Need for Strategic Change for British Airways - Research Paper Example

Need for Strategic Change for British Airways 1.0 Introduction The strategic management is concerned with the analysis of strategic objectives along with the analysis of internal and external environment. British Airways (BA) is recognized as a full service providing global airline. It offers its service on a ‘year-round low fares’ basis. They also provide worldwide route network of airline that fly generally to and also from centrally-located airports (British Airways, 2011). Strategic management plays a significant role in the growth and competitiveness of any organisation. British Airways in order to maintain its competitiveness in the existing contemporary global business environment requires identifying the need for strategic change. In order to successfully cope up with the changing global environment as well as consumer demand, an organisation like British Airways requires assessing their external environmental factors. In the process of undertaking organisational change, the support and constructive approach of the management plays a key part. Thus, in order to sustain its position in among the tough competitive global market BA requires performing and managing changes according to the need of the hour. Therefore, the study will look to evaluate need for strategic change for British Airways and the method by which the organisation should look to realign with respect to its external environment. 2.0 Need for Strategic change for British Airways British Airways has been able to establish itself as a market leader in the segment of airline operations in the UK market. In spite of such a coveted position in the UK market BA has faced stiff and increasing competition from its rivals which has resulted in decrease in their market share. In lieu of the existing scenario, the prime aspects which can be recognized for BA in the process of strategic change are the need for providing customer satisfaction which had seen a decline and also make substantial technological advancements which will enable them to attract as well as retain consumers. This overall strategic change can also aid BA to enhance overall experience of the customers. In the airline sector, the customer retention is one of the major aspects. With the advent of so many low-fare airlines along with the need for providing high level of safety and security, the people process strategy and technological advancements have become inseparable components for any airline organisation (Quy, 2011). The strategic management objectives for BA in the past market few years have been to become the ‘world’s leading global premium airline’. In order to make their cost base more efficient and to provide unparallel customer service they need to constantly evaluate the present scenario and look for any possible opportunity (British Airways, 2010). Despite their endeavor and prospects of growth and sustainability BA require to be always on their toes due to the existing complexities in their operations. The airline industry globally as well as in the UK is highly competitive. By referring to Michael Porter’s five forces model it can be observed that the barriers to entry in the industry is quite high. Therefore, the existing players in the market have been able to sustain their position in the market. The other significant aspects that compel BA to undertake strategic change includes government regulations, availability of funding from the designated financial markets, terrorism, pandemics and others. The aspects related to mergers and acquisitions among the competitors can also force BA to undertake strategic changes. It can affect their revenue as well as market position. The critical aspects such as economic condition which includes decline in the global economy can have a severe impact and can make strategic change a necessity. Employee relation is also a crucial aspect in the sector in which BA operates. They have unionized workforce. Thus, any disruption or breakdown of discussion or bargaining among the workforce can lead to disorder in the entire operations. Failure in the technological aspects can cause disruption and can hamper smooth operations of BA. Moreover, any failure to maintain safety and security of the flights can cause severe harm on the financial performance as well as on the operations of BA (British Airways, 2010). 3.0 External Forces Economic conditions are affected by political as well as government policies. There are several other ways in which the government decisions can have an affect on the country directly and indirectly as it provides threats and opportunities. The requirement for air travel is differentiated by high income elasticity and as a result the world economy grows and the demand for air travel is expected to increase. The political situation has driven oil prices to a high rate in British Airways and thus it might add to a hundred million pound to their cost. British Airways is in the business of transporting people from worldwide destinations for business and pleasure. British Airways’ profitability is closely tied to economic growth as well as trade. The political and cultural power differs from country to country and includes demographic and intellectual aspects. These factors affect the customers’ needs and the size of prospective market in the industry. Demographic changes have resulted in the expansion of grey market that are spending more on free time and travelling. The socio-cultural environment summarizes the demand which vary with the amount of disposable income of the consumers. British Airways is focused on enhancing its customer service with modern technology. New technologies, technical methods and ideas are implemented for providing services in the industry. The events of terrorism attacks with other countries no doubt caused unprecedented crisis and political stability. Government has controlled the aspects of their pricing policies as well as product planning. Global warming also affects the demand for airline travel as during summers more people spend their holidays in different countries (Nanto, 2009). 4.0 Competitive Environment The purpose of strategic management is to enable an organisation to achieve competitive advantage by altering the organisation’s strength relative to that of its competitors in a most efficient way. To meet the requirements of their increasingly discerning travelers certain airlines invest a great deal in the quality of service that is offered both on ground and in the air. New entertainment systems, comfortable seating, and Ticketless travel are few of the improvements made in order to attract the travelers. BA must position as a customer service driven organisation in order to be protected against any threats from competitors and influence the forces through its own corporate and competitive strategies. British Airways operates in two different markets namely short-haul and long-haul flights and face competitions in both. In the short-haul flights competition arise due to low-prices and in the long-haul flights competition come from larger airlines who compete on routes, comfort, service and the whole quality. British Airways competes on global, national and regional scale. British Airways functions within a highly competitive market (Seng, 2007). 5.0 Organisational Culture British Airways allocates official reporting relationships, including the number of levels in the hierarchy and the span of control of managers and supervisors. It identifies the grouping of individuals into departments and department into organisations. Their organisational culture encourages effective communication, coordination and integration of effort in order to sustain their growth. The organisation provides information flow to accomplish the overall goals. British Airways focuses on the control of tasks flow of information in the organisation. It increases the efficiency of the business operations at various levels such as technologies, assets and knowledge. Therefore, in the strategic change process the BA’s organisational culture in which they seek to achieve the best possible service for their customers enables them in the long run to stay ahead (Black, 2003). 6.0 Change Management British Airways is the fastest growing airlines in the world. It inculcates leadership qualities and unique culture among its employees. The changes were implemented in the organisation without any support from the employees. The technological, legal, political and cultural development is implemented in British Airways for the organisational development. The organisation facilitates the implementation of business models and helps the airline to travel faster with its IT function in the business to support the business goals. Dramatic changes occurred in times of crisis; ranging from reconstructing the organisation and repositioning strategy to reframe the mindset of the organisation and culture. Corporate celebration was introduced in British Airways which urged the employees to examine their exchanges with other people, which include family, friends and customers. The program highlighted encouraging relations with people focusing on non-related relationships (Illinois State University, n.d.). British Airways must manage and change their strategies according to the issues and problems raised. British Airways managers should learn from their past experiences and develop future decisions. British Airways needs to develop a culture of change orientation without loosing internal consistency and stability. This implies a clear and shared vision of where the organisation is heading. There might be a problem of decline but British Airways must be able to act in quick response to opportunities and threats and control their costs and accept lower limitations when there is demand in economic downturn. High technological tools are implemented for good production cost in the country (Thompson & Martin, n.d.). The rapid growth of trade and services has contributed in business travel. In order to meet the condition of the discriminating customers few airlines invested heavily in the quality of service they render. British Airways is facing crisis and therefore certain actions are required to be taken. The need for changes in British Airways is in its culture and values. It is the Britishers who dictate the ways decisions are made, the objectives of the organisation, the type of competitive advantage sought, the organisation and the systems of management, functional strategies and policies attitudes towards managing people and information system. It involves the awareness of environmental forces and the ways in which things are changed, an appreciation of potential and future opportunities and threats, appreciating how key strategic resources might be reorganized and exploited to create opportunities in British Airways. It enhances the awareness of wider environmental opportunities and threats, the knowledge of existing competitors and what they are doing at the moment and what they are preparing to do. The business organisations must understand the other departments as well. The flight operation is essential part in the airline industry. It provides comforts and luxury to the travelers. Many employed people at British Airways have experience in the areas of information system and business. The need of information technology is essential in British Airways because it creates awareness among the travelers while travelling in the flight. The business leaders realized the need of IT and thus play an essential role in the organisation. Through information technology one can get various kinds of information. This system provides information about the market trends, the international trades of other organisations. 7.0 Corporate Leadership British Airways has developed with its unique culture and leadership qualities. The business leader thought of implementing certain changes in the organisation to improve the business growth of the airline. Though the British Airways was making high profit, yet effective decisions were undertaken in the long run for its proper maintenance. They provided training programs, workshops and outsourced departments such as engineering and information technology in the organisation. The company was responsible for developing strategy and also taking clients project related to the economic issue and change management. The focus was on the development and leadership within other organisations in implementing corporate strategy and the development of profitable growth. The business leaders are responsible for the entire work. Corporate leadership is considered as the driving force behind an organisations endeavor to undertake strategic changes. Thus, BA also has to receive support from their high-level management in order to successfully implement the strategic changes (Heifetz & Laurie, 2001). 8.0 Corporate Culture British Airways has over the recent years have faced crisis in various aspects such as increase in fuel cost and high employment cost have forced British Airways and the government to privatize their organisation. As the business in the organisation improved, the service also improved. While representing the gaps between the mainstream work of the company and the demands placed by normal considerations, the business analysis reveals the differences over time, which offers significant insights into the procedures of change. The confrontation and opportunities faced by corporate members of the organisation also creates interests among the members of companies at all levels, as well as advisor and members of non-governmental organisations. British Airways radically improved the financial strength and its awareness in the market. With exceptional success, the management faced problem regarding how to maintain impetus and recall the focus that would meet new challenges. Unexpected depression left the British Airways under pressure to survive on volumes. The competitive advantages required through amalgamation had been hopelessly defeated by unifying corporate culture. With increase in competition and rise in labor cost in Britain, the lack of efficiency and poor service became harmful fro the organisation. British Airways faced the evident opposition between critical costs and powerful customer service which has been the difficult challenge of all. British Airways had lifted itself out of economic failure to become one of the most respected airlines in the whole world (Schein, 2009). 9.0 Knowledge of Strategic Management/ Strategic Thinking can improve an Organisations competitiveness and efficiency Strategic Management awareness is the understanding of the ways to make the organisation successful and bring changes in the environment along with the effectiveness of the strategies that can develop the organisation. The organisation can be improved by choosing an appropriate course of action, by implementation of changes and determining desirable changes to strategies at corporate and competitive levels. The mission provides emphasis on the desire of British Airways to become the world’s truly global airline which in turn generated a corporate strategy of selected association. The purpose of the organisation is its existence, the nature of business and the satisfaction of the customers. It formulates the objective of the organisation and differentiates the competitors, the companies and the organisations. The strategy should describe the business and the activities of the organisation and what it wants to achieve in the field. The organisation requires a profit seeking-business, matter of social responsibility and business principles, which are important and therefore can bring an improvement in the organisation. In order to control the national and international competition, the new airlines were prohibited to enter the market and the existing companies offered flights of their choice. This is one of the ways to control the national and international competitions. Proper planning, maintenance, developing and controlling and project management skills can improve the organisational effectiveness. If the organisation implements highly skilled employees, high technologies, new methods and techniques and provides good training programs, proper infrastructures, then it is obvious that the organisation will bring improvements in various sectors of economical, social and political fields. A research survey will also enable the organisation to gather various information regarding important issues or about different competitive organisations (Thompson & Martin, n.d.) 10.0 Critique of Contemporary Strategic Management Research and Practice Strategic management research provides support and involvement of consultants into the service department. BA through business plans, objectives, policies and procedures help to uphold the overall organisational improvement. Employees’ interest and participation is influenced by how the program has been launched and marketed. Knowledge sharing is the exchange of any thoughts, ideas, experiences and events. In order to stay competitive in the organisation, the institutional members should promote knowledge sharing. The competitive nature of knowledge in the organisation may hamper the knowledge sharing among the employees. This study examines how the technological, social and political factors together serve as knowledge sharing. The study aims at determining the economic, social, legal and political conditions of the organisation. It also aims at evaluating the production cost and labor cost of the organisation. It can be observed that contemporary strategic business dimension entails creating frameworks for learning process as well as market-driven culture. Strategic management perspectives looks to determine organisations unique value propositions, implement required organisational changes and also leveraging the existing distinct capabilities. Therefore, British Airways also need to implement such value as well as market driven strategic change objectives, which will enable them to achieve long run success and sustainability (Cravens & Et. Al., 1998). 11.0 Conclusion British Airways needs to develop a culture of change orientation without losing internal consistency and stability. Strategic management examines how managers create and maintain competitive advantage for the organisations. It considers how managers determine strategic direction and manage the process. It develops the ability to analyze the competitive environment that are being faced by the organisation and separate the potential sources of the organisation. The managers in the organisation are aware of potentially threatening developments and opportunities for profitable change. They seek to match and improve the organisation’s resources. The nature of the opportunities is directly related to the general and specific industrial environment. Planning is essential to provide direction and ensure appropriate resources for the detection of objectives. Detailed analysis of strategies situation is used to create strategic alternatives and certain options are implemented. Lack of resources takes the form of scarcity strategic management knowledge whereas lack of managerial skills and inadequate capital exploits the external opportunities. The environmental aspects also cause disturbances in the organisation. Strategies and objectives are set to achieve the purpose or mission of the organisation. In their endeavor to maintain competitive advantage over their competitors BA need to evaluate the existing possibilities in the market as well as the risks and threats that can hamper their growth in the airline industry. A proper strategic change taken at an important juncture can affect an organisation such as British Airways to maintain their market share and also their financial stranglehold on the global market. References British Airways, 2011. About British Airways. Travel. [Online] Available at: http://www.britishairways.com/travel/about-british-airways/public/en_gb [Accessed March 11, 2011]. British Airways, 2010. Our Strategy and Objectives. Directors’ Report and Business Review. [Online] Available at: http://www.britishairways.com/cms/global/microsites/ba_reports0910/our_business/strategy2.html [Accessed March 11, 2011]. British Airways, 2010. Principal Risks and Uncertainties. Our Businesses. 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