An Organisational and Strategic Analysis of British Airways - Essay Example

An Organisational and Strategic Analysis of British Airways In this paper I will focus on the British Airways company. I will analyse the policies of this company in regard with its structure, organization and management and discuss the changes it introduced for better economic performance. Nowadays British Airways holds the image of the best and largest scheduled airline in the UK, which conducts flights to 550 destinations at any time from the variety of the best located airports / About British Airways, 2007/. The British Airways group has a complex structure, which includes British Airways Plc and numerous subsidiary companies, to which such well-known names as British Airways Holidays Limited and BA Connect Ltd belong / Dana & Vignali, 2000/. British Airways realises its strong position on the international airlines market, however, its management is also well aware of the constant competition with other companies. Therefore, over the last decade we were able to follow the well-considered steps of the BA management aimed to hold the position of the company and advance it further of the airlines market. Let’s for example, investigate the technical advancement of the company. Realising that currently the market conditions remain for the greater part unchanged the management of BA decided to perfect in the technical perspective. Thus, Strategic Development British Airways began the expansion of the longhaul fleet of the company. The first step in this was the decision of purchase four Boeing 777-200 ER aircraft, which are supposed to make the first flights in early 2009. These technical advances aim to provide better competitive position of the company on the international market / About British Airways, 2007/. However, in this research I’m not going to dwell on the introduction of technical news and expansion of the air fleet of the company. Instead I would like to discuss the changes, which were introduced in the structure, organisation and management of the company, which are aimed to prompt the development and better performance of the company. British Airways realizes the necessity to improve its management and the qualification level of its employees. Therefore, I can say that BA is indeed able to foresee its future needs by identifying the skills and knowledge requirements to each employee and then match need with opportunity. British Airways views the work as a proper occasion to train its employees. In order to provide decent training and enable the employees to learn the company researches and develops new techniques) and seeks to obtain external accreditation for training in order to guarantee that the training provided is of the highest quality and may be recognized by other employers. One of the first programs, which was specifically devised for training the corporate staff was “Putting People First”, which initially was created by specialists only for customer contact staff but gradually this training program was extended to staff from all departments of the company and was amended regarding to the needs of every department in particular / About British Airways, 2007/. The program was quite many-faceted and touched various aspects of the cooperation of the staff with the customers and within the company as well. Program aimed to make the employees aware of the importance of teamwork and treatment of the customers’ expectations and on the other hand revealed to importance of each worker and the contribution, which he/she can make to the mutual benefit of the company. Therefore, the main themes of the program included four main training aspects. They are “being a winner or loser”, management of the problems, which appear in the course of the work, training people to be attentive and teaching of empowerment techniques / Street,1994/. The program aimed to focus on the each person’s performance and his/her contribution to the development and competitiveness of the company. The culture change program encouraged individual initiative and empowerment, which led to the better job satisfaction and, consequently, higher performance and level of service. Other positive moments was the reduction in the staff turnover and better understanding of the customers’ needs / Street, 1994/. The next step of the program was known as “A Day in the Life”, which focused teamwork and importance of the each individual’s contribution. The next step was known as “To Be the Best”, which concentrated on the competition and the necessity to become the best and most successful company in the airline industry / Street, 1994/. The other program initiated by the management of the BA company was “Winning for Customers”, which took place in late 1990s to motivate the staff to achieve service excellence and win the respect and loyalty of the customers / Street, 1994/. The standard provided by the state fosters the employers to develop the skills of their employees and therefore it is often seen as an important factor in achieving business perfection. According to the last employee opinion survey more than 75 % of respondents also confirmed that their working skills improved considerably during the year spent in the company /Employee Development & Culture, 2006/. One more aspect that stimulates the work of the employees is rewards. The company constantly improves its recognition schemes. Those who won in the individual schemes are enabled to enter the company-wide scheme, the result of which is the announcement of the best employee of the month and the best team of the quarter /Employee Development & Culture, 2006/. In fact, we can see that nowadays managing people problems is in the focus of attention of any employer who wants to succeed in business and create a comfortable atmosphere that will promote employers develop their skills and work at their full potential. British Airways is the company, for which the constant implementation of new technologies is crucial. This implementation of new technologies involves as well new training methods and organization culture. Though the technological world is rather changeable the way the organization works usually stays the same and is modified by the careful planning, detailed design and thorough implementation / DeWitt, 2004/. The first step in the implementation of new technologies is, according to Ron DeWitt, realistic goals and the ways in which these changes can be implemented: either from the upper level and than pushed down or start with smaller groups on the lower level and than work up the company / DeWitt, 2004/. He also claims that in the process of implementation one of the most important things is communication for the sake of “selling” the benefits of new technologies to the stakeholders and for the sake of getting feedback information, which will help in identification of problems and setting corrections / DeWitt, 2004/. Training is also a crucial moment that will help to develop necessary skills and knowledge in the employees. It must be comprehensible and correspond to the needs and goals set /DeWitt, 2004/. Robey & Sales emphasize the importance of effective learning processes, without which “organizations are less able to formulate strategies, implement needed innovations, and make other needed changes” /Robey & Sales, 1994/. Training and new skills acquisition is regarded as the means to achieve competitive advantage. According to Worrell company will be successful, which possesses “an organizational culture in which individual development is a priority, outmoded and erroneous ways of thinking are actively identified and corrected, and the purpose and vision of the organization are clearly understood and supported by all its members”/ Worrell, 1995 /. British Airways runs some 130 community and conservation projects. Among the conservation projects the most important are those focusing on the protection of endangered plants and animals and environmental education. The other aspect of the philanthropic actions of British Airways is revealed in its partnership with UNICEF UK on the Change for Good programme. Started from 1994 till nowadays this program has raised over £22 million for the improvement of living conditions of millions of children around the globe. The actions taken by British Airways were awarded for “Most Effective Corporate Relationship” by the Institute of Fundraising and Professional Fundraising magazine / Community Relations Globally British Airways Communities & Conservation (BACC), 2007 /. All these actions undertaken by the management of the British Airways company on the one hand contributed to the creation of the better image of the company within the UK citizens and other people of the whole world and on the other and led to the better economic performance due to the greater fame of the company and loyalty of its customers. Thus, we can come to the conclusion that in the contemporary world taking into account the level of technical development and constant scientific introductions, company management has to be aware of the positive management strategies, constant training of its staff, its rewards, rallying, empowerment and take into consideration the importance of the corporate social responsibilities techniques. British Airways well realizes these factors and therefore, its position on the air services market is quite stable and progressing. It should be mentioned that all airline industry underwent much change during the last few years. These changes brought the companies to the realization of the necessity of co-operation. Contemporary huge carriers and small airlines aim to work together rather than compete. Co-operation may take various forms from sub-contracting, code-sharing, franchising to formation of global marketing networks / Dana & Vignali, 1999/. British Airways also realized the need to expand on the airline industry. In this process the company had to realize several ways of expansion. The first one was traditional way through adding flights to the schedule without any changes in equipment and crew. However, the disadvantages on this method were its slow pace and great capital expenditures / Dana & Vignali, 1999/. Therefore the company had to regard the other way of development namely through mergers and/or acquisitions. In fact if we take a look at the present-day structure of the company we will see that nowadays it is the agglomeration of BOAC, BEA and British Caledonian, the latter a merger of British United (BUA) and Caledonian / Dana & Vignali, 1999/. The newest way of airline company expansion is through co-operative marketing rather than acquisitions. The company regarded several ways of doing this through connecting with other companies in order to form greater networks. However, in the process of expansion British Airways faced the necessity to undergo numerous changes in its structure, image and organization. In the middle 1990s, executives came to the realization that much depends on the image of the company. Therefore, it was decided to create a new image for British Airways. For this in 1995 British Airways invited 50 design consultants for creation of a new image for the company. In 1997, British Airways started massive re-branding, which cost over 60 million Pounds / Dana & Vignali, 1999/. British Airways aimed to change its image to be viewed not as a company with international operations but rather as a global airway company with employees, passengers and even aircraft livery representing the world. The purpose of re-branding was the creation of an image of a company “friendly without being frivolous, international without being colonialist”. “Global and caring does not mean post-imperialist flag-waving. It has to mean intelligently sensitive relations with customers and communities” / Dana & Vignali, 1999/. In order to support re-branding policy British Airways organized a special training program for its employees. The course of training received a name of breakthrough. Its purpose was to retrain flight attendants to teach them a more personalized style. In the process of training the teaching staff focused greatly on leadership, teamwork and self-esteem / Dana & Vignali, 1999/. The other important issue which appeared in the process of rebranding of British Airways was the need to create strategic flexibility, which can be defined as the ability of companies to respond and adapt to environmental change with success /Chakravarthy, 1982, 1986; Evans, 1991; Greenley and Oktemgil, 1998/. Strategic flexibility appeared to be an essential aspect of the further change and development of the company due to its ability to generate decision-making options. Thus, we can come to the conclusion that strategic flexibility helped British Airways to cope with dynamic and changing environments /Sanchez, 1995/. The company had to regard strategic flexibility at two levels. The first level was the level of the company in general, where it means the ability of company to respond and adapt to any kind of environmental change and to be successive competitor to other large companies /Evans, 1991; Greenley and Oktemgil, 1998/. The second level of strategic flexibility is the level of decision makers. At this level the notion applies to the extent to which new options are created and considered /Aaker and Mascarenhas, 1984; Fiegenbaum and Karnani, 1991; Greenley and Oktemgil, 1998; Sharfman and Dean, 1997/. British Airways had a closer look at strategic thinking. This broad term can be briefly defined as a systematic analysis of the present situation of the company and the development of its longer-term direction /Allio, 2006 /. In fact strategic thinking is a very important step in the process of changing of some aspect of the company work or its common change of its image. First, strategic thinking was applied to the areas of marketing and human resource, however, now it is applied to all spheres of the company life and gained importance in the contemporary age of harsh competition, desire for development and change. However, it should be mentioned that the main feature of the contemporary strategic thinking (which was also applied in British Airways) is its correspondence to the present-day situation and ability to manage real-life problems, which naturally appear in the process of existence of the company on the national and international market. One of the essential parts of the strategic thinking, applied in the British Airways, is Strategic analysis. This part is extremely important for the company like BA, particularly due to its quick development and restructuring. Strategic thinking applies several techniques, like market segmentation, the lifecycle, SWOT analysis and industry structure. I’d like to stop with more detail on the last two techniques. SWOT analysis is now applied commonly in every type of industry and proved extremely valuable for British Airways as well. It aims to discover the company’s strengths and weaknesses and considers its potential threats and opportunities /Allio, 2006 /. Industry structure is also a very important technique, which was considered by the management of the British Airways. It regards analysis of five forces, which participate in the functioning of any industry (buyers, suppliers, entry/exit barriers, substitutes for the customer, and competitor rivalry) / Porter, 1980./. This strategy is in fact extremely important as it gives the management of the company the entire realization of the appropriate development of the company within the framework of the general dynamics of the industry, within which the company operates. Strategic thinking also incorporates the notion of corporate culture. In the condition of the airline market British Airways had to consider the ways of the further development and also regarded the way how to engage better human resources. John Kotter and many other researchers made an attempt to outline strategies for managing the change process / Kotter, 1996/. I can’t but agree with the viewpoint of Jim Collins expressed in “Good to Great” that “change the organization by getting the right people on the bus”. It seems the British Airways is also well aware of this fact and tries to develop the best corporate culture strategy, which will unite all its staff in one team, promote company loyalty and better performance of all the employees. However, there is also one more aspect of the change process, which I would like to mention in this paper. In its strategic thinking British Airways came to the realization of the importance of the leadership craft for the promotion of “right” changes and effective management of employees/Allio, 2006 /. It is completely true that leaders are responsible for supervision of the flow of changes process and implementation of the strategy / Taylor, 1919/. Effective leadership is vital for the company development and its better performance. If we look at the implementation of changes in the British Airways we will see that only effective leadership could secure the implementation of the changes and management of employees’ resistance to change. I will list several reasons of the people’s resistance to change, which commonly occur in every company in the process of the implementation of new corporate strategy. The first reason is the employees’ belief that the risk of change is greater as the risk of standing still / Schuler, 2007 /. Of course any change is associated in the minds of the staff as the risk and the task of the leader is to explain the essence of the change and all its pros and cons, encourage the staff and explain the reasons, which are the driving motion of the company to change. The second reason of the staff opposition to any changes is its close connection with the other people, who are identified with the old way / Schuler, 2007 /. That’s why the leader should ossibly engage the old staff in the change process and support the people’s loyalty, making use of it instead of considering it as disadvantage. The leader has also to consider the people’s fear of being useless in the new company, as in the process of changes people generally loose their role models for the completely new activity / /. The role of the leader in overcoming this fear is to establish new role for each employee and give him the realization of his proper meaning and importance to the company. Besides, a leader should ensure the people that they do have enough competence to change and can operate even better in the changed environment. The other reason, why a person becomes resistant to change, is the feeling that they are overloaded with the new information and can’t cope with all the new facts, they have to deal with. The leader can also manage this resistance quite easily: re-emphasizing the risk scenario, which drives the company to change, and use every opportunity to praise the people for any achievement and help them in any difficulties / Schuler, 2007 /. One more problem, which can appear in the process of change, is the natural fear of people to lose their status and importance in the changed environment. The only way how to overcome this resistance is explain people their new opportunities and reward, which will be possible in the new work/ Schuler, 2007 /. So, the role of effective leadership in the process of change can not be underestimated and British Airways also came to the realization that they have to implement effective leadership to overcome the resistance of the staff to change and to lead the people in this process. So, as we can see British Airways came to the realization of the need of change for the effective performance in future and regarded change as an important part of the future development. In the change process British Airways regarded advantages and disadvantages of its position with the help of strategic thinking. Finally, the company developed the scenario of its changes and had to overcome the employee’s resistance to change, which was effectively done. References 1. Allio, R. (2006). Strategic thinking: the ten big ideas. Strategy & Leadership J Vol. 34 No. 4 2. About British Airways. [Online]. Available from: 14 March 2007. 3. Aaker, D.A. and Mascarenhas, B. (1984). The need for strategic flexibility, Journal of Management Studies, Vol. 5, 4. Chakravarthy, B. (1982). Adaptation: a promising metaphor for strategic management, Academy of Management Review, Vol. 7. 5. Community Relations Globally British Airways Communities & Conservation (BACC) [Online]. Available from: 14 March 2007. 6. Dana, L.-P. and Vignali, D. (2000). British Airways Plc. International Marketing Review. 7. DeWitt, R. (30 April 2004).Managing Change is Managing People. [Online]. Available from: < http:// www.cioupdate.com/insights>14 March 2007. 8. Employee Development & Culture. 2006. [Online]. 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