EXECUTIVE SUMMARY

The main aim of this paper is to provide strategies for British Airways, in line with
the published strategy of the said company. The researcher is guided by Strategic
Management Process found below to come up with a strategy and strategic planning
and management insights.

ENVIRONMENTAL SCANNING

EXTERNAL ANALYSIS
(OPPORTUNITIES & THREATS)
VISION GOALS &
AND LONG-TERM STRATEGIC STRATEGY STRATEGY
MISSIO OBJECTIVES CHOICE IMPLEMENTATION EVALUATION
N
STAGE 1: STRATEGY FORMULATION
INTERNAL ANALYSIS
(STRENGTHS & WEAKNESSES)

STAGE 1: STRATEGY FORMULATION STAGE 2: STAGE 3:

STRATEGY STRATEGY
IMPLEMENTATION EVALUATION
British Airways has flights to more than three
hundred destinations along with codeshare and franchise
partners- carrying approximately thirty three million passengers, with a revenue of £8.7
billion 2007/08 (British Airways, 2008). It has over 42,000 employees on March 2008
(Datamonitor 2008). Although BA has freight and mail operations, this paper focuses on
scheduled passenger market. The following strategies and its discussion are based on
British Airways 2008/09 report:
(a) Upgrade customer experience via the introduction of text and mobile services for
business class customers, (b) Modernize aircraft fleet and offer new services, (c)
Manage cost base, and (d) Increase corporate responsibility through environmental
performance and partnerships.

Furthermore, different tools were used for environmental scanning, such as

Porter’s Five Forces Model, PESTEL Analysis, Value Chain Analysis, SWOT Analysis,
IFE, EFE, IE, and QSP Matrices etc. The researcher suggested to use differentiation
strategy for business level strategy, and for functional level strategy, British Airways
should improve relationship between its employees and customers, improve
environmental stance, introduce complimentary services and technological
advancement. It is also important to improve marketing strategy for British Airways.

ii
TABLE OF CONTENTS
I. INTRODUCTION ....................................................................................................... 1
i. OBJECTIVES OF THE STUDY ............................................................................. 1
ii. METHODOLOGY .................................................................................................. 1
iii. SCOPE AND LIMITATION .................................................................................... 1
II. COMPANY (2008-2009) ........................................................................................... 2
i. COMPANY OVERVIEW ........................................................................................ 2
ii. CURRENT STRATEGY ......................................................................................... 3
III. STRAMA PAPER AND FRAMEWORKS (STRATEGY PAPER) ........................... 5
i. EXTERNAL ANALYSIS ......................................................................................... 5
ii. CUSTOMER ANALYSIS...................................................................................... 10
iii. COMPETITOR ANALYSIS .................................................................................. 11
iv. INTERNAL ANALYSIS ........................................................................................ 14
v. SUMMARY .......................................................................................................... 19
vi. STRATEGY FORMULATION .............................................................................. 22
IV. MACRO-ENVIRONMENTAL ANALYSIS............................................................. 25
V. PORTER’S FIVE FORCES MODEL ....................................................................... 27
VI. INTERNAL ANALYSIS ........................................................................................ 28
VII. INPUT-MATCHING-DECISION TOOLS .............................................................. 29
VIII. STRATEGY COMPARISON ................................................................................ 36
IX. STRATEGIC PLANNING AND MANAGEMENT INSIGHTS ............................... 39
X. REFERENCES ........................................................................................................ 40

iii
LIST OF FIGURES:
Figure 1 PESTEL Analysis ............................................................................................... 6
Figure 2 Porter's Five Forces Model ................................................................................ 8
Figure 3 GE Matrix ........................................................................................................... 9
Figure 4 Strategic Group Mapping ................................................................................ 11
Figure 5 Competitive Spider Index ................................................................................ 13
Figure 6 Value Chain Analysis ...................................................................................... 15
Figure 7 Resource Based View ...................................................................................... 16
Figure 8 BA's Turnover, PBT, and PAT.......................................................................... 17
Figure 9 BA's Fuel and Operating Costs ........................................................................ 17
Figure 10 SWOT Analysis ............................................................................................. 19
Figure 11 Key Strategic Issues ..................................................................................... 20
Figure 12 Ansoff Matrix .................................................................................................. 21
Figure 13 TOWS Matrix ................................................................................................. 22
Figure 14 Preliminary Comparison of Strategies ........................................................... 23
Figure 15 Balance Score Card ....................................................................................... 24
Figure 16 Stakeholder Map ............................................................................................ 26
Figure 17 Porter's Five Forces Model ............................................................................ 27
Figure 18 IFE Matrix ....................................................................................................... 29
Figure 19 EFE Matrix ..................................................................................................... 30
Figure 20 SWOT Analysis .............................................................................................. 31
Figure 21 IE Matrix ......................................................................................................... 32
Figure 22 Preliminary Comparison of Strategies ............................................................ 33
Figure 23 QSP Matrix ..................................................................................................... 34
Figure 24 Strategy Comparison ..................................................................................... 36
Figure 25 Reason for Strategy ....................................................................................... 38

iv
I. INTRODUCTION
i. OBJECTIVES OF THE STUDY
This study aims the following:

a. Assess a Published strategy paper for British Airways

b. Provide strategies for British Airways

c. Provide strategic planning and management insights

ii. METHODOLOGY
a. Data Collection

b. Assessment of the strategy paper

c. Provision of strategies and strategic planning and management

insights

iii. SCOPE AND LIMITATION

Scope

This study contains a published strategy by British Airways, published

strategy papers of British Airways. The researcher will then assess the
collected data to provide strategies and insights for British Airways.

Limitation

This study’s data are collected from different websites. Authors of the
papers were considered credible, since they are Candidates for MBA, and
one finished a degree of MBA already.

1
II. COMPANY (2008-2009)
i. COMPANY OVERVIEW
British Airways Plc (BA) is United Kingdom’s largest international
scheduled airline. Apart from BA’s scheduled services, it is also engaged in
the operation of international and domestic carriage of freight and mail, and
the ancillary services (Datamonitor, 2008). British Airways has flights to more
than three hundred destinations along with codeshare and franchise partners-
carrying approximately thirty three million passengers, with a revenue of £8.7
billion 2007/08 (British Airways, 2008). It has over 42,000 employees on
March 2008 (Datamonitor 2008)

Ever since the company was privatized in 1987, British Airways has
continued to be and grow along the increasing competition in the industry.
BA has alwso been labelled as one of the pioneering airlines in green
technology adaptation and environmental strategic decisions. It is known to
be the first airline to be a part of the scheme of European countries reducing
greenhouse gas emissions. BA also initiated the process wherein passengers
may print their own boarding passes. (British Airways 2008). The company
have been able to come up with include the company’s on-going
developments in the Heathrow airport which happens to be the United
Kingdom’s and one of the world’s busiest airports.

The global economic collapse of 2008 has also affected British Airways in
terms of revenue. British Airways annual reports have always stressed out of
how much the company would like to become the “world’s most responsible
airline” and the development of the guiding principles along with careful
strategic direction will definitely allow the goal to be achieved.

2
ii. CURRENT STRATEGY
Although BA has freight and mail operations, this paper focuses on scheduled
passenger market. The following strategies and its discussion are based on
British Airways 2008/09 report.

ü Upgrade customer experience via the introduction of text and mobile services
for business class customers.
ü Modernize aircraft fleet and offer new services.
ü Manage cost base.
ü Increase corporate responsibility through environmental performance and
partnerships.

An upgraded customer experience

London Heathrow’s Terminal 5, which opened on the year 2008 has
transformed BA’s operational performance and customer service. It made the
company exceed punctuality and baggage targets across the network,
achieving record customer satisfaction scores. (British Airways 2008/09)

Competitive cost base

With record fuel prices to contend with during the year we redoubled efforts to
control costs. Terminal 5 has allowed us to cut the cost of our Heathrow
operations by more than expected. By the end of March 2009, our overall
Heathrow manpower levels had reduced by 1,074 employees, 14 % lower
than the peak resource level during the first month of Terminal 5
operations. A significant management voluntary severance program also
reduced the number of managers by a third. Capacity was realigned to meet
weaker demand and, where possible, exploit our most fuel-efficient aircraft.
(British Airways 2008/09)

3
A plan for growth
Despite the downturn, the company have continued to grow where it makes
economic sense and meets the needs of our customers. BA launched new
routes from London to Hyderabad and St Kitts; we launched OpenSkies, our
subsidiary flying from continental Europe to North America in June 2008, and
subsequently purchased L’Avion in July 2008; and we have announced the
launch of the first London City to New York JFK service to start later this year.
Investing in efficient and flexible new aircraft makes sense, even in these
tough times. With the arrival of our new Boeing 787s delayed, we contracted
six Boeing 777-300ER aircraft (two acquired, four leased), with options for a
further four. (British Airways 2008/09)

Corporate responsibility
BA’s vision is to become the world’s most responsible airline, and the
company have brought all our corporate responsibility activities together
under the banner ‘One Destination’. We have set challenging goals for further
reductions in our carbon emissions, reducing and recycling waste and
minimizing air and noise pollution. We have continued to invest significantly in
our community relations program and are proud of our record of raising
money for charities, both as a business and through the incredible energy and
commitment of our people.

4
III. STRAMA PAPER AND FRAMEWORKS (STRATEGY PAPER)
i. EXTERNAL ANALYSIS
British Airways will need a proper understanding of the external
environment to achieve a sustainable competitive advantage over other
companies. At the same time, the external analysis on British Airway’s
environmental and competitive environment is also important in attaining a
proper representation of British Airway’s capabilities to meet current and
future business challenges.

The following tools were used for external analysis:

PESTEL Analysis
Porter’s Five Forces
GE Matrix

5
 Figure 1 PESTEL Analysis

Assessment:
Although this PESTEL Analysis has a list of different factors that may
affect British Airways, along with its implications, the researcher suggests that
there are still more factors to consider, or rather, should have been listed and
detailed down.

6
 For the Political, these could have been discussed farther under heavy
regulation: (a) Airport fee and charges that reduces net profit of British Airways,
VAT imposed with increase in air fares, this ways potential customers may look
for other cheaper options, and changes in UK’s policies in licensing may change.

For the Economic, the following may be added: pattern of inflation of rate
and drop in Gross Domestic Product (The Guardian 2016)

For the Social, the following may have been added: lifestyle and growing
trend in tourism, this may affect the company if a customer decides to use other
mode of transportation, media reviews has a high impact on the company since it
influence the buyer’s decision making.

For the Technological, the following may have been considered: Research
and Development has a high impact on industry. The company that has a high
R&D will have less wastage, less time spent and always will focus on the product
to be developed.

For the Environmental/Ethical, BA may considered using eco-friendly

products, not just in fuel, but also in what they distribute to customers (utensils,
tissue paper etc.)

For the Legal, Internal trade may have been considered, The main material
for an air company which are the airplanes are imported from other country and
any change in this international trade can cause more cost for the company. (de
Matos, 2008)

7
 Figure 2 Porter's Five Forces Model

Assessment:
The researcher suggests that not all factors on the different factors have
the same level of power. There are also some factors not listed down, that the
researcher ought to think should be included. The researcher’s take will further
be discussed in this study.

8
 Figure 3 GE Matrix

Size of Circle = size of market (British Airways based on 2006 data)

Width of Circle = CAGR Forecast Growth (2006 – 2011)
Source: Euromonitor (2008)

Assessment:
The researcher agrees with the analysis that Eastern Europe and Asia Pacific
would be the prime markets for profitability due to high growth, and that BA
should create a strategy that would defend their company from other competitors
in their core market, the Western Europe.

9
ii. CUSTOMER ANALYSIS

Over the past decade there has been increasing complexity in customer
needs, as the customer has become more educated and demanding.
Particularly, the following changes have occurred:

• A shift in demographics to older passengers (Keynote, 2008c).

• Increased global connectivity allowing the usage of internet and search
mediums (e.g. comparison and review websites).
• Increased requirement for convenience (e.g. new destinations, quick check-
in).
• Price has become more of a priority
• Segments have become more defined within their needs.

Evidence that BA is failing to respond to the changing customer landscape

includes:

• The amount of BA customers recommending their services reduced from 61%

in 2006/07 to 59% in 2007/08 (British Airways, 2008).
• BA have been criticized for slow innovation (Doganis, 2006, Pg 165).
• Poor reliability and baggage handling (AQR)
• Failed attempts to target the price conscious consumer through low cost
airline operation (Eirma, 2008).

Assessment:
The researcher agrees with the Customer Analysis of this study. Due
to the changes mentioned above, British Airways should create a strategy
focusing on its people.

10
 iii. COMPETITOR ANALYSIS
The following tools were used for Competitor Analysis:

Strategic Group Mapping

Competitive Spider Index

Figure 4 Strategic Group Mapping

The figure above illustrates that BA’s direct competitors are those who operate
similar services and lie within the same strategic group. The competition is likely to be
most intense within this group as they are seeking similar strategies.

Lufthansa and KLM-Air France are the 2 leading European Airlines Member
carriers in terms of passenger numbers, with 15.1% and 14.1% respectively of the total
number of passengers carried. BA comes in third with 9.3% of the total (Keynote,
2008c).

11
 BA face competition from a small number of serious contenders in the UK, with
the main contenders being Virgin Atlantic, and United Airlines in the Star Alliance soon
controlling BMI (Euromonitor, 2008). Although they do not lie within the same strategic
group as BA the advent of low-cost air travel has changed the face of the airline
industry. Airlines such as Ryanair and EasyJet have established themselves among the
leading carriers in Europe, whilst the more established long-haul carriers such as BA
have struggled to keep up with their counterparts’ growth rates.

Moreover the economic downturn and sharp fall in oil prices has caused a price
war between Emirates, BA and Virgin Atlantic on the London-Dubai route. Fares have
dropped by 30% across the airlines. Thus competition still remains fierce.

Based on the strategic group analysis it could be argued that there is a gap in the
market for a low cost airline operating a high breadth of service however it is likely the
reason no airlines have adopted this strategy is due to the fact that it would be destined
to fail. This assumption could be supported by BA’s failed attempt to enter this market in
recent years (Telegraph, 2002).

Assessment:

The statements above indicate that BA should focus on improving the

service for a price that is right. Treating every customer with value, from
purchasing ticket to getting them to their point of destination should be a must.
They should gain competitive advantage from the different airlines such as
Virgin Atlantic, Lufthansa and Airfrance KKM.

12
 Figure 5 Competitive Spider Index

(Skytrax is an independent website and therefore gives an objective view of BA’s quality
of service in comparison to its competitors and may highlight strategic issues that need
to be addressed.)
• The overall Airline Rating for BA was 4. Its major competitors all scored 4
apart from KLM, which scored 3.

• BA and Virgin Atlantic are virtually identically marked in all categories with the
rest less highly rated.

• BA is not a Quality Approved Airline, whilst Virgin Atlantic is.

• BA needs to improve upon its interaction with its passengers across all
classes in order to outperform its nearest competitor Virgin Atlantic.

• BA needs to improve its baggage delivery service. ‘Slow baggage recovery at

T5’ (SkyTrax, 2008).

• General customer reviews have shown a common theme: poor in-flight

entertainment which regularly breaks down.

13
 • BA needs to look at improving its online services by providing additional
services all with a more personal touch.

• Six competitors hold a five-star rating with the independent evaluator.

• For BA to become a 5 Star Airline emphasis needs to be placed on the quality

of its customer service delivery at all levels, which it has lacked in the past.
This is what will differentiate itself between its main competitors.

Assessment:

The researcher suggests to add more factors to rate. This include being
environmentally friendly, since BA aims to improve environmental performance.
Furthermore, the researcher agrees that customer service delivery should be
addressed by the British Airways, since competition is tough and it is the most
appropriate way to be different from other competitors.

iv. INTERNAL ANALYSIS

The following tools were used for Internal Analysis:

Value Chain Analysis

Resource Based View

Financial Analysis

14
 Figure 6 Value Chain Analysis

Assessment:
Value chain is useful management tool that breaks an organization's
activities down into strategically relevant pieces and identifies specific activities
in which a firm gains a competitive advantage. In the Value Chain Analysis of
British Airways, details should be clearly stated. Such as for the outbound
logistics, specific information about customer service must be indicated. The
researcher agrees on both the Primary and Secondary activities of the BA.

15
 Figure 7 Resource Based View

Assessment:
British Airways developed a number of key operational processes ahead of
our move into Terminal 5 which have helped the company to become more
efficient. Building on these we are now rolling out what we call the ‘Lean’
Continuous Improvement approach across our business. (British Airways
2008/09)
For the Core Competencies, British Airways offer an aircraft that would
make passenger feel more valuable. Since BA is in a service industry, its
employees should be able to outstand other competitors’ employees.
16
Figure 8 BA's Turnover, PBT, and PAT

Figure 9 BA's Fuel and Operating Costs

17
In 2007/08, BA made post-tax profits of £694 million, an increase of 128% over the prior
year. In 2006/07 profits were £304 million. The difference is mainly caused by the loss
from discontinued in operations in 2006/07 of £134 million. However, the doubling in
profits is also attributed to a decrease in operating costs and no credit arising on
changes to the pension scheme or provisions made for settlement of completion
investigations.

BA has performed well in managing and reducing costs. Operating costs have risen
steadily over the past 5 years and this is in-line with the increase in fuel prices and
increase in landing fees/en- route charges as the company expands. In 2007/08 BA had
operating costs of £7,878 million which is a 1% decrease over the prior year despite
increase in fuel costs to £2,055 million and increased landing fees, handling/catering
charges with Terminal 5. BA managed to reduce costs through a reduction in the
number of employees by approximately 3000 people. BA’ online booking/reservation
service helped reduce agency costs leading to a £77 million decrease in selling costs.
BA efficient control of all these costs has helped put them into a strong position in
relation to its competitors, especially with the current economic crisis.

BA gearing ratio was at 27% in 2007/08, which is a reduction from the prior year. This
reduction shows that less debt is being taken on by the firm. This could also be due to
the fact that they have paid some of it back. Also, with increased liquidity to 21% from
19%, BA is a strong position in the current economic crisis and is more likely to have
better relations with its suppliers and financial institutions going forward. BA’s earning
per share increased, reaching 59p per share. This was due to the increase in profit
before tax and the reduced corporation tax rate.

Assessment:

The researcher agree with the statement “BA is a strong position in the
current economic crisis and is more likely to have better relations with its
suppliers and financial institutions going forward”. BA have handled its
operating costs well despite the fact that landing fees increased, as mentioned
above.
18
 v. SUMMARY
SWOT Analysis

Key Strategic Issues

Figure 10 SWOT Analysis

Assessment:
Since SWOT Analysis in this paper shows the summary of the Strengths,
Weaknesses, Opportunities and Threats from the tools mentioned previously, the
researcher’s suggestions/assessment may also be seen on its corresponding
tools.

19
 Figure 11 Key Strategic Issues

Above contains the key findings and implications using the tools. The
researcher suggests the use of Ansoff Matrix. The product-market growth matrix
of Ansoff allows a business to grow by virtue of a new or existing product
succeeding in a new or existing market. The Ansoff matrix outputs a series of
suggested growth strategies that directs the business’ strategy through the
following drivers:

20
 Figure 12 Ansoff Matrix

For market penetration, British Airways can actually gain market share
through renovation and modernization of the operations. By focusing on a
segment-focus strategies, British Airways can actually derive from the fact that
profit margins from business class passengers are the highest for the company
and the fact the services that business class passengers require cannot be
replicated by budget carriers makes it even more possible. (Thesus)

The product development phase of British Airways will involve

technological advancement. There must be introduction of internet access on
flights along with improved integration services with the use of gadgets, such as
tablet PCs, smartphones and laptops would be a value increasing service
offering. BA’s complementary services such as concierge services, car rental,
hotel booking and even smaller services such as appointment scheduling and
mapping of routes for foreign tourists would be value added bonuses in the
product offering. (Thesus)

21
 Diversification and Market Development can be formed together for British
Airways. The company will need to diversify into substitute services such as
ferries or cruise with the same level of quality that is recognizable from the
British Airways brand name. (Thesus)

vi. STRATEGY FORMULATION

TOWS Matrix

Preliminary Comparison of Strategies

Figure 13 TOWS Matrix

22
Assessment:
The researcher agrees with TOWS Matrix. BA should consider segment
focus. In a study by Thesus, there is a higher profit margin for business class.
Meaning, BA should make sure that seats for business class should always be
full. Since BA operates on London Heathrow’s Terminal 5 alone, there is an
increase in landing costs, however BA managed to be in control of operating
costs.
Since British Airways has a high competition with other airlines, the
company should focus on improving customer service. This will help them gain
competitive advantage and retain customers.
Lastly, BA should improve environmental performance, not only because it
is in their strategy, but because it would attract customers knowing that they are
concerned with the environment.

Figure 14 Preliminary Comparison of Strategies

Assessment:
The researcher suggest that the strategic option of introduction of
complimentary services should be considered. The Virgin Atlantic, which is one
of the leading competitors of BA provides its customers different services such
as car rentals, booking hotels, booking of taxis, in-flight massages and beauty
23
therapies. (Dilushan, 2016). I strongly agree, that vertical integration should not
be used. In a study by Hayre, Horizontal Integration should be used, since it
allows the company to be more innovative. For an instance, they could
manufacture their own airplanes, instead of just dictating to the manufacturer
what they want.

Figure 15 Balance Score Card

Assessment:
The researcher agrees with the Balance Score Card provided in the paper.

24
 IV. MACRO-ENVIRONMENTAL ANALYSIS

Porter’s Five Forces was already discussed previously.

The paper lacks key success factors. The researcher suggests that BA should consider
the following key success factors according to a paper entitled “Overview of British
Airways And Issues They Face”:

ü Success Criteria
ü Potential Benefit
ü Approach
ü Consumer Loyalty
ü Repeat client demand
ü Loyalty programs and frequent flyer miles
ü Willingness to form inter company coalitions
ü Reduced competition and access to additional routes with less capital outlay
ü Form alliances and/ or partnerships and ONE
ü Strong brand image and awareness
ü Increase demand for repeat and new customers
ü Innovative advertising campaign while incorporating new deliverables in
response to evolving needs and value changes ie increased awareness of
environmental issues
ü Sensitivity to changing market needs
ü Maintain and develop passenger demand
ü Use customer surveys to assess customer requirements both in flight and on the
ground
ü High quality product
ü Safety and consistency of travel
ü Ensure proper maintenance of fleet and ensuring the acquisition of new
equipment that provides quality service and addresses environmental issues.
ü Develop human resources
ü High quality consistent services in flight and on the ground
ü Recruitment of qualified personnel, after initial training, continued developmental
training and competitive compensation packages.
ü Reduction in operating costs
ü Implementation of progressive IT application, in reservation, flight information
and coordination.
ü Management ability and experience
ü Ensure the most effective and efficient delivery of BA's corporate objectives
ü Recruit and maintain top level management. Compensate above industry
standards and effect executive training programs.

25
 Figure 16 Stakeholder Map

Assessment:
The researcher suggests that BA should see to it that the charity works they
have done make an impact on their strategies. People should know that they are
engaged in this matter. This will attract customers, who are also on the same
view.

26
V. PORTER’S FIVE FORCES MODEL

Figure 17 Porter's Five Forces Model

Assessment:
For the Competitive Rivalry, market growth and brand identity with high
level of power (strength). Multiple establishments are attracted to invest into
the airline market which increases the competition. Also, Virgin Atlantic,
American Airlines and Lufthansa are some of the competitors of British
Airways.
For the Power of Suppliers, supplier market has high level of power which
results more cost for the company.
For the Threat of Substitutes, if the company increase the price, the
customer can move to other company in other segment such as train, coach,
etc. (high)

27
VI. INTERNAL ANALYSIS
As discussed earlier, the internal analysis tools used for the paper were the
following:

Value Chain Analysis

Resource Based View

Financial Analysis

The researcher had the following assessments on the tools mentioned.

Value chain is useful management tool that breaks an organization's

activities down into strategically relevant pieces and identifies specific
activities in which a firm gains a competitive advantage. In the Value Chain
Analysis of British Airways, details should be clearly stated. Such as for the
outbound logistics, specific information about customer service must be
indicated. The researcher agrees on both the Primary and Secondary
activities of the BA. Furthermore, BA should consider horizontal integration.
As per Hayre, the use of Horizontal Integration would give BA power in being
innovative, in terms of manufacturing their own aircraft that they think would
be suitable to the market.

British Airways developed a number of key operational processes

ahead of our move into Terminal 5 which have helped the company to become
more efficient. Building on these we are now rolling out what we call the ‘Lean’
Continuous Improvement approach across our business. (British Airways
2008/09). For the Core Competencies, British Airways offer an aircraft that
would make passenger feel more valuable. Since BA is in a service industry,
its employees should be able to outstand other competitors’ employees.

The researcher agree with the statement “BA is a strong position in the
current economic crisis and is more likely to have better relations with its

28
 suppliers and financial institutions going forward”. BA have handled its
operating costs well despite the fact that landing fees increased as mentioned
in the Financial Analysis.

VII. INPUT-MATCHING-DECISION TOOLS

This paper lacks the tools for Input-Matching Decision

i. INPUT TOOLS

IFE MATRIX

WT. SCORE WTD. SCORE

STRENGTHS
Brand Image 10% 5 0.5
Partnerships and
20% 5
Alliances 1
Financial Size &
10% 3
Stability 0.3
Terminal 5 15% 5 0.75
WEAKNESSES
Poor employee
15%
relations history 2 0.3
Recent negative
attention on 15%
reliability and trust
2 0.3
Quick innovation
15%
and change 3 0.45
Total 100% 3.6
Figure 18 IFE Matrix

A weighted score of 3.6 denotes company’s internal situation is strong.

29
EFE MATRIX

WT. SCORE WTD. SCORE

OPPORTUNITIES
Skytrax- star system of
10%
quality 3 0.3
Competitors forced exit 10% 3 0.3
Competitors failing on
10%
delivering reliability
3 0.3
Emergence of new
10%
markets 3 0.3
THREATS 0
Open skies agreement 20% 4 0.8
Environmental
Awareness (Climate 20%
change bill) 5 1
Global Economic Crisis 10% 4 0.4
Lower cost competition 10% 3 0.3
Total 100% 3.7
Figure 19 EFE Matrix

A weighted score of 3.7 denotes that the company is responding well to the
external forces.

30
 ii. MATCHING TOOLS

SWOT ANALYSIS

Figure 20 SWOT Analysis

Since SWOT Analysis in this paper shows the summary of the Strengths,
Weaknesses, Opportunities and Threats from the tools mentioned previously, the
researcher’s suggestions/assessment may also be seen on its corresponding
tools.

31
IE MATRIX

Figure 21 IE Matrix

British Airways should consider grow and build strategy. Strategies may
focus on market penetration, market development, and product development.
For the operational perspective, the researcher would want to consider
horizontal integration.

32
 iii. DECISION TOOLS

This tool was used to compare the strategies and make a decision.

Figure 22 Preliminary Comparison of Strategies

However, the researcher thinks that this QSP Matrix is more appropriate.

33
 Diversify into
Improvement to Improved Technological Introduction of Broader other
Segment focus
people environmental Renovation of advancement complimentary service transport Supply chain
processes stance brand image. services. offering markets. migration.

AS TAS AS TAS AS TAS AS TAS AS TAS AS TAS AS TAS AS TAS AS TAS

STRENGTHS
Brand Image 5% 5
0.25 5 0.25 5 0.25 5 0.25 5 0.25 5 0.25 4 0.2 4 0.2 5 0.25
Partnerships and
10% 5
Alliances 0.5 5 0.5 5 0.5 5 0.5 5 0.5 5 0.5 4 0.4 5 0.5 5 0.5

Financial Size &

10% 5
Stability
0.5 5 0.5 5 0.5 3 0.3 5 0.5 5 0.5 4 0.4 4 0.4 4 0.4
Terminal 5 10% 5
0.5 5 0.5 5 0.5 5 0.5 5 0.5 5 0.5 4 0.4 2 0.2 5 0.5
WEAKNESSES

Poor employee
8%
relations history
5 0.4 4 0.32 5 0.4 3 0.24 3 0.24 4 0.32 3 0.24 3 0.24 4 0.32
Recent negative
attention on 5%
reliability and trust 5 0.25 4 0.2 4 0.2 3 0.15 2 0.1 4 0.2 3 0.15 3 0.15 4 0.2
Quick innovation
8%
and change 5 0.4 4 0.32 4 0.32 3 0.24 5 0.4 5 0.4 3 0.24 3 0.24 5 0.4
OPPORTUNITIES
Skytrax- star
2%
system of quality 5 0.1 5 0.1 4 0.08 3 0.06 3 0.06 4 0.08 4 0.08 4 0.08 5 0.1
Competitors
2%
forced exit 5 0.1 5 0.1 2 0.04 5 0.1 5 0.1 4 0.08 4 0.08 4 0.08 4 0.08
Competitors
failing on
5%
delivering
reliability 5 0.25 5 0.25 1 0.05 5 0.25 5 0.25 4 0.2 4 0.2 4 0.2 5 0.25
Emergence of
5%
new markets 5 0.25 5 0.25 1 0.05 5 0.25 5 0.25 4 0.2 4 0.2 4 0.2 4 0.2
THREATS
Open skies
10%
agreement 5 0.5 5 0.5 4 0.4 5 0.5 4 0.4 4 0.4 4 0.4 3 0.3 4 0.4
Environmental
Awareness
10%
(Climate change
bill) 5 0.5 5 0.5 5 0.5 5 0.5 5 0.5 4 0.4 4 0.4 3 0.3 5 0.5
Global Economic
5%
Crisis 5 0.25 5 0.25 5 0.25 5 0.25 5 0.25 4 0.2 4 0.2 3 0.15 5 0.25
Lower cost
5%
competition 3 0.15 3 0.15 5 0.25 5 0.25 5 0.25 4 0.2 4 0.2 3 0.15 5 0.25
Total 100% 4.9 4.69 4.29 4.34 4.55 4.43 3.79 3.39 4.6
Figure 23 QSP Matrix
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Based on the QSP Matrix, researcher strongly suggests the following strategies:

a. Improvement to people process (4.9)

b. Improved environmental stance (4.69)

c. Supply chain migration (4.6)

d. Technological Advancement (4.55)

e. Introduction of complimentary services (4.43)

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 VIII. STRATEGY COMPARISON

The table below shows the top 5 strategy suggested based on the Strategy Paper used
in this study and the strategy chosen by the researcher based on the QSP Matrix. The
researcher list the strategies based on the ratings found on the strategy paper and the
researcher’s ratings respectively.

STRATEGY SUGGESTED STRATEGY CHOSEN

(BASED ON THE APPENDIX 1) (RESEARCHER)
Technological Advancement Improvement to People Processes

Improvement to People Processes Improved environmental stance

Improved Environmental Stance Supply chain migration

Broader Service Offering Technological Advancement

Segment Focus Introduction of complimentary services

Figure 24 Strategy Comparison

The researcher prioritized improvement to people process, while the strategy

paper suggested technological advancement. The second strategy for the researcher is
to have an improved environmental stance, and improvement to people process for the
other. The third strategy option for the researcher is for supply chain migration, while
improved service offering for the other. The last two strategies, technological
advancement and introduction of complimentary services were chosen by the
researcher, while broad service offering and segment focus are chosen by the other.

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 The researcher suggests all five strategies for British Airways. The table below
will show the reason as for why the researcher chose the strategies.

STRATEGY CHOSEN REASON

(RESEARCHER)
Improvement to People Processes This is to further improve relationship
between customer and employees. This
will reduce negative tensions between the
two. BA should train its employees, from
ground personnel to air crew. The
company should create an image on its
employees that is both consistent and
attractive.
Improved environmental stance This is in line with BA’s strategy on
corporate responsibility. This is for further
reductions in our carbon emissions,
reducing and recycling waste and
minimizing air and noise pollution. We
have continued to invest significantly. This
would attract customers, especially those
who support eco-friendly, may it be
products or services. (British Airways
2008/09)
Supply chain migration A study by Hayre strongly suggests British
Airways to implement horizontal
integration on its operation. Instead of
informing manufacturers on what to build,
they should instead create their own
airplanes. This may be another source of
income for British Airways, as they can
manufacture aircraft parts or as a whole to
other airlines.
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 Technological Advancement In this period, internet access is
prohibited. If BA could provide internet
access to passengers, this would provide
more value to their services. The company
should consider giving access to
passengers’ flights even without WiFi.
Introduction of complimentary services BA should consider providing
complimentary services such as booking
of taxis and booking of hotels, not only
that it would add value to their services,
but one of its leading competitor, Virgin
Atlantic is already implementing it.
Figure 25 Reason for Strategy

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IX. STRATEGIC PLANNING AND MANAGEMENT INSIGHTS
BUSINESS STRATEGIES
British Airways is in a matured industry, and competition is tough
for the company. In order to maintain, or better, improve its current position in
the air transport industry. The researcher suggests a differentiation strategy.
This involves the need for a company to differentiate its products and services
in such a way as to create a uniquely desirable products/services that achieve
target market of its own, or even make customers ignore competitors’
products and services for being uniquely different and non-imitable.
Furthermore, the company may focus on providing the best quality to
customers.

FUNCTIONAL STRATEGIES
The researcher suggests that for operations to improve, British Airways
should improve relationship between its employees and customers, improve
environmental stance, introduce complimentary services and technological
advancement. It is also important to improve marketing strategy for British
Airways.

LESSONS LEARNED:
Creating a strategy for British Airways was difficult, because of the
limitation of the primary sources. However, the researcher appreciated more
the course, IE166 Strategic Planning and Management. Formulating
strategies for a company to gain sustainable competitive advantage require a
lot of knowledge, skills and time.

AREA OF FURTHER STUDY:

Future researchers may use different tools for crafting and evaluating a
strategy. The researchers suggest the use of SPACE Matrix and BCG Matrix
for British Airways.

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X. REFERENCES

• British Airways: Strategic Report 2009 (Rep.). (n.d.). Retrieved August 30, 2017,
from https://www.scribd.com/doc/23329171/British-Airways-Strategic-Plan

• Hayre, A. (n.d.). Business Strategy of British Airways. A Case Study(Publication).

Retrieved September 01, 2017, from
https://play.google.com/books/reader?id=SHUtBgAAQBAJ&printsec=frontcover&
pg=GBS.PA9.w.7.0.0

• Thesus, A. (n.d.). British Airways Strategic Management. Retrieved September

01, 2017, from
https://www.academia.edu/5285221/British_Airways_Strategic_Management

• Dumke, D. (n.d.). Agile Supply Chains. Retrieved September 07, 2017, from
http://scrmblog.com/review/agile-supply-chains

• Essays, UK. (November 2013). Overview Of British Airways And Issues They
Face Management Essay. Retrieved from
https://www.ukessays.com/essays/management/overview-of-british-airways-and-
issues-they-face-management-essay.php?cref=1

• Virgin Atlantic Airways. (n.d.). Retrieved September 06, 2017, from

https://www.scribd.com/presentation/53730988/Virgin-Atlantic-Airways

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