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Business Environment

Analysis of Business Environment

Introduction to Business Environment

Business environment contains all the external and internal factors that impact on the business for growing in nation or world. It also requires natural resources, living persons and places to exist for development of business. British Airways is one of the leading organisation in the UK. It provides air service for its consumers in the world. The present report defines the organisational functions of business in nation. It also introduces the nature of business environment of aviation industry in which corporation operates its business in the world. Further, it explains behaviour of British Airways in the market of UK. In an addition, it represents importance of international factors which is crucial for national business activities of organization.

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Task 1

1.1 Determine the aim of various kind of organisation.

There are many type of organisations in United Kingdom. Some of them is described below the paragraph.

Private Organisation

These types of firms try to give higher priority to cover its investment cost in the market. For example, Purpose of TESCO retail organisation emphasize on more earning profit from market as soon as possible (Commander and Svejnar, 2011). Then after, company think about the serving of customer in the market.

Partnership Corporation

This type of firm also comes under the private enterprise. For Example, the main aim of ASDA retail firm is to give progress legal business in the market to earn more profit from the consumers (Chavis, Klapper and Love 2011).

Non-Government Organisation (NGO)

It is also different type of organization. For example, Oxfam enterprise is enable people to work together and utilizes shared resources to get common goals and objectives (Sessoms, 2015). It provides its efforts to solve out the social problems in state or country.

Public Firm

Mainly this type of organisation contains maximum government stake in the market. For example, British Airways provides equal priority regarding retained earnings and serving of customers in the market. Mission, vision long and short term Objectives also help to organization to achieve goals. It is explained below the paragraph.

Mission of British Airways (BA)

Company is focused on better service of air travelling for its consumers in the world.

Vision of BA

Organisation is wanted to become leading firm in the world regarding airline services of its customers.

Short Term Objectives of BA

  • To become first priority for its premium consumers in the world with help of its better network.
  • To deliver a superior service for its customers at each airport in the world.

Long Term Objectives of BA

  • To increase its presence in many important global cities.
  • To create leading position in Britain (Porter and Rivkin, 2012).
  • To meet out needs of customers
  • To enhance its profit margins by new revenue schemes.

1.2 Determine the key stakeholders and how these challenges impact the various stakeholders of BA

There are many key stakeholders in the organisation. Customers, government, suppliers as well as employees are main stakeholders of British airways. Generally stakeholders of BA face various challenges in the Britain. It is represented below the paragraph.

Recession

This factor creates bad effect on all the stakeholders of British Airways. For example, consumers face more problems regarding airline services due to higher prices of tickets. Further, fall in economy creates adverse effect on suppliers by decreasing sales of its products because British Airway has no appropriate money to purchase more spare parts and fuel (Aterido, Hallward-Driemeier and Pagés, 2011). Company also uses retrenchment process which also creates job problems for its employees.

Modification of Rules and Regulations

These policies produce negative impact on stakeholders. For example, customer services are affected due to changes in current legal policies which creates negative image in mind of them in the respect of British Airways because changed rules increase the rates of air tickets. Further, it also affects revenue of suppliers due to changes of acts like higher income tax, trade and tariffs which reduces the profit shares in the airline market.

Political Instability

These factors create adverse effect on employees and consumers. For example, it influences employees of British Airways to change the strategic financial policies (Strumickas and Valanciene, 2015). In addition to this, it increases prices of air ticket due to changes in supply and demand which directly creates adverse effect on the purchasing behaviour of consumers.

Task 2

2.1 Explain economic systems that efforts to assign resources for organisation effectively

There are many type of economic systems for the allocation of resources in the country. It explained below the paragraph.

Command Economic System

In this system, Administration has list of all valuable resources in the country. Government of United of Kingdom has power to allocate its resources to firms. Authority assigns resources to all companies in equal manner for effective development of economy in the world. There is also advantage to the country (Gemma, 2014). Command economy is also able to develop a better supply of its resources. Generally government also rewards its persons for optimal efforts with affordable prices in the nation.

Market Economic System

In this scheme, public and private companies have authority for the allocation of resources. These companies assign resources itself as per need of particular firm in the country. Government has no right for allocation of any valuable resources or other segment (Reddick and Roy, 2013). So organisations take decision regarding economy run, supply and demand of materials. The main advantage of this capitalism is that corporations can develop better economy by using effective allocation of resources in the UK.

Mixed Economy System

In this economy, government and organisation both have authority for allocation of valuable resources in the country. It is mixture of command and market of economy. So government and firm conduct meeting for allocation of resources in nation. This system assigns the resources as per demand of company in the Britain (Gold, 2014). Then after, administration and organisation discuss on it. After perfect analysis, they allot resources to every corporation in the UK.

2.2 Explain challenges due to fiscal and monetary policies on business environment faced by firm

British airways can face many challenges regarding fiscal and monetary policies. It is represented below the paragraph.

Challenges of Fiscal Policies

Changes in fiscal policies created lot of trouble for the company because it increased various types of tax rates like income and VAT in this country. So income of firm reduced in the market. This thing obliged the BA to increases prises of its flights to sustain in the market (Burke, 2015). Further, falling income of company also increases the chances of unemployment in the country.

Challenges of Monetary Policies

These policies are focused on enhancing and decreasing the rate of inflation in United Kingdom. Enhanced inflation rate affects the aggregate demand and supply which create adverse effect on customers. This in turn decreases the growth of British Airways in the airline market due to reduced earnings of people (Kindsfaterienė and Lukaševičius, 2015). Further, it leads to increase the service cost of company due to increased rate of fuel in the market.

2.3 Describe the impact of regulatory, competition and legal policies changes on British Airways

There are many impacts due to changes in competition, regulatory and legal policies on British Airways. As per the Botha, Kourie and Snyman (2014), changes in competition policies influence organisation to keep price low in the market. So, customers can get better services at affordable prices in the aviation industry. They need to retain the best air service in the flights and airports. These competition policies also help firms to innovate better services in the airline market for the consumers (Botha, Kourie and Snyman, 2014) However, alteration in competition creates negative impact on British Airways as it leads to decrease the level of profit due to charging lower prices on air tickets. According to Aterido, Hallward-Driemeier and Pagés (2011), changes in legal policies affect firm in the market. Sometimes, legal policies and regulatory policies of UK insist the organisation to change engines of aeroplane due to certain reasons like noise and air pollution in the environment. It creates impact on the profit of British Airways. In addition, it enhances unnecessary repair and maintenance cost of firm for the purpose of maintaining the whole safety of customers (Aterido, Hallward-Driemeier and Pagés, 2011). On the other side, regulatory policies create bad impact on the supply and demand due to changes in current rules which increase the prices of air tickets.

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Task 3

3.1 How has the market structure of the airline industry Affected the pricing and demand for airline seats

Airline industry is highly affected through pricing and demand for airline seats .It is stated below the paragraph.

Perfect competition is followed by airline industry in nation. Any one organisation can enter in airline industry by following rules and regulation of aviation industry in UK. This structure serves homogeneous services in the market (Wetherly and Otter, 2014). In market of United Kingdom, there are many firms in airline industry. It compels Air organisations to keep lower prices due to many private corporations in the aviation market. Perfect competition is increasing cut-throat rivalry in air market. It also increases the demand of airline seats in the United Kingdom. Reduced rate of air tickets is increasing frequency of person in the air travelling (Halbert and Ingulli, 2011).

In the monopoly market structure, pricing of air tickets increases in the air line market which automatically reduces the demand of airline seats because company charges very high rates in the market due to single company in the market. So, premium segment of people travel in aeroplanes.

In the oligopoly, costing of air services is slightly low as comparison of monopoly market structure due to few air companies in the market of UK (Wild, Wild and Han, 2014). It also increases the few demand of customers in aviation industry regarding air travelling.

3.2 How the interplay of different players and market forces shape organisational responses

There are many different players and market forces which shape organisational responses in the nation. It is explained in below paragraph.

Supply and demand

They are important market forces which contribute an effective role for the organisation to develop better strategies for providing better responses to the consumers (Reddick and Roy, 2013). British Airways analyses supply and demand of airlines services as per the market condition. In season time, demand of air ticket increases that helps company to enhance its profit as in such time, business can charge high prices from customers. On the other hand, in off season, business needs to decrease the prices of its services in order to maintain the number of customers as well as revenue and profitability. This process helps the firm to manage its operations and gives better services to consumers in an appropriate manner.

Competition

There are many local and international competitors in the aviation market which affect the business of British Airways by attracting the customers of it towards their services. Due to this, British Airways reduces the prices of its air tickets in the market in order to beat its competitors (Hill and Hernández-Requejo, 2011). This technique helps firm to increases its business by maintaining supply and demand in the air industry.

Technological Forces

There are many technologies which create effect on the organization. For example, British airways has adopt many new and innovative technologies for improving its shipping and logistics work in the market (Holm, 2011). Further, company also uses navigation system for tracking to provide flexibility to its consumers.

Economic Forces

Economics forces affect the British Airways by increasing prices of raw material like fuel and its spare part which directly affect the cost of maintenance and repair. In addition to this, they also focuses on maintaining the supply and demand of air services in the airline industry. For example, organisation is trying to use solar technology to reduce fuel cost of its plane as a response. These process also save too much expense of firm.

Political and Government Forces

In the UK, these factors greatly affect the British airways by enhancing interest rate, tax rate and level of global trade which put impact on the supply and demand of air tickets in the nation (Solomon and et.al., 2014). For example, organisation regularly conducts meeting with government officials to overcome from these situations in the market. This way, corporation maintains its air services in the market.

Natural Resources

There are many natural resources which are widely used in the world. So, increasing cost and shortage of fuel affect flight schedule of many airline organisations. Further, it also creates effect on supply and demand of air services in the UK. For example, British airways uses fuel efficient engines which reduces oil consumption as possible (Elzinga, Gulledge and Lee, 2012). Management of firm also makes optimal flight schedule to cover the maximum passengers in the minimum flights for providing better services to them.

Human Resources

Generally employees of air industry have no knowledge of about the technical things which provide huge complexity to consumers and employees in air service. Further, these things also create problems to manage supply and demand in the nation. For example, British Airways recruits many new employees to provide effective training regarding technical expertise (Carroll and Buchholtz, 2014). So this process provides long term benefits to the organisation. It also play major role to give better service in air travelling in the market.

3.3 How the interplay of different players and market forces shape organisational responses

There are many different players and market forces which shape organisational responses in the nation. It is explained in below paragraph.

Supply and demand

They are important market forces which contribute an effective role for the organisation to develop better strategies for providing better responses to the consumers (Reddick and Roy, 2013). British Airways analyses supply and demand of airlines services as per the market condition. In season time, demand of air ticket increases that helps company to enhance its profit as in such time, business can charge high prices from customers. On the other hand, in off season, business needs to decrease the prices of its services in order to maintain the number of customers as well as revenue and profitability. This process helps the firm to manage its operations and gives better services to consumers in an appropriate manner.

Competition

There are many local and international competitors in the aviation market which affect the business of British Airways by attracting the customers of it towards their services. Due to this, British Airways reduces the prices of its air tickets in the market in order to beat its competitors (Hill and Hernández-Requejo, 2011). This technique helps firm to increases its business by maintaining supply and demand in the air industry.

Technological Forces

There are many technologies which create effect on the organization. For example, British airways has adopt many new and innovative technologies for improving its shipping and logistics work in the market (Holm, 2011). Further, company also uses navigation system for tracking to provide flexibility to its consumers.

Economic Forces

Economic forces affect the British Airways by increasing prices of raw material like fuel and its spare part which directly affect the cost of maintenance and repair. In addition to this, they also focuses on maintaining the supply and demand of air services in the airline industry. For example, organisation is trying to use solar technology to reduce fuel cost of its plane as a response. These process also save too much expense of firm.

Political and Government Forces

In the UK, these factors greatly affect the British airways by enhancing interest rate, tax rate and level of global trade which put impact on the supply and demand of air tickets in the nation (Solomon and et.al., 2014). For example, organisation regularly conducts meeting with government officials to overcome from these situations in the market. This way, corporation maintains its air services in the market.

Natural Resources

There are many natural resources which are widely used in the world. So, increasing cost and shortage of fuel affect flight schedule of many airline organisations. Further, it also creates effect on supply and demand of air services in the UK. For example, British airways uses fuel efficient engines which reduces oil consumption as possible (Elzinga, Gulledge and Lee, 2012). Management of firm also makes optimal flight schedule to cover the maximum passengers in the minimum flights for providing better services to them.

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Human Resources

Generally employees of air industry have no knowledge of about the technical things which provide huge complexity to consumers and employees in air service. Further, these things also create problems to manage supply and demand in the nation. For example, British Airways recruits many new employees to provide effective training regarding technical expertise (Carroll and Buchholtz, 2014). So this process provides long term benefits to the organisation. It also play major role to give better service in air travelling in the market.

3.4 How British Airways has been impacted by the working practices and cultures of the countries

There are many reasons which create optimal effect on working practices of organisation. Some of them are represented below the paragraph.

Multi Faith Country

In the current world, UK has become multi faith country because there are living many people of different countries. This thing also increases the different type of religion in the United Kingdom. British airways designs new ways according to mixed culture of its country (Cavusgil and et.al., 2014). This thing does not harm any personal value of any employee in the Britain. It does not discriminate any person on the basis of country and religion. This process is leaving good impact for the country by increasing its performance of working in the aviation market.

Young People

In the United Kingdom, ratio of young people increasing in the country. So British Airways is recruiting more young people in its organisation. This process also provides greater working efficiency regarding better working practices in the corporation (Nickels, McHugh and McHugh, 2011). It also gives huge help to complete goals and objectives in the market.

Work Life Balance

Organisation also makes its policies, rules and regulations very effective way in the United Kingdom. This process also greatly helps the employees of British Airways to balance its personal and professional life. Management of enterprise regularly provides training and motivation sessions regarding their enhancement of core knowledge and work life balance. This approach also increases the efficiency of staff members as well as provides stability between personal and professional life (Bjorklund, 2011). This thing gives huge help in reduced turnover of employees in the British Airways.

Task 4

4.1 Explain the effect of global changes in trade regime caused by organisations such as WTO

There are so many effects of global changes in trade regime on British airways. These are stated in below paragraph.

International organisation like WTO and tourism bodies can help in increasing business of BA in another countries. For example, rules and regulations of international civil aviation can provide appropriate help in enhancing business activities of organization in many nations like Brazil, china and Nepal which can lead to increase its effective growth in global airline market (Commander and Svejnar, 2011). This way, management of British airways can enhance its existence in many countries. These efforts can assist organization to create effective brand image in the mind of consumers which can aid to improve its global market share. Further, firm can get help to earn better revenues and profit by selling air tickets to the passengers.

Further, rules made by professional bodies of tourism provide huge reliability to manage its international business operations like selling of air tickets and buying of raw material in the market. Further, information provided by WTO and tourism bodies contribute an effective role for BA to select proper market entry strategies and take many other decisions in several countries (Porter and Rivkin, 2012). These international authorities help firm to perform business activities as per the rules and regulations made by government along with maintaining level of competition and effective culture at workplace in order to establish in an effective as well as legal manner.

4.2 What are the other global factors, considering policies/regulations of government players which may affect British Airways

There are many global factors which are impacting the business practices of organisation in the country. Some of them are described in below paragraph.

Environmental Factors

In the present era, Organization has to follow the all the acts and policies regarding the safety of environment which provide huge help to keep climate safe from hazardous chemical, carbon smoke, global warming and noise pollution (Chavis, Klapper and Love, 2011). Environmental factors influence the enterprise to use fuel efficient engines and advanced technology to save the natural resources globally. It enhances the expenses of company as it needs to perform business activities as per the environment friendly rules and regulations. addition to this, it reduces the profit share of company which creates negative impact on British Airways in the market.

Number of Passengers

Global factors suggest British Airways to follow the minimum number of passenger’s criteria to take off its flight from the airport (Aterido, Hallward-Driemeier and Pagés, 2011). This process impacts on international operation and customers services of firm. In addition to this, it provides effective help to manage its operations which creates positive impact on British Airways in the airline market.

Policies of Employees

International factors oblige British Airways to follow the proper rules and regulations for its staff members like operating working hours and insurance of its members during the flight. These policies are created good impact on organisation that are regarding the safety of its employees as well as passengers. Further, such policies contribute an effective role for BA to increase its efficiency and performance in the airline industry.

4.3 Can European Union policies on travel, competition or aviation impact British Airways, what measures can be taken by BA in order to remain competitive?

Generally, European Union policies can create positive and negative impact on British Airways regarding travel and competition. Organization can take many measures to remain competitive in the market.

Safe Guarded Policies of Competition

According to Elzinga, Gulledge and Lee (2012), Rivalry among the air companies is not higher. Therefore, it is not so difficult for British Airways to gain optimal profit in the market of United Kingdom. Due to this impact, organisation needs to adopt safe guarded policies of competition with including ethical consideration. In this manner, management of company provides better quality services to its consumers in the market (Elzinga, Gulledge and Lee, 2012). As per the Strumickas and Valanciene (2015), Corporation develops new market strategy like better discounts and special offers on festivals to attract number of consumers towards the flights which creates positive effect on them. In addition to this, BA earns good profit and growth in the aviation market of Britain by adopting ethical practices which help to remain competitive in the market (Strumickas and Valanciene, 2015).

Airport Policies

According to Cavusgil and et.al (2014), airport facilities of UK is well managed like efficient runways for safety landing of planes which creates optimistic effect for the firm. Infrastructure of airport is organized in an appropriate manner. So, these things help British Airways to run its business optimally in the market (Cavusgil and et.al., 2014). According to Faria and Wellington (2014), organisation provides high quality service to its consumers at the airport by recruiting more employees to run its operation smoothly. This process contributes an effective role for BA to avoid long queue which automatically leads to reduce waiting time of consumers at the airport. These steps aid British Airways to sustain competitive in the aviation market of United Kingdom (Faria and Wellington, 2014). On the other side, these activities increase the expenditure and investment of organisation which reduces its profit in the nation.

Conclusion

From the report, it is found that long and short term objectives provide perfect direction to British Airways in the market. Recession, political instability, modification of rules and regulations affect various type of stakeholder in the Britain. Changes in regulation and competition policies create optimistic effect for profit of organisation. Various market structure of air industry leaves different type of effects on airline seats. It can be concluded that new ideas of corporation is providing positive impact on working practices and culture. Changes of global trades increase the security and reliability of customers. It also enhances the expenses of organisation for the execution of these rules and regulations in the world.

References

  • Aterido, R., Hallward-Driemeier, M. and Pagés, C., 2011. Big constraints to small firms’ growth? Business environment and employment growth across firms. Economic Development and Cultural Change.
  • Aydogan, E. K., 2011. Performance measurement model for Turkish aviation firms using the rough-AHP and TOPSIS methods under fuzzy environment. Expert Systems with Applications.
  • Bjorklund, M., 2011. Influence from the business environment on environmental purchasing—Drivers and hinders of purchasing green transportation services. Journal of Purchasing and Supply Management.
  • Burke, A., 2015. Risk, innovation and the business of architecture. Architecture Australia.
  • Chavis, L. W., Klapper, L. F. and Love, I., 2011. The impact of the business environment on young firm financing. The world bank economic review.
 
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