British Air Essay

scheme In this context, dodging is to be taken as the nature and also the direction a companionship lot take in heat of the fillings which atomic number 18 at its dispose. Therefore, from this definition of dodging, strategicalal responses can be inferred to mean the responses that an placement takes in achieving its strategies and and so strategic responses.Nature refers to the very essence of the club, for eccentric BA is an air lane and t because in the f in sozzled path exertion.Direction refers to where the disposal in question (BA) is headed and so strategic responses.Pestle analysis It refers to a methodological systemal systemal digest whereby the macro environment is analysed. It will be used to analyze the political, scotch, sociological, technological, profound and environmental forces affecting the air passage attention under which BA operates and to which this forces impacts on the strategic making of BA.AbstractThe airline industry is in the g ain industry which experiences very erratic changes constantlyy last(predicate) over the adult male and hence companies have to keep up with the changes as well as aim for future changes and ch everyenges in the inspection and repair industry of airlines with strategic making. schema making is an important aspect in the governance in comfortable of the organization succeeding in the environment it is direct in. Though the airline industry is changing like any other typical gain industry, it does non mean that the airline industry can afford to round behind or sleep in term of making strategies able for the now marketplaces tastes and the then (future) markets tastes.Therefore the paper critically reviews the corporeal system of British Airship canal (BA), the companys antagonisty strategies d whiz with(predicate) critical approximation of the companys strategy, industry and company analysis. However, an overall industry analysis is undertaken before any ana lysis of the companys strategy done and with analysis of a three dichotomies impact in the company and in the context of three paradoxes in the company and the perspectives which ar appli cable length to the paradoxes. intentness AnalysisOverviewBA is a ren have airline in the UK and among the biggerst airlines in the world, features which argon derived from fleet size of the airline, the number of passengers carried and the number of international f fainthearteds do by the airline. It was causeed in 1971 with the motives of gaining jibe of BOAC and BEA which was the then nationalized airlines a considerableside other two airlines, which were Cambrian Airways and the Northeast Airlines. The merger of the four companies that formed the inadequately BA airline was effected in 1974 and become a invoke owned company.However, the company was later privatized in 1987 and its expansion was gained through acquiring the British Caledonian together with Dan Air in 1992. BA is per iodly transaction in the UK Market sh be as the largest airline in terms of the fleet size and boasts of organism in 2nd position in terms of its market sh ar (IATA 2012), trading under the name of supranational Airlines Group fol piteo utilise a merger in 2011 with Iberia. In the spherical bena, the front end of BA is felt through the company being fifth largest airline in terms of the passengers who are flown using the BA airline (See Figure 1, position of BA in the world(prenominal) arena).Current and prox Key Issues Affecting the Airline IndustryIn researching on the current and future key issues affecting the airline industry together with researching the trends and the agonistic forces that are affecting the airline industry in the modern times, in light of BA strategy making and the influences that are to effect on BA, a pestle analysis, SWOT analysis and the Porters quin Force Analysis are the tools that are going to be utilised. However, for great specificity, th e focus of the pestle analysis is the europiuman Airline Industry.Pestle AnalysisPolitical IssuesHaving state owned airline, which are owned by governments and and then enjoys government protection resulting to regulated opposition. This classic example of government regularization of international air was seen in BA in the merger of British Caledonian together with Dan Air in 1992, to combat take exceptionr on considerable catch r reveales. organic evolution of aviation policies which are politically generated, for cause, the strain insurance in UK of increasing the capacity at Heathrow, which according to Civil Aviation Authority are only short term measures that would do Europe no good in terms of competing with other global competitors for precedent USA, China and India. The idea is to have to a greater extent capacity through grammatical construction other airports (Reals n.d.).In UK, airlines be broading to another country are not allowed to operate within the rout e of another country (cabotage) and hence eliminates controversy in the airline industry in the UK for at that place is no competition from the non European countries.Increase in APD (Air Passenger Duty) by 8% for which all airlines have to comply and which can translate to less travels to the UK for ADP in conclusion increases the cost of travels (BBC immatures 2012, 1st April).Airlines constrains in terms of adhering to government policies for example the pledge by the UK government to reduce carbon emissions by 60% reflected in the UK Climate Change Bill.Economic FactorsSevere crisis in world economics where financial systems have been destabilized and paralyzed and consequently demand to be restored to stability, otherwise translates to less travels by air.Stiff competition in the airline industry in the UK receivable to presence of competitors who even offer low fares flights. Competition was brought about by the deregulation of the Airline Industry in UKSocio Cultura l FactorsUKs agedness population which is approximated to rise over the years. Projections in UKs populations estimates that there would be more elderly people than there are presently (see Figure 2 and Figure 3 for the projections) handiness of airline travels by the lower social groups in the UKTechnological FactorsDevelopment of cleaner engines in the aviation industry which means that airlines like BA have to adopt the new technologies and also in light of the pledges in support of governments policies to reduce carbon emissions.New operating procedures which can be as a result of sudden changes in weather patternsThe use of Bio fuel by the airline industry is the assorted festerings in the world of technology that the airline industry has to deal with.environmental FactorsDevelopment of environmental policies for grammatical case the UK Climate Change Billwellness scares which mostly are as a result of the changes in clime and weather patterns for instance earth quakes a nd bird flues.Emissions policy in the UK, for instance the move to have airlines charged for their share of green house gasconade contri preciselyion on flights that are to and fro Europe.Legal FactorsOpen sky promise ending the protection of national aircraft carriers and introducing completion in the airline industry.EU regulatory changes for instance the increased call for better care of the clientUS regulatory changes for instance the ban on liquids and gels past the display check come ins affects the customers of air transport mode who may be in self-discipline of much(prenominal) goods (liquids and gels).BAs SWOT AnalysisStrengthsA slopped BrandGlobal appealEstablished Fleet Operationsa la mode(p) fleets that provide the calm to its customersInnovativeness in the emergence of products and operate by the companyStrong analytical and marketing skilfulnessWeaknessesThe organizations culture (the us culture)Decline in operations efficiencyUnhealthy financial military o perationLack of provision of competitive customer packagesPoor marketing strategies that are to reinforce competitiveness of the company to the standard of its competitorsOpportunitiesGlobal tourism, which continues to increase due to globalizationTechnological advancements in the airline industryUKs ageing populationCorporation tax reductionsThreatsCompetition from low fares airlines (e.g. British Airways broken Cost Airline BALOW)Increase in ADP by 8%Oil price volatilityIncrease in regulatory conditions and laws which are varyingSubstitute means of transport like galvanising trains and busesThe ever changing customer behaviour which is hard to predictPorters Five Force AnalysisPorters Five Forces get a line is important in order to check whether BAs proposed strategies are to become profitable to the organization (Porter 2008).Diagram illustrating a simplified 5 Forces Model By Micheal Porter adopted from http//www.brs-inc.com/porter.asp, Analysis distinct to BA as provided bel owDegree of RivarlyBA operates both the small and the enormous flightsBA is different in policies and terms with their competitors in the airline industryOther companies like Virgin Atlantic criticisms of some of BAs strategies for instance the merger of BA with AA and thus disregarding the companys strategies to its customers.Threat of EntryCompetitors are discouraged from entering the market byExisting firms in the airline industry having a competitive serviceChanging new technlogyTransformed government policiesThreats of SubstitutesInternal substitutes embarrassbusses, cars, electric trainsExternal substitutes include international airlines like EasyJet and Virgin Atlanticbuyer PowerAvailmability of the internet to consumers increases the consumers conciousness and exposes the consumers to BA competitors. supplier PowerSuppliers take a craps use of trade unions to have a high negotiate powerMarket characterised by suppliers having a high powerBA has only two supply manufact urers of its aircrafts and a sole fuel supplierThe Paradox of Markets versus ResourcesThe airline industry being a very volatile industry has to survive through tough financial times, for instance economic recessions. In light of all the changes that occur in the airline industry, an organization has to regularly adapt to the environment in which it is operating in. In light of BAs environment, i.e. the service industry, it is paramount that the organizations strategic thinkers acknowledge that imitation of what other companies are doing in the market may not ever produce the same results and hence BA inevitably to constantly study the market to identify the asymmetries that keeps emerging in the service industry and hence develop the asymmetries to capabilities for the organization. This therefore proposes that the organization has to keep in touch with the market for instance through free burning research and development of the organizations products and services and in light of the companys strategy of becoming an airline of choice to customers of long and short haul allowance.BA differentiation from its competitors is seen through continuous research and development of the industry which can be inferred through the analysis of the SWOT, PESTLE and the Porters Five Forces tool, continuous improvements of the companys products and services to its customers for instance through halting the organizations networks in the long, short and committal segments. In addition, BA as a front-line in the airline industry has an expediency over its competitors due to its long presence in the industry which dates to the years where it was a state owned airline. This travel byly shows that in adopting some strategies for instance the acquisition of Iberia, BA tries to make its presence felt in the global arena.In addition, the organization resources allows the organization to apply the inside out logic as compared to its competitors who may not have a good command of resources at their dispose and therefore making BA have a competitive prefer. The inside out logic follows that for a firm to gain a competitive favour over its competitors, it must have the capability of converting the processes of production in a quick and cheap way and which BA has exhibited and continues to exhibit through its various acquisitions of other airlines and through mergers formed with other airlines. BAs strategy that is consistent with achieving its strategy of being an airline of choice to customers of long and short haul premium is through acquisition of other airlines so that all customers are within in its reach enabled through the mergers and the acquisitions.While the theories of completive advantage suggest that for an organization to gain competitive advantage, the organization must establish a cost effective way of strikeing its strategies. This means that the companys operational costs are lowered and this leads to the company having a competitive ad vantage over its competitors. Therefore, BAs strategy of mergers and acquisitions is geared or leans towards the company having a global presence in the world and hence appealing to its customers and reduction of operational costs. The reality of the environment that the organization operates in is realised through the SWOT, PESTLE and analysis of Porters five force (Fine 2009).In as much as an organization has to adapt to the environment for instance through continuous development of services and products to meet the ever changing inevitably of the consumer, the resources that are at the dispose of an organization in light to adapting to the current trends, tastes and preferences of the consumers in the industry can indicate otherwise. A companys resources refers to the unmistakable and the intangible resources for instance land, m adepty and materials which are tangible while the intangible resources include the rational resources for instance the relationships and reputation an d the competencies which include the knowledge and capabilities.One of BAs strategies is becoming an airline of choice to customers of long haul premium and which is counter acted by strategies for instance through continuous research and development in order to identify the tastes and the preferences of the customers, continuous improvements in products, services and networks and through maintaining its presence in the long, short and cargo segments. However, these strategic responses are evaluated against a background of whether the market unavoidably of the consumers are the once to guide the strategy making process of the firm or the firm is the one to leverage the strategies that BA is to take owing to the fact that whether there are adequate resources to respond to the needs of the markets so identify through the research and development process in order for BA to attain its strategy of becoming the airline of choice to customers of the premium long haul (Clegg, Kornberger & Pitsis 2008).BAs markets versus ResourcesThe strategic responses put forth by BA illustrates its dedication towards attaining it strategy of becoming an airline of choice to customers of premium long haul which is achieved through BA building a pole which increased the operations of the airline. In addition, BA also appeals to customers through transforming the customers service in that the customer service exceeds punctuality and hence customers are more satisfied which represents the rational resources of the company.BA has also act to grow in order to meet at the crossroads with the needs of the customers through launching of routes from London to St Kitts, launch of the open skies and also flights from Continental Europe to countries in North America. In addition, BA also do LAvion and started to fly from London to NY JKF. The expansion is made in the efforts of BA coordinating its efforts to have a more international perspective that is cable of meeting the demands of the c ustomers. BA Plc (2010), recognises that there are 5574 BA resources oversees and approximately 35, 920 in the UK. However, greater specificity is to be achieved through coordinating the resources and market availability (Schneider, Gunnarson & Niles-Jolly 1994).BAs commitment to the needs of the customers is seen through the purchases of aircrafts which are modern which are also in the effort of appealing to customers. Other ways through which BA appeals to its customers is through being corporate responsible through its commitment in reducing carbon emissions (Johnson, Scholes, & Whittington 2008).Therefore BA is driven by the outside in logic other than the inside out logic for the balance between the companys resources and the markets availability will always indicate a different shift where the company strategies are more bound towards meeting the demands of the market and hence the outside in logic prevails.The Paradox of globalization versus localizationGlobalization is a strategy that is being adopted by international corporations in order for them to gain a competitive advantage over competitors. Strategic tensions that a company for instance BA has to face in light of globalization revolves about the sentiment of globalization that is to be adopted in light of achieving strategic goals. For instance, one of BAs strategy is to increase its global presence with the strategic tensions in attaining this objective being whether global is to be taken in the terms of a worldwide scope that is to refer to the geographic presence of BA in the world, worldwide similarity of the BAs products for instance, using the word global to refer to the homogeneity of BAs products around the world or whether globalization (Thompson, Strickland & Stappenbech 1994) would be in the context of the desegregation of the operations of BA, that is linking the world as a system through its services (See Figure 5 for illustrations of the dimensions of globalization).A differe nt tension lies in whether BA is to respect the differences that exist between markets defined by national boundaries which can be done through designing products and services that meet the needs of customers in different countries. The paradox of globalization and localization is a challenge that BA has to address in light of its strategy of having a global presence with questions ranging on how the company can address the globalization synergies and at the same time remain relevant in addressing the local synergies.BAs Globalization and LocalizationTo begin with, one of the ways through which BAs strategy of global presence is achieved is through the strategic response of having a global connectivity for all the customers and this is achieved through BA establishing gradation in most of the major cities in the world or through expansion which is gained through BA partnering with other airlines for instance the low fares airlines or through mergers for instance the merger of BA wi th Iberia, code sharing with Kingfisher carrier in India (in 2010) and the recent acquisition of BMI from Lufthansa in 2012.In addition, BA is one of the largest airlines in the UK a position that the company has gained through having a large fleet size, flies to over 300 destinations in the world and has shareholdings in BA city Flyer, Comair, Flybe, Open Skies, AIG, ICCR and BMI. In addition, the global presence of BA is felt through BA being the 5th largest airline by scheduled passengers.Without much further ado, the paradox of globalization versus localization for BA is congruent with the dichotomy of whether BA develops a clientele deterrent example distinctively different from its competitors or whether industry logic is the one that largely determines the firms strategy. In analysis, the drivers of globalization are market drivers, government drivers and competitors drivers which have less to do with BA developing a business model that is distinct from its competitors. As a major airline in UK, BA enjoys economies of scale and understands that it must have the oligopoly characteristics where firms operating in an oligopoly market cannot act independently on their own (De Wit& Meyer 2010) and hence disputing the fact that BA can develop a business model distinct from its competitors (Porter 1985).Owing to the drivers that make a firm to be globalised, BAs strategies are interdependent with its competitors. For instance, deregulation brought new agreements for example the EU US Open Skies agreement in 2008 which brought a shift to competition in Transatlantic Routes and as a result the US toter Deltas, US Airways and the Continental started operations at Heathrow in 2009. Therefore, it is less convince to claim that BA develops a business model distinct to it for clear facts exists to establish the claim that it does not act independently of its competitors and one of the ways it does so is through the strategy of having a global presence in respons e of what its competitors are achieving (the operations of other airlines which are taking advantage of deregulation to coin agreements and operate in other countries) (Roth & Ricks 1994).The paradox of responsiveness and SynergyThis paradox brings into focus a companys dilemma of how to respond to the competition in the industry and whether the company can contact the demands of the market and at the same time maintain the responsiveness of the business.In order to have synergies in an organization there is need for a company to unify the different activities carried out in the organization which in some instances may make a company lose its business responsiveness. For a company to attain synergies and at the same time attain responsiveness (Mintzberg, Quinn & Ghoshal 2002), the organization must draw out clearly its corporate scope for instances of how many businesses the company should have, corporate distribution, for instance the weight that is to be placed on each business unit in the organization, corporate mechanisms for instance of how the synergies in the companys business should be achieved and the oversight mechanisms that ensures that the synergies so developed are a reality to the company. The meeting point of a business responsiveness and the synergies so created, results to the paradox of responsiveness versus synergy. military control demands presents a business to forces that pull it apart while the synergies pulls the company into an integrate unhurt.BAs Responsiveness versus SynergyOne of BAs strategies is to meet the ever changing needs of the consumer for instance meeting the needs of the ageing population which requires the company to provide more value to the products offered to this market segment, reinforce the companys brand, development of new products and also through enhancing customer loyalty (Mintzberg & Ahlstrand 1998). For the company to achieve the above strategy through the strategic responses discussed above, there is need to coordinate the various units of the organization into a functional whole whereby units so entrusted with the development of new products, researching on upcoming market trends are an integrated whole of the organization and hence the synergies. For instance, the finance department of the organization needs to avail funds to the research and development of the organization so that proper research on upcoming trends is conducted effectively. This rationale is consistent with making the parts an integrated part of the whole for the whole to function as one unit, that is the organization (Raynor 2005).The paradox of responsiveness and synergy can be best achieved when the focussing and the leadership style demonstrates control or managed chaos. In a controlled leadership, a company attains responsiveness (Porter 1996) and at the same time attains synergies because the management of the organization is organized in such a way that the different businesses or the department in the organization are headed by leaders who have the same goals. In a leadership where there is chaos, the synergies and the business responsiveness losses focus for the management is not organised to attain the responsiveness and the synergies (Mintzberg & Ahlstrand 1998). .ConclusionIn light of the volatility of the airline industry, the strategies that BA has put in place are best achieved when the paradoxes of globalization versus localization, markets versus resources and responsiveness versus synergies are analysed in the context of the dichotomies relevant to paradoxes. 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