Professional Documents
Culture Documents
Pest-G analysis
The main PEST factors that have influenced alliances are:Political - Political factors include government regulations and legal issues
and define both formal and informal rules under which BA must operate. The
benefits, is that it makes unreachable routes, possible.
Economic - Economic factors affect the purchasing power of potential
customers and BA's cost of capital. Economically, this lead to a greater
control on capacity, which results in reducing competition and increasing
yields. By code sharing airlines are able to not only split costs but to offer
services and enter markets, they might ill afford to do on their own.
Social. - Social factors which include the demographic and cultural aspects
of the external macro environment of BA. These factors are the ones that
affect customer needs and the size of potential markets.
Technological - Technology in this industry is fast moving and can be a little
expensive. It gives the opportunity for joint investment ventures, such as
shared check-in systems.
The competition
Who are the main competitors?
British Airways faces competition from many like bmi, Air Berlin, Air France,
KLM Royal Dutch Airlines, Ryanair, easyJet. However, it's major competitor is
Virgin Atlantic.
Virgin Atlantic is Britain's second biggest long haul airline and was
established by Sir Richard Branson. It works hard to retain customer loyalty
and to remain long-term profitable and successful.
Market Share
Target Markets
VA operates long haul services to thirty destinations worldwide that range
from Shanghai to Las Vegas.
The company
Sales and profit trend
British Airways finally managed to end its period of losses and bounced back
in the first six months of the year. It has posted their pre-tax profits of 158m
for the six months to the end of September. In the summer quarter, BA got
an operating profit of 370m with an operating margin of 14.7pc.
Nearly one-third of its sales have been made through ba.com, which
accounts for 20 percent of its revenue.
By 31 March 2010, the company's selling costs were 290 million, coming
down from 369 million by 21.4 percent over the previous year.
Market Share
Last year, Market shares of British Airways were 47%. Recently, it serves up
to 43.6 percent flights from Heathrow to the United
States.http://kona.kontera.com/javascript/lib/imgs/grey_loader.gif
It's market capitalization is 1505.48 million and it has 45% of the total
market shares.
SWOT Analysis
Strengths
Size
Strong brand recognition
High level customer experience
Customer loyalty
Environment friendly
Weakness
Lower fares due to high competition
Poor communication within the company
Poor employee relations history
Opportunities
Increasing demand for transatlantic flights
Emergence of new markets
Decreasing costs as industry expectations decline
Competitors failing on delivering reliability
Threats
Fuel costs
Terror Attacks
Economical instability
Global economic crisis
Targeting
British Airways mainly aims at the banking and finance passengers which
account for 40 per cent of its revenues.
Differentiation
What makes BA different from others?
A 28% improvement in carbon efficiency across their fleet since 1990 has
provides environment friendly services.
They are the only airline to proudly win the Pfm Award for their work on the
reuse and recycling of office and lounge furniture.
They aim at becoming world's most responsible airline to ensure they lead
the industry in managing and minimising environmental impact.
Growth Strategy
British Airways and Spanish carrier Iberia announced a merger plan on 30
July 2008. In 2009, it was confirmed by BA. This will create the world's thirdlargest airline in terms of annual revenue and the second largest airline
group in Europe. The agreement is expected to be completed by the end of
2010. British Airways and Iberia have already drawn up a list of 12 potential
airline targets as takeover candidates, once their merger is finalized.
Price
Place
Promotion
People
BA offers highly attractive rewards packages to its crew. They closely monitor
wages across the different industries and take reviews to make sure their
salaries remain sufficiently competitive to attract and retain the people
needed.
The employees are provided with the special benefits like bonus, employee
share scheme, profit scheme, etc.
Processes
Once the booking is done, the rest of the process is made quite easy. There is
an option of checking-in online, where the customer does not have to wait in
queue for any checking and can directly proceed to passport control. BA also
provides special lounge service to their business and first class passengers.
They are making efforts to provide maximum customer satisfaction to make
travel a pleasure.
Physical Evidence
This includes the environment in which the service is delivered and where
British Airways interacts with their customers. They provide excellent quality
and service to the customers. The aircraft's seating configuration which is
meant to be spacious and comfortable, and it's in-flight food provide count
for the physical evidence. The domestic lounges are enhanced with good
interiors and basic amenities.
BCG matrix
British Airways has had a great market share and low growth rate over the
past few years. They did not make any major investments like increasing
their fleet size or expanding their destinations which made them a cash cow.
But recently, BA placed more focus on their growth strategies by placing
orders for new aircrafts, expanding geographical market. Another major
decision was the merger with Iberia which will be finalized by the end of
2010. This will make the company's revenue one of the highest in the
Aviation Industry. By doing so, BA will not only generate large amounts of
cash because of their strong relative market share, but also consume large
amounts of cash because of their high growth rate; therefore the cash in
each direction approximately nets out. It shows that the company is slowly in
the process of becoming a star.
BA presented its interim report for the six months ended September
30, 2010.
Period highlights:
Profit before tax of 158 million (2009: loss of 292 million)
Costs down by1.5 per cent
Operating profit of 298 million (2009: loss of 111 million)
Quarter 2 operating profit of 370 million (2009: loss of 17 million)
Total revenue for the period was up to 8.4 per cent.
Operating costs were down by 1.5 per cent. Fuel costs were up by 2.4
per cent, and other non fuel costs reduced by 3.1 per cent, 4.0 per
cent.
Profit before tax for the period was 158 million.
The effective tax rate for the period was 27 per cent.
Cash position remains strong, at 1,857 million as at the end of
September, up 143 million from the end of March 2010.
The Directors declare that no dividend be paid for the period ended
September 30, 2010.
Sourcehttp://phx.corporate-ir.net/External.File?
item=UGFyZW50SUQ9Njc0MTh8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1
Conclusion
After going through a bad phase for two years, British Airways appears to
have finally drawn a line in the sand and turned those losses around. Now
not only does BA offer excellent punctuality and customer service, they also
have an excellent route network, with plenty of choice and a flexible
schedule allowing passengers to connect from many parts of the UK. The real
challenge now is how it aims to plug the money-spilling into revenue
generation