Managers Role in Implementing Organizational Change - Case Study Example

1. External analysis has an effect on the future prospects of the business as organizations look towards including it in their planning process. External environment impacts all players in the industry in a similar way and organizations that are able to find a solution and develop a strategy to counter the external environment are able to develop their business model (Chew, Cheng, & Petrovic-Lazarevic, 2006). British Airlines that performs in the airline industry faces similar competition from other players and are also influenced by the external environment. This makes it imperative that British Airways looks towards identifying a strategy which will reduce the impact of external environment and will provide a platform through which they are able to grow and perform in the competitive environment. The external analysis for British Airways is being looked through the Porter Five Force Model which will help to develop a strategy to combat the external environment and ensure growth for the organization (Cateora, Mary & Graham, 2009). The five force model for British Airways is as follows Rivalry among Sellers The airline industry faces stiff competition from different airline operators operating in the industry. This has intensified the degree of competition for British Airways. The growth in the volume of passengers has been matched by more players entering the industry. This has resulted in airlines sharing the market share with others in the industry and has made it difficult to sustain competition. British Airways further faces pressure as other airlines are outperforming the airlines in the market. The degree of competition is stiff especially after considering the degree of competition from the Chinese airlines. This has made it difficult for the airline player to be able to garner the same market. The matter gets worse when the product and services offered by players are looked into. Since, all airline looks towards using Just in Time technology this has resulted in the airlines to suffer. British Airlines is facing stiff competition due to the fact that all airlines are looking to lure customers by offering competitive rates and looking towards delivering high quality service. Also, the manner in which the price of oil has gone up has intensified competition as it has translated into different players looking to attract customers based on it. This has made British Airlines look towards attracting customers by changing their airlines and having more fleet of Boeing so that they are able to attract more customers by offering better facilities. The degree of competition has further grown due to the policies of the government. The government has followed a policy of open economy which has resulted in more airlines entering the industry. This policy of the government has made foreign players like Swiss Airlines and other to ensure the industry. This has resulted in competition between the players to be very stiff thereby resulting in the degree of competition to intensify and has resulted in the degree of competition to be very high. Potential Threat of New Entrant The airline industry has a very high entry cost due to the heavy cost associated with the establishment of the industry. Since, the industry requires heavy expenditure on airlines and other equipments this raises the cost of establishment for entering into the airline industry. This has made it difficult for the new airline to enter the industry. The high profits and growth in the volume of passengers has resulted in the more players looking towards the industry as the opportunity of profits is very high. Also, the availability of shorter aircrafts and Boeing has made players to look towards purchasing those. This has been aided by the opening up of economy which has made more players to enter the market. New players entering into the airline look towards having flight at destinations where there are few. The growth in the volume of passengers travelling to second tier cities has resulted in the new entrants entering into the market. This provides an opportunity to tap on and using it to develop the business model has resulted in many smaller players entering into the market. This has intensified the competition for British Airways and has also resulted in increasing threat from other players entering into the market. Threat of Substitute The airline industry faces minimum threat from other in the market due to the mechanism used by airline industry. Since, the airline industry relies on faster travel and high quality service so the threat from other mode of travel like road and rail is minimum. This has resulted in the airline to face minimum threat from others in the market. The degree of substitute varies in the services offered by different airlines. Airlines are looking to offer customers low rates for the tickets and cutting down some of the amenities provided to them. This has created differentiation between the players and increased the number of alternatives for customers as they can switch to other airlines which offer better prices. The difference in services offered between British Airways and other airlines has increased the availability of substitute to a certain extent. This has provided the customers with different options to choose from and has resulted in the different players looking towards improving their services and offerings so that they are able to attract customers. Also, different strategies and policies like money back and points that can be redeemed in the future have resulted in the availability of substitute for customers. Still, the airline industry faces some degree of competition from rail and road transport especially for short distance travel has given more opportunity to customers. Thus, the degree of substitute is limited to a large extent but still provides the customers some options from which they can look towards purchasing the different services and offerings thereby making the customer have certain degree of substitute in their offerings. Bargaining power of Suppliers The bargaining power of suppliers in the airline industry shows a mixed response. The airline industry looks towards using the same infrastructure like airport, running area, parking area and similar other facilities. This has resulted in the bargaining power to be limited. Also, the fact that the interference of the government and making of different rules and regulations has resulted in the bargaining power of suppliers to be limited. The interference of the government in ensuring that the facilities are provided at the minimal cost and treating all airlines equally has resulted in the suppliers to ensure regular charges for all the players. The suppliers as a result have also been able to ensure similar rules and have thereby resulted in limited bargaining power for the suppliers. The suppliers have some bargaining power when we consider the individual agreement entered between different airlines in the industry. Different players like British Airlines look towards entering into a contract with food suppliers and others on their individual basis. This results in some bargaining and differential charges being laid emphasized by different airlines. The degree of competition has thereby been limited to a large extent and is primarily due to government interference and similar facilities being used by all players. The degree of substitute is there when we consider the individual agreement entered by different airline players which has thereby ensured that the suppliers have some degree of bargaining power Bargaining power of Customers The bargaining power of customers has risen to a large extent due to different airlines operating in the industry and the competitive rates being offered by the different players. Each airline looks towards working on their core strengths and look towards using their business model in a manner that has helped to develop their business. This has increased the degree of differentiation and customers as a result are benefitting from it. The increase in competition has ensured that different airlines offer different lucrative offer to the customers. This has increased the bargaining power as customer look towards switching airlines when the find competitive rates being offered along with similar services. This has thereby increased the growth rate for low cost airline and has increased the bargaining power for customer. The customers are also able to get a better bargain due to the fact that different mode of transport like road and rail has developed. The road and rail transport has developed which has resulted in the customer getting faster mode of transport especially for short distance. This is available to the customers at a lower rate in comparison to the one charged by airline industry. This has thereby increased the bargaining power and provided customers with more alternatives to look at. Thus, the customers have a very high bargaining power and development of new and better mode of transport has increased their bargaining power. This has made customer look towards alternatives and choose the best one out of the different options available resulting in the different players to offer more at the same price. British Airways thereby faces stiff completion and need to address those at the earliest. Some of the threat surrounding British Airways is as Increasing competition from other airlines especially low cost carriers that are looking towards providing the same service and quality at a lower price. This has been matched by growing competition from other players that have entered the market making it difficult to have the same market share Rising prices of oil and other expenses has intensified the problems and limited the amount of profits earned. This has been matched by the problems and agitation faced due to labor rates which have increased tremendously making it difficult to ensure similar profits by providing the same services the airlines used to deliver earlier (Kramar, Bartram, De Cieri, Noe, Hollenbeck, Gerhart and Wright, 2011). Increasing threat due to lack of airline over shorter duration which has limited the amount of passengers travelling by British Airways. This has made the airlines concentrate on major regions and have limited them to major destination and having limited penetration at the smaller destinations This threat makes it important that British Airways is able to devise a strategy which will help them to deal with the mounting threats. British Airways need to concentrate on their core business and look towards delivering quality service. This will help to create a niche market and ensure that customer remain loyal. Also, having loyalty programs and other programs which looks to attract customers will help British Airways come out of the over mounting problem. British Airways also need to have smaller flights over destination where there is limited passenger so that it can save on fuel cost. Also penetrating into other areas where they don’t have a presence will help to ensure that the threats are dealt with. Thus, working on different quarters will help British Airways to be able to develop a strategy and ensure proper growth and return for the stakeholders. 2. The uncertainties facing British Airways and the strategy they need to develop for it is as follows British Airways faces an uncertainty related to the customer loyalty as growth of low cost carrier who look towards providing lower rate at slightly lower services have attracted customers towards it. This increases the risk for British Airways as it might result in customers switching one airline for the other. This makes it important that British Airways looks towards differentiating them based on services. They need to look towards concentrating on the core services and look towards maximizing the return for the customers. Also, having different loyalty programs and specialized services will ensure that the airline is able to deal with uncertainties. British Airways at the same time needs to concentrate on the fact that the development of their business model faces threat as other players follows a similar model. This makes it important that the marketing aspect is looked into seriously and the airline looks towards maximizing the return for the customers (Czinkota & Ronkainen, 2004). The other uncertainty surrounding British Airways is the fact that it faces an uncertainty related to the price of fuel. Fuel accounts for a large percentage of the cost and British Airlines need to develop strategies for it. On this front British Airlines needs to look towards having forward contracts which will ensure that the fuel are purchased at lower rates if contracts are entered properly. Along, with this British Airways need to reduce the size of their fleet especially having airlines with lower capacity over destinations which doesn’t have abundant travelers. This will help British Airways to ensure that they are able to control the price of fuel. This will also help British Airways to improve the efficiency and being able to develop a mechanism which helps the airline industry to be able to deal with the external environment will help them to be ahead of competition. British Airways thereby needs to concentrate on developing strategies slightly different from the competitors so that they are able to differentiate it. This will help British Airways to stand as a differentiator and will help them to develop their business model based on it. British Airways by being able to ensure strategies to deal with the external environment will be able to reduce the risk and ensure that they are able to grow and improve their bottom line for the shareholders. References Chew, M.M.M., Cheng, J.S.L. & S. Petrovic-Lazarevic, 2006. Managers’ Role in Implementing Organizational Change, Journal of Global Business and Technology, Vol. 2, No. 1 Cateora, P.R. & Mary, C. G. & Graham, J.L. 2009. International Marketing, 14th edn. Irwin:McGraw-Hill Czinkota, M.R. & Ronkainen, I. A. 2004. International Marketing, 7th edn. South-WesternPublishing:Australia. Kramar, R., Bartram, T., De Cieri, H., Noe, R., Hollenbeck., J, Gerhart., B, and Wright, P. 2011. Human Resource Management: Strategy, People, Performance, McGraw Hill: Sydney. Read More