Strategic Management at British Airways - Case Study Example

Strategic Management at British Airways - Planning, Development and Implementation: Review of Literature Introduction In the present competitive world, each business in each industry is planning, developing and implementing strategies. Karger (1991, p.6) states the creating and establishing strategies through planning is very complex process as it involves huge data and valuable insights from the data. Further it is been found necessary that corporations address the issue of cultural diversity, communication, and training barriers as they manage more diverse workforce (Haines, 2000:p.4). Strategic planning is an involved, intricate and complex process (David, 2006:p18) tailored to the type of organization, can be much simpler and effective (Camillus, 1986:p8). The present study on British Airways is to identify, evaluate and assess the planning, development and implementation process of its strategy management and to analyze the performance of the strategic decisions made as part of the strategic management on the organization because it is believed that British Airways has been able to achieve the present position since its establishment in 1919 only due to its strategic management decisions (Cole, G.A., 2003:191). This section deals with various literatures available on the present research in order to study the process of planning, development and implementation in British Airways and also to identify the role of various stakeholders in the decision making process. Review of literature Thompson, Martin and Thompson (2009:p2) stated that strategy is about how organizations cope with the world which is dynamic and emergent with technologies, design and competitors getting revamped at regular intervals providing the impetus t reformulate the existing strategy and restructure the organizations in order to survive in the competitive market. It is further clarified that strategies are means to ends; whereas the process of strategic management involves clarifying the desired ends, mapping out a route for achieving them (development), putting those strategies into practice (implementation), changing what the organization is doing tactically in the face of competition and unexpected issues that arise and finally evaluating progress and performance. Mintzberg (cited in Idenburg, 1993) stated that there are at least ten schools of strategy development with two fundamental dimensions i.e. goal orientation (what) and process orientation (how). The process of strategy development includes rational planning, planning as guided learning process, logical in incrementalism and emergent strategy. Idenburg (1993) stated that four alternative view of the process of strategy development must be reflected in business research and education. Thompson and Martin (2005, p8) mention that strategic management is a complex and fascinating subject with straightforward underlying principles but no right answers. It is further stated that companies succeed if their strategies are appropriate for the circumstances they face and are feasible in respect of their resources, skills and capabilities and the same companies fail if the fail to meet the expectations of its stakeholders or produce undesirables outcomes. According to Thompson and Martin (2005), strategies are means to end as opined various other researchers and management specialists and managers are strategy makers to some extent in the companies. This statement articulates that mangers are the key persons involved in the strategic management process of planning who then take decisions regarding the development and implementation in the organization. The aviation industry has undergone major transition phase wherein the main stakeholders were involved and have been granted a greater degree of autonomy. Airlines were the first to realize the importance of strategies and strategic decision making in a competitive environment (Delfmann, 2005; p3). British Airways (BA) is major international airline with multinational operations which came into existence with merger of two British Airlines: British European Airways and British Overseas Airways Corporation (Fitzroy and Herbert, 2009:p293). Meyer (2007; p.6) mentions that British Airways current objective is to provide superior service in every market in which it competes and further BA values its human resources as an important asset which makes it clear that BA strategy is provide utmost superior and satisfactory service to its customer in the market utilizing its resources and capabilities. Further the mission statement also reiterates its objectives stating 'to be the undisputed leader in world travel' which describes the company's values and goals which is to be safe and secure, honest and responsible, innovative and team spirited, global and caring, and a good neighbor. The goals of British Airways is to be the customers' choice, to show strong probability, to be truly global with a global network, global outlook and aims to be recognized everywhere and to employ inspired people (Joyce and Woods, 2001: p. 67). Kaufman (2003, p.85) explained the strategic planning process with the help of flowchart which shows that the whole process is started with identifying sponsors and partners, (i.e. to identify the members or participants in the planning process); develop a vision, conduct needs assessment by gathering and analyzing data and develop the mission objective; analyze the SWOTs and present issues, review strategic objectives, developing strategic objectives identifying cultural change requirements, and implementing the strategy, evaluating and continuously improving through future data analysis and feedback. Strategy implementation involves taking actions at the functional, business and corporate levels to execute a strategic plan which may be quality improvement, change in design, marketplace positioning, segmenting the market and also entails the best organization structure, culture, and control systems (Hill and Jones, 2008:2). Robinson (cited in Thompson et al, 2009) argues that the role of planner should not be confined to just planning but to enable good managers to plan and should concentrate on understanding the future. Planning process can encourage the mangers to think about the need and opportunities for change and to communicate the same to the persons who are responsible for implementing the strategy. However Paul (1983, p.9) mentions that planners regard the process of implementation and management as the issues outside their purview. Gruing and Kuhn (2005, p.19) mentions that strategic planning plays a key role within the strategic management and is perceived as the process operated on daily basis. It refers to the realization of strategies at the material level of market offers and hard resources. Thompson et al (2009, p.370) states that contemporary planning approach is required to ensure that planning does not become an end in itself. The business environment is analyzed after the planning process concentrating on the industries in which the organization competes with its rivals. The planners are responsible in the process of organization and strategic thinking by programming strategies enabling effective implementation, formalizing ongoing strategic awareness, using scenario and planning techniques and searching for new competitive opportunities and strategic alternatives. British Airways had achieved what it is today only due to the strategic decisions taken during the course of planning. The success of British Airways strategic management is evident in the cultural change process during 1983 when the organization was named BA for "Bloody Awful" at the time when the company has lost US $900 million, market share, and was noted as unreliable and known for poor quality of service and the performance deteriorated to an extent that government decided to take over the company. Sir Colin, appointed CEO during that period identified the lack of vision and quality of service as the main reasons for the ouster of company from the company. Sir Colin framed the vision of the company as to be 'the world's favorite airline' and implemented cultural change in the company through variety of approaches, training courses, totally revamped personnel system, and changing number of players which resulted successful achievement of the objectives set out in the vision (Goodstein, Nolan and Pfieffer, 1993;p55). Organizational change is ongoing process driven by both external as well as internal factors. It is further stated that increasing competition arising from deregulation and new entrants fundamentally changed the airline industry whereas the events like Asian crisis and terrorism affected the passenger traffic which makes it necessary for the organizations to manage change in the changing environmental conditions (Fitzroy and Herbert, 2009;294) And later during the times when BA tumbled out of UK's FTSE 100 index of leading shares as a result of terrorism, world health scares and war. In view of the disastrous global scenario and downfall of the industry, John Rishton, CFO, British Airways changed his strategy in various Reiterating to the vision set by Sir Colin (Dransfield, Richard and Dooley, 2004; p.53), British Airways achieved the vision by providing a wide range of flight options at pre-set prices, providing quality meals, entertainment, different services, for passengers in business class. Mergers or alliances are also one of the important strategies which have become an inherent part of the task environment of airlines which are beneficial in its control and maintenance on the business (www. bizcovering.com). British Airways has indulged in numerous alliances with airline companies and formed an alliance with US in 1992 as part of its strategy of building up key global collaborative agreements by acquiring 44% equity share capital in US Airways (Evans et al, p. 340) Airline alliances are more of a strategic perspective becoming an inherent part of the task environment of airlines (Vaara et al, 2004). The driving factor behind British Airways adopting this strategy was its long term profitability and their formation trends to be for strategic reasons so as to access larger markets, establishing global brand loyalty and building hub to hub traffic. Further as strategic management possess dynamic and complex characteristics, it is necessary to adopt change in the management of airlines, services offered, developing new information systems, etc. And according to the annual reports of the company for the year 2008-09, the long term strategy is aimed to be the world's leading global premium airline and at the same time focus hard on evolving itself through the global crisis. The company has set out its objectives in its strategy and aims to achieve it by providing world class service to its customers by keeping its promises, unique services, doing the right things, solving the problems, and treating everyone as individual, making the managers accountable for delivery of targets in order to measure the performance of the goals, and to garner more sustainable relationships (www.britishairways.com) The British Airways is committed to high standards of corporate governance and the board of directors is accountable to shareholders for good corporate governance. It is further stated that Board of Directors are the one who evaluate and assess the company's risk assessment, resource management, strategic planning and financial and operational management in order to ensure that promises made to shareholder are fulfilled. The board meets eight times a year to consider and discuss on the issues pertaining to the performance and strategy of the company. The strategy plan is further approved by the board which is followed by the detailed financial plan. The company has formulated five key plans to achieve its vision of being the world's premium airline so that people choose the brand over others. The company plans to introduce great products such as the new business class seat on longhaul and restyled First Cabin; deliver an outstanding service for customers at every touch point by training its employees; grow our presence in key global cities to provide the best connectivity to its customers and meet our customers' needs and improve margins through new revenue streams by building profitable ancillary services that offer customers great value and re-enforce their brand and boost revenues from third party engineering. (www.britishairways.com). BA has been involved in various other services like providing low cost airline services as part of its continuous improvement and innovative strategies such as RyanAir, Easyjet, and Debonair which have been successful in opening of new routes within Europe (Thompson, 1999) As stated earlier by Thompson et al (2009), strategic management should be improved continuously as British Airways has planned and implemented various strategies in the areas of HR, customers, alliance, market, IT, etc. to gain competitive advantage over its rivals. Moyer (1996) states that Airways is a technical and complex business and coupled immediacy, it makes life difficult for mangers to conduct day to day operations and therefore the existing planning process, budget and business plan is targeted towards the next three years. Balmer and Gray (1999) mention the impact of the privatization programmes that has left the firms vulnerable to identity crisis giving rise to plethora of new firms in the industry. However British Airways has been able to effectively reposition itself as a profitable, consumer friendly airline. Conclusion The main objective and goal of any strategy is to rebuild the image of an organization suiting to the needs of the consumer i.e. rebranding. Corporate branding is the strategy which was adopted by BA to become the world's premium airlines (Hatch and Schultz, 2001) It is evident from the review of various literatures that strategic management is a complex process which involves the board of directors who are the key personnel responsible for chalking out the business strategy. The mission of British Airways is to be the worlds premium online service for which it proposes to offer differentiated and world class service to its customers which is possible only though employee involvement at the ground, floor and cabin crew level, all contributing to achieve the objective of the company. The recent strategy of British Airways is to attain the status of undisputable world leader in airline industry while providing safe, cost effective and pleasant services to the customers. However it is evident from the annual reports that the Board of Directors are involved in the planning process of strategy management and make decisions regarding the development and implementation strategy. References 1. Annual Reports 2008-09, British Airways, www.britishairways.com Balmer J, and Gray E.R. (1999) Corporate Identity and corporate communications - creating a competitive advantage, Corporate Communications: An International Journal, Vol 4, No.4, pp:171-177, MCB UP Ltd 2. Camillus, J.C. (1986) Strategic planning and management control: systems for survival and success, Lexington Books, US 3. Cole, A. G. (2003) Strategic Management, 2nd Edn. Cengage Learning, United Kingdom 4. David. R.F (2006) Strategic management: concepts and cases, Edn. 10, Prentice Hall, China 5. 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