I choose British Airways plc. The SWOT of British Airways plc is easy to understand. With regard to strength of the British Airways plc, there are five points. First, the British Airways has a broad geographic presence. It has approximately 150 international destinations across 6 countries. Second, the British Airways is sole airline occupant of Heathrow Terminal 5 after March 2008, because it is significantly boosting the service it offers customers in the UK. Third, the British Airways has powerful alliances. In other words, it is means that the ‘British Airways is a founder member of the one world alliance, along with other major players such as AMR Corp and Cathay Pacific, boosting its competitive strength at the global level (MahaSagar, 2013).’Next, the British Airways established online presence.
It is means that the company has developed the online ordering system and is working to shift completely from paper to e-tickets, as well as improve the development of website and make order tickets easy and efficient. Finally the British Airways has high levels of consumer recognition and trust. The weakness has four points. First, the UK airways are reliant on airlines. For example, ‘British Airways is heavily reliant on the airline industry, which accounted for 99.7% of its total operating profit in fiscal 2007 (MahaSagar, 2013).’ Actually the government need focus on rising fuel prices and increasing pricing competition. Second, the BA’s image is exposure by problem.
‘During 2007 the image of British Airways’ eponymous brand suffered from factors such as consumer concerns about carbon emissions and, more specifically, the scandal surrounding fuel surcharge price-fixing (MahaSagar, 2013).’Third, the British Airways is bias towards the UK. In other words, although the British Airways has a broad geographic presence, the company rely on UK market, such as in 2007 the airways accounted for almost half of its total revenue. As a result, British Airways will get low-cost carries in the future. Finally, British Airways are laggards in terms of employee management.
The opportunities of British Airways are the most important things. First, the Heathrow Airport is the most hubs across the world. Second, the British Airways has strong growth in emerging markets. For example, China and India is emerging markets. In these countries, the investment in the travel infrastructure, rising foreign tourism, the expansion of the middle class and increasing international business opportunities. Third, in modern countries, internet is the most popular ways to know something. So the British Airways should increases access to the internet. The internet is not only more efficient and safer, but also more convenient payment online.
Finally, British Airways has powerful alliances. In other words, British Airways has developed partnerships with other airlines and makes sure competitive and international development. The threats with which British Airways is faced with are pricing competition. Some low-cost airline, such as Ryanair is ongoing expansion. Then the threat is raising fuel prices. ‘Fuel price increases would represent a significant threat to British Airways, particularly in the highly price-competitive conditions of its core markets. Indeed, fuel price rises were largely responsible for the company’s fall in operating profit in fiscal 2007 (MahaSagar, 2013).’ In addition also, the airline has some unpredictable external factors such as terrorist attacks which happened on 11/09/2001 and 07/07/2005.
b) Write an essay analysing and evaluating the factors that have made this company a success. Word count between 1500-2200 words. (25 marks).
In fact, the British Airways has two main points to make success. One of the major points is external. The external divided six parts, receptively political, economic, social, technological, environmental and legal. In parts of Political, the BA has complied with government regulation to continue its operations. ‘Due to war on terror the security has to beef up with advanced measures so as to keep the consumers safe and confident in relation to their continued travel with British Airways as a preferred airline (Rodrigo, 2012).’ In parts of economic, the world going through a big trouble, so the BA has to reduce consumer spending to a large extent. For example, ‘due to global economic crisis, world growth is projected to just over 2 percent in 2009. The value of Pound has begun to slide especially against the Euro.
Possible reduction in the amount of business travel as companies are cutting costs and using alternative means of communication such as teleconferencing. Hence British Airways is vulnerable as an UK operating airline to a poor exchange rate. Oil prices have been declining by 50 % since their peak retreating to 2007 levels. Decline in fuel price will obviously strengthening of the dollar changeability in oil prices and exchange rates will directly affect BA’s cost base. UK’s consumer spending had its sharpest decline for 13 years between July and September 2008. Hence there is an expectancy of more intense competition in the near future (UKESSAY, 2014).’
In parts of social, the UK has an aging population in the past decades, so the old people has more time to spend on their like activities such as international travel. In parts of technological, most young people would like to order or booking tickets, hotels, restaurants and so on. Therefor it is very convenient and easy to use it. ‘Additionally, other conveniences provided for ease of check in including telephone check-in that consists of many features allowing passengers to check flight schedules, check personal bookings, travel advice, information on British Airways destinations and even perform online flight bookings. In fact, they have even implemented an e-ticketing system which provides passengers with the flexibility of checking in without the need of a physical ticket.
Only passenger details including proof of identification are required to be produced during check-ins, as all booking information has already been stored in their computer systems. In fact, through this system, flights can be changed even up to 30 minutes before departure time (Stephen, 2008).’ In addition also, in British Airways portal is not only offer ordering ticket, but also provide hotel booking, travel insurance purchase, car rentals, holiday purchases and so on. In parts of environmental, British Airways is aware of both Noise pollution controls, and energy consumption controls. In parts of legal, the British Airways will offer a good employee relation in anytime.
Another major point is internal. The internal of British Airways is divided by two parts, called resources and core competences. The company runs 245 aircrafts covering over 550 destinations. In addition the Heathrow Terminal 5 is a huge boon to the company’s brand image. As a result, British Airways is renowned globally as a reputable brand. And then the BA’s competences are realizable. ‘The company has its own training of ground school, flight simulators, and cabin safety training which holds the favourable part in its core competences. The company holds the capability to fly and handle passengers safely on different routes (Open Skies). Their subsidiary’s aircraft never have more than 64 passengers per flight, with one flight attendant per twelve customers. They also hold the name as the first UK airline known as a training centre by the City & Guilds, educating all cabin crew with NVQ Level 2 (UKESSAY, 2014).’
Moreover, the success of British Airways could mostly be economy of scale, cost control and brand reputation. The economy of scale is a high-threshold work with large initial funds. The economy of scale can lower the overhead cost and improve the individual unit performance and efficiency. For example, British Airways should get a based on achieving and maintaining the wide customer recognition. Then the cost control is crucial to the financial performance and firm survival. For instance, ‘by constant expanding and purchasing, British Airways can enlarge its fleet scale and make effective of each by resource optimization. It also helps British Airways to lower average unit cost (UKESSAY, 2014).’ Finally the brand reputation is crucial to this industry as it indicates the quality, accessibility and safety. It helps British Airways to reach a better financial status and lower down the threat of new player in the long-run.
To sum up, it is clear that the British Airways is very successful company. It is not only British Airways has good strengths, weaknesses, opportunities and threats, but also British Airways has external environment and internal environment. In addition, it also has government’s ideas and supports.
MahaSagar Publications (2013) Dissertation on British Airways Plc- Airlines
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