Strategic management, British Airways - Essay Example

External market costs, such as supply chain, are also impacting profit negatively at BA. This report takes an in-depth view of the market environment in which British Airways must operate as well as a strategic analysis about how the company has positioned itself for strategic success. British Airways operates in a very difficult environment currently, with profit continuously declining both in consumer travel and in the cargo division of the business. It is currently the economic downturn being felt globally which is contributing to these profit declines.

Done (2009) offers that the recession has given the business more than two years of losses, with loss expectations until at least March 2010. Much of this decline, according to the author, is due to difficult financial market trading conditions which significantly impacts the budget capability at BA. In fact, this economic recession has caused British Airways to lose a total of 17.7 percent of its passenger traffic profit just in April of 2009 (Done). Additionally, BA is also losing money due to the slip of value in the British pound.

Done (2009) offers that its total operating loss was 150 million pounds, which will serve as the firm’s first operating loss in over five years. These losses have given the company a very poor credit rating which impacts the firm’s ability to procure enough working capital to make strategic changes which can have positive long-term impact, such as new construction at various international airport terminals. There is also a great deal of competition in British Airways’ passenger traffic division of the business, including Lufthansa, Ryanair, Air France, Martinair and Iberia (plus many more European airlines).

Competition is one external force which appears to be consistently trying to outperform BA by offering different consumer options on board, such as