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This type of information systems is largely external in terms. These information systems are basically dealt with the top authoritative people in the organisation of British Airways to decide on mergers and acquisitions, new purchases of Boeing, capital investments and financial structuring. Large area of information required for this type of information systems is from the Market and economic forecast, political and social trends, legislative, environmental and technological constrains and opportunities.
This information system is largely from internal and external sources, with concern on the current and future performance. The main decision example for British Airways in maintaining this type of information system is pricing, capacity planning, budget preparation, purchasing contracts etc. To maintain the information systems some of the information is required like for instance cost and sales analyses, performance measures, summaries of operations, production, budget / actual comparisons etc.
3) Operational Information System
This type of information system is largely internal, mainly historical, detailed information on a daily or weekly basis, often quantitative, high accuracy and narrow in scope. The main aspect of why British Airways database is so efficiently controlled is due of the appropriate functioning at Operations level. The operational level information system of British airways mainly deals with production scheduling and broadcasting flights timings and destinations, maintenance of customer data base, re-ordering, booking acceptance by all means of payments, credit approval etc.
I am going to use Porter's five forces model to analyse how an information systems strategy at British Airways can give itself competitive advantage.
The airline industry requires raw materials, labour, components. By using electronic data interchange they can create a highly efficent bond with the suplier. This according to Porter leads to buyer supplier relationships between the industry and firms that provide the raw materials used to create products. Two suppliers serve passenger business of the airline industry: Boeing and Airbus. From this side it may seem that suppliers are very strong in this industry. However taking into account the fact, that hundreds of airplanes were landed and many companies are looking to sell them for low prices, suppliers of new aircrafts are weak now. Bearing in mind the prices for the new planes, suppliers are in the very unpleasant situation.
Buyers can have a similar effect on profitability as suppliers, just in the other direction. Buyers are very important for any industry, as they provide the source of revenue for the company. As Porter pointed out, buyers can compete within the industry by forcing down prices, bargaining for higher quality or more services and playing competitors against each other all at the expense of industry profitability. This is particularly the case for airline industry.
Now, due to the situation on the airline market, buyers are much more concerned with overall airlines safety, then with the service provided. Surprisingly not many companies work on reassuring people about the safety, which in my opinion is crucial under present circumstances. Buyers, are ruling the airline industry, thus for airline companies it is crucial to forego excessive profits in exchange for sales in order to compete effectively.
British Airways through the use of informations systems through customer recognition systems on board it's planes has improved safety and security dramatically to ensure it's passengers are safe and they are not switching to another provider because they fear their safety.
British Airways has solved the problem of buyers switching to another supplier by issuing online discounts for first time buyers then an increase in discounts for bulk ticket buying and regular ticket buyers. This has strengthened their bargaining power.
Obviously, the last thing established firms want is someone else taking their profits, but this is always a possibility if other people can enter the industry easily. High profits in incumbent firms always attract attention, so profitable firms in easily accessible industries are constantly under pressure from new competitors. The most profitable industries are those that are very difficult to enter. They have barriers preventing entry by other companies.Porter spells out seven major barriers to entry in to a business. These major barriers are the economies of scale available to existing competitors, access to input and distribution channel, the resistance offered by existing businesses, the capital costs of entry, regulatory and legal constraints, brand loyalty and customer switching costs.Due to the decrease of the profit of airline industry is not safe for new firms to enter the market. In addition to this, the airline industry now is extremely uncertain and new entrants need expensive start up costs. Threat of new entrance in the airline industry is low; however, the probability of the alliances and joint ventures between existing firms is very high.
Although threat of new entrants is low, British Airways is still improving it's services dramtically through information technology where purchasing tickets online as well as last minute emergency buying machines at airports across the UK can be easy, fast & efficent resulting in ticket prices being driven down lower than ever due to high sales. Information Technology has also helped in tickets that are lost can be instantly replace as they have a customer database record of purchases made which maximises customer service relations. The revenue will help with paying off expensive fuel and running costs of the plane as well as expensive overhead costs so they can maximise company profits and have competitive advantage.
Again, this is very similar to the threat of new entrants. If customers can get another product that does a similar job, they will not accept excessive profits in an industry. For the firm, the most desirable position is where there are no substitute products. The extent of the threat from a particular substitute will depend upon the extent to which the price and performance of the substitute can match the industryââ‚¬â„¢s product and the willingness of the buyers to switch to the substitute. After the September the 11th people in the UK, prefer to take the Euro Star to go shopping in Paris rather than going to New York with airplane. Furthermore, people that travel within Europe has the ability to go with their car for instance to Amsterdam because it offers them security and comfort ability. The airline industry is constrained by the price and excessive promotion of the above substitutes. Heavy promotion of the cheap UK to US calls works against airlines. It could be concluded, that airline industry experiences heavy pressure from substitute products.
Once again Information Technology helps to keeps threat of substitutes to a minimum through online efficient purchasing and discounting for regular & bulk buying ticket services so customers won't go elsewhere part of an incentive to create a consumer's demand.
When analysing competition it is necessary to outline, that one airlineââ‚¬â„¢s competitors are not only other airlines operating on this route, but airlines that fly to other destinations, trains. Other competitors are personal cars of the people, who intend to travel. Taking into account these factors it is possible to say, that rivalry in the airline industry is very aggressive at the moment and for any airline company it is necessary to upgrade its strategy on the continuous basis to compete successfully on the market.
The main problem with British Airways is polution caused by it's airlines. This has caused problems for them as people who are trying to go green would resent flying and would try to find alternative transports for e.g. ships, ferrys & boats.
Breakthrough in information systems management has found ways of reducing polution in the air cause by major airlines like British Airways by designing and building more aerodynamic, lighter weight planes so the fuel consumption is decreased as a result of that which is also helped by making more efficent fuels for the planes.
Information systems is integral to the business of British airways and it is always responding to the changes in environment by using information systems to rethink it's business processes by adapting to the current climate of technological advancement. Running an airline is based on a high amount of information content which is mastered by an information management strategy. Information systems play a critical role in such key functions as the passenger reservation systems; yield management systems and flight operation. Apart from the above-mentioned examples there are various other fields in which information systems play a vital role in British airways. Some of them are very useful in terms to know the financial status of British airways, the future investment etc.
British airways can be broadly divided into different levels of information systems within the organization. Some of them, which are mentioned above, are Strategic level information system. This information system is used to take strategic decisions to aid in forecasting the budget for the company. Decisions include review of financial statements and estimations of future profits and costs and thus helping them to budget for the next few years. Management-level systems This information system helps the Management to do and track Sales. The managers get ready data of quantitative analysis. They get ready coefficients, pie diagrams, charts etc and thus track sales according to their products and Regions, which they cover. Knowledge-level systems This information system helps the people in the technical departments and those involved in the research and development by aiding in tracking the developments in the technical and research fronts. These systems help British Airways to automate all the paperwork and thus bring about efficient office work. Operational-Level systems These systems include Transaction Processing Systems as follows. Order Tracking System: This system uses an information base of all the orders undertaken over a period for ready reference and action. The order database is used to service the clients and distributors and works in conjunction with other transaction processing system.
A detailed analysis on the British Airways was conducted involving a Porterââ‚¬â„¢s five forces analysis. We have considered all the external and internal environment factors that affected British Airways and we realised that although is a well known airline industry it still has its limitations. The airline industry is monopolistic competition as airline companiesââ‚¬â„¢ focus on particular segments. As an airline industry, British Airways is facing competition and it faces a downturn in economy. It has the latest check in technology through highly effiicient information systems. The relationships between the staff members are Excellent with the use of strategic information management. Overall, British Airways is the world's second biggest international airline and has always been regarded as an industry leader with instant adaptation to the changing environment to dominate the airline industry.