Internal Environment of British Airways
Table of Contents
The company selected for analyzing the business environment is British Airways. British Airways (BA) is the largest airline as per fleet size in the United Kingdom. The essay discusses various aspects of the company such as strengths, weaknesses, corporate culture, leadership, and corporate governances with the application of theoretical models.
Five strengths of British Airways
Brand recognition has a significant commercial value for a company to flourish. Strong brand recognition is one of the core strengths of BA in the airline industry. The advertisements along with a high level of trust and consumer recognition are the core aspects of British airways.
90 years experience in the airline industry
British Airways is one of the oldest and largest international scheduled airlines in the United Kingdom. It is one of the leading premium global airlines in the world. BA was established in 1972 by the UK government.
Support of U.K. government
British Airways maintains an innovative culture for satisfying its customer’s needs and demands. The airline was nationalized in 1972 is combined with the British Airways board. The government also supports many partnerships and alliances with other airlines for development (Grundy and Moxon, 2013).
BA is developing its technologies for the convenience of the customers. It has developed an online system and shifted the company totally to an online system, i.e. from paper ticketing system to e-ticketing system. Superior technology used by British Airways helped passengers is experiencing excellent service from the company.
High-level engineering for aircraft fleet maintenance
BA has a strong fleet capacity of 292 fleets. It has its own engineering department which maintains different fleets and 70 airports across the world. The company serves up to 183 destinations while providing service on short-haul, mid-haul, and long-haul flights along with the latest improved fleets.
Five weaknesses of British Airways
The unionized workforce is dominated by British Airways. Inside the company, collective bargaining takes place regularly which is the cause of the breakdown of the bargaining process. Finally, it affects business performance and corrupts internal operations. Continuous efforts while managing costs of employment are responsible for the creation of risk in this sphere.
Low penetration in global market
Recent statistics of revenue of British Airways forecasted that the company is focusing too much on the market of United Kingdom. There are many markets that BA has still not tapped. under-penetrated markets namely China, India, etc. have high potential markets due to changing lifestyles and increasing spending of people.
High dependence on UK market
More than 50% of the revenue of BA is generated from the UK market. They are not taking the risk of penetrating new markets. However, diverse market penetration is far better than monopoly market capturing.
Lack of management within the company
The company is facing issues in the management area due to a lack of management. Change management is required for every company to sustain itself in the competitive business world. Apart from that, there is also a lack of skilled labor and their management within the company.
There are many competitors of British Airways which are providing tough competition to the airline. Ryanair, Aer Lingus, Thomas Cook, Blue Islands, etc. airlines have their spread across the continent of Europe and outside Europe. These are also popular among many customers of the United Kingdom serving diverse facilities (Srivastava, 2014).
Organizational Performance of British Airways
Leadership development is the core activity of British Airways for developing the company over the last twenty years. An airline can be leading and global by enhancing potential and present leaders within the company. To maintain this leadership culture in the company Willie Walsh, Chief Executive of the company had introduced a leadership development program based on the behavioral pattern of the employees. A High-Performance Leadership system (HPL) is an integrated framework that is initially focused leadership of senior leaders and the identification of talented leaders within the organization. It is a system that links objective setting, business strategy, and reward and performance development. HPL system also integrates the right tools in order to support and develop leadership at an individual level. Individual leadership is encouraged by leaders against three capabilities and operational excellence. The three capabilities are communicating a common vision among the leaders; agreeing on different accountabilities; inspiring and motivating people in developing leadership.
The trait theory of leadership is followed in British Airways by many leaders of the company over twenty years. According to the trait theory of leadership, people are either born with some traits for becoming a perfect leader or can develop certain traits while excelling in leadership roles within an organization. The qualities or traits of a good leader include creativity, a sense of responsibility, energy, self-confidence, tactfulness, diplomacy, persistence, decisive, ambition, dependability, intelligence, etc. The theory considers analyzing physical, mental, social characteristics while gaining an understanding of the desired characteristic or combination of different traits among the leaders (Storey, 2016). Willie Walsh and other leaders of BA over many years have all the traits of a good leader and they apply their traits in formulating and developing leaders among the organization. Many initiatives are developed based on the trait theory of leadership for the development of new talented leaders within British Airways. They are leadership matters; leadership development portfolio and behaviors for success. These three schemes are various forms of leadership programs that understand and develop personal leadership development. However, situational leadership is followed by the leaders in order to maintain flexibility depending on the nature and intensity of the situation for benefit of the company.
Culture is a thing that needs to change for the sustainable development of a company. Under the leadership of Sir Colin Marshal and Lord King in the 1980s, the company had undergone certain changes in corporate culture which is very important and most successful in the corporate world. British Airways was performing disastrously in every sphere at the end of the 1970s and at the beginning of the 1980s. In this condition, a change in the corporate culture had transformed the face of the company from loss-making to the most profitable airline in the country (He and Balmer, 2013). The cultural change during the 1980s had proved that British Airways had the capability to beat the tough competition among other competitors in the market. Two main initiatives of cultural change are implemented for improving the loss incurred by BA. They are putting people first and managing people first. Almost 40,000 employees had attended the Putting People First (PPF) which was aimed to restructure the attitudes of employees.
Organizational culture has many models or theories which are practiced by organizations for the development of a company. Among them, Daniel Denison’s model of organizational culture can be applied by British Airways. The dimensions of the model are mission, adaptability, involvement, and consistency. The advantages of this model are it allows cultures that are described both internally and externally focused as well as stable and flexible. It is also used in order to detect various cultural problems in organizations. Application of this model to PPF leads to militaristic culture and challenging hierarchical and encouraging staffs for becoming more positive. However, the Managing people first (MPF) is targeted for changing the behaviors of the managerial employees while considering some factors such as: promoting achievement, helpfulness and clarity, trust and care, team working, and integrating personal excellence. Apart from these two programs, there are many programs adopted by British Airways these days for improving the corporate culture such as to be the best, winning for customers, etc.
Corporate Governance of British Airways is committed to maintaining high standards in the sphere of stakeholders and shareholders of the company. From the very beginning, BA is trying to focus on its internal and external shareholders of the company. There are set of codes and conducts while maintaining a high standard of corporate governance. Over the last twenty years, BA focused on different entrepreneurial leadership among the stakeholders and shareholders within a stipulated framework. The framework of entrepreneurial leadership considers certain factors which are improved in recent years. They are effective to control, the strategic aims of the company, and the values of BA (Coller, Helms Mills, and Mills, 2016). However, corporate governance remains a key aspect of the business of British Airways from the establishment of the company. The company, as time passes by, continues in reviewing the internal control of the framework. It is improving in order to ensure the maintenance of effective and strong internal control on the business environment. The framework is reviewed continuously by the leadership team of the company. However, till now corporate governance of British Airways had put emphasis on the stewardship model or the external shareholders of the company till date. But now BA has to put focus on the stakeholder’s theory or the insider model. The insider model gives priority to stakeholders’ control. Stakeholders are often associated with the Board of Directors or in any other senior authority of the organization (Lu, Wang, Hung and Lu, 2012). The stakeholder theory refers to maintaining control over the different stakeholders of British Airways. The theory focuses on the interests and managerial decision-making factors of all categories of Stakeholders having intrinsic value.
- Coller, K.E., Helms Mills, J., and Mills, A.J. 2016. The British Airways Heritage Collection: an ethnographic ‘history’. Business History, 58(4), pp.547-570.
- Grundy, M., and Moxon, R. 2013. The effectiveness of airline crisis management on brand protection: A case study of British Airways. Journal of Air Transport Management, 28, pp.55-61.
- He, H.W., and Balmer, J.M. 2013. A grounded theory of the corporate identity and corporate strategy dynamic: A corporate marketing perspective. European Journal of Marketing, 47(3/4), pp.401-430.
- Lu, W.M., Wang, W.K., Hung, S.W., and Lu, E.T. 2012. The effects of corporate governance on airline performance: Production and marketing efficiency perspectives. Transportation Research Part E: Logistics and Transportation Review, 48(2), pp.529-544.
- Srivastava, V.N. 2014. Excellence through Innovations in Public Enterprises. Productivity, 55(2), p.149.
- Storey, J. ed., 2016. Leadership in Organizations: Current Issues and Key Trends. London: Routledge.