Strategic Management Assignment with British Airways (GC0393)

Executive Summary

The aim of this paper is to conduct an external analysis of the industry of Airways and the internal analysis of British Airway. From the finding of PESTLE Analysis, Porter’s Five Forces Analysis, as well as opportunities and threats analysis, this paper discusses the trends, key drivers, and power of the industry of Airways. In addition, the notion of the attractiveness of the Airways industry is heightened. Then, from the finding of core competencies, benchmarking, and VRIN analysis, the competitive advantages, and distinctiveness of British Airways are determined.

The finding of this paper shows that the Airways Industry is attractive, most importantly it is attractive for major players like British Airways, American Airways, and Emirate Airways. The finding also discloses that British Airways has been able to gain sustainable competitive advantages because of its several core competencies.

Table of Contents

1.0 Introduction.

1.1 Overviews of the Airlines Industry.

1.2 Overviews of British Airways.

2.0 External Analysis.

2.1 Trends.

2.2 Key drivers.

2.3 Power

2.4 Attractiveness of the airline industry.

3.0 Internal analysis.

3.1 Core competencies.

3.2 VRIN analysis of British Airways.

3.3 Benchmarking core competencies of British Airways.

3.4 Competitive Advantages.

3.5 Distinctiveness.

4.0 Conclusion.

References.

Appendix A: PESTLE Analysis of the UK Airline Industry.

Appendix B: Porter Five Forces Analysis of the Airline Industry.

Appendix C: Opportunity and Threat Analysis airline industry.

1.0 Introduction

This paper, first, provides an overview of the Airlines Industry and British Airways. Then, this paper conducts an external analysis of the Airlines Industry by using PESTLE, Porter’s Five Forces, and Opportunities and Threats analysis. From the finding of this analysis, the trends, drivers, power, and notion of attractiveness are highlighted. Next, this paper conducts an internal analysis of British Airways by using VRIN, Core Competencies, and Benchmarking analysis and defined the distinctiveness in the competitive market.

1.1 Overviews of the Airlines Industry

Several headwinds are currently preventing the Airways Industry from flying higher which is ultimately affecting the airline stocks negatively. In addition, customer dissatisfaction issues, and price wars between low-cost careers have an impact on the performance airline industry (Zacks, 2017). Natural calamities and high fuel costs are significantly affecting the earnings growth of the airline industry (Revel, 2014). Soft airfares and capacity issues are also affecting the performance of the airline industry. Although low airfares are good news for fliers, it is reducing the profit margin of the industry (TTS, 2017).

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1.2 Overviews of British Airways

British Airways is the largest international airline in the UK. It offers air services for passengers and cargo worldwide. It operates in about 200 destinations in 80 countries with its 290 aircraft (British Airways, 2017). In addition, it offers insurance, ground services, call center, finance, bond, engineering, aircraft leasing, and airline marketing (ADVFN, 2016). British Airways is growing up with its destinations, fleet sizes, and revenue, and profits. For instance, the revenue passenger kilometers increased from 12821 million in 2016 to 12942 million in 2017 (Bloomberg, 2017)

2.0 External Analysis

PESTLE refers to Political, Economic, Social, Technological, Legal, and Environmental. This tool is an effective framework to analyze the macro-environment of a business (Kotler et al., 2014). According to Palmer (2016), this is an effective management tool that helps businesses to define external risks and threats and improves productivity. From the finding of the PESTLE analysis of the UK Airline industry (included in Appendix A), the key trends and drivers are identified and discussed.

2.1 Trends

2.1.1 Need to build ‘Social’ pace to create brand equity

According to Dudovskiy (2016), many international airlines are now taking off on their ‘social’ flights to build stronger relationships with customers and engage with them on a long time basis. Some of the airlines are nowadays taking a lead on social media to engage with customers, whereas others are wetting their feet. For example, Virgin Atlantic has developed a unique concept by initiating an innovative airline social media campaign, ‘Looking for Linda’ (Virgin Atlantic, 2017). British Airways has introduced a Facebook application named ‘Perfect Days’ which has motivated passengers to share their views and opinions (British Airways, 2017). The ‘Meat & Seat’ service provided by KLM offers passengers to select seats from their social media profiles (KLM, 2017). In addition, the study shows that the volume of social media communication in the airline industry is dramatically increasing. Therefore, WNS (2017) suggests airlines focus on social media experts and technology platform to improve the effectiveness of their customer relationship management and enhance brand equity.

2.1.2 Increased trend in online customer base

Internet, business websites, and online travel agencies are nowadays contributing a lot in generating revenue for airlines. According to a study by WNS (2017), 75% of air tickets are sold today through online. The increasing popularity of smartphones, automation of business processes (like web check-in), and e-commerce are enhancing air travel convenience, contributing to revenue generation, and customer relationship management (McGee, 2017). Therefore, Cederholm (2014) said airlines should focus more on their online activities………..