The Competitive Strategy Of British Airways Economics Essay

Any business has issues from different elements like globalisation, information and technology, socio and social factors, political factors and so forth. To meet these challenges a strategy is very critical for any firm. A technique is a specific vision of the actual organisation will be based on a ecological competitive edge. Actually, strategy is a street map for future directions and scope. It really is a long range plan for five years plus more. It develops mission, target and goals for an company. To develop a powerful strategy any company must set an account with different facets. Environmental evaluation, present analysis, durability, weakness, opportunities and so on will be the factor through which a strategy can be developed.

Are thinking of buying products or services, they want for a variety of products and services. In addition they want easy ease of access and desire to buy good quality products and services at a competitive price. They are really important as they provide money for the business enterprise to become successful.

Suppliers stock the business enterprise with the resources the business enterprise needs, if they're late then it will cause a turmoil between business and suppliers. Therefor it is vital that all the business suppliers are promptly. Suppliers are most likely the 3rd important part in a business, they offer the products/services and if they're not in time it poses to be always a danger to the financial condition of the business enterprise. On the other hand, suppliers aren't that important in decision making because they are scared of getting rid of their deal with English Airways.

An economic system is loosely thought as a countries arrange for its services, goods, and the precise manner in which its monetary plan is completed. Essentially there are three major/different types of monetary systems prevailing round the world and they're

Market Market: In market economy, national and state governments play a role. Instead consumers and their buying decisions drive the overall economy. In this kind of monetary system, the assumptions of the market play a significant role in deciding the right path for a country's economic development.

Market economies try to reduce or eliminate entirely subsidies for a particular industry, the pre-determination of prices for different goods, and the quantity of regulation controlling different industrial areas.

The absence of central planning is one of the major top features of this monetary system. Market decisions are mainly dominated by source and demand, the role of the federal government in a market current economic climate is to simply make sure that the marketplace is steady enough to handle its financial activities properly.

Planned Current economic climate: A well planned economy is also known as a command current economic climate. The most important aspect of this type of overall economy is that major decisions related to the creation, distribution, product and service prices, are all made by the federal government.

The planned economy is government directed, and market causes have very little say in this economy. This type of economy lacks the kind of flexibility that is present a market current economic climate, and because of this, the planned current economic climate reacts slower to changes in consumer needs and fluctuating patterns of source and demand.

On the other hands, a planned overall economy is aimed at using all available resources for producing production instead of allocating the resources either to promote or marketing.

Mixed Current economic climate: A merged economy combines elements of both the designed and the market economies in one cohesive system. Which means that certain features from both market and prepared monetary systems are taken to form this type of economy. This technique prevails in many countries where neither the federal government nor the business enterprise entities control the economical activities of that country - both areas play an important role in the economic decision - making of the country. In a merged economy there may be flexibility in a few areas and federal control in others. Mixed economies include both capitalist and sociable economic policies and often arise in societies that seek to balance a variety of political and monetary views.

http://www. economywatch. com/world_economic-indicators/type

British Airways runs in the Blended economical system as Uk Airways was privatised on Feb 1987 and the government has less involvement as it's a private company really the only intervention that the federal government would have is merely setting the prices of mid-air tickets.

What is Social Welfare: Sociable welfare is about how people, communicate and establishments in a culture do something to provide certain minimal benchmarks and certain opportunities. It is generally about supporting people facing contingencies.

Social welfare which British Airways does because of its employees.

Social Welfare Policy: Is actually to boost and protect the standard of living of individuals or citizens all together. In britain the Name "Social Coverage" is utilized to apply to the policies that the government uses for welfare and social protection and the ways that welfare is basically developed in a culture. There are various social welfare insurance policies that the United Kingdom's adopts and they're
Social welfare insurance policy that English Airways has adopted/follows

Health and communal protection

Employment Law

Work place regulation

Social fund

Social security

The impact that public welfare initiates on English Airways as well as the wider community is first of all that Uk Airways adopting the task place regulation is the fact that it benefits the employees of English Airways and that the employees can work without any mind aces as English Airways has provided all it employees with trained in safety precautions, plus leftovers time is directed at the employees and to the crew customers of British Airways accommodation is given because the team is normally traveling for endless time/long journeys. The staff are also made alert about the basic conditions and conditions of the organisation which are quite simply ethics, code of carry out, and the responsibility of the company.

The other sociable welfare coverage which British Airways provides its employees is cultural security because of its employees very much like contribution benefits (Old age pension, maternity allowances) and also non contributor benefits (social fund, working taxes benefits) to its employees, gives the employees the liberty to do whatever in their personal life. The Career Law in Uk Airways areas and illustrates the standard working hours, conditions, and the functions of the organisation.

What is Industrial Insurance policy
Industrial policy includes all government interventions which consist of

Directed into the supply aspect of the economy that includes enterprises, industries, areas).

Aims to influence the industrial structure of the current economic climate and its industrial changes.

Industrial insurance policy purposefully affects incentives to produce specific goods or bonuses to enter in or exit a specific goods market.

It is not limited by production and includes all types of commercial financial activities.

Industrial plan interventions have to be justified because if competitive marketplaces worked adequately, any such intervention would

Distort best allocation,

Distort strong competition and its own benefits (development, overall flexibility, consumer's sovereignty etc. ).

Privilege specific enterprises or business or sectors at the expenses of others,

Would downside taxpayers and consumers. (An European industrial insurance plan: ideas and implications, Oliver Budzinski).

Industrial policy is concerned; it is the government sponsored monetary program in which the general population and private sector organize their efforts to build up new systems and industries. Federal provides the financial support and capital to the private sector by immediate subsidies, taxes credits or government- run developmental finance institutions. Industries policy emphasise co-operation between government, bankers, private business, and employees to strengthen the national economy. http://encyclopedia2. thefreedictionary. com

Impact of Industrial insurance plan on Uk Airways

In the United Kingdoms the Industrial plan has damaged a lot of industries however the Industry that endured the most was the aviation industry including all the airlines even English Airways. Therefore British Airways has modified its strategy of working and has prevailed as British Airways followed new policies. Among the policy that states to lessen Co2 emissions by 15% by all airlines and English Airways has decided to reduce by 50% as they are working on creating a new kind of energy which is recognized as bio diesel which is pollution free and environment friendly.

Fiscal Insurance policy: Government spending insurance policies that influences macroeconomic conditions. These guidelines affect duty rates, rates of interest and administration spending in an effort to control the overall economy.

Monetary Insurance plan: The action of your central, bank currency or other regulatory committee that determine the scale and rate of growth of the money supply, which in turn affects interest levels. Monetary insurance policy is managed through actions such as increasing the interest rate, or changing the amount of money banking companies need to keep in the vault or standard bank reserves.

Impact of fiscal and financial policy on air travel industry as well as English Airways

The rules of economics reveal that governments will often improve market effects. Ways of influencing market results can come in the form of financial and fiscal policies. Monetary policies affect shifts

in aggregate demand for goods and services by increasing the amount of money supply, reducing the equilibrium rates of interest and revitalizing investment spending or decreasing the money resource, raising equilibrium interest levels, cutting down investment spending (Mankiw, 2004). Fiscal policies transfer the aggregate demand curve by increasing or lessening administration spending or through the increase or reduction in taxes (Mankiw). Because these plans effect aggregate demand, the federal government uses such insurance policies to bring stabilization to the overall economy.

Such polices impact different companies on various levels. Some industries have results plus some negative. In analysing how monetary and fiscal insurance policies affect the airline industry, we can look at how these plans affect employment, growth of the industry, and product prices.

Many fiscal plans aimed toward the air travel industry have had profound effects. One particular policy is displayed by the excise taxes and fees levied on air carriers. Such fees and fees are allocated by the

Government to fund improvements of international airports, provide security for the airlines and airports, allocate money for the FAA, provide for services for international customers, and support procedures at airpark facilities. These fees signify roughly 26% or $52 of a typical 200-dollars round-trip airfare ticket (Air Transport Connection, 2005). Current economic conditions of the air travel industry are dismal, especially due to the tragic occurrences of Sept 11th. MID-AIR Transport Relationship (ATA) argues that such fiscal policy in these hoping times hinder the environment carriers' capability to right themselves through a self-help policy. The ATA further explains that in order to stabilize the industry, such fees and fees can account for the removal of over 129, 000 jobs, forced many carriers into personal bankruptcy, and, because consumers behave greatly to price increases in this industry, hinder their potential to allocate funds by raising ticket prices. With this current fiscal plan, airline carriers have little manoeuvrability of cash to meet up with the demands of your operating budget.

Mike Smith (personal communication, June 10, 2008), past owner of Pacific Crest Aviation in Big Bear Lake, CA, contributes that governing businesses institute other fees to generate operating income for airports. On example of this is landing fees. Landing fees change from airport to air-port, but play a key role in the persistence of where airline carriers decide to starting their functions. In attempts to accumulate more funding through fiscal plan, Mr. Smith talks about that the FAA continues to suggest the implementation of individual fees. Still to be decided how such a payment would impact the airline industry; present fiscal guidelines have airline carriers screaming for reform.

Deregulation is another fiscal insurance plan that has noticeably impacted regions of the air travel industry. Since deregulation in 1979, the air travel industry experienced substantial growth. Along with the emergence of new competition in the industry this created numerous amounts of jobs, drove solution prices down, and widened the available market for various airline carriers. Through an commercial wide progress of over 200%, new companies were able to open positions to thousands of new employees in a variety of parts of the country. Average solution prices in 1979 continue to be relatively unchanged today. As an exceptionally competitive market surfaced, the rally for travellers on each companies flights kept ticket prices down as carrier created linking plane tickets through this new open up sky policy; achieving more consumers, lessening opportunity cost, and offering competitive pricing.

The Airline industry is still affected by the entire condition of the country's economy. When healthy spending is accessible and pleasure travel is repeated, air carriers have the ability to fill flights, raise prices, and keep maintaining a stable monetary environment. However, when condition of the country's economy comes, so do the buying behaviors of the consumer. This is where the air travel industry confirms itself today. Struggling to fill flights in a poor economy and preventing heavy fiscal coverage.

Recent monetary procedures made by the government to improve market conditions are sure to have an effect, but how it'll impact employment, growth, and prices in the air travel industry are still mysterious. The most

Recent monetary coverage made by the federal government came in the form of economic stimulus assessments. This in-flow of money into the economy in an attempt to energize the purchase of goods and services throughout america may help reduce the effects of the current sluggish economy. Little to no data prevails to show how this has impacted any expansion in the air travel industry. So far, there seems to be little change in the spending practices of the buyer to travel via air. Because the economical position of the flight industry has been struggling for so long, improvements anticipated to any solitary event may be impossible to observe. Whether changes in fiscal policies, monetary policies, or inside carrier structure assist in improving conditions in the airline industry, changes will happen slow and can reflect financial condition in the nation's marketplace.

By successfully controlling opportunity cost, and adapting for an ever changing economic environment, airline industries can have monetary success. However, the well-being of the country's overall economy will have a direct impact on the amount of success experienced in the flight industry. During economical shortfalls in the nation's economy, tourists will have fewer resources available to travel for pleasure. Contributing to the negative economical influences in the airline industry, future and existing insurance policies targeting the air travel industry will continue to prevent the industry's potential to recover loss in durations of monetary hardships. http://www. taxreformpanel. gov

Makiw, N. G. (2004) Principles of economics (3rd model). Chicago, 2: Thomson South-Western.

PESTLE Analyses on Uk Airways

PESTLE Factors

Key Points

Implications for British Airways


Heavy rules (AEA, 2009).

Increased security scheduled to past terrorist hazards (DFT, 2008)

Compliance is vital if Uk Airways wants to continue.

Sufficient security actions should be in destination to ensure consumer self-confidence and competitive edge in maintenance.


Global economic crisis: world development is projected to just over 2 per cent in '09 2009 (IMF, 2008). Pound weakness especially contrary to the Euro.

Oil prices dropped by 50% since their optimum retreating to 2007 levels. Decrease in gasoline prises the dollars strengthens (IMF, 2008).

UK Consumer spending found its sharpest decline for 13 years between July and Sept 2008 (Channel 4, 2008)

Possible decrease in the quantity of business travel as companies are chopping costs and using substitute method of communication such as telecom fencing. Uk Airways is prone as a UK operating flight to a poor exchange rate.

Fluctuation in oil prices and exchange rates will directly affect United kingdom Airways cost base.

More powerful competition.


The United Kingdom has an ageing population.

Increasing Unemployment

Potential opportunities for progress as older years have significantly more time to invest on leisure activities such as international travel.

Increased bargaining ability as an employee.


A recent review discovered that 34% of online consumers plan to use price- comparability sites more in '09 2009 (NMA, 2009)

Online booking services and check-in is now increasingly employed by the air travel industry.

Increased consumer recognition and therefore bargaining electric power.

British Airways must be sure that they stay up to date with these technical advances whilst keeping away from becoming overly reliant, as this may isolate certain consumer markets (i. e. the elderly) who don't feel safe using such technology.


Noise pollution handles and energy consumption controls.

Cancellations of flights and lack of baggage.

New legislation (e. g. climate change charge) enforcing tighter environmental legislation may increase operational costs every year.

Such moral issues might have a detrimental effect on reputation if remaining unresolved.


Collusion and price fixing.

Recognition of trade union and industrial action e. g. cabin team strikes.

Open skies agreement.

Restriction on mergers will impact on English Airways suggested alliance with American Airlines.

Good employee relationships are crucial if British Airways wishes to avoid professional action and interrupted functions.

Opportunity for Uk Airways and its own competitors to easily transport aircrafts between the EU and the United States.

Part 3

Investigate the behavior of organizations and the market environment.

What is Oligopoly

Oligopoly is market which is normally dominated by a few amounts of large suppliers. The degree of market awareness is high. Firms in a oligopoly produce top quality products and also sometimes there's a hurdle to new entries.

Advantages as general

Firms or companies have the ability to reap economies of range, scheduled to large scale competition.

Products cannot produce by individual firms on a small scale.

There can be an incentive to activate in research and development. They have the ability to earn ultra normal profits and capture large market talk about.

Firms enjoy lower costs credited to technological improvement. This results in higher profits which will improve the firms or companies capacity to withstand price warfare.

http://www. blurtit. com/q2774865. html

Disadvantages as basic

Firms and companies are concerned with the actions of their challengers.

If one firm or company reduces its prices the others would need to.

How oligopoly has impacted the flight market and British Airways

In the later 1990s the Western flight market was liberalised, reducing the obstacles to accessibility.

Traditional businesses then faced competition as organizations could enter the marketplace more easily.

New entrants used leased aircrafts to keep costs low.

Firms have merged (such as Liberia Airways and English Airways does in 2000) to improve the firms horizontal integration.

What is monopoly

A situation when a single company is the owner of all or nearly all of the market for confirmed type of service or product. This might happen in the event that there is a hurdle to entry into the industry that allows the solitary company to operate without competition. In this industry structure, the producer will most likely produce a size that is less than the total amount which would optimize social welfare. www. investwords. com/3112/monopoly. html


Advantages of monopoly as standard

There is no risk of excessive production.

There is sufficient capital for research.

Price of goods are reduced.

The market can be operated.

Disadvantages of monopoly as standard

The individuals are exploited.

There is hardly and consumer choice.

The price is on top of products.

As there is absolutely no competition it brings about inefficiency.

The labour is exploited as the purchase price charged is higher than the marginal cost.

How monopoly has impacted the airline market and English Airways

There is not any competition which would make the airlines inefficient.

As there is absolutely no choice the consumer would have to take any particular one air travel only.

As the solution prices could be high the consumers would like to have a train with their vacation spot if the consumer's vacation spot is in European countries and this would result in a loss for the company.

What is ideal competition

An ideal market framework characterized by a huge volume of small firms, equivalent products sold by all businesses, freedom of accessibility into and leave out of the industry, and perfect knowledge of prices and technology. That is one of four basic, market structures. The other three are monopoly, oligopoly, and monopolistic competition. Perfect competition can be an idealized market structure that's not observed in the real world. While unrealistic, it does provide an outstanding benchmark you can use to analyse real life market structure. Specifically, perfect competition successfully allocates resources. http://www. amosweb. com.

Advantages of perfect competition as general

Optimal allocation of resources.

Competition promotes efficiency.

Consumers charged a lesser price.

Responsive to consumer wants, change in demand, leads extra source.

Disadvantages of perfect competition as basic

Insufficient gains for investment.

Lack of product variety.

Lack of competition over product design and specs.

Unequal circulation of goods and income.

Externalities. e. g. pollution.

How perfect competition influences airlines market and British Airways

As in the Airlines Industry there are numerous airlines and there is competition there can be either results as well as negatives effects the results of perfect competition is that the resources of the airlines is allocated to the idea as there is competition the other airlines as well as Uk Airways is urged to work harder to overcome the competition and there for the airlines charge its customers with a lower cost to gather more of the customers. The negative effects of perfect competition is that sometimes the return on investment can be poor you can find noise pollution being created by the noise of the airplane engines and can affect the contemporary society with air pollution as it can harm the society.

Part 4

Explain the importance of international trade and the Western european sizing for UK businesses.

What is trade

Trade is the transfer of possession of goods or services in one person to another person. Trade is also known as business or financial deal or barter like back many years ago. Trade can only just happen in a market. A market is a location where investing takes place maybe it's either in a shop, house or even the internet.

Advantages of trade

Can increase international ties.

Leads to specialisation and therefore increases efficiency.

Increases standards of living.

Disadvantages of trade

As there may be excess development it brings about pollution.

Can lead to a possible economical imperialism.

Can result in a balance of payment problem which can result in international credit debt.

Why is trade important

To trade is important for a country because through trade a country gets its resources which it can't provide for itself, or its cheaper for a country to import than to create locally. A country trades its resources to other countries that cannot produce them which means that it's a major circuit where everyone trades until all the countries have what they exactly need while making some cash by selling what they don't need. The united states basically does it for the introduction of the country so that its people can get their daily breads and butter, clothes and necessities that they need that their country doesn't have access to, and even do business with other countries through trade.

What is international trade

International trade is exchange of capital, goods, and services across abroad boarders or territories. It in essence identifies exports of goods and services by organizations to a overseas buyer also known as a importer. In most countries it presents a significant show of gross domestic product also known a (GDP).

Advantages of international trade

Improve home competitiveness.

Helps to gain global market talk about.

Reduces the dependency on existing market.

Increases chances to increase.

Disadvantages of international trade

Can take a long time to get.

Additional cost can be incurred.

Payments come after long.

Licenses are need and package should be done in rules.

Why is international trade important

International trade is important since it allows other countries to consider good thing about something known as comparative benefit. Comparative advantage means that a country can produce something by giving less for something else they need. Therefore even when a country in unable to produce the best quality product of anything, relatively the countries can produce without giving up something. When countries take benefit of comparative advantage, the total output on the globe increases and therefore everyone advantages from extra output and therefore international trade helps set up a higher standard of living.

What is economic integration

Economic integration is the removal of tariff and nontariff barriers to the move of goods and services and the factors of creation between several countries or various various areas of the same nation.

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