final presentation
DESCRIPTION
Strategy analsis of british airays long haul divisionTRANSCRIPT
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Shashank Yadvendra(19035322)MBA
Sheffield Hallam University
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AGENDAAGENDA
■ Overview of British Airways■ Environmental analysis: pestle & five forces
■ Critical success factors
■ BA strategic position
■ Competencies and resources
■ Stakeholder 's mapping
■ SWOT analysis
■ Strategic clock of BA
■ ANSOFF matrix
■ Conclusion & Recommendations
■ References
Discussions: Long Haul Market
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Overview of BAOverview of BA
► Since its inception, over 90 years ago, BA has grown to a full service global airline operating to and from centrally located airports across the globe
► Covering 600 destinations with allied members - one world alliance
Discussions: Long Haul market
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Environmental Analysis: PESTEL Environmental Analysis: PESTEL
POLITICAL● Employments laws
● Political stability
● Government regulations such as aviation permits, environmental regulations, safety, security regulations and taxation policies
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ECONOMIC
● Fuel availability and cost
● Business cycle (economic growth and Recession)
● macroeconomic variables such as taxations, inflation, exchange and interest rate
● Competition from other airlines
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SOCIAL - CULTURAL
● Lifestyle changes e.g. attitude towards leisure , changes in tastes and preferences
● overall cost of living
● Societal work ethics
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TECHNOLOGICAL
● Rate of obsolescence
● Innovation and technological development
● Other means of communication such as teleconferencing, email, telecommunication and video - conferencing
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ENVIRONMENTAL
● Environmental legislation
● Energy consumption
● Waste Handling
● Corporate social responsibility (CSR) such as BA's support for charities and community development
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LEGAL● Employment Laws
● Health, safety and security laws
● Preferential legislations for certain carriers e.g. terminal five that was allotted for British Airways' exclusive use
● Monopoly legislation
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Five forcesFive forces● Competitive rivalry: High because the industry is characterised by large players such as Virgin Atlantic, Air France-KLM and Lufthansa
● Power of Buyers: Low power of buyers because of the wide range of options available options
● Power of Suppliers: Although there are over 250 suppliers, however fuel and hardware suppliers posses relatively high power
● Threat of substitutes: There is low threat of substitute in the long haul market because of limited or no substitute. However, tele (video)conferencing and telecommunication present low threats
● Threat of entrants: Low Cost Implications Deregulation, which constrains favourable competition
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● Additional on-board services
● Safety controls, punctuality and reliability
● Additional baggage allowance
● Promotions and offers
CRITICAL SUCCESS FACTORS
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BA strategic position
Regional
National
International BALufthansa
VirginAir France-KLM
American Airlines
Air France-KLMBMILufthansa
No Frills Full Service
Geo
gra
ph
ic S
cop
e
Service rendered
Ryan AirBMI BabyEasy JetFly BeJet 2MonarchThomson fly
Aer Lingus
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COMPETENCE AND RESOURCESCOMPETENCE AND RESOURCESThreshold resources
● Brand Reputation● Internet facilities such as online booking and check-in services● Lounge availability for different travel class● Strategic Alliance and open sky agreement e.g. one world alliance● Infrastructure and technology such as fuel efficient aircraft, terminal hubs, hangers and landing slots
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Threshold Competences
● Safety and Security measures: BA spends over £100 million annually on security measures such as CCTV system , background and criminal checks of all flyers and ground staff, a team of trained security auditors who carry out security checks globally● Good management ● Effective brand management● Baggage handling● Online booking and check-in facility
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Unique Resources
● Dominance of take off and landing slot at Heathrow terminal five and other central global hubs
● Dedicated business class flight from London to New York
● Airbus recently delivered the first of two A318 aircraft equipped with ‘steep approach’ capability to British Airways
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Core Competences
● BA provides the most direct non-stop flights to London worldwide
● Product innovation
● Punctuality: In September, BA announced that over 87% of its flight departed early
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Stakeholder's mappingStakeholder's mapping
● Community ● Small scale Suppliers such as stationery and toiletries suppliers
● Competitor
● Travel agents and marketing intermediaries
● Board of Directors
● Employees representative such as trade unions and associations
● Investors and shareholders
● CreditorsPo
wer
Level of interest
Low High
Lo
wH
igh
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SWOT Analysis SWOT Analysis Strengths
• Brand name, consistency, reliability, customer service, size and scale• Responsive to market trends • Strong sectoral presence in the long haul market • Environmental performance• Customer loyalty• Advanced technology like A318 for steep landing
Weaknesses • Management-employee relationship•Too narrow product line•Job losses and pension issues
Opportunities• Heathrow –Terminal 5, anti-trust immunity and One-world alliance• Official carrier for 2012 Olympics games
Threats •Rising fuel costs and future tax on aviation fuel •Changes in buyers taste and preference•Adverse Government policies e.g. planned increase in air passenger duty by 2011
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Hybrid
Differentiation Focuseddifferentiation
Low price/low added value
Lowprice
Strategiesdestined for
ultimate failureLow
Perceived added value
High
Low Price High
Strategic clock of BA
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Protect / build
● Reasonable pricing
● Advertisement
● Corporate social responsibility to gain customers support
Market Development
● Use Avionic Engineers to provide consulting services to other airlines
Product Development
● Additional services such as in-flight internet and telephony services
● dedicated travel class to certain regions
● In- flight advertisements for various companies e.g. HSBC, Gucci e.t.c.
● Providing financial services such as travelers cheques and bureau de change
Diversification
● Establishing training academy for pilots and stewards
● Investing in the hotel industry to cater for customers and travelers
ANSOFF MATRIXexisting new
exis
tin
gn
ewm
arke
t
product
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CONCLUSION AND RECOMMENDATION
● Take advantage of its strength in order to increase market share
● Transform its weakness to attract competitors customers
● maximize opportunities such as the forthcoming Olympic games, Anti trust immunity, and proposed merger with Iberia
● Advertisement, offers and promotions
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Contd….Contd….▪ Improve on area where competition is relatively weak
▪ Take advantage of existing capabilities, unique resources and competences
▪ Effective utilisation of existing facilities such as T5 and lobbying for approval of anti-trust immunity
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REFERENCESREFERENCESJohnson, G., Scholes, K. and Whittington, R. (2008) Exploring corporate strategy: text and cases, Pearson Education Limited, 8th Edition Wheelen, L. and Hunger, D. (1998) Strategic management and business policy, Addison Wesley Longman, 6th Edition http://www.guardian.co.uk http://www.ba.com