors. Under the survey and feedback process, views and opinions of the people affected by change can be obtained (Jansson, 2008). For instance, worker's involvement is also essential as it is essential to prepare them mentally before the implementation of change within the organization. Leaders play an essential role in every company as they are the one who motivate and inspire other to show positive attitude towards the change. They have the potential to make sure that followers are ready to accept the change and to make contribution in the achievement of goals and objectives within the business (Kerzner, 2002).
Summary – Project Committee enclosed with quality experts and specialists will be established. A team of skilled and talented workers will be chosen to implement the project. A project manager will be appointed to look after all the operations. Among all the stakeholders, supplier Crisplant will play an essential role as they are supplying the new bagging system to British Airways (Kourdi, 2009). Strategic intervention techniques such as role playing and process consultation will be used to prepare employees to accept change. For wider implication of planned quality change, approaches like Committed leadership, survey etc will be used.
Project plan for change in quality systems at BA will be as follows:
A budget of 1 million pound has been set in order to implement the new quality system at British Airways. Suitable cost will be allocated to resources of plan such as efficient manpower, funding, tools, project manager etc.
Project Committee will be established enclosed with different experts and specialists. Project team will be handled by a project manager who will be accountable for all the activities to Committee(Kumaraswamy, 2011). A highly skilled and efficient team will be appointed in the implementation of new system.
Different types of monitoring methods can be used to control the project:
Survey and feedbacks- British Airways can monitor the quality change by performing surveys on their customers and employees. Before applying the new system, they can identify the opinions and views of staff and customers. Hence this will help the company in implementing the new system in more effective manner (Lakhal, Pasin and Limam, 2006). This will bring out more suggestions and improvements for the plan. Through survey company can know their staff and customers in more in-depth manner.
Six Sigma Approach – It is a set of techniques and tools for bringing improvement in process and is used in many business industries. The technique drives towards improving the quality of process outputs through identifying and removing the causes of defects or errors (Motohashi, 2015). Through this technique, company can make use of quality management approaches such as empirical, statistical methods etc. It helps in creating a special infrastructure of people within the company. It follows a defined sequence of steps and carries quantified value targets. In order to achieve quality, British Airways will need commitment and efforts from whole organization particularly the top level management (Nakatsu,2009).
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Committed leadership – Leadership plays an important role in the success of the project. Here efficient leadership is required to be reflected from project manager. As a team leader he must develop effective communication within the team members. There should not be any confusion and mistakes (Nicholas and Steyn, 2008). Sound decision making is required where he must take all decisions taking into consideration each and every aspect. He should act as appropriate listener who listen to his followers very carefully and respond to their queries swiftly. Further cognitive and analytical skills are also needed from leaders so that every time improvements can arise in the processes (Paul and et.al., 2011).
Lewin's change management model can be applied by British Airways. This model will prove to be very useful to deal with the changes arising at the airports of British Airways. Model comprise of three major steps. Step one is unfreezing which is one of the essential step to understand the world of change (Ramroth, 2006). It is about getting prepared for the change and realizing that it is necessary. Unfreezing relates w ith making preparations to move away from the existing comfort zones. The more employees will feel that change is essential, the more urgent it is and the more motivated people are to accept the change. Unfreezing and getting motivated for change is concerned with giving weightage to benefits and dis benefits and identifying if the benefits overcomes the benefits before taking any action (Reiss, 2007).
Hence it involves movement of company towards motivation for change. Second step if change or transition which states that change is not an event rather it is a process. The process is called transition. It is regarded as the inner movement or journey which is made in reaction to change (Sheldon, 2006). The second stage occurs during the time changes which are needed are made. It is regarded as the difficult stage because people are unsure or even fearful. It is not easy time for the followers because they are learning about changes and they require time to understand and show cooperation. It is also useful to portrait a picture of the desired change and the advantages to employees, so that they do not loose the direction in which they are heading. The last step is freezing and it is also regarded as refreezing. It is related with establishing stability once the changes have been made (Shenhar and Dvir,2013). Changes are accepted by the people and it become the new norm. They form new relations and become comfortable with their routines. Things can take time to adjust. At this stage people laugh and practically there is no time for this freezing stage. This last stage of change must be taken as more flexible so that unfreezing for the next chapter might become easier (Yang, Kueng and Hong, 2015).
Certain types of skills and qualities are needed to implement any change project successfully. These skills contributes towards achievement of goals and objectives of business. In order to implement the quality systems change project more appropriately, following qualities are required:
Participation – It is very important for each and every team member to show complete participation is every activity of the project. Each of them have a defined job which can affect the outcome of goal (Sadler,2003). Team members are required to feel important and understand their value to the team. They must be highly motivated and inspired to show their active participation. If each member contribute, then only system can be developed effectively.
Communication – Good communication provide strength to all decisions. All team members should able to communicate well within the team and with leaders. It is essential to avoid any kind confusion and query among them. Openness is needed and they should fell free to ask anything. Good communication imparts knowledge and learning within team which brings improvements in the process (Harmsen 2006). A team requires high level of mutual understanding between the team members. A team is established for an reason and all members have to share the resources and ideas with each other to make things work. They must contribute and share openly and willingly. This can be done through effective communication only.
Cooperation – A team is merely a group of individuals if they does not work together. Cooperation and coordination is needed at every aspect or level. In case if someone is struggling with an issue, then others should come to back the support. All members should help each other in bad conditions, then only a team can succeed (Zu ,2009) They should care about working together and to get things done and move things forward as a team.
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Fearless – It is another important quality of a team which can improve then quality. Fear act as constrain for creativity and growth. It is a kind of virus which should not be spread within the team. All of them should be mentally prepared to face challenges and issues without any fear. Efforts must be made to build a fearless team which can give challenge any kind of problem (Yang, Kueng and Hong, 2015). Carrying a fearless attitude will make them strong and harder to face any kind of uncertainty.
Respect each other- These qualities are also essential to build a successful team. Members within the team possess different types of qualities and skills which makes them distinctive from others. This is something at, which they should be proud of but they should not show any arrogance. All members should respect each other and the quality possessed by them. They should respect each other's backgrounds, personalities, cultures and selections. Every one should be cautious and careful before saying anything which can impact the bonding of a team. It is to be assured that everyone feels respected (Stonehouse and Houston, 2003). Giving respect to each other is the first step to become a part of a happy team. In case of any success of a team member, other should celebrate it as the success of the team avoiding jealousy.
A sense of responsibility and appreciation – These are another good qualities of a team. Members must carry a sense of responsibility towards the team and the business. Results can come out valuable if all team members understand their responsibilities and live up to it to the fullest level. Every member must understand his responsibility and must think that how his efforts can affect the operations of the team (Shenhar and Dvir, 2013). Hence they all are responsible for their respective actions. Appreciation is about admiring one's efforts and contribution. In any member has shown great performance, then his efforts must be highly considered and appreciated. All members must be encouraged to express a sense of appreciation to others on a consistent basis.
From the above study it can be concluded that case of Terminal 5 was a major issue for British Airways and also a lesson for them, Their business strategies are highly impacted by economical, social, technological, legal and environmental etc. Adopting luggage processing system of Crisplant into their business will add value to their business. Lewin's model of change can be adopted by the company in order to face resistance with the change. Before implementing the change it is essential that employees must be prepared mentally for it. Certain types of skills and qualities are needed to implement any change project successfully.
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