The whole port is made in the context of business environment of British Airways. In this report, the purpose of different types of organization will be critically analyzed and simultaneously it also been discussed what activities are done by the management to fulfils the objective of different stakeholders. In the report, the impact of fiscal policy, monetary policy, and competition policy on the British Airways business activities is also analyzed. Moreover, the report also examined how market structure determines pricing and output decisions of business. TASK- 1 1. 1 The purposes of different types of organization-
Every organization comes in the market with some objective or purpose which we call business enterprise mission or ultimate goals that it wanted to achieve from the concerned market. The purpose of organization depends on its type whether it is public sector (Government firm) or private sector. A public sector firm usually establish to give employment opportunities in the society and to protect the industry areas which are highly sensitive in respect of nation’s security (Capon, 2009). On the other hand private company’s purpose of establishment is to earn profit by adopting sustainable strategy to grow in the industry.
The basic purpose of any firm is to make profit by serving its customers in the best manner so that the customer retention can be maintained. British Airways is one of the Auk’s success stories of prevarication. In sass’s, British Airways become privatized due to increase in the accumulated losses. British Airways rejuvenate its strategy and made its mission to become “The world’s favorite airline” and company makes accomplish its mission in sass’s by becoming the World’s most profitable airline (About British Airways, 2014).
Now British Airways s more concerned about the continuous exponential growth as more airlines firms have come in the market. In the view of this scenario the company has made its mission to become the world’s leading global premium airline (Paul, 2006). The firm will accomplish this ultimate objective by offering the best qualitative and enjoyable flying experience to the customers of all over the world. So this was the British Airways mission. The vision of the organization refers to the desired end state of the business enterprise.
The British Airways vision statement states that the firm wants o become the world’s most responsible airline (Kenney and Newly, 2003). The company NAS set goals to reduce cordon emission, recycling AT waste Ana minimization of air an noise pollution. 1. 2 Key Stakeholders of the British Airways- Stakeholders of the organization are those who can influence the business activities or can be influence by the business enterprise activities. They have significant role in the functioning of the business enterprise (Allen and Rayon, 2004).
The Stakeholders of British Airways can be categorized into internal and external stakeholders. Internal Stakeholder Owner- He is the actual business owner of the business. He wants to have sufficient ownership control over the business and want to earn incremental profits from the business (Immense and et al. , 2008). Manager- Manager is the one who make important decision related to the growth of the business and makes organizational policies and strategies to fulfill the common objective of the business enterprise.
Employee- Employee of the firm wants to take part in the decision making process of the organization and wants to get good remuneration for their work (Kenney and Newly, 2003). If the firm fails to fulfill employees need then employees can create barrier on operational efficiency of the company. Customers- Customer are those stakeholders which desires to have the best quality of product and services from the British airways at the best optimal price. External Stakeholders- Shareholder- Shareholders are ones who invested their money in the share capital of the firm.
Shareholders wants to earn maximum return on their capital invested. They want to see exponential growth of the business. Government- Government are concerned with the collection of taxes from the business enterprise (Immense and t al. , 2008). Government collects different types of taxes from the company like corporate tax on profit of the firm, Airport charges for the landing of aircraft in the country and etc. Government also gives emphasis on the safety and security of the people and for this they perform inspection on the aircraft (Ward and Landowners, 2008).
Creditors- They can take part in the management decision if the firm has borrowed large amount of firm from the bank or venture capital. They wants to earn interest on the amount they gave on credit. 1. 3 The way British Airways fulfill its susceptibilities of different stakeholders- Table The way British Airways accomplishes the objectives of different stakeholder Stakeholders Stakeholders Objective Ways through which organization meets stakeholders objectives Company Employees Appropriate Remuneration, Good working condition, Incentives, Equality, and good corporate governance.
By framing good organizational policy, providing remuneration according to industry standards, facilitating good infrastructure for work, fair and transparent treatment with employees (Sullivan, 2003). Managers Achievement of recognized position in the organization, participation in decision aging, authority and responsibility and management control (Immense and et al. , 2008). Good practice related to promotion of employees, best practice for performance appraisal of employees. Suppliers Timely payment of the input supplied like Fuel, Food and Beverages. Through efficient working capital management.
Customers Flying with enjoyable experience by getting the best service from the airlines service provoker. I-calculating ten Test service Day provoking good other amenities. Owner Continuous profit booking of the firm. Ana Diverges Ana By doing good marketing campaign and availing the best services to the customers of he firm which will bring more sales revenue for the firm (Fernando, 2011). Shareholders Good return on the capital invested. Through high profit generation. Competitors Competitors want to gain higher market share of the market (Immense and et al. 2008). British Airways will establish competitive advantage in the industry which will maintain competitive environment in the industry. Government Regular and timely payment of taxes and safety of people. By Practicing good ethical and moral standards. 2. 1 Effect of economic systems in allocation of resources effectively- Across the globe, mainly 4 types of economic system are followed namely- Traditional economic system, Market economic system, Command economic system, and mixed economic system. All four economic systems have their own advantages and disadvantages.
Traditional economic system refers to that economic system in which new generations followed historic success of social customs and norms Innings, 2010). They rely on the practices of their parents and grandparent. The Market economic system is also called capitalist economic system. This economic system is based on consumers and their buying behavior. Here, the buyer decides hat type of product they require and how much they are ready to pay for that required product. In this economic system the role of government is almost negligible as this economic system is dominant by private businesses.
The command economic system is one in which the government hold the power on the ownership and management of the business activities (Change and et . Al. , 2007). This economic system is less flexible and it is very slow to adapt changes related to consumer buying behavior. Here, private sector business is restricted. A mixed economic system is the combination of market economic system and command economic yester. Here, both government and private business plays crucial role in the development of the country’s economic system.
British Airways is one of the successful examples of prevarication. Primarily the control and management of British Airways was in the hands of UK government but due to the accumulation of large losses the firm become privatized and proves to be profitable (Paul and Barbara, 2009). The Mixed economic system of the I-J helps the firm to survive and achieve incremental growth in the world aviation industry. Now the company is free from government restriction and management control which alps it to make changes according to the need and requirement of the customers (Canonical, 2005). . 2 Impact of fiscal and monetary policies on British Airways and its activities- Monetary Policy is that policy which is made and governs by the central bank of the country. This policy is made to control the money supply in the economy. The money supply is controlled by increasing or decreasing in the interest rate. This w arc ten Drowning cost AT cap tall. Increase In ten Interest rate or kneel In ten monetary policy will have effect in increase in fuel prices of the airlines and will also increase the cost of debt capital if any (Mohamed and Lashing, 2003).
Due to this impact British Airways will have to increase its price and this rise in price will reduce the demand of British Airways service as price has inverse relationship with demand. On the other hand fiscal policy is related with the government planned and non- planned expenditure which will influence the economic conditions of the country. According to this planned and non-planned expenditure government plans its revenue source to meet this expenditure and this revenue comes in the form of taxes (Chatty and et. Al, 2012).
At the time of recession government lowers taxes and at the time of inflation government increases the taxes to control excess money supply. Higher taxes will not motivate people to use luxury services as they will have to pay higher tax (Conklin, 2011). Moreover, it will also gobble up the profit of the British Airways. 2. 3 Impact of competition policy and other regulatory mechanisms on the activities of British Airways- Competition policy is made to encourage healthy competition the market so that consumer can get the best quality product at the best competitive price.
This policy is dad to safeguard the interest of society and consumer so that companies cannot make monopoly condition in the market and cannot exploit the consumer through price discrimination (Allen and Rayon, 2004). In the view of competition policy, British Airways have to follow fair and transparent pricing policy and have to follow the set guidelines to go for strategic alliance with firms of other countries where the company wants to establish its presence. The airline industry is subject to high degree of global, European and I-J Government regulation encompassing of commercial activity and operational activity.
British Airways is regulated by Secretary of State for Transport and Civil Aviation Authority (CA). The CA monitors various aspects of airline industry like company’s financial condition, management and operation and etc (Ghana and Hung, 2012). British Airways is also subjected to follow rules and provisions related to EX. regulations which are made under the provisions of European Treaty. The airline companies also have to follow International Regulations of Airline (CIAO) which is related to Airlines’ rights to flyover, or make stops in, foreign countries for technical reason.
TASK- 2 . 1 Determination of pricing and output decisions of businesses by market structures- It has been seen that airline industry in UK as a market structure is oligopoly. In case of oligopoly, there are numerous amount of sellers but very few sellers. Airline industry is major concerned with traveling services. So here, it can be differentiated based on quality of service offered by such airlines. In this particular market, companies have little control over the price and it is the reason why non-price competition prevails in the market (Barman and et. Al. , 2009).
The biggest advantage f British airways is that it is very little scope of entrance of new competitor in the market as it requires huge investment. However, here majority of losses are high with respect to abnormal when demand falls significantly. Even in this market, there is an effect of interdependence relationship when one firms adopts strategic ideas it has direct effect on the demand of other firm. The main objective of British airways is to prove null quality service to Its customers Day provoking teem Walt good effective services (Balladic and Celsius, 2006).
In such particular market, Price of airline highly depends upon market force such as demand and supply. 3. 2 Ways in which British Airways respond to the market forces- British airways has adopted various strategies in order to deal with market forces. These given below are some of the strategy formulated by company in order to back down market forces: Expansion in fleet size- The airlines have expanded its fleet size that allows it to offer more seats or supply to the customers. By increasing the fleet size in different countries British airways able to cater more customers in finest manner (Parkas, 2010).
This helps the firm to increase its profit. Upgraded Customer Experience- Company has received good response towards its Galleries lounges at Terminal 5 and Terminal 3 in I-J. Now British airways is planning to come up with same kind of amenities in other airports such as Milan, Johannesburg, and Vancouver (About British Airways, 2014). Premium Services for the customers- Organization now a days has focused on the premium services to their high-end customers. With an added advantage of new club world product in the aircraft Boeing 747 and Boeing 777.
Cost efficient Aircrafts- British airways has always tried to reduce the cost of fuel institution, in order to decrease their overall operation cost. In order to cope with such situation, they are trying to purchase those aircrafts that are highly fuel-efficient (Sheikh, 2010). Launched of new routes- There have been consistency in the slowdown of market demand, rather British airways identified new routes like London to Hydrated and SST Skits that proves to be profit yielding for the firm (About British Airways, 2014). 3. Analyzing impact of business and cultural environments on British Airways- For an airline business, they have to deal with various cultural environment resent in various different countries where organization is functioning. British Airways is in the market from last 90 years and is one of the multinational airline company of I-J. Organization is carrying out its operations in many countries and have to deal in different culture, as it has significant influence on the British Airways. British airways have to follow the rules and regulations of different countries related to aviation (Kanata, 2011).
It makes huge complexities for understanding aviation rules and regulations of each country. Even political factor have greater effect on the rising structure of airlines provider, due to difference in the tax policy with respect to custom and excise duty. Further Economic slowdown affects the growth of the airline firms. Even cultural environment has significant effect on British airways, as organization have employed employees in the business who are from different ethnic backgrounds. It may with respect to caste, language, religion, nationality, value etc. Organization have been recruiting staff from diversified background.
It helps in providing greater satisfaction to customer, as these employees can easily understand ND deal with passengers of their country or religion or race (Paul, 2006). Hence, it can be stated that both business environment and cultural environment have significant impact on British Airways. 4. 1 Significance of international trade to UK business organizations- International trade of any nation could be defined as transfer of goods and service outside the geographical boundaries of once own country. It also includes flow of capital, movement AT people Tort Loveland, Ana now AT Tolerance Ana technology Trot one country to other.
If any company is dealing in international trade then it helps hem to increase their revenue. It may be due to increase in the cargo, travel of people from one country to another for business purpose, and less tariff barrier on import and export through air routes (Capon, 2009). This concept has helped I-J in many economic scopes such as increase in the strategic alliance, organization of I-J expanding their operation in developing economies, increasing production activities by establishing factories in highly economic efficient companies and outsourcing of work (Kenney and Newly, 2003).
International trade has even helped in the area of ours and hospitality industry of the I-J, in the form of increased benefits. 4. 2 Impact of global factors on I-J British Airways- The global factors that can have impact on the British Airways can be assessed with the help of following factors- Exports- Goods and services exported by company have a significant impact on the British Airways. However, if countries will not be having resources that can be used for the purpose of export, then it will not add value to the airline firms (Ward and Landowners, 2008).
Trade Associations- It refers to free flow of goods and services among the member countries without any extraction. Even payment could be done on mutually decided currency. I-J is the member country of ELI. Trade association helps in opening the gate with respect to international trade. However, even sometimes it restricts the trade of the member country with other countries. So it can be seen as an obstacles (Fernando, 2011). Strategic alliance with foreign firms- This is done by organization in order to develop their functioning in other countries. This may not be successful always due to lack of coordination between the firms.
Competitive advantage overseas- Organization trying o expand their operation globally, needs to have a strong competitive edge towards the global competitors (Ward and Landowners, 2008). Political factors- If other countries will not be having stable political situation, then it will be difficult for British airways to continue their operations. Economic Stability- if there will be sluggish economic growth or downturn then in that case economy doesn’t encourage strategic alliance. 4. 3 Impact of policies of the European Union on British Airways- It has been seen that European transport policy has significant impact on the British Airways.
There are various provisions relating to European transport policy such as: Single European sky (SEES)- It is European Commission initiative in order to design and manage regulation of airspace. It will be helpful for coordination throughout the European Union (Written evidence from British Airways Pl (E 03), 2011). Consumer protection legislation- This provision came in light when the recent mass grounding of aircraft across Europe caused the airspace closure due to volcanic ash eruption that makes emphasis to compensate those customers who are adversely affected by such disruption.
SLOTS- This is with respect to allocation of slots across the global network of airports and airlines. It creates business assurance for operators that will help in the investment in new routes, equipment and employees (Written evidence from British Airways Pl (E 03), 2011). EX. emission trading scheme (TEST) – This scheme is established to sort climate change by reducing industrial greenhouse gas emissions cost-effectively. British Airways always go in line with environmentally friendly way to manage its impact on the environment.
The main aim of present report is to critically analyze different types of organization ND simultaneously it have been discussed that what activities does the management do to fulfill the objective of different stakeholders. In the report, the impact of fiscal policy, monetary policy, and competition policy on the British Airways business activities is also analyzed. Moreover, the report also examined how market structure determines pricing and output decisions of business. The study concludes that British Airways is having better market capitalization in those countries where they have frequent operations.