Understanding Organisations and the Role of HR - British Airways - Essay Example

Understanding Organisations and the Role of HR L&D of the Contents 1 Aim and Objective 3 Aims 3 2Product, Services and Customers 3 1.2.1 Variety of Destinations 3 1.3 External Factors 4 PESTEL Analysis 4 1.3.2. Economic: 4 1.3.3. Social 5 1.3.4. Technological 5 1.3.6. Legal 5 2.1. Structure 6 2.2. Culture 7 References 9 1.1 Aim and Objective Aims British Airways (BA) aims to influence the industrial structure of the economy by introducing new price structure. Low and affordable fares will attract not only customers but other companies who are willing to transport their cargo (British Airways, 2009). This will create a positive impact on the industries as their goods will get delivered or they can obtain their resources at the right time without incurring high cost. Proper arrival of resources mean that production process will run smoothly and there will be inflow of cash in the firms. Technological innovation can also lead to a change in the airline industry. BA can have the advantage of implementing new and improved techniques to gain over its competitors. Ideas like coating with silver the common areas in order to prevent the spread of flu and cold, more localised temperature control which can be operated from the personal display system or a self cleaning table that is embedded in the armrest can be implemented by BA. Presenting correct mix of discounted tickets and full fare tickets can also provide an edge over its competitors. This means that BA intends to implement a skilled revenue management team since the calculation is complex which requires sophisticated computer software. This team will help to find the correct mix of fares for the company by approximating the demand for seats on a particular flight so that it can set the prices of the seats consequently (British Airways, 2009). 1.2 Product, Services and Customers 1.2.1 Variety of Destinations British Airways covers over 550 destinations worldwide. It is a member of one world alliance and in cooperation with American Airlines, Aer Lingus, Cathay Pacific, Iberia, Finnair, Quantas and LAN covers more than 600 destinations (British Airways, 2009). Customers BA offers rewards and privileges to travellers who travel frequently. The company provides the regular fliers a membership of oneworld airline’s frequent flyer programme where the passengers can enjoy privileges like easy transfers between partner airlines and smooth access to some of the finest premium airport lounges around the globe. If the status of oneworld frequent flier is Emerald or Sapphire or they are travelling in Business Class Cabin in any oneworld member airline, then they gain access to 600 international airport lounges. 1.3 External Factors PESTEL Analysis 1.3.1. Politics: The airlines Industry have been influenced by the political environment. The terrorist attacks on airlines and hijacks have invited rigorous government regulations and the security rules have been tightened. These incidents instilled the fear among the customers which adversely affected business activities of the company since some passengers started avoiding air travelling and some also opted for other airlines (Haag & Tilebein, 2013). However, security has become the main priority of BA. As a result, airline business decisions and operations are now affected by the policies and regulations. Stringent rules have been implemented on the routes that BA chooses, its business partners, the fare that BA sets, infrastructure costs and airport slots. It has also tied up with various governing bodies such as national governments and European Union so that the security and safety of the passengers can be ensured with minimal possible inconvenience to them. Implementing such regulations has made the airlines incur some costs and they have also increased their staff members so that measures are properly executed (Peng, 2013). 1.3.2. Economic: The airline business is very sensitive to economic downturn. Economic downturn adversely affects business around the globe which in turn causes business travel to drop drastically. Business travel is considered as the main source of revenue of the aviation industry. So, if business travel gets hit, it implies that the airline will have to suffer financially (Davila, Epstein & Shelton, 2012). Other than economic downturn, increase in prices of oil and commodities and collapse of sterling also affect BA. Recession of 2008 caused a downturn in air travel demand. According to Starkie (2012), UK’s GDP fell to 0.7% level. As a result, there was huge demand for low cost fares. This prompted BA to adopt the Air Passenger Duty which takes distance into account when passengers flying from UK airports are making long distance travelling expenses. Statistics reveals that in 2008, there was enlargement in the cost of traveller air transport by 34.3% because of hike in oil prices. It has been observed that an increment in other air travel charges leads to more costly airfares. These rising prices lowered the number of passengers in BA in 2008. Data suggests that the percentage of air travellers dropped to 47.3% in 2008 in the UK (Morrell, 2013). 1.3.3. Social Due to economic decline, consumers are cutting back their air travel expenses. It has been noticed by Morgan, Pritchard and Pride (2011), that all these have decreased consumer’s confidence. The consumers are becoming more price-sensitive due to economic downturn. This also affects customer loyalty. Data cites 10 million people are above 65years in the UK which implies that, UK has an ageing population. BA has taken this statistics with optimism as it believes that retired folks make long vacation plans and this will increase BA’s revenue. 1.3.4. Technological The new requirement of the airlines industry is maintenance of corporate websites to handle reservations and customers queries. There has been an increase in the technological advancement which aims to diminish environmental damage that is caused by airline operations. Improved technologies include environmental mitigation technique and capacity enhancing equipment. Along with these, BA should also introduce Arrival Management System (AMS) to effectively manage traffic control around the Terminal Manoeuvring Area (TMA). It should also focus on developing a system for elderly customers who still purchase tickets and check procedures offline so that they can avail information smoothly. 1.3.6. Legal There has been a recent increase in the regulations in the aviation industry. The extent of such regulation ranges from managing infrastructure problems related to route flights and slot capacity with the application of new security and environmental requirements (Budd, et al., 2014). However, legal issues have been developed regarding price fixing among competitors with the aim of capturing more customers. Also, legal disputes have cropped up earlier because of growing cabin strikes which have created an unstable environment for British Airways. In 2009, the Open Skies Agreement helped in the free transport of aircrafts between Europe and the United States. The merger between British Airways and American Airlines had to undergo legal proceedings which proved to be unnecessary and expensive deviation from its main business operations. The legislative constraints have to be maintained for health and safety legislations and limitations on the merger and acquisition of organisations. Maintenance of good and healthy relationship with the employees helps to avoid different industrial actions like cabin crew strikes which disrupt company’s flights (Fu & Oum, 2014). 2.1. Structure The structure of an organisation is vital because it establishes the platform for smooth running of the organisation so that it can achieve its aims and objectives. The levels of management are considered small but it retains wide control over the functioning of the company (Wensveen, 2015). Since the business is focussed on customers, the airline has implemented a divisional structure. Under the Chief Executive Willie Walsh, there are three broad segments namely, Customer and Operations Executive, Manager Board and Reporting to the Chief Executive (British Airways, 2009). Figure: Organisational Structure of British Airways (Source: British Airways, 2009) The management board is accountable for setting up the strategic direction and vision of the company. Robert Boyle is the director of Strategy and Business Units which controls the operations of the business units. The Management Board is responsible for the vision and tactical direction of the Company. The Customer and Operations Executive is accountable for day-to-day customer service, operational performance and ensuring the highest standards of safety. Legal, director of safety and security and director of investments also report to the Chief Executive. Garry Copeland is the Director of Engineering who manages the mechanics department. Andrew Crawley and Silla Maizey are the director of sales and marketing and acting customer director respectively who look after the marketing of the company. Silla is responsible for improving customer services. Roger Maynard being the director of Investments and Alliances look for profitable investments of the company. Tony McCarthy is the director of People and Organisational Effectiveness. Keith Williams manages the financial department (British Airways, 2009). Julia Simpson is the chief of staff who is responsible for government relations, global communications and monitors various business services and administrative actions. Stephen Riley is the director of flight operations. Andy Lord has given the role of enhancing performance, safety, IT systems and compliance of the operations of BA worldwide. Being the director of Operations of BA, he also looks after corporate business flexibility and various other operations of BA along with the UK and Irish airport customer services. Maria Da Cunha, who manages legal and government affairs, has taken the responsibility of supervising the HR functions of the company. She also tries to interact with trade unions to reduce cabin crew disputes (British Airways, 2009). 2.2. Culture The company nurtures and welcomes cultural diversity. Hence, its culture is to work with all employees from different ethnicity and treat with equally without discrimination (Hagmann, Semeijn & Vellenga, 2015). BA believes that diversity and inclusion are a method of living a life. The initiatives taken by the company is about maintaining dignity and respect. The programmes are designed in a way so that good relationships between colleagues are promoted irrespective of their religion, culture or background. Annual diversity week is celebrated where a series of events like an inter-faith panel discussion on religions and presentation from a member of the British Paralympics Association are organised. To eliminate workplace harassment and bullying, BA has focussed on implementing dignity at work strategy. It has already selected trained harassment advisors. Using internal mediators, the company wants to accept an informal approach to resolve conflicts. To recognize disability issues, it consults with disabled workers. In this year, the online training course ‘Expect Respect’ has been implemented which the employees are required to complete (British Airways, 2009). References British Airways. (2009). The Way We Run Our Business. Retrieved from Budd, L., Francis, G., Humphreys, I., & Ison, S. (2014). Grounded: Characterising the Market exit of European low cost Airlines. Journal of Air Transport Management, 34, 78-85. Davila, T., Epstein, M., & Shelton, R. (2012). Making Innovation Work: How to manage it, Measure it, and Profit from it. New Jersey: FT Press. Fu, X. & Oum, T. H. (2014). Air Transport Liberalization and its effects on Airline Competition and Traffic Growth—An overview. Advances in Airline Economics, 4(8), 11-44. Haag, H. C. & Tilebein, M. (2013). Dynamic Business Model Analysis for Strategic Foresight in Production Networks. In Robust Manufacturing Control. New York: Springer Berlin Heidelberg. Hagmann, C., Semeijn, J. & Vellenga, D. B. (2015). Exploring the Green Image of Airlines: Passenger Perceptions and Airline Choice. Journal of Air Transport Management, 43, 37-45. Morgan, N., Pritchard, A., & Pride, R. (2011). Destination Brands: Managing Place Reputation. London: Routledge. Morrell, P. S. (2013). Airline Finance. Hampshire: Ashgate Publishing, Ltd. Peng, M. (2013). Global strategy. Boston: Cengage learning. Starkie, D. (2012). European Airports and Airlines: Evolving Relationships and the Regulatory Implications. Journal of Air Transport Management, 21, 40-49. Wensveen, J. G. (2015). Air Transportation: A Management Perspective. Hampshire: Ashgate Publishing, Ltd. Read More