Organisational Strategy & Decision Making - British Airways - Case Study Example

Organisational Strategy & Decision Making Contents 3 Introduction 4 Company Background 4 SWOT Analysis 6 Internal Audit 6 External Audit 7 Discussions 7 Evaluation 8 Conclusions 8 References 10 Bibliography 11 Abstract The term “strategy” was initially used in wars for developing tactics to win over the enemy. Business is also a kind of war, where the rival firms are considered as enemies & everyone fight with them to achieve the maximum market share & maximum sales. In this war the weapon is strategy. A strategy is a tool used for managing the organization’s resources in order to mitigate risks & optimize resources. This is the simplest definition of the term strategy. However in real life, the organization faces a lot of complexity to form & maintain a strategy. (Jeffs, 2008, pp. 13-14) A strategy addresses questions like- What’s the objective of the firm What are the resources of the firm Who are the competitors What strategy are they adopting What pros & cons did they face In which ways our product is separate from theirs Who are our target consumers How to reach them What’s the budget allocated for the promotion of the products The prices fixed are according to the market or not? These questions are never ending. From the question it’s clear that strategy can be formed to address any issue, be it the launch of a new product, be it a sales promotion effort or be it budget creation. Strategies ultimately helps the organization in the decision making process. Introduction Strategy formulation depends on the management’s ability & organizations resources. These are the predictable issues which can be answered by forming brilliant strategies. But we should also keep a provision for the uncertainties of the environment. These uncertainties can destroy any good enterprise if the provision to face them is not properly & timely created. The objectives of a firm are the primary guideline for preparing the strategy. These objectives are clearly mentioned in the Vision & Mission Statement of the company. The Mission Statement is a written document where the ideas & thoughts of the company are communicated & the purpose of the firm is clearly defined to the internal & the external stakeholders. This statement helps the managers in the decision of resource allocation. The Vision Statement is a kind of future planning document which states where the company wants to reach in future. These statements are very useful in the strategy making decision of the firm. (Harrison & St. John, 2009, p 74) The anticipation of the future risks & benefits is termed as SWOT analysis in the language of management. Here we are going to discuss about a certain product & we will prepare the report containing the SWOT analysis, Strategy Formulation based on the SWOT analysis & Strategy evaluation of the product. (Pahl & Richter, 2007,pp. 3-5] The product of our choice is British Airways. Company Background In 1974, British Airways came into existence with the merger of two state-owned airlines, British European Airways & British Overseas Airways Corporation. British Airways was formed with the aim of creating a worldwide network & also for achieving economies of scale. British Airways, based near the main hub at London Heathrow Airport is the leading airline in the United Kingdom. British Airways is the largest airline company based on sizes of the fleets and the second largest in passenger carriage. The company had around 50000 staffs & nearly 215 aircraft. Cultural differences between the airlines caused issues relating to class of the people.(Alkhafaji, 2001,p. 243) It underwent massive losses during the Middle East oil crisis. With the government’s support, the company didn’t feel any urge to improve or adapt new policies. Customers were neglected & were provided with poor services. The management failed to take any remedial steps & in spite of having large number of aircrafts & excellent engineers, the company failed to get the customer’s support. In the 1980s, a survey said that 33% of the passengers didn’t prefer to travel by British Airways. With the appointment of Margaret Thatcher as the Prime Minister of UK in 1979, the things started to change rapidly. She introduced privatization of the national firms & British Airways was made the responsibility of a successful industrialist, Lord King who was appointed as the CEO of the organization. (Lundy & Cowling, 1996, pp. 353-354) Soon in 1986, The CEO of British Airways declared in their mission statement that they would be putting more & more emphasis on the customer service. They rebuild their objectives, management, sales & put focus on their reputation & competition. On this very point the British Airways adopted new strategies & for applying the new strategy they invested a lot.(Doganis,2006,p.283) Again in 1997,the company came up with new strategies where they invested a lot on the physical part of the airline service which means every tangible product associated with it were taken care of. Also a training program was started for the development of the staffs. The airlines maintained the traditions of Britain yet it contained openness & friendliness towards other cultures. It introduced various articles representing the various countries like a Japanese porcelain model, Chinese calligraphy, frescoes from S.A. etc. Now the airlines saw customers from various places & three out of five customers belonged to places other than UK. At the turn of 2002-2003, the vision of the company indicated that it now wants to be profitable offering full range of services & wide network of connections to the airlines. The vision included the achievement of 10% profits & that too by improving their image. It gives more & more importance to the reputation of a firm & its professionalism. Today it’s been considered as the most high quality aviation company. They were the first to start branding & loyalty programs. Also they introduced revolving seats which turns into a complete flat bed in the first class. They came up with the concept that just boarding the flight is not the trip. The trip includes the clearance & waiting time also which should be pleasing for the passengers. Therefore they came up with their own lounges where their staff wearing uniforms helped the passengers in clearance in no time. Now the passengers felt that they are taken good care of by the airlines. This boosted confidence & trust among them. (Hall,Jones & Raffo, 2007, p.125) SWOT Analysis Internal Audit Strengths- The management of the company is efficiently controlling the staffs & the services offered. They are fully devoted towards the satisfaction of customers. In order to create a sense of fusion of cultures, it includes several articles to decorate its lounges. This brings their customer closer to them. They have also invented revolutionary seats which can be turned into a complete flat bed. It’s a totally new innovation & it’s very useful for the passengers. Their staffs are full of energy, which are always in uniforms with the willingness to serve the passengers. The company is ready to invest more for the betterment of their services. Also they are keen to offer world class service to their customers. They focus more on their reputation than anything else. Weaknesses- Primarily, it was a government owned company & therefore the staffs didn’t worry for the maintenance of the goodwill of the firm. Moreover, they were less “customer” oriented & more “class” oriented which made discrimination between the customers. The management was incapable of efficiently handling the staffs & the services. Huge ticket prices in comparison to their rivals are also a major drawback of the company. (Ferell & Hartline, 2010, p.125) External Audit Opportunities- As the company is a merger of two renowned brand names; therefore they enjoy the already established market shares of both the companies. Also as it serves people from various countries & cultures, there is a huge chance of further growth of their market share with the improvement of excellence in their customer service efforts. Threat- Just before privatization, the company earned a negative image in the minds of the customers & therefore, it’s a huge threat for the company to replace that image with a positive one. Also the ticket prices are higher & this could also result in the reduction in market share of the firm. Discussions The present scenario of British Airways shows that they have recently learnt the tactics of customer service, image building & customer retention. They are thinking from the viewpoint of the customers & are putting effort to make their experience wonderful starting from the ticket counters till the arrival. got ample market to expand its operations. Although their prices are high, still people would like to pay this much price for experiencing a comfortable journey. But the fact remains, that the service is meant for the higher income groups. It’s also evident that there is still a huge middle income group market left, which is yet to be explored by the British Airways. The company re-constructed its mission & vision statement stating that their main focus is to be the leading airlines of the world in terms of customer satisfaction & safety. They put emphasis on employee motivation. Evaluation At this point of time when the airlines started implementing its new strategies & they started to evaluate the results continuously, they found that their efforts are widely accepted by the customers & their response is quite positive. Hence the Company decided to improve further & started forming new strategies like- To focus on the sector which frequently travels to/from UK for business purpose To eliminate unnecessary employees To improve the pricing structure & focusing on the revenue management To introduce IT based designs for improved customer service To introduce self-services which helped to reduce administrative costs (Johnson, Scholes & Whittington, 2008,p. 14) Conclusions Strategy formation is a skill of the manager. It never follows any guidelines or rules. It’s totally dependent on the situation. The British Airways underwent huge changes just after changing the strategy of its operations which were perfect for the situation it was going through. The same strategy might not work out in some other case. Every situation is unique & every strategy should be tailor made to match it. References Jeffs, C., 2008. Strategic Management. [Online] London: SAGE Publications Ltd. Available at: http://books.google.co.in [Accessed 13 May, 2013] Lundy, O. & Cowling, A.G., 1996. Strategic Human Resource Management. [Online] London: Routledge. Available at : http://books.google.co.in [Accessed 13 May, 2013] Pahl, N. and Richter, A., 2007. Swot Analysis.[Online] Germany: GRIN Verlag. Available at:http://books.google.co.in [Accessed 13 May, 2013] Harrison, J.S. & St. John, C.H., 2009. Foundations of Strategic Management.[Online] USA:Cengage. Available at : http://books.google.co.in [Accessed 13 May, 2013] Johnson, G., Scholes, K. & Whittington, R., 2008. Exploring Corporate Strategy: Text & Cases. [Online] UK: Pearson Education Ltd. Available at: http://books.google.co.in [Accessed 15 May, 2013] Ferell, O.C. and Hartline, M.D., 2010. Marketing Strategy. [Online] USA:Cengage learning.Available at: http://books.google.co.in [Accessed 15 May, 2013] Hall,D., Jones, R & Raffo,C., 2007. Business Studies. [Online] UK: Pearson Education Ltd. Available at: http://books.google.co.in [Accessed 15 May, 2013] Alkhafaji, A.F., 2001. Corporate Transformation and Restructuring: A Strategic Approach. [Online] USA: Greenwood Publishing Group. Available at: http://books.google.co.in [Accessed 15 May, 2013] Doganis, R., 2006, The Airline business. [Online] USA: Routledge. Available at: http://books.google.co.in [Accessed 15 May, 2013] Bibliography Sadler, P. 2003. Strategic management [Online] USA: Kogan Page Publishers. Read More