British Airways and its Strategy
British Airways is the national airline of Great Britain. It was established in 1974 as a result of a merger of 4 British airlines. British Airways were privatised in 1987. BA expanded as a result of acquiring British Caledonian in 1987, Dan Air in 1992, and British Midland International in 2012. In 2011 British Airways merged with Iberia, creating the International Airlines Group (IAG), the world's 3rd largest airline group in terms of annual revenue and the 2nd largest in Europe.
British Airways compete with both domestic and international airlines on short-haul and long-haul routes. BA has a vision of becoming "the world's leading global premium airline". The company has several lines of products and targets different customer markets with those products. For example, its business class products are geared towards corporate customers.
Responding to the difficult economic situation in the UK, BA reduced its employee base significantly throughout the recession. BA had plans of achieving target savings of £300 million for reduced staff costs during 2006 and 2007. This was in addition to planned £450 million savings from programmes including greater use of technology and reduced external spend. The cost reduction plan included 30% reduction in employee costs at BA head office. Despite cost reductions BA aimed to maintain the size of its flying programme.
In 2009 and 2010 in response to declining passenger numbers BA planned to slash almost 3,700 jobs. BA claimed that retrenchment measures would allow the company to achieve 20% reduction in spending which would be down from £725 million to £580 million.
In 2003, 2005, 2007, 2009 and 2010 to name a few British Airways had industrial disputes and issues with the trade union. These strikes led to very significant financial losses in millions of pounds, disruption to flights, cancellations, re-scheduling of flights and accommodation arrangements which created inconvenience for customers and damage to BA reputation.
For example, in August 2005 as a result of the BA employees' sympathy strike with its caterer Gate Gourmet's employees many of whom lost their jobs, British Airways losses according to some estimates amounted to £40 million (www.news.bbc.co.uk).
An airline BA aims to differentiate itself from other air carries. However, the company is also paying attention to achieving cost efficiency. The recent strategic move includes entering South Korean market and introducing a new route to Seoul. As a part of its international strategy British Airways has also increased its presence in the Middle East and further penetrated markets in this region. BA particularly increased the number of flights to Dubai and Riyadh due to increased traffic and customer demand. British Airways has also re-entered Lybia, Jordan and Lebanon starting flights to and from these destinations.
(Please refer to the BA corporate reports and articles on BA provided).
Prepare a report addressing the following tasks, answer all questions and relate your answers to British Airways wherever possible:
TASK 1 The Process of Strategic Planning
1.1. Explain the concept of "strategy", state and explain vision, mission, goals, objectives and core competencies of British Airways.
1.2. Review the issues involved in strategic planning.
1.3. Explain strategic planning techniques that organisations can use, such as BCG growth-share matrix, and apply to British Airways.
TASK 2 Formulating Strategy
2.1. Carry out an (internal) organizational audit of British Airways particularly considering strengths and weaknesses (using SWOT), organisational culture, and benchmarking (to determine current position and performance of BA relative to other companies in the industry).
2.2. Undertake an external environmental analysis of British Airways using PESTEL model (macro environment), identify opportunities and threats present in the external environment (using SWOT), and industry analysis (using Porter's 5 Forces framework).
2.3. Using Stakeholder Mapping Technique undertake analysis of the British Airways stakeholders and explain the importance of undertaking stakeholder analysis.
TASK 3 Approaches to Strategy Evaluation and Selection
3.1. Present and evaluate possible alternative future strategies of British Airways relating to substantive growth (horizontal and vertical integration, related and unrelated diversification), limited growth (do nothing, strategies described in Ansoff's Matrix - market penetration, market development, product development) and retrenchment.
3.2. Select an appropriate future strategy for British Airways to pursue using Porter's Generic Strategies.
TASK 4 Strategy Implementation
4.1. Compare the roles and responsibilities of the managers and (project) team members in implementing strategy, relate to British Airways, evaluate on the example of any specific strategy (increasing the number of flights on Dubai service in the Middle East, or launching flights to Seoul in South Korea).
4.2. Evaluate what resources (financial, human resources, time, materials and equipment/technology) will be required to implement a new strategy for British Airways.
4.3. Discuss targets and timescales set to successfully realise a particular British Airways strategy, and use these targets and timescales for evaluation and monitoring of a given strategy (give an example)