Impact Of Internal Factors That Changed British Airways Management Essay
In recent years, airlines company are following alots of strategies to beat each other. Airlines, previously competitor was highly regulated industry, but they become opportunistic seekers of co-operation. In today's world, big and small airlines are make strategy together rather than competing with one another. Forms of assistance now-a-days they are sharing a lots of things include sub-contracting, code sharing, authorization and the arrangement of global marketing networks. In essence, co-operation among competitors has led to increased competitiveness. This has increased the speed and development of combined marketing, and the airline has become characterized by the desire to belong to a global network. The similarity has been to strive for a global presence.
According to annual report of British Airways (2009), they are the UK's largest international scheduled airline,they are flying to over 550 destinations at suitable times, to the best-positioned airports. They are take full pride whether consumers are in the air or on the ground for provive them experince customer service.
The purpose of this report is to assess the impact of internal factors which change the organisation and evaluate the organisation responses and. It focuses on British Airways (BA) in order to analyze the primary changes in technology management on the company and evaluate its responses.
The report trying to investigate the primary internal and external influences to which the organisation is subject. The paper focuses to analyze how change in technology can influence the policies and decision making of British Airways. It aims to critically evaluating the effectiveness of BA’s response to change in technology.
Internal & External Analysis
2.1 Internal Analysis
The internal analysis of strengths and weaknesses are focuses on internal features that give an organisation certain advantages and disadvantages to organize the needs of its target market. Strengths refer to core competencies that give the company an advantage in meeting the needs of its target markets. Weaknesses refer to any constraints a company faces in developing or implementing a strategy.
The external analysis examines the opportunities and threats that exist in the environment of the business. Both opportunities and threats subsist independently of the organisation. Opportunities are conditions that exist but must act on if the firm is to benefit from them. Threats refer to conditions or obstructions that may prevent the firms from reaching its objectives.
Figure 01: SWOT matrix
5.0 Academic literature review
Robbins and Coulter (2005) mentioned in their book ‘Management’ that change is an organisational reality. Organisational change means any alternation in people, structure or technology. Big companies and small businesses, universities and colleges, state and city governments, and even the military are being forced to significantly change the way they do things. Although change has always been a part of the manager’s job, it has become more important in recent years.
5.1 Changes in Technology
When speaking of technological change and its impact on workers and the toughness of organisations, the common view of technological change give emphasis on mechanization and other capital-intensive production devices. Such as technological change converts the nature of human interaction with work in a straightforward way. Less obvious is the transformation in work and markets generated by the superabundance of newly designed technology based products. For example, the development of economical integrated circuits for electronic calculators in 1972 virtually bankrupted the manufacturers of electric mechanical adding machines, throwing large numbers of semi skilled employees into the labour pool. These employees' skills were, for the most part, not transferable to other products. Twenty-five years later, the Internet endangered to have a similar impact on the computer and communications industries, the direct sales industry and, perhaps by the next millennium, the very nature of work.
According to Krell (2000), technological change alters the nature of the marketplace by changing the relative cost, features and availability of products. Rapid technological change leads to swift product introduction and hence to rapid product obsolescence. To describe this phenomenon the term “product life cycle” was invented.
Rapid technological change demands at the similar time that a workforce be highly skilled, sometimes in specialized areas, and yet highly flexible, if an organisation is to continue to use the same workers. Corporate America has responded to this challenge by developing and implementing on-the-job training and retraining in the meticulous technical skills needed. For those who perform the actual labour of production, the long-term development is for corporate technical training to replace the public educational system. Simultaneously, however, the need for elasticity in management thinking is causing a greater reliance on education than on on-the-job experience in the training of managers. According to Bennis (1996), the objective is managers who make decisions based on the demands of the marketplace, rather than the demands of the organization culture. On the other hand, Krell (2000) said that the anticipation is that such managers will function in, and ultimately help maintain, a more responsive organizational culture.
Now, focusing on information technology, which is the other critical domain of new technology application and communication it can say that, some airlines may use innovations in information systems to gain a competitive advantage. The computerized reservation systems developed by airlines exemplify this approach. Veitor and Veytsman (2007) mentioned that, out sourcing of firm’s operation is another response to change in technology. In recent years, many airlines have out sourced functions that are not core to their business and on which they are unable to build competitive advantage. Airlines can reduce costs, often significantly throughout sourcing.
6.0 Changes in Technology and British Airways & Benefits to the Organisation
The world is rapidly changing and the organisation meets the new consumer demands. To meet the demand of the changing world, organisation’s need to be innovative and without innovation, a company could not survive. Technological change has influence BA’s decision making policies in many ways. Below, BA’s response to various technological changes has evaluated.
6.1 The Internet
The internet allows customer's easier access to airlines; individuals are able to book flights from the comfort of their own home this presents customers with more influence in the market, as they are able to source the best price for a flight. The emergence of the Internet has forced airliners into changing their strategies, notably concerning means of competing; airliners forced to differentiate their service and even lowering prices in order to maintain a competitive edge. This results in a great expense to airliners such as BA, especially as more and more independent airliners are penetrating the market. BA now forced to constantly developing in order to stay ahead of other rival airliners.
6.2 Passenger Aircraft Development
Due to the increasing demand for flights and the limited seats to satisfy the demand, the world's biggest passenger aircraft is created. The “Airbus A380” is able to carry a third more passengers than its nearest rival, the Boeing 747 Jumbo Jet. The ability to fill a plane with more passengers’ means an airline is able to maximize the productivity of the business, thus improving profits. Having more seats to fill many also lead to cheaper prices for flights, this may allow companies such as British Airways to have an opportunity to increase competitive edge especially when taking on the smaller low budget carriers.
6.3 Computer Reservation System
This complex selling and reservation system depends on the investment, principally by airlines or consortia of airlines, in Computer Reservation Systems (CRS). CRS owners indict subscription fees for agency use and airlines’ booking fees on tickets sold. These fees ultimately replicated in airfares as part of the distribution cost of marketing seats. With both agencies and the airlines reliant on CRS the issue of distribution cost, mainly the margins exacted for the services given, is becoming increasingly important as is the use made of the data collected by this means. Therefore, by using computer reservation system, British Airways is merging itself towards the age of modern technology.
6.4 The Cabin Management Interactive System
The Cabin Management Interactive System (CMIS) involves a 15cm colour monitor at each seat of an airplane. This provides every passenger the option of listening to music, playing video games, tracking the position of the aircraft on various maps, or watching one of the six or more audio visual presentations, including recent film releases. Considering that the cost of the CMIS averages approximately £2.5 million, British Airways decided not to provide this entertainment facility. Instead, cabins continued to have traditional screens.
6.5 Greener Aircraft
According to a journal about British Airways (2008), protecting the environment was one of BA’s main priorities in choosing of their new planes. Both the A380 and Boeing 787 are much greener than the aircraft they reinstate. The Boeing 787 has a 30% lower fuel burn than the Boeing 767. The Boeing 787 NOx emissions are about 46% less per aircraft than the 767. In terms of CO2 emissions, the Airbus A380 has 17% lower fuel burn per seat than the Boeing 747. The A380 emits about 10% less NOx per aircraft than the Boeing 747-400.
6.6 Quieter Aircraft
A journal about British Airways (2008) said that, they started a night noise rating system at Heathrow, which computes noise according to a measurement called the 'Quota Count' or 'QC' scale. When coming in to land, both of BA’s new aircraft measure QC 0.5 on this scale. This contrasts with QC 2 for the Boeing 747-400 and QC 1 for the Boeing 767. In other words, both the A380 and the Boeing 787 make only a quarter of the sound impact made by the B747-400. These new aircraft joining the fleet will make a huge difference in terms of BA’s environmental performance as an organization. They will also be a better neighbour because it will be operating planes with lower NOx emissions and lower noise levels.
British Airways also provide mid-flight email and Net access for its customers as part of three-month pilot into the technology. BA has installed Connexion, a broadband technology from Boeing in its First, Club World and World Traveller Plus cabins, which will enable passengers to plug-in their laptops and surf internet. Connexion by Boeing allows passengers to not only surf the net while on board but also allows business travellers to access their corporate and personal e-mail accounts, send real-time e-mails and access their corporate networks (Richardson, 2002).
6.8 Service Oriented Architecture
A Service Oriented Architecture (SOA) will help the airline develop its self-service approach and ensure the consumer remains the priority. SOA enables to get things right by allowing to make short-term changes where is a need to be done it, such as making sure the seating policy is right. If the system is set up correctly, SOA allows the user to get things done by rules. Service orientation is also very important for the development of BA’s self-service staff portal. With SOA, BA should be able to move much more quickly in what they require to make available to staff (Kelly, 2007).
6.9 Special Innovation Unit
British Airways has established a special innovation unit, comprised of staff from both IT and business units, to lead small trials of new technology. The unit led to the introduction of Google gadgets on the company website, which allows users to port airline information such as promotional offers or arrival/departure times over to their iGoogle homepages (All, 2007).
6.10 Refreshing Perspective of Staffing
BA also has a refreshing perspective on staffing, proposing eight days of training a year for IT staffers in business-oriented skills like project management. Its CIO has encouraged British universities to consider incorporating IT training in business courses, since it is becoming increasingly important for business folks to have a good understanding of technology (All, 2007).
7.0 Areas for Improvement
7.1 Customer Relation
According to an article on USA Today on society for the advancement of education (2003), BA can use technology to enhance customer relations. They can offer travellers a web interface customized to a specific type of travel. Whether someone flies frequently, checks many pieces of luggage, or likes to enjoy certain amenities such as an airport club lounge, the web interface can direct the traveller to services that cost a little more, but offer desired benefits.
7.2 Automated check-in machines
Another prospect lies in the automated check-in machines some airlines now operate. Instead of checking in with airport staff, passengers swipe a credit card through the machine as identification, and print out their tickets. Currently, each carrier manages its own machines, and passengers of ether airlines may not use them. However, just as one bank allows customers of other banks to use its ATMs for a fee, the industry could profit from letting all passengers check in through a common automated interface.
British Airways can produce revenue on an origin-destination basis, while their costs are generated on a flight segment basis, which makes for a very complicated business structure.
7.4 Efficient aircrafts
The costs of labour and new aircraft are very elevated across the industry. Therefore, BA can use more efficient planes in order to decrease the money spent on fuels.
7.5 Weather condition
If bad weather shuts down only one major airport, the impact to business and scheduling immediately is felt worldwide. BA can take initiatives in order to terminate the vulnerabilities of infrastructure include limited availability of terminal slots.
British Airways have to conduct long-term and short-term planning simultaneously. For example, building a fleet of airplanes takes years, but pricing decisions have to happen within minutes.
7.7 Innovation and customer relation
As BA looks forward, innovation and a unique relationship with passengers and the air transport industry will continue to be a key to the future. According to Kelemen (2003), innovation and partnership will have to play a major role in airlines’ strategy, which focuses on internet protocol technologies, end-to-end services to the desktop and airport integration.
BA will have to continue development such as online distribution, ticket less travel, self-service ticketing and smart cards. There is a great opportunity for the integration of airport and airline systems, along with new applications for biometric security, electronic passports, wireless bag tracing and much more.
7.8 Customer service
BA can add more functionality, especially in customer service areas ranging from check-in desks upwards. Furthermore, BA can also integrate their internal systems. This relatively under developed area may have the strongest potential for future growth.
7.9 Online services
Online services of British Airways can configured to include specialist application such as content management in order to make the site easier to navigate and use. They also can use business intelligence tool for in depth management information. Finally, BA can add personalization software, which will allow the site to customize for each individual user.
For catering logistics management, BA can develop a new solution extending an airline’s catering supply applications over an extranet, which will help to improve catering management efficiency and reducing costs using Internet technologies.
7.11 Information system
BA’s airport staffs are the customer representatives and a customer’s perception of an airport can strongly influenced by the service they receive. Service that is personalized and efficient wins loyalty for operation and helps recurring business. A good information system can enable airport staff to provide the utmost in customer service. Onscreen user guide, customized workflow design, and other easy to use Features can allow experienced agents to spend more time to important personal contact with passengers, because routine check-in activity performed quickly. It also can reduce initial and refresher training for new and experienced agents.
BA should also install the CMIS system in their aircraft in order to strength their relationship with the customers. The CMIS provide maximum in flight entertainment for the travellers. Therefore, it is important to have this technology on board to satisfy the entertainment needs of the travellers.
In many ways current marketing activity of airlines is following traditional and well tried methods which imitate decisions regarding the product/service provision of routes, seat allocation and types, in-flight and ground-based services, the price structure, distribution channels and promotional activity. The marketing environment, however, is becoming more competitive, as the international market is expanding and airlines are returning to profit after the recession of the early 1990s (Betts, 1994, cited in Driver, 1999). Many developments have technologically pushed. Therefore, larger aircrafts have increased capacity, leading to reduced real fares and improved many aspects of the in-flight experience (Skapinker, 1995, cited in Driver, 1999). Computer reservation systems have simplified flight booking and airport infrastructure investment improved the pre and post flight aspects of travel; computer systems to manage reservations, yields, and investment in air-traffic control systems and flight navigation systems improved the punctuality of airlines (Driver, 1999). The paper contrasted the analysis of primary internal and external factors that influences many part of British Airways. The paper then discussed how change in technology influences BA’s policy and decision-making. The report further evaluated BA’s response to change in technology. In the end, identification of several areas to improve BA’s response to technological change has evaluated.