INTRODUCTION TO BUSINESS ENVIRONMENT

Business Environment is a very important aspect of business operations for companies, mainly because of reason that it is directly associated with overall performance of firm and also its existence in market. Today surroundings in which companies operate have become very volatile and unpredictable, which makes it tough for organizations to survive and carry out their various functions (Fernando, 2011). Present report is an attempt through which researcher will try to uncover and describe mission, vision and values incorporated by British Airways (BA) – the UK based aviation giant, at workplace. Additionally focus of the study is on evaluating how various market structures and forces affect the company.

TASK 1

LO 1.1

Mission is the goal that an organization looks to attain while operating or functioning in the industry. Determining and developing such goals is of great importance to companies, as it helps management in knowing what all activities they have to carry out in order to be able to attain the mission. Main objective of aviation organization, while functioning in the market is providing best in class services and air traveling options to passengers. It means mission of company is to make sure that travelers get a very good and optimized traveling experience. On one hand firm looks to providing the best services to travelers, but it also tries to ensure that it’s various activities have the minimal impact on natural environment (Batra, Kaufmann and Stone, 2005). To do the same, firm’s vision statement has been developed keeping the same thought in mind. BA’s vision is to reduce its negative impact on the environment and to be the favored company which people select for the purpose of air travel.

Apart from developing vision and mission statement, management at British Airways also have paid a lot of attention to formulation of various goals and targets – both short and long term (Our strategy and objectives, 2010). Short term targets are those which the organization looks to achieve in a span of 1-2 years. Various such objectives are developed at workplace. One of them is that to find and open up more routes so as to fly more planes and serves to the needs of customers in a much more efficient and effective manner. On the other hand, long term objectives of the firm is that it wants to offer the best services to its customers and try to reduce carbon emissions as well as negative effects on environment by 2020 (Yu and Ramanathan, 2012).

LO 1.2

Stakeholders are those parties and individuals who have direct interest and association with operations of the company. They can be in form of customers, competitors, suppliers, investors, government, etc. Each of such stakeholders of British Airways has its own needs, wants and objectives, which the aviation firm has to fulfill so as to survive and effective operate in market (Sohal and Perry, 2006). In many cases, special programs have been developed by the organization so as to make sure that it fulfills and meets needs of various business associates. One of the main stakeholders of company is the customers. To met their expectations in terms of quality and price of products and services that it provides, management pays a lot of attention to making sure that offerings are of best standards and also that they are not overly or under priced. Apart from passengers, another very important stakeholder of aviation firm is the employees. They are the ones who have to perform various tasks and duties so as to make sure that corporate goal are attained. For the same purpose, special employee training and development programs have been developed and put in place by the company, with a view to improve their overall performance and conduct (Kennerley and Neely, 2003).



Get plagiarism-free report by a Ph.D. Writer
Professional essay Writers are Aware of your
Requirements!

In addition to it, firm also discloses information regarding its financial performance, during a stipulated time period to the government and pays taxes on time, along with compliance of different rules and regulations. For such bodies and governing councils, it is the main objective which has to be fulfilled, so as to sustain in the market for a longer time period.

LO 1.3

For companies it is important that they, after identifying responsibilities towards different stakeholders, develop strategies and implement them (Ward and Lewandowska, 2008). Management at British Airways has prepared various plans and tactics through which they can fulfill needs and wants of these stakeholders. In order to make sure that customers get products and services which are of best standards, a quality department has been developed at workplace. It is responsibility of this department to make sure that demands and expectations of the passengers are fulfilled to the greatest extent possible. Here focus of organization is on making sure that they put in best efforts to meet and surpass expectations of clients.

Further to make sure that the employees are performing to their fullest potential, various training and development sessions are organized at the workplace (Capon, 2009). Main purpose behind it is that management wants to optimize performance of its employees by considerable margin. In regard to it, they organize various campaigns and sessions where the staff gets a chance to know areas that they are lack in, and also undergo through training session with a view to improving those areas. It is responsibility of the T&D department in company to ensure that development needs of each and every employee is met and that workforce gives their best performance every time for company. Timely payment is a desire which suppliers have of British Airways. To make sure that vendors get money on time for raw materials that they provide to company, authorities have established a special link between the purchase and finance department. This way healthy relation between the firm and suppliers can be developed and also maintained (Wong and Aspinwall, 2004).

LO 2.1

Utilization of resources in a region depends on the economic system being followed. In this regard it may not be wrong to say that performance and usage by BA relies on what economic system is being followed in UK. There are three main such systems, and they all have a great impact on effective distribution of the various resources between numerous business organizations. Command economic system is the one where government and other regulatory bodies take all decisions regarding operations of companies (Worthington and Britton, 2009). Since in this system, decision making power rests with such bodies and organizations, resources are distributed among market players in such a manner that they all get the opportunity to showcase their best performance, by effectively using the materials made available to them.

Another type of economic system is that of the free market. Herein government and other such authorities do not have any role to play in how resources are allocated and distributed among the companies (Dettwiler, Lindelöf and Löfsten, 2006). It is the responsibility of private players to assign the resources amongst themselves, such that their performance and existence is not negatively influenced. Many a times in this system it is seen that firms which operate at small scale do not get good access to the various resources to be used in their daily routines, as most of them is consumed by larger organizations. This means that this system is not useful in effective allocation of the resources. On the other hand, transitional economic system is the one where government used to follow one type of system but now is changing its approach. For instance the Soviet Union economy, which once was a command economy, is now being altered to fit into mixed system. In UK, mixed economic system is followed, where in private organizations and the government; both play an important role in distribution of the various resources (Kelliher and Henderson, 2006).

LO 2.2

Business organizations to a great extent are affected by economic policies followed in a region. There are two main types of policies – fiscal and monetary. They have a substantial effect on functioning and existence of company in market. Fiscal policy is related to spending of government in the nation. It has a direct relation with taxation system. Tax rates and government expenditures or budgets are updated and modified at regular intervals, meaning that functioning of companies can get influenced by a great margin if there are any changes in tax rates and other such components of fiscal policy (French, 2009). At present UK’s fiscal policy is not stable, as it is recovering from effects of recent recessions and economic crisis. This means that tax rates also in the country are not stable; they are being changed and modified on a continuous basis so as to suit as per needs of government.

On other hand, monetary policy is related to interest rates on borrowings that companies take so as to perform their various business operations. British Airways to a great extent is affected by changes in interest rates, as it usually takes loan of large sums from various banks in the country (Olsen, 2004). Due to the recent Eurozone Crisis, interest rates on bank borrowings were increased due to which company had to repay a huge sum of money to bank(s). In this regard it may not be wrong to say that due to such reasons, operations of BA have been affected by a great margin, as both fiscal and monetary policies have a great impact on the company.

LO 2.3

Aviation industry in UK is a highly regulated one, as there are plenty of norms and regulations which have to be complied with companies in this sector. If they are not followed then it may be bad for image of brand in the market, and also its existence. Firms have to keep in mind various norms which have been prepared by the European Union and various other governing bodies along with governments of different member nations (Pateli and Giaglis, 2005). One such policy which governs working of aviation industry and all other sectors is the Competition Policy. It has been developed in light of fact that UK and in particular this industry consists of numerous organizations, which compete with one another. The level of competition has risen to a whole new level, because of which many times customers and/or companies themselves have to suffer the negative consequences. It is the competition policy that prohibits business organizations from engaging into unhealthy rivalry; instead it helps in creation of a positive environment amongst them (Chen and Mohamed, 2008).

Apart from competition policy, there are several other laws as well which British Airways has to follow. Environmental Law is one of them. This piece of legislation states that companies have to make sure their operations do not have a significant negative impact on natural environment (Shaikh, 2010). Concept behind it is that functioning of aviation companies have the most prominent negative effect on natural surroundings and environment. Government under this law has developed various norms in relation to pollution in form of emission of gases and other such facets have to be controlled. Due to this very reason, management at BA have to develop various methods through which they can reduce, monitor and control those activities which may have a negative effect on the environment.

TASK 2

LO 3.1

Aviation Industry of not only UK, but internationally is renowned as a very volatile, competitive and unpredictable (Kew and Stredwick, 2005). Due to this reason it may not be wrong to say that aviation market is a very competitive place. There are so many airline companies functioning in this industry and have their influence on it. British Airways is also an organization existing in this sector of economy and one of the many competitors. As discussed earlier, structure of this market is very competitive, meaning that its doors are always are open to any firm looking to enter it and making their presence felt. Due to such a structure of the market, numerous aspects of business operations get influenced, such as pricing and output decisions (Curtis and Samy, 2014).

Because of such a nature of the industry, organizations such as British Airways have to determine prices of goods in such a manner that they not only help firm to remain competitive, but also earn a good amount of money. It can be supported through fact that the number of more companies with same offerings operate in a market, the less will be prices which they charge for the good. This means that company will have to charge for services that it offers on basis of what the competitors are charging (Granger and Schroeder, 2006). It is so mainly because of reason that of management at British Airways decides to charge price which is different from what rivals are doing, then there is absolute possibility that customers will shift their preference to other organization(s) in the industry. Along with this, output decisions of the company are also based on principles and tactics followed by competitors. Firm’s output should be in line with that of the competitors.

LO 3.2

It is a well known fact that aviation industry is a highly competitive and regulated one, which essentially means that there are a large number of entities who can interfere into operations of business organizations. There are numerous forces which affect operations of the company in market. Some of them are the likes of government, competitors, government, suppliers, etc (Li, 2000). They collectively have a significant impact on working of the company as well as its very existence. One of the major force and change that has happened in this industry is related to aspect of innovation and creatively developing products of company. Today airliners are trying to find new ways through which they can provide much better and improved services to passengers and also make flying a positive and memorable experience for them. One such development that has happened is the in-flight entertainment. Its introduction and development has changed whole scenario of the industry and companies that operate in it.Business organizations in the industry are now developing and using such latest in-flight entertainment systems through which they can provide passengers with the best time and also to make their journey comfortable (Tennant, 2005). Satellite systems and other such approaches are being used in it nowadays.

SPECIAL DISCOUNT LIMITED TIME ONLY
ORDER
NOW

Apart from this, another market force is laws developed by government so as to promote environment safety and to reduce negative effects of operations of this sector of economy. Various legislations have been developed in order to make sure that aviation companies have the minimum negative impact on natural environment and surroundings. In this regard, new engine and noise policies have been developed by the governing bodies (Palmer and Hartley, 2009). British Airways also have to bring about necessary modifications and changes to their operations, so as to reduce their influence on the environment.

LO 3.3

British Airways is a UK based company operating in the aviation industry. United Kingdom, over the years has transformed into a multi-culture nation, as people from various ethnicities, backgrounds, religions live in the country (Gani, 2011). Therefore it may not be wrong to say that due to this very reason; environment in UK has a great deal of impact on working of the company. Cultural environment is one of the most important aspects to which management pays a lot of attention to, as it has a direct link with that of organizational working and also its existence in the market. It can be proved through an example that since UK is a multi-cultural nation, workplace in business organizations can also be characterized to consist of people from various cultures and backgrounds. Because of this, management at BA have to concentrate on development and maintenance of such a workplace, where people or the employees can feel free from any kind of discrimination and carry out the tasks assigned to them in an effective manner (Kefalas, 2001). Considering environment present in the country, government also has developed various policies and regulations through which workers can be promoted. It is the Equality Act, 2010. Non-compliance of it can lead to serious repercussions for the organizations. This means that cultural environment at workplace has a significant impact on overall working of the company. In addition to it, business environment in UK is also very strict, as it is not only extremely competitive, but there are many other rules and regulations which the companies have to follow. Today the aviation industry is characterized to be overcrowded with organizations, which makes it very tough for a player like that of British Airways to successfully operate and make profits.

LO 4.1

Most business organizations which operate in UK, work at the global level, which means that they function in the international environment (Kraft and Kamieniecki, 2007). With an objective to monitor and control working of companies, various global governing bodies have made different set of rules and regulations. One of them is the World Trade Organization or the WTO. The conference held by WTO in 1999 paid a lot of focus towards covering the aviation industry under the regime of GATS (General Agreement on Trade in Services). One feature of GATS is that it enabled breaking of or removal of trade barriers at international level and enable the companies to work more efficiently (LIBERALISATION OF AIR TRANSPORT AND THE GATS, 1999). But the inculcation of air transportation into GATS also limited its ability to operate at international level mainly because of reason that the economic system all around the world were not in a very good condition at the time, and there was very limited financial activities globally. This resulted in downfall or a slump period in the industry, as number of people who travelled through air also got limited, as aviation companies could not operate freely at the international level

Other that WTO, there are many other international bodies which have a significant impact on working of companies in the aviation industry. One of them is the International Air Transport Authority (IATA). It is the body which governs working and operations of the companies in this sector of economy, along with development of various policies and norms (Kourteli, 2000). Over the years, IATA in association with market players of the industry have developed various policies through which they attempt to cover various aspects of business operations also the impact that they have on environment as well as surroundings. One of them is the environmental policy through which it attempts to control noise pollution and other forms of pollution that spreads through aircrafts.

LO 4.2

There are a lot of factors and forces which affect working of the industry, as they are closely linked with overall performance of the sector and companies that operate in it. Since BA operates in the global aviation industry there are numerous such forces which exert their influence on working of the company (Shetzera, Stackmana and Moore, 2001). Legal aspects are one of them. Management at British Airways have to keep in mind that they follow all the rules and regulations as developed by government and other such regulatory bodies of different nations. Additionally the organization also has to comply with international norms as prescribed by IATA and other such regulators. If policies developed by any of these parties are not followed, then it can bring negative results for the company and also affect its image and position in the market.

Economic scenario is another crucial aspect of operating in the international arena. Countries all around the planet are recovering from recent economic crisis and recessions, due to which operations of BA are also affected badly (Blair and Hitchcock, 2001). It can be proved through fact that sales of the company during same period diminished by a great margin, as the recession eroded purchasing power of people and did not allow them to engage into activities where a lot of money was to be spent.

LO 4.3

European Union (EU) is the body made up of European countries and usually is tasked with the responsibility to monitor and control activities being performed by various business organizations and also the impact that they have on society (Shaikh, 2010). Over the years, EU has made a lot of policies and regulations through which it can control the working of companies such as British Airways. It has made policies in relation to competition, environment, etc. Some of the measures which have been developed by EU in this regard include the following:

  • Passenger rights
  • Passenger safety measures
  • European Union Citizen Rights when travelling in Europe

These all policies and regulations have a great impact on working of the industry as well as companies in it. For instance the Passenger Safety measures policy developed by EU forces organizations like BA to ensure that they take care of passengers in every possible way be it related to quality of services they provide, or protection against harmful and violent activities such as terrorism.

CONCLUSION

British Airways is an aviation giant, based out of UK, and operates in a very volatile, unpredictable and competitive environment, due to which its operations get affected by a lot of forces. During the study, it was observed that the company wants to serve its customers in such a manner that their air traveling experience can be made memorable, comfortable and enjoyable. It was also seen that the company is operating in a very volatile and highly unpredictable environment, due to presence of a lot of market forces and rival firms in the industry. International bodies and organizations such as WTO, IATA also has significant impact on working of the company in this sector of economy.

REFERENCES

Batra, G. Kaufmann, D. and Stone, W. H. A., 2005. Investment climate around the world: voices of the firms from the World Business Environment Survey. World Bank Publication.
Blair, M. A., and Hitchcock, D., 2001. Environment and Business. Psychology Press.
Capon, C., 2009. Understanding the Business Environment. Financial Times Prentice Hall.
Fernando, A. C., 2011. Business Environment.Pearson Education.
Kew, J. and Stredwick, J., 2005. Business Environment: Managing in a Strategic Context. CIPD Publishing.
Kraft, E. M. and Kamieniecki, S., 2007. Business and Environmental Policy: Corporate Interests in the American Political System.
Palmer, A. and Hartley, B., 2009. The Business and Marketing Environment. 3rd ed. McGraw-Hill.
Shaikh, S., 2010. Business Environment, 2/E. Pearson Education.
Worthington, I. and Britton, C., 2009. Business Environment. FT Prentice Hall.