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Strategic business management can be identified as a continuous analysis, planning and assessment of all sorts of essentials which are firmly needed for a company to reach its objectives. An innovation which is growing in a rapid pace along with the technologies which are in a developing form needs to be good enough for reaching the expectation levels of the customers. A company should not be to driven in rush before making any kind of decisions. Each and every decision should be taken by using the proper procedure and process. It can be helpful for a company to analyse its situation before implementing the different strategies. This not only helps to highlight the strategies to be used, it also helps for deploying the industry. In setting up a business, it is essential for a company to write a business strategy of their own. A business cannot and should not be set up without one. It would also be very difficult to set up objectives and goals for the company. In developing a business strategy, an analysis must be done on the suitability of the business environment in order to achieve the ideal outcome. The ideal theory of analysis suitable would be for example PESTLE and SWOT.

There is a Porter’s model of Five Forces used by companies including the airline industries and these are Rivalry among existing competitors; The power of customers; The power of suppliers; Threat of market entry and Threat of substitutes.

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2.0 Porter’s Five Forces within the Airline Industry

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2.0 Porter’s Five Forces within the Airline Industry

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Threat of substitutes

The airlines which are big for using a pretty high level of profit which are suggesting that there should have some obstacles for gaining entrance for the substitutes and for getting nothing running into a competition. In the past few years, the new companies have faced a large amount of loss in the factor of profit.  For that reason, the competition has been reasonable in the past few years.

2.1 Rivalry among existing players

The last thing are remains that the rivalry which among the players who already exist. The rivalry is very intense in term of the industry of airlines. Stagnant, is the word which will be suitable for using for this industry. It hovers in a cycle of business. There are a good number of competitors who stay in run and seem to be capacitated in an over manner. The costs which are fixed are very much high in this industry. It is hard for any company to leave this industry as there is a high amount of agreements and investments spent in for staying to run business.  The products such as services to the customer are very much high in price and cannot be left. The competition sometimes get to be in a less form for the need of identity by different small companies. An example of this would the company named Jetblue is renowned for its operation and for its low prices in the southwest region. A company which has its own part of the market along with a good market share can be equally distributed because of the costs which swings and none of the companies are capable of holding a large part of the market (Parnell, 2010).

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2.2 Bargaining Power of the Buyers

There are two distinct kinds of group of buyers in the airline industry. First there is a group of buyers who like to fly alone. They tend to buy tickets for their personal reasons or maybe business purposes. This group has certain amount of diversity among them. In the developed countries, most of the flyers are used to purchase a ticket of plan. They can also buy ticket from the second type of group who can be identified as the travel agencies or different online related portals.

2.3 Bargaining Power of Suppliers

Another factor which is considered is related to the bargaining power of the suppliers. In this case, the main suppliers can be identified as the manufactures. Boeing and  Airbus only two of the manufactures running in this modern world. In this modern world, the inputs are tackled in a very standard note. Some manufactures are now aiming for being more and more eco-friendly.

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2.4 Threats of new entrance

There are some particular costs which are fixed and very high in terms of setting up an airline company. There should be planes which have to be bought along with training staff and many more. Because of this reason, the new companies have a high rate of costs for establishing their company and to compete with the old ones. Despites all these reasons, still some new companies who have entered this industry such as Easy Jet, Rynair and many more. It may therefore be cheaper to purchase tickets from the new company.  Any new company entering the airline industry will naturally offer cheaper prices in order to build up a list regular clienteles. But there strong loyalty lies in some companies like British Airways who spend a lot of money in the promotion and advertising. So, now new companies therefore a higher amount for marketing their services.  This can be counted as a sunk cost because the money spent in this case cannot be recovered. This implies that the new companies can lose a lot of money as they take a huge risk. That will ultimately make the market less contestable. There is another obstacle known as vertical integration stages. It is much harder for the new companies for achieving different slots of landing in the airports. The new companies can get the slots of shorter runways at airports (O’Regan & Ghobdian, 2002).

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Airlines in the UK is a very big industry indeed. The air transport in the UK is used as a carriage, sending mail, and for other purposes. From the last twenty years, this industry has improved and continues to improve as much as it can. This industry has improved in a level that almost 465 million of people are now being covered from having 236 million in the earlier stages. In London, there is an airport named “London Heathrow” which is counted as one of the top ten busiest and important airports of the whole world. A healthy number of passengers now travel by air. Manchester Airport is also one of the busiest and largest from the remaining airports. It is used by more than 20 million of people living near there.

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Cinquini, L. & Tenucci, A. (2010) "Strategic management accounting and business strategy: a loose coupling?", Journal of Accounting & Organizational Change, Vol. 6 Issue: 2

Fuller, M. (2010) "Building‐blocks of strategic management: A multi‐dimensional, pan‐theoretical taxonomy of business strategies", Management Decision, Vol. 48 Issue: 1

Johnson,G., Whitting, R., Scholes, K., Angwin, D. and Regner, P. (n.d.) Exploring strategy

O’Regan, N. & Ghobadian, A. (2002) "Formal strategic planning: The key to effective business process management?", Business Process Management Journal, Vol. 8 Issue: 5

Parnell, A. J. (2010) "Strategic clarity, business strategy and performance", Journal of Strategy and Management, Vol. 3 Issue: 4

Pehrsson, A. (2007) "The “Strategic States Model”: strategies for business growth", Business Strategy Series, Vol. 8 Issue: 1

Piercy, F. N. & Lane, N. (2006) "The hidden risks in strategic account management strategy", Journal of Business Strategy, Vol. 27 Issue: 1

Saxena, C. B. K. & Bharadwaj, S. S. (2009) "Managing business processes through outsourcing: a strategic partnering perspective", Business Process Management Journal, Vol. 15 Issue: 5

Snyman, R. & Kruger, J. C. (2004) "The interdependency between strategic management and strategic knowledge management", Journal of Knowledge Management, Vol. 8 Issue: 1, pp.5-19

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3.0 Competitive Advantage Factor of British Airways

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3.0 Competitive Advantage Factor of British Airways

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British Airways doing business with much dignity and efficiency can be identified as one of the biggest companies in the airline industry. They are so far doing great in every possible part of their business. They certainly have some issues but efforts are being made to overcome these problems.

Porter’s five forces have been done in respect of many things but at all times keeping in mind the airline industry. It can be said that British Airways approach to business demonstrate they continue to thrive which shows they are certainly running on the perfect track to achieve their ultimate goal.

Whatever British Airways have as their ultimate goal for customer services, it can be that other airline industries are using this as a goals to improve their services. British Airways has become a role model to other airline industry

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Apart from being a highly renowned company still there are some places where more concentration is needed. British Airways is a company who conduct  business and have been for many years by maintaining a good reputation and always putting customers first.  This way they build up a picture of regular business travellers as well as other travellers.  They encourage their clients for good and bad feedback but then use the negatives to set up as new goals. The certain areas they should concentrate on  are:

·         They have an issue regarding poor satisfaction level of their employer’s in some cases

·         There is a certain lack in the reliability which results in high amount of baggage lost

·         Their innovation process and changing criteria is pretty slow

·         There are some issues in terms of the revenue sources which are reliant

·         They should grab the opportunity as there is less geographically pressure in terms of less restriction in the Europe

·         In terms of the recession factor people are not just going to spend their money

·         The market is emerging in order to expand and the survival of the company.  There is scope of more growth in this emerging industry (Cinquin & Tenucci, 2010)

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LO2: 1.0 Related factors capabilities of British Airways

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LO2: 1.0 Related factors capabilities of British Airways

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I have chosen British Airways who conduct their business operation in UK. In term of the size of the fleet British Airways can be identified as the flag carrier of the whole UK. They are one of the largest airlines of the UK just behind Easy Jet in the of number carrying passengers. It has its base close to its main operating place at London Heathrow Airport. In the year of 2011, they have merged with Iberia. Then they have created IAG (International Airlines Group) which can be said to be a holding company getting registered in the capital of Spain. IAG has achieved the position of world’s third biggest group of airlines in terms of the boundary of Europe. There is a very popular company who use valuation metric which can be used for measuring the overall business operation. The valuation factor is called N/A ratios. This would be useful to know whether a company is under- valued or over-valued. (Snyman & Kruger, 2004)

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(Google.co.uk, 2018)

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2.0 Companies Resources and Capabilities

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2.0 Companies Resources and Capabilities

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2.1Threshold Resources

Tangible:

They have a huge fleet of 245 aircraft which have access over destinations of 550 places

They have other additional services such as number in employment given at any one time

Intangible:

They have a database of international customers which is kept regularly up to date

They have alliances and partnerships such as Iberia merging with British Airways – problems with previous merging of Iberia which becomes a baggage to British Airways

2.2 Competencies

They have training capabilities along with simulators of flights and health and safety

They have a good scale of suppliers who are ongoing

They have firm ability of flying and they have sufficient amount of routes for landing the passengers safely

British Airways have subsidiary aircraft which can carry 64 passengers where there will be one attendant for each 12 customers

They are first airline of UK as per the training center which enriched (Saxena & Bharadwaj, 2009)

Apart from all these British Airways has some other capabilities for which customers scrutinize. The premium services which are offered by them can be shown as:

They gather customer feedbacks at regular intervals and aim to improve by setting the negative into goals

They are very much active in the Customer Services Relations (CSR)

50% of the waste is reduced by them in terms of fulfilling CSR activities

They certainly have some resources which are both tangible and unique and these can be described as:

Terminal 5 is exclusively used by British Airways Iberia

They reputable brand image

They are globally recognised and well greeted brand

They have a good and strong strand in the airline industry