BAA Limited: Operator of British Airports - Article Example

BAA Limited: Operator of British Airports Introduction BAA limited is the owner and operator of seven British Airports and some other airports world wide. It is owned by a Spanish firm and is considered as one of the largest transport companies in the world. The main source of revenue for the company is the charging of landing fees to the airlines and some other retail operations on those airports which are run and owned by BAA. Over the period of time, BAA has attracted lot of criticism for its operations on the airports it own in UK including Heathrow Airport. The peculiar nature of the criticism includes many important issues related both with the consumers as well as the airliners. Considering a hypothical situation where if dominance of BAA over UK airports is broken by Government’s competition commission, following advantages may arise to consumers as well as airlines? Advantages to Consumers 1) More better services being offered to them. 2) Better security measures at the airports 3) Cheaper goods as monopoly will be removed. Advantages to Airlines 1) Better services 2) Lower landing charges 3) More terminals for swift entry and exit 4) Less bureaucracies 5) More flexible flight schedules may be arranged due to removal of the administrative bottlenecks. 2) Analysis A new large firm enters the market place Entry of large firms into the market creates possibly two impacts on the firm. A new firm, if is old in the business may have achieved economies of scales. Economies of scale provide strong cost advantage to the bigger firms therefore the immediate the effect of this change would be the fierce price competition as new and large firm, in order to penetrate the market would start offering products at lower prices. However this would only be possible if industry is largely undifferentiated and generic products are being offered to the consumers. However where a market is largely differentiated and competitive landscape is not reliant on price wars, then the firm may be able to sustain the entry of the new and large firm into the market. An Early Frost hits the Brazilian Coffee harvest A firm working in the coffee business would be greatly affected by this incident. An early frost can have negative impacts on the demand patterns on the world coffee markets which would ultimately increase the cost to the providers of coffee. This would further raise the prices and firm largely dependent on Brazilian coffee would largely get affected by this. This would further have the capability to create shortages thus increase in prices and the overall cost increase. Further, working in a competitive landscape where pricing is the main element of strategic competition, the firm may not be able to increase the price thus the overall margins will squeeze and the firm may find itself at difficult roads of generating enough revenue to sustain the year. However, it must be noted that this kind of incidents can have only short term impacts and can have long term impacts only if conditions persists over the period of time or the alternative products are flourished into the market. Salmonella is found in the UK’s egg products Such kind of incidents creates negative publicity for the firm as they create strong post purchase dissonance with potential to take away the customers. Further, strong health related issues may come up forcing firms to some kind of tests before selling products into the markets. This would therefore increase the overall cost of doing the business. Further, it will also place the organizations under more strict regulatory scrutiny thus forcing the firms to have more checks on them. It is also imperative that such kind of incidents raise the overall cost of doing the business besides creating strong negative publicity for the firm. The recent events in China regarding the toxics into children’s toys is just one example of how such kind of issues can derive the consumer opinion regarding the products and services offered by the companies. The famous TELENOL incident is another important indication of how the companies and firms working in international environment face strong negative publicity and how they can cope with this. On the whole the overall impacts of the above incidents on the firm would be variable in nature. WTD and Minimum Wages The most important benefit of the WTD and Minimum Wages for a British Company working in EU would be the fact that it would be compliant with the government directives. By standardizing the wage rates, companies can save cost. Besides WTD and minimum wages would allow firms to have lesser influence of unions. This would reduce the collective bargaining power of the unions as well as reduce their influence into the affairs of the company thus providing firms to focus more on issues of productive nature. Further resources can be directed in more productive way for the firm. The most important draw back for the firm would be the fact with the introduction of minimum wages and WTD, the payroll management has become difficult thus forcing firms to outsource the payroll activities to third parties. This therefore has increased the overall cost for the firm in terms of managing the potentially non productive activities at the firm.[htt08]. Further it would force the firm to be more regulatory compliant and any deviations from the regulations could cost company good amount in terms of litigations and law suits as under the rules of WTD and Minimum wages, workers are entitled to certain facilities and concessions which if not provided or fulfilled can entitle workers to go into litigation against the firm. Further, it is also imperative that the WTD and Minimum wage could hamper the productivity of the firm as restricted working hours would ultimately result into reduction in the productivity especially firm is labor intensive in nature. Works Cited htt08: , (http://www.whitingandpartners.co.uk), Read More