Importance of external factors Essay

In an organisation t present argon several(prenominal) factors influence the growing and performance of the organisation. There atomic number 18 some factors which atomic number 18 influence the organization rouse be accountantled by the centering only if some factors are beyond the organisation solicitude operate on. The factors which are controlled by the organisation known as internal factors and factors which are beyond the management control known as external factors such(prenominal) as Political, economical, fri endly and technical factors.Political Factors For BA political factors are very folkical for occupation growth. As this community is operating nigh the world and convolute in descent transport, countrys political tension can hamper its normal motion as well as the receipts income.Economical economical factor is a nonher(prenominal) important factor for such company. As still air fit is expensive, peoples competency to travel and economic condition s should be count oned when visualizening for BA. As an example BA faced a huge loss when the European recession started. proficient Total business organisation related to BA is based on the technology. As the air transport sector is too competitive, entirely companies are continuously ready to grab the bracing technology as a natural endowment for their potential customers. So, as leading company BA always has to consider the technological factors inwardly its business.Expectations of a stakeholdersStakeholders include those individuals, groups, and other organizations who confound an affair in the actions of an organization and who have the ability to influence it. The stakeholder approach consistently integrates executives concerns ab step forward organizational dodge with the organizations interests in food marketing, humanity resource management, public relations, organizational politics, and social responsibility. This integrative perspective assumes that an sound organization strategy requiresconsensus from a plurality of key stakeholders about what it should be doing and how these things should be done. The level of stakeholders expectations are depends on the motley factors and types of stakeholders in a company. Considering all afcts BAs stakeholders expectations are stated be funkyo Risk management of the company,o Technological change within the company,o Financial and economical performance of the company,o Environmental and ethical engagement,o Conti hardlyion to social, cultural and economical,o Policy for the future external and internal factors,o Program to address any negative op set,o Future ontogenesis and goals.Major changes in the external environmentAs a company in airline sector BA is operating and has umpteen offices around the world. So the socio-economic factors regardless of geographic areas can be a replete(p) factor fro its strategicalal planning puzzle out. For example, BA had closed their all operation and off ice from to the highest degree of south Asian countries due to the continuous loss. The of import reason for that loss was economic bad conditions in that area. Like this some(prenominal) socio-economic factors can be the major issues for BAs strategy making. During the political tension in middle-east many people ignored to travel with BA, which caused a huge loss for its yearly tax revenue. Another important change that could bear on BAs strategy is legal issues. BA faced various legal obligations in several(predicate) countries that played a huge bear upon on their future staretgy. Many countries has different rules for their airline sector and BA has to follow those rules to operate its slip by in those countries.A SWOT abridgment of BA can be included here to evaluate its contingent major changes in external environment.Strength1. Merger and Acquisition 2. Opensky agreement, 3. grueling brand image 4. involution of fleetWeakness 1. Cost of management, 2. set pr ofitability 3. Labour strikeOpportunities1. Emergence of new market, 2. Increased travel business in europe, 3. Economic restoration,Threats 1. Raising fuel cost, 2. Changing of consumers behaviour, 3. volatile political issues worldwide.PESTEL AnalysisIn order to measure success in airline industry, en external environmental psychoanalysis is very important. This PESTEL analysis depart explain the BAs position in the market, peculiarly in terms of competitors and how it assessing to meet its current and future challenges.Factor primeval PointsImplications for BAPolitical1. Heavy regulations,2. Increased security due to sometime(prenominal) attacks.1. Compliance is essential,2. Sufficient security measures should be in place.Economic1. orbicular Economic Crisis,2. Oil price is not stable,3. UK consumer saw largest decline in falling.1. Possible reduction of business travel.2. Directly affecting the BAs cost base.SocialTechnological1. UK has an aging population,2. Increasing unemployment.1. Online user commonly use comparison site.2. Online booking and reservation neat to a greater extent popular.1. electromotive force opportunity for growth as older person will spend more time in holiday.2. Increased bargaining power for new employees.1. Increased bargain power for both parties.2. Must ensure that BAs remain up to date.Ethical1. Noise pollution control2. Cancellations of passage and baggage loss.1. New legislation,2. Such ethical issues could have a detrimental effect on reputation if left unresolved.Legal1. collusion and price fixing.2. Open skies agreement.1. Restriction on mergers will have an impact on BAs proposed alliance with American Airlines.2. Opportunity for BA and its competitors to freely transport aircraft between the EU and US.Task 2 poll the cause of current business planAny organisation has to have a detailed plan for their business. This plan determines the mission and vision of that organisation. The strategic planning team re ar this business plan for the organisation. By assesing this plan any stakeholder or other external entities can get theme about the type and area of business. There are many tools for analysing the wreak of such plan over the organisation. These analysis tools includes SWOT Analysis, set chain of mountains Analysis, ostiarys Five Forces Analysis and so forth To consider the effects of business plan on BA, author will use doorkeepers Five forces tool here.British Airways- market position, by Porters Five forcesForceStrength1. Competitive Rivalryb. BA caters for other flights,c. There are very small diffrentiation between BA and other competitors in terms of pricing,d. Short Haul market is more fragmented by small players.2. military unit of Suppliera. Only two suppliers for aircrafts,b. BA restricted by sole supplier of fuel to the airport.3. Power of Buyera. For long haul, customers has no choice most of the time,b. Availability of flight and seats are not enoughc. Price no rmally changes fit to demand.4. Threats to new Entrantsa. Competitive Environment,b. exalted regulatory requirements,c. High cost requirements.5. Threats to substitutesa. precise few direct closed substitutes,b. Short Haul flight Euro thaumaturgist or Ferry,c. Long Haul flights No notable substitutes.HighHighMediumHighLowCurrent Market poistion of BAIn startegic manageemtn various tools are used to analyse the current market position of any organisation. These tools are proven technical analysis tools in management sector. The analysis tools that mostly used for the market position analysis are BCG hyaloplasm, GAP Analysis, Life Cycle Analysis, Market Share Analysis etc. In order to undertake the BAs current market share analysis as asked in the course work, author here used two tools. These are below,BCG matrixFigure 1 BCG Matrix (Source Emerald Insight 2012)British Airways had a great market share and low growth in last few years. It is evident that, they did not make any wh opping investment either in their fleet or increasing the destination, which could make them money cow. In recent, they changed their staretgies and concentrating on increasing fleet as well as expanding the geographical market. BAs another big strategic decesion was merger with Liberia which finally done on the end of 2010. This merger will help to ontogeny BAs revenue as a one of the top in the avaiation inductry. By doing so, BA will not only generate the large issue forths of money they will also consume large amount of money per year. Therefore the cash in every direction approximately nets out. This physical body of activities proves that British Airways is becoming a Star but in slow process. Product/ work life cycleIntroduction StageBy the 1920s Britain had a lot of airline companies but due to strong competition many private British air carriers were forced out of business. In 1923 all these companies merged to form a single british international air carrier called the Imperial Air transport. Meanwhile, the british airways, had begun to impose a big threat and competition to imperial air transport which resulted in the makeup of the British Overseas Airways Cooperation was formed (BOAC) that later combined with the BEA and 2 littler companies formed the British Airways (BA) Growth StageThe growth can be easily marked by the introduction of the concorde into the BA. In 1985 British Airways was do a public limited company. In February 1987 the privatization was finally consummated when 720.2 zillion shares of British Airways stock were sold to the public for one billion pounds. Expansion of fleet and routes were even more noticeable after mergers with other carriers comparable Bcal (British Caledonian). Due to the expansion of BA, another carrier Laker Airways were also forced out of business. This marked how dominant BA was turning out to be in the air carrier sector. Maturity StageThe BA mergers assured the command of the carrier in the home market secure for the time being. During this floor alliances and mergers made/attempted by BA with other carriers in different markets were numerous Aliiance with Aeroflot in Russia to create Air Russia.Attempted merger with KLM empurpled dutch airways. Broke down due to valuation of the two firms. Purchased 25% of Qantas airlines in Australia. Gained 49.9% of the French, TAT European Airlines. Started a german carrier called Deutsche BA with 49% ownership.Evaluate the competitive strength and weaknessAccording to Jhonson (2008), a value chain analysis is undertaken when a authentic approach to develop competitive emolument has made. In here, in order to analyse the British Airways competitive advantages, value chain analysis has done.Figure 2 Value Chain Analysis (Source Emerald Insight 2008) Value Chain Analysis particular activities within value-chain analysis are the ones that directly affect the business within short period of time and their affect is easy to monitor. They are inward logistics, trading operations, operations, outbound logistics, marketing and gross revenue, and post-sales work. Inbound logistics. Goods received from company suppliers are referred to as inbound logistics. Competitive advantage is achieved in inbound logistics stage of the business by BA by means of establishing on-going relationships with suppliers, sophisticated system for stock control and professional training that has been accredited by UK City and Guilds (BA Press Office, 2008) Operations.Generally, operations stage of the business involves preparing goods and services to be sold to customers. BA has a range of competitive advantages in operations part of the business through offering its customers increased security for their luggage, offering quick check-in services and also offering some services such as slating bookings and booking of other services online. Marketing and sales are considered to be one of the main grounds for gaining competitive advantage a nd usually is apply by many companies fully. Competitive edge gained in marketing and sales by BA involvemarketing activities not only to customers, but also to all stakeholders of the company. Also, BA senior management large amount of budget for marketing and sales initiatives for the company.Task 3Strategic options for British AirwaysIn order to develop strategic options for an organization using mold tools, author here used Ansoff matrix. Here is the discussion with this tool. The Ansoff implies business growth either by marketing new or existing products in existing or new markets (Shaw 2011, 83).Market PenetrationAlthough BA already has presence in the existing market it is facing stiff competition. For example, in the short haul market, rapidly saturating with budget airlines, BA lost 1 billion in revenues by end of 2009/2010 financial year. The major options presently are 1) Improving on people processes including bag handling 2) tho investment on information technology especially on net profit bookings (British Airways 2010, 58)Market developmentMarket development strategy focuses on non-buying clients in already presently targeted segments and focuses on new customers in new segments (Angwin, e. e. cummings , Smith 2011, 73). BA is trying to regain some business class customers from Virgin airlines and other competitors.Product developmentProduct development entails the process used to bring new products into the market. For example, BA introduced a new in-flight diversion system in the Boeing 777-300 ERs in 2010 and the First Cabin, a sophisticated ne cabin that offers customers the chance to work, recreate, eat and sleep (British Airways 2010, 67).DiversificationDiversification is a business strategy that attempts to increase profitability by introducing new products in new markets. Formation of alliances is a relatively new trend in new markets, for instance by collaborating with Indias Kingfisher airlines, BA will increase destination con nections and improve flight schedules (British Airways 2010, 76).Selection of the most viable strategic optionsThe best way of doing this is by eliminating the least viable options to remain with the most viable options. Renovation of brand image British Airways already possesses the advantage of having a globally recognised brand name (Buckingham 2011, 13). Introduction of complimentary services essentially requires the diversion of capital funds to implement. Currently, it does not importantly enhance Product development (Ansoff) (Punzel 2011, 32).Diversifying into other transport markets- Diversification is currently not a priority relative to other more full strategies (Punzel 2011, 32). Supply chain migration As part of diversification (Ansoff), this is also not a viable strategy at this time (Belobaba, Odoni, Barnhart 2009, 67).Options for future organisational strategyThrough market segmentation , companies divide large heterogeneous markets into small segments that can be reached more efficiently with products and services that match their eccentric needs.(kotler, 2009) British Airways has divided it market segmentation into different variables. There are number of variables involved in consumer market segmentation, alone and in combination. These variables areGeographic variablesDemographic variablesPsychographic variablesBehavioral variablesOccupation- British Airways give extra wellbeing for High Class .Some of the benefits like Club Card. Income- People who are into business class can travel in British airways as airfare are very high. Nationality In british airway all different kind of nationality travel.