Business Environment of British Airways - Assignment Example

? Business environment Report on business environment of British Airways Introduction There are different types of business organisations such as sole proprietorships, partnerships, private limited companies, limited liability companies (LLC), co-operatives, franchises, public sector organisations, non-profit making organisations and corporations. The size and nature of business organisation depends on the method of formation, the number of owners, revenues of the organisation, market value, number of countries in which the organisation operates and liability of owners towards the obligations of the business organisation (Punzel, 2011). For instance, one individual forms sole proprietorships and the owner incurs all the liabilities of the business. Two or more persons can form partnership while limited liability partnerships have a limited liability. Joint ventures are formed between two or more organisations for the purpose of undertaking a specific project or attaining benefits from sharing resources, management expertise and minimising competition between rivalry firms (Barnes, Norris and Jones, 2001). British Airways is the largest airline in the UK by fleet size and is based at London’s Heathrow Airport. The airline is part of Oneworld airline alliance that includes other members such as American airlines, Qantas and Cathay (Punzel, 2011). The airline has established codeshare agreements and partnerships with other airlines such as WestJet, LAN airlines, Bangkok Airways, Japan Airlines, Finnair, Iberia, Meridiana Fly, Royal Jordanian, Air Berlin and JetBlue (Punzel, 2011). British Airways main strategic objective is to become the leading global premium travel airline through attaining the status of airline of choice for the long haul premium clients. At the same time, the airline is committed to delivering high quality services to its customers and growing its market presence in the key international cities (Punzel, 2011). The airline is currently enhancing its leadership position in London in order to beat the competition from EasyJet and improve its revenue margins through creating additional revenue streams (Barnes, Norris and Jones, 2001). The airline meets the needs of various stakeholders such as employees, customers, business partners, suppliers and the community (Punzel, 2011). According to the company, the main objective towards employees is to develop customer-focused culture than offers rewards for individual employee performance and recognise the individual efforts of each employee through offering numerous opportunities of training and development (Barnes, Norris and Jones, 2001). British Airways aims at appealing to global customers in all markets and ensuring that individual and business travellers choose the airline as the preferred mode of air travel. The company offers premium and differentiated services that are worth for additional little payment. Accordingly, the airline is focused on its aviation segment through offering cargo movement services that complement its core business activities (Barnes, Norris and Jones, 2001). Impact of UK economic system on British Airways The current UK economic system is favourable for the business operations of British Airways. Despite the economic downturn of 2008-2009 that saw a decline in passenger volumes, the airline has implemented innovative services such as new longhaul from London to New York in order to attract more customers (Gabriele, Kuenzel and Springbett, 2012). Accordingly, the airline launched the award winning Club World product for the Boeing 747 and 777s in its brand development and positioning efforts in order to enhance its market position as the premium airline in the world. The airline adjusted its fleet in order to cut down on employment costs and save costs on shorthaul catering and attain additional revenues from baggage allowance (Punzel, 2011). The airline works closely with key suppliers and contractors in the One Destination programme in order to improve its efforts in energy conservation and recycling of waste products (Punzel, 2011). According to the airline strategic goals, the main aim is to minimise the carbon emissions as 25 percent in 2025. Accordingly, the airline is committed to its Joint business agreements with Iberia, American Airlines and members of the Oneworld Alliance in order to enhance its competitive position in the global aviation industry (Punzel, 2011). The monetary and fiscal policies of UK government and impact on British Airways The fiscal policies of the UK economy aim at enhancing economic growth, maintaining stable interest rates and attaining high employment levels through government taxation and government spending on infrastructural projects such as railways, airports and roads (Jeffs, 2008). The UK government has implemented both direct and indirect income taxes that aim at raising government revenues and indirect taxes that aim at controlling the viability of economic system and enhancing commerce in the country (Punzel, 2011). For instance, the value added tax is taxed at the rate of 17.5 percent thus increasing the costs of air travel to passengers. During the recent economic and financial crisis, the UK government implemented several monetary policy mechanisms that aim at enhancing the liquidity of the financial system and increasing consumer incomes in the country (Barnes, Norris and Jones, 2001). At the same time, the UK government has a welfare policy that aims at cushioning the poor citizens against poverty through provision of benefits such as unemployment benefits and education benefits (Geyer, Lehmann and Mackintosh, 2005). The government has provided special assistance through enterprise zones that aim at attracting investments in inner cities. The Bank of England is targeting at maintaining the inflation rate at below 2 percent through repurchase of assets worth more than 375 billion pounds (Langdana, 2009). The UK economy has a high population of more than 60 million people and receives more than 100 million visitors annually. At the same time, the UK enjoys a stable sterling pound currency that minimises currency exchange costs especially hedging costs in fuel purchase (Punzel, 2011). Competition policy and other regulatory mechanisms The UK government has implemented competition policies that ensure fair play to all firms in a particular industry. The competition policies aim at safeguarding the welfare of consumers, promoting market transparency and efficiency (Punzel, 2011). In this case, the Office of Fair Trading and Competition Commission monitor the business activities of all the business organisations in order to foster openness in business agreements and increase consumer variety in the market (Punzel, 2011). The fair trading practices aim at controlling the formation of cartels that fix prices and ending anti-trust business deals that affect competitiveness of a particular industry. Accordingly, the UK government regulatory bodies are committed at market liberalisation and compliance with EU regulations that promote competition across the member countries. In this case, the airline is not capable of receiving state aid or territorial exclusivity to the airline in order to minimise the degree of rivalry from foreign airlines (Barnes, Norris and Jones, 2001). However, British Airways is free to engage in business alliances and partnerships that will foster the development of the aviation industry and improve efficiency of its operations and that of the business partners. The regulatory mechanisms in the UK require the airlines to acquire license from the Civil Aviation Authority and comply with numerous environmental laws on air pollution and airspace security (Barnes, Norris and Jones, 2001). The airline must comply with the requirements of EU emissions trading scheme and pay the Air Passenger duty as required by the taxation laws of UK. Accordingly, the custom rules in UK require exemption of airport embarkation tax for the passengers arriving at the airports. In addition, the currency rules on import and export have no restrictions on passengers travelling to another EU member country, but passengers arriving directly from non-EU countries must declare any currency exceeding EUR 10,000. Conclusion British Airways is committed to becoming the leading airline in air travel services and offering differentiated services to all its customers. The airline is currently increasing its market presence in international cities and growing its leadership position in London. The airline has attained high brand recognition through its strategic mission of implementing customer-focused and innovative service standards. The airline has formed partnership agreements with several other airlines in order reduce operating costs and offer integrated services to global customers. The airline is currently increasing its revenue streams in the cargo transport business segment. Accordingly, the UK economic environment will enhance the operations of the airline due to increase in the population, economic recovery and stable interest rates that are prevailing in the country. However, the airline must comply with airspace safety regulatory mechanisms such as airplane manufacture specifications, and standards and environmental laws that aim at reducing air pollution and combating noise emissions from the airplanes. Reference List: Barnes, S., Norris, L and Jones, J. (2001). The competitive business environment. New York: Routledge. Gabriele, Giudice, Kuenzel, Robert and Springbett, Tom. (2012). The UK economy: the crisis in perspective. New York: Routledge. Geyer, Robert., Lehmann, Kai and Mackintosh, Andrew. (2005). Integrating UK and European social policy: the complexity of Europeanisastion. London: Sharpe. Jeffs, Chris. (2008). Strategic management. London: Sage. Langdana, Farrokh. (2009). Macroeconomic policy: demystifying monetary and fiscal policy. London: Springer. Punzel, T. (2011). Risks and decision making: using the examples of British Airways. London: Taylor & Francis. Sadler, Philip and Craig, James. (2003). Strategic management. 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