Business Environment Sample Assignment By Ex

BUSINESS ENVIRONMENT

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Table of Contents INTRODUCTION...........................................................................................................................1 Task 1...............................................................................................................................................1 Lo 1.1...........................................................................................................................................1 Lo1.2............................................................................................................................................2 Lo 1.3...........................................................................................................................................2 Lo 2.1...........................................................................................................................................3 Lo 2.2...........................................................................................................................................4 Lo 2.3...........................................................................................................................................5 Task 2...............................................................................................................................................5 Lo 3.1...........................................................................................................................................5 Lo 3.2...........................................................................................................................................6 Lo 3.3...........................................................................................................................................7 Lo 4.1...........................................................................................................................................7 Lo 4.2...........................................................................................................................................8 Lo 4.3...........................................................................................................................................8 CONCLUSION................................................................................................................................9 REFERENCES..............................................................................................................................10

INTRODUCTION Business environment is the combination of internal and external factors that influence organizations operating situation. It is very complex and requires a deep study. The study of TOLL-FREE NO: +44 2038681671 WHATSAPP NO: +44 7999903324

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business environment facilitates keeping business flexible (Carr and Stone, 2009). Business environment include factors such as suppliers, owners, government activities and economic trends. This report discusses about the business environment analysis of British Airways.

Business environment of the company is getting complex because of many competitors in the market. For making business environment effective British Airways has to develop unique strategy. This report also discusses about the mission, vision and company’s goals and objectives.

Various challenges faced by the company in the market.

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Task 1 Lo 1.1 The purposes of different types of companies are as follows: 

Sole trader – Sole trader is the sole owner of the business and operates on very small scale. The main purpose is to earn small level of profits so that a good level of livelihood



can be attained.

Partnerships – Here a business is established on the basis of two or more than two partners. The profits and expenses are shared on an agreed ratio of agreement.

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

Private & public firms – Company could be private or public limited. The ultimate aim of such companies are to earn profits and market share.



Charity or NGO – These are called non-profit organizations. The main objective of the bodies is to fulfill social responsibilities and work for the welfare of the society.

British Airways is a British PLC. The mission and vision of British Airways is to become the world’s leading global premium airline by fulfilling the needs of customers and developed guiding principles. 

Mission of British Airways: Mission statement is a summary of the values and aims of a company. Mission of British Airways is to offer top quality aviation services to its customers (Crowther and Aras, 2011). Innovation, creativity and customer loyalty are top priorities for the organization



Vision of British Airways: Vision defines the organizations primary objectives and purpose. The vision of the company is to officially approve for carbon offsetting schemes and to reduce carbon emissions. BA works towards applying strategic approaches in order to make sure that there is no bad effect on the environment surroundings.



Goals: British Airways support international communities and charities in the countries Crowther and Aras, 2011). The short term and long term objective of the organization is to continuously work on improving the flight experience of customers in order to achieve customer loyalty.



Objectives: British Airways facing unexpected market conditions over the last few months. But then also they concentrated on the strategy to become the world’s leading global premium airline. They take several actions to make the cost more effective and focus on customer service. British Airways also create more efficient working environment for their teams throughout the world (Kensler, 2007). The main objective of the company is to increase its market share and overall profitability.

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Lo1.2 Stakeholder is a person and group that have an interest in an organization. It can affect the company’s activities, objectives and policies. British Airways has many different stakeholder groups. Good knowledge and skills of the stakeholders can help the company to grow in the competitive market (Lee, 2005). The key stakeholders of British Airways are: 

Customers: They are the main source of earnings for the company and it decides how the company is managed. British Airways aims to attract new customers and wants to keep



the existing customers by its good services quality.

Employees: British Airways have the ability to influencing the customers (Maloney and Stanford, 2006). But lack of facilities to their employees leads to strikes and dissatisfaction. The image of British Airways is heavily unionized. This shows that they



don’t have good relationship with their employees.

Competitors: British Airways has a lot of competitors such as Japan Airlines, Virgin Airlines and American Airlines. The company makes different strategy to compete with its competitors (Sloman, 2006). British Airways mainly work on the certain route by



which they have a monopoly and can charge a higher ticket price.

Suppliers: The main suppliers of British Airways are Boeing and Airbus. They have big impact and high interest on the company. British Airways also depends on online travel



agents because they are convenient and provide cheaper deals to the customers.

Financial institutions: They have high impact and interest in British Airways. The need of funding depends on the company gearing ratio and liquidity (Zhifei and Joo, 2013).

Financial institutions have the power to refuse or grand funding.

Lo 1.3 In order to fulfill the requirement of various stakeholder groups the company has adopted different strategies which help to achieve the overall target. The key stakeholders of the company are; customers, employees, competitors, suppliers and financial institutions. Customers provide profit to the company so British Airways mainly focus on fulfilling their needs by giving them proper amount of quality services and satisfaction (Clarkson, Miller and Cross, 2012).

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Company holds the following responsibilities towards its stakeholders: Employees - These people are the real assets for the business and they should be given appropriate reward and benefits for their contribution for the company.

Suppliers – BA is required to maintain long term business relations with its suppliers so that they can supply quality inputs and raw materials.

Customers – Organization must focus on offering amazing air experience to its customers so that they remain loyal towards the services all the time.

Government – In front of the government there is a responsibility of doing the business in ethical manner. Government bodies always keeps an eye on the business practices of the organization Shareholders – These people expect adequate returns from the shares which they have invested within the company. It is the responsibility of BA to offer attractive returns for its investors.

British Airways successfully satisfies the basic requirements of their customers and has the ability to influence and make them loyal customers. Employees are having the power to influence the customers. But employees are not satisfied and have issues regarding their jobs.

British Airways has to satisfy their employees by providing them sufficient amount of salaries and other facilities such as bonuses, incentives and rewards (Dettwiler, Lindelöf and Löfsten, 2004). By giving them all such facilities they can perform well and increase the productivity and fulfilled the customers’ needs.

There are so many competitors of British Airways such as Japan Airlines, Virgin Airlines and American Airlines. Other low cost airlines can affect the business decisions of BA. In order to survive competition, company will have to continuously offer attractive discounts and offers for its passengers. Financial institutions also keep a interest in the financial information of BA and they can deny granting funds to airline if they find it in a bad gearing & liquidity position.

Media also carries a great impact on image of the firm, especially in case of controversies. BA is trying to portray its image as good corporate citizen with lowering the carbon footprint and developing good business relations with local communities.

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Lo 2.1 An economic system is a system of distribution and production of goods and services, and allocation of resources in the national community. Economic system is of three types; free market, command and mixed economy. This system is mostly affected by production of goods and services due to limited supply of several elements such as land and labor (Kelliher and Henderson, 2006). British Airways operates its business where mixed economy is present. In this economy major decisions are taken on the basis of market conditions. A mixed economy combines elements of both free private enterprises and government intervention. For effective allocation of resources in the mixed economies, the company has to change the policies from country to country. In mixed economy some resources are owned by the government and others by the private sector.

In free market economy system, government involvement is kept to the minimum and private players take important decisions on the basis of market mechanism (Wilkson and Grugulis, 2007). This means that no freedom for individuals to select what they produce and what they consume.

In command economies decisions are taken by government. In this economy government decides how to allocate resources based on customs and tradition. Command economy has nonexistent property laws and services are allocated according to social conventions and sometimes according to a hereditary class system (Russell and Reynolds, 2004). This economy is not respond effectively to real market forces.

Lo 2.2 In order to control the market conditions fiscal and monetary policies are used by the government. Fiscal policy relates to revenue collection and government spending. It involves spending and government taxation. Monetary policy relates to the size and rate of growth of money supply. These policies make an impact on all manner of business decisions (Ling, 2010).

Government affects their nations’ economies through monetary and fiscal policy.

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

Fiscal policy: It frequently affects the level of taxation faced by business. If government increases taxes, businesses don’t have sufficient money for investment and might pass the increase on to consumers in the form of higher prices. This policy negatively affected British Airways because the company has to pay more taxes (Langford and et.al., 2005). This leads to increase in the expenditure and decrease in the income and profitability is low. They also left with the fewer amounts for development.



Monetary policy: It has a major impact on the overall economy by affecting the ability of businesses to obtain credit. An expansionary monetary policy leads to decrease in rates of interest and help to access to credit easily. This policy reduces the flow of money and makes it more difficult for companies to borrow (Britton, 2010).

British Airways has to pay high rate of interest in this policy by which expenditure increase. If company takes loan on the short term basis so they have to pay more interest.

Fiscal and monetary policies involve the opposite actions. Both policies have pros and

cons on the business activity. Fiscal policy involves time limits. If the business is falling, government take time to work and improve the business conditions. In monetary policy the immediate impact of fed policy is on interest rates (Dickinson, 2013). The increased supply of money holds down interest rates and making it easier to borrow money for capital investments.

Lo 2.3 Competition policy is related with the use of good practices in competing with main players in the market. Competition policy and other regulatory methods are two important and inter related areas of public administration and regulatory policy (Li, 2008). Competition policies are framed so that companies can compete with each other in fair manner and healthy competition can be encouraged within industry.

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There are various tools used by government to improve the quality of new regulations which includes forward planning of review, public consultation and hearing and regulatory performance indicators. British Airways operates in the market which is highly competitive in nature. The intensity of competition changes from route to route in aviation sector, depending on the nature and number of competitors (Riddle, 2011). For domestic flights there is a free market within the whole Europe. European airline allowing all airlines to function on any route and they decide their own fares according to the market conditions.

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Environmental regulations cover emissions to the global atmosphere, disposal of solid waste, noise and other relevant factors. In managing the environment performance British Airways aims to develop new rules and regulations and laws for safeguarding the environment.

The company has to use natural resources effectively (Wessels, 2011). BA must have to compete in ethical manner through adopting right business activities. Company is required to fulfill its corporate social responsibilities in effective manner.

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Task 2 Lo 3.1

Market structure plays a very important role in the identification of price and production.

Different types of market structure carry different impact on pricing decisions of the company.

These are as follows: Perefect competition – There are many firms under this market. They earn normal level of profits on the basis of homogeneous products.

Monopoly – Under this market, only one company dominates the market. There are barriers to the entry also.

Oligopoly – It is an industry dominated by few companies.

Monopolistic competition – There is a freedom of entry and exit for the companies but the products are different from one another.

Perfect competition is present in the aviation industry. The key competitors of British Airways are Japan airlines, American airlines, Delta airlines and Virgin airlines. These competitors are varying from route to route. The aviation industry is competitive and highly exposed to changes in the customer behavior according to their preferences (Kew and Stredwick, 2005). British Airways keep their fares low to sustain in the competitive market because customers have lots of other option available.

When cut down their fares they face financial crises and to overcome with such problem governments have resorted to bailout programmes. This has been particularly true in a number of major markets such as China, Russia and India (Halbert, 2014). British Airways get success in their London operations because there the customers are not price sensitive and believed in quality services.

Lo 3.2 Market forces have direct impact on the operation of company and such forces consist of economic conditions, consumer behavior and technological advancements. The economic TOLL-FREE NO: +44 2038681671 WHATSAPP NO: +44 7999903324

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condition of UK where British Airways mainly operates its business has mounted a strong recovery over the past few decades (Levy, 2009). Most of the business and regions of the economy where the company starts its new operations are now showing positive growth with recent signs. When UK faces recessions, the people of the country doesn’t have sufficient amount of money to buy air tickets which can negatively affect the business. During the time of recession British Airways cut down the fair to sustain in the market which helps them to maintain their sales.

Customers of British Airways believe that if they travel through air so it harms the environment badly. Several steps are taken by the company to safeguarding environment and work towards sustainable tourism practices (Twomey and Jennings, 2012). British Airways take positive steps to encourage environmentally responsible tourism. They solve environmental problems through individual departments. The company now has a clear environmental laws and regulation consistent with best industry practice.

Over the last few decades airlines industry came up with innovative technology. With the help of this latest technology British Airways operates it business in many part of the globe. They use SOA (Service oriented architecture) to serve over 600 passenger and airports system (Carr and Stone, 2009). The main aim of the company is to provide the better travel experience for their customers.

Lo 3.3 Pestle analysis of BA 

Political environment – Incidents such as hijacking and terrorist attacks affects the functioning of the airline. Due to this the air bodies are required to increase the safety of the passengers. British Airways is directly affected by the environment of country. UK is known for having wide diversity in population. The population consists of people from different religion, creed, race, culture etc.

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

Economic - The majority population of UK is youth and they like to work in the challenging environment. British Airways mainly focus on resolving industrial relation problems and organizational conflicts. Such issues did not allow them to respond in an effective manner in this rapidly changing environment (Guy, 2009). Young people were



brought in to give the company an effective result.

Social - Culture of an organization is reflected from its employees. British Airways is known for diversified range of employees who jointly contributes towards goals & objectives of the airlines. They have the power to influence the customers. Sometimes costs improvements adopted by the company leads to dissatisfaction among the employees. This results in strikes from crew staff. Hence BA must ensure long term



sustainable relations between management and employees.

Technological – Most of the customers visits the price comparison sites in order to avail cheaper tickets due to recession period. Online technology is also used by the people for check ins. BA has to take care of these customers in order to get technological



advancements.

Ethical - British Airways is committed to promoting diversity and understanding. They provide information, guidance and support to their customers related to latest discrimination laws and have compliance and behavioral training on diversity.

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This culture serves as promotional tools for British Airways because it increases the efficiency and it become easy to achieve overall objectives of the company (Dettwiler, Lindelöf and Löfsten, 2004). They create an environment where people feel free to come out and express their ideas, and their ideas are taken into consideration. The culture change activity in the company make a strong commitment to profits, productivity, and customer service, lifting the company out of insolvency to become one of the world’s most respected airlines.

Lo 4.1 There are various things in an organization that are important for international trade and global market (Kensler, 2007). Businesses wouldn’t be as profitable without international trade.

If the company based in the UK trade their products domestically, the country would completely limit its potential. The business may always get success from UK customers, but if they traded with other countries they are not able to gain from that country. International trade is very vital for companies because it increases traffic, sales and customer figures.

Implication of international trade to UK based business can be understood by referring to the concept of comparative advantage (Langford and et.al, 2005). The concept trade between the countries can be made in an equally beneficial manner, if each country has comparative advantage to manufacture products. Earning from the sale of goods and services in UK are around 30 percent of the UK gross domestic product. These are the income generated through TOLL-FREE NO: +44 2038681671 WHATSAPP NO: +44 7999903324

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British associations and their investments both within and outside the country (Ling, 2010).

Shares of exports in GDP terms are much lower as compare to United States and Japan.

Lo 4.2 There are different global factors which affect British Airways. These factors help the company to modify its system of decision making. Such factors are: 

Political: The political environment in which British Airways operates its business has a significant influence (Russell and Reynolds, 2004). The company decides policies on the basis of customer preferences. British Airways achieved its goals for growth with alliances with a number of airlines in 1988.



Economic: The economy was facing recession in the year 1995, in the climate British Airways was the most profitable western airline industry because they cut down the fares to maintain their sales. Such factors include increased competition from low cost operations and increased fuel prices.



Social: The cultural and social influences on a business changes from country to country (Wessels, 2011). The identity of an organization is socially influence in the country in which it operates its business. The company believes if they satisfy the consumer’s needs they become the world leading airline.



Technological: It plays an important role in the competitive advantage and it is a principle driver of globalization. Technology advancements of the late 1990 allowed British Airways to employing skill and introduce effective and efficient systems.

Lo 4.3 European Union has designed different policies that impact on the organization (Wilkson and Grugulis, 2007). The main aim of such policies is to remove unemployment and promote high level of employment and encourages business to fair practices of trade and commerce. The two European Union polices that affect British Airways are: 

Competition policy: Most of the market in which aviation industry operates is highly competitive in nature (Britton, 2010). They face competition from their competitors on

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the similar routes, from charter services, from indirect flights and from other modes of transport. The intensity of completion fluctuates from area to area, depending on the nature and number of the competitors. There are some international routes on which other airlines are limited which helps British Airways to capture the market by its monopoly and decide the fares according to the market condition. Their pricing decisions are affected by competition from airlines on many routes with different carriers (Halbert, 2014). They decide the fare according to their competitors. British Airways provide better quality services with low fare to their customers to make them regular and loyal. 

Cultural policy: British Airways create a working environment that engages, motivates and develop the colleagues. Diversity and inclusion team of the company have developed a strategy that engages all the linked people with the aim of recognizing talent and promoting flexible thinking (Zhifei and Joo, 2013). Through senior level sponsors this strategy is integrated in all departments. This helps the company to find out and meet the various needs of the consumers.

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CONCLUSION Business environment refers to the various forces or surroundings that affect industry operations. This report discussed about the vision, mission, goals and objectives of British Airways. Mission of the company is to provide unique service to its customers. The main aim of the company is to provide the full service experience to its passengers. The environmental goal of the company is to reduce carbon emissions, noise and waste and improve local air quality.

British Airways help international communities and charities in the countries. The main objective of the company is to increase its market share and overall profitability.

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