Resource and Capability Analysis of British Airways Plc - Case Study Example

BRITISH AIRWAYS PLC RESOURCE AND CAPABILITY ANALYSIS Name: Institution affiliated: Date of submission: Tutor: Introduction British Airways PLC (BA) is the largest airline base in the world according to its fleet size, international destination and international flights. The company was founded in January 1972. It is viewed as the flag carrier of the United Kingdom since its logo is the national flag of the United Kingdom. British Airways PLC has its headquarters in waterside, Harmondsworth in England. The company had a total fleet size of 290 and served 183 different destinations excluding the destinations that are served by its subsidiaries. Among the subsidiaries of British Airways PLC is British Airways Limited, open skies, British Airways World Cargo and BA City Flyer. British Airways PLC is however the second largest company when measured using the number of passengers carried, the first being Easyjet. Since 2010, the company has been recording an increase in revenues collected and has also been recording profits from the same year. The company had however recorded losses in 2009 and the first three months of 2010. It was so due to the acquisitions made during both years and the expansions made by the company. The revenue turnover after 2010 has constantly been increasing. There is high competition faced by the company from other competitors such as the Virgin Atlantic. Other competitors include the competition faced according to alliances that include airlines such as Star Alliance, SkyTeam and Oneworld. Similarly, there are other airlines that compete with British Airways PLC according to the quality of services provided and such include Nippon Airways, Cathay Pacific, Singapore Airlines, Malaysia Airlines, Asiana Airlines, Garuda Indonesia, Hainan Airlines and Qatar Airways [Bri101]. Air France is the French national flag carrier organization that was founded in 1933. The organization has a fleet size of 235 and currently serves 204 destinations. In terms of destinations served, the organization serves more destination than British Airways. Similarly, the organization has the advantage of being an older organization in terms of the number of years that it has been in operation. To manage their market share and try to expand it, the companies engage in three major types of competition namely passenger management and destination and number of flights for each destination and the quality of service provided. British Airways PLC thus focuses on providing the best quality services to its passengers to ensure that they achieve customer loyalty to the existing customers and attracting more customers to the company. Similarly, British Airways PLC focuses on increasing the number of destinations that it serves and increasing the number of flights made to each destination to increase convenience to the consumers of their services [Nig12]. VRIO framework The VRIO framework is a framework that tries to establish whether the questions of value, rarity, imitability and organization are satisfied by the organization. The VRIO framework is a strategic scheme that could be used as an objective for the resource utilization in the organization. The strategic scheme usually starts by identifying the vision and mission statements of the organization, then moves on ahead to provide strategic choices available to the objectives of the organization and its internal and external activities. Value in the VRIO framework provides an analysis to identify whether British Airways can neutralize the threat that it faces from the scarcity of resources available. The question of value tries to exploit the opportunities that are available to the organization. For resources and capabilities to be considered of value in British Airways, it is required that the organization consider the resource or capability ability to exploit available opportunities in the organization or help reduce or mitigate the threats that British Airways faces in its daily activities. An easy way to determine whether the resources and capabilities are strengths within the organization, it is important to investigate on the value chain of the organization. Where the resources or capabilities allow the organization to operate more effectively in the value chain, there are higher chances that the VRIO framework will consider the resource valuable. The question of rarity provides British Airways with the ability to be in control of the limited resources that they have available in hand. Rarity will thus provide the organization with a competitive edge over its main rivals. Rarity is understood to be where resources and capabilities are rare to most of the organization. The rare resources and capabilities are usually in short supply. However, they provide the organization with an opportunity for growth and improved performance thereby increasing their competitiveness. The availability of the rare resources to British Airways would provide undue advantage by the organization over its competitors. However, where there are a scarcity of the rare resources and capabilities for all the organizations, then it provides perfect competitions to the organizations operating in the same industry. Imitability in the VRIO framework provides the organization with an option of how difficult it is to imitate the resources and capabilities that are available to the organization. The question of imitability tries to identify the costs that the organization is likely to incur when they try to develop obtain or duplicate the resources available to them. British Airways can either have a well established means to exploit the external opportunities or suppress the threat that they face through the use of the rare and valuable resources. The idea of imitation is done to provide the organization with the ideas and options that are used by the competitor companies that are performing better than it and use that to gain advantage over the competitors. British Airways can use the idea of imitation to duplicate the competitive strategies that are used by the competitor organizations. Where the valuable and tare resources are hard to come by, then it is possible to imitate the competitive advantage of the organization through innovative company’s strategies. Finally, the question of organization in the VRIO framework provides the organization with the understanding of the ability to readily exploit the resources available. It determines British Airways organizational structure and its ability and willingness to exploit the most of their available resources and capabilities. Once an organization realizes their ability to create value, rarity and imitability for resources and capabilities, then British Airways should organize the company to provide them with the best options available to exploit the resources. The organizations control of most organization usually includes the systems that have been placed to balance the resources of the company. The components of organizations include the compensation policies, reporting structures and the management control systems. The compensation policies provide the organization with an understanding on how they provide incentives to their employees to ensure that they achieve the objectives and gaols of the organization through compensation benefits. The compensation benefits that are provided by the organization include bonuses, stock shares, and salary increments and at time some non-monetary incentives. The reporting structures refer to the formal reporting structure and disclosures that are made to the organization and to whom the disclosures are made to. Finally, the management control systems are usually broad for the organization. The control systems are usually the systems that provide for budgeting and reporting and their ability to make informed decisions regarding the activities of the organization. With correct organization by British Airways, the firm’s valuable, rare and imitable resources can help them improve their competitive advantage. Better resource management through the VRIO framework The resource management for both physical and human resources in an organization are usually the duties of the office of the human resource manager. Human Resource Management (HRM) entails balancing the resources of the corporation. The available resources are people and processes and the Human Resource Management working towards providing the optimal ratio to enhance the best achievements for goals and strategies in the organization. The Human Resource Management integrates the wide range of culture, ideas, and products with the human resources available to achieve maximum potential of the organization [Mic06]. The resource management ensures that the organization optimally uses the resources that are available to them to ensure full performance in the organization is achieved. Innovation and invention are key drivers in growth and development of most companies in the recent years. Innovation refers to the adoption of new processes, ideas and devices to help improve on a particular issue that needs to be improved. Innovation encompasses a number of factors key among them being ideas, processes, products, services and technologies. The process of innovation is usually triggered by the availability of markets for new products, deficits in the market, need for reduction of costs for goods and services, need to improve on quality of the goods and services provided and an increase in demand for goods and services [Phi111]. Innovation is thus required by British Airways resource management team to ensure that they optimally make use of the available resources to keep the organization ahead of the other competitors and help reduce the competition that they face. Competitive implication Valuable Rare Imitable Organizational exploitation Competitive disadvantage No Competitive parity Yes No Temporary competitive advantage Yes Yes No Unexploited competitive advantage Yes Yes Yes No Sustained competitive advantage Yes Yes Yes Yes REFERENCES Bri101: , (British Airways, 2010, p. 68), Nig12: , (Nigel, George, & David, 2012, p. 17), Mic06: , (Michael, 2006), Phi111: , (Philipp & Jens, 2011), BRITISH AIRWAYS – CORPORATE PROFILE Mission – British Airways’ mission statement is to strive to become the “World’s Favourite Airline” while providing the full service experience and achieving the target both, in-flight and on the ground Vision – The vision of British Airways is to gain accreditation for Carbon Offsetting Scheme and to fulfil the industry united position on climate change by reducing the climate change emission in aviation with a cap on net emissions by 2020 and 50% cut by 2050. Corporate Responsibility Values - British Airways corporate responsibility vision is to become the world’s most responsible airline and they have developed guiding principles that describe what they are doing to achieve this goal. Read More