Category: British Airways

Introduction & Background

In business organizations, there are many aspects that come onto repetitive considerations; culture is one of those considerations. According to Justin Paul (The Author of the International Business), culture is a manifestation of human custom, values and attributes (Paul, 2011, p. 149).

Such customs and values represent a particular system, group, society, or an organization. They are a sort of identity for such systems group and society. As per Hofstedes assessment, culture is collective programming of minds. It is programming that distinguishes one group or system from another group or system (Paul, 2011).

According to the modern literature, culture is a source of practice for international business organizations (Kinicki & Kreitner, 1999, p. 42). Culture has influences for strategies, decisions, plans and actions which take place inside the organization system. Similarly, the literature also highlights that culture is a part of the organization system. It has influence for all components of the system, whether its leadership, management or administration all comes under the affect of culture and its changing dimensions (Hauser, 1999).

In theorists perspective, there are different levels of cultural diffusion. Likewise, culture diffuses through National level-outside (macro level) and through organizational level-inside (micro level), depending upon the nature and scope of the business in which it corresponds (NDU, 2013). The wider scope of a business the broader are dimensions of a culture to affect. Similarly, the national culture shapes up through societal norms while organizational culture gets formed through human behaviors, practices and attributes. It includes the practices of professionals and practices of the corporate, which eventually shapes up the organizational culture and system (Kinicki & Kreitner, 1999).

For international business organizations, timely assessment and evaluation of the culture is vital (NDU, 2013). Organizations cannot survive or sustain if they do not have a close eye on their cultures. According to the modern literature, cross cultural management is precisely crucial for businesses, especially multinational corporations which comprise a cross-cultural system of human behaviors and attributes (Kinicki & Kreitner, 1999). To bring the competitive strength and effectiveness, it is necessary that organizations change, reform and improve their business cultures. It has been a frequent practice, a popular activity accompanied by all international corporations (Paul, 2011).

In view of the discussion, there are two of the leading companies which are going to be analyzed in this study, Virgin Atlantic Airways and British Airways. Here is the assessment for both organizations in international business perspective:

Company Background and Structure

Virgin Atlantic Airways

Virgin Atlantic Airways is one of the renowned UKs airline firms established in 1984 by the famous entrepreneur Richard Branson. The company owns its place in the international airline market. The best services include mixed fleets based on Airbuses and Boeing wide-bodied airplanes, which are trademarks of the company (Virgin Atlantic, 2013).

Virgin Atlantic has established its name due to innovation and creativeness which are attributes innate by Richard Branson to the company system and culture. Meanwhile, with a starting off name the company determined its first place and still today believes in the philosophy of innovation and advancement which seems to be the companys real strengths and potencies (Virgin Atlantic, 2013).

British Airways

British Airways is another trademark company in the airline sector. The company got established in 1974 and since then it came out as a flag carrying European organization for airline fleet services. Meanwhile, the organization is the member of the European Royal Family holding the name and recognition of the European monarchs (Hoovers, 2013).

The company provides flight and courier services to more than 70 countries across the world. The fleet services are based on Airbus and Boeings which travels to more than 150 destinations of the world (Hoovers, 2013). BAs flight central hubs are Londons Heathrow, Gatwick and London airports which take flight exchanges for national and international regions.

Apart from all, British Airways is the member of the American Airlines and One World Alliance, which shows the companys direct international recognition and status. There is a strong affiliation with governmental authorities, which makes British Airways a public service organization (Hoovers, 2013).

Leadership & Culture

Virgin Airways

As the above discussion highlights that culture is influential for all segments of an organization. Whether its leadership, management or administration, all falls under the influence of culture and its dimensions. Some organizations adopt a culture from their leaders while some take it through learning and experience (Virgin Atlantic, 2012). Virgin Airways is an organization which took inspirations and culture from the leadership.

The leadership of Richard Branson, who was a courageous, a daunting and an imaginative man brought the brightest culture of innovation to the organization system. With a true entrepreneurial spirit Richard Branson innate the culture of advancement and technology. This was to bring modification and creativeness in the organization system and in the thoughts and actions of the people associated to the organization (McClendon, 2009).

British Airways

On the other hand, British Airways has a much diversified business system. The diversity is in terms of employees experiences and in terms of operations and services. In recent times, the leadership has a wider vision as British Airways is all about bringing people together (British Airways, 2012).

Giving full opportunities to the employees has become a tradition in British Airways system. 36 million people, who travel all the way with BA, are given chances of self development and training. They are provided equal opportunities to make the organization system prolong and effective (British Airways, 2012).

Issues prevailing within Organization System

Virgin Airways

In view of the Virgin Airways system, there have been several issues, which the organization has faced. The issues were at the managerial side just as the young team management or cross cultural development and at the leadership side just as the establishment of Bransons innovative philosophy (Virgin Atlantic, 2012).

Bringing a technological fleet service with a competitive low price was another significant challenge. Price competition was a core challenge because the fleet services derived from Bransons rich philosophy were respectively high in price than other rivalries in the market British Airways (Burke, 2010).

British Airways has been a direct international competitor of VA. Being a public service organization, BA has competed on price grounds as it offered low price fleet services with respect to VA. VA provided quality fleet in high price while BA provided mid level fleet in respective low price. In this way, price was the greatest challenge for VA especially in the international market, which already contains several other price competitors like Singapore Airlines or Arabian Airlines (Virgin Atlantic, 2012).

These were the macro level challenges (cultural, environmental, political and economical), which VA had to manage to build its place in the international business market. This required an assessment of the VAs internal culture which is based on two micro level practices, professional and corporate (Virgin Atlantic, 2012).

British Airways

Just like VA, British Airways has also been in the siege of problems. There have been problems associated to culture and system of the organization (Hauser, 1999). Due to cultural instability, the organization has been challenged in the international business operation. Managing business in cross cultural way and in the diversified international market all became difficult for organization and its administration (Burke, 2010).

Since from the origin, BA has remained in the transformation phase, the transformation of culture and the system. The main problem was in the culture which affected all segments of BA.

Some leaders at BA appreciated the conventional culture which was close to governmental rules and interferences while some admired the culture of privatization which contained the elements of advancement, technology and innovation. It was due to governmental interference the organization has remained stagnant in growth and technology (Hoovers, 2013).

Managing Conflicts & Issues

Virgin Airways

According to Richard Branson, Im often asked what it is that makes Virgin different. The simple answer is  our people. If it werent for a bunch of well trained, motivated and, above all, happy people doing their bit, wed have never launched a record label, never mind a fleet of 747s (Virgin Atlantic, 2012). From this statement, it can be said that behind VAs success, there are two strong forces; one leadership with the brightest vision and culture, and second human resource with the capability to adopt that culture (Virgin Atlantic, 2012).

For managing issues, the leadership precisely focused on personnel management and engagement. Managing individuals first has brought a way for the organization to cross cultural integration (Hall, 2007, pp. 120). Developing wider communication networks and international communication programs are some of the strategies laid by the VAs administration.

These are to bring strong and effective cross cultural system based on personnel management rules and principles. Hence, it can be said that VA evolved through people oriented culture. Individuals were considered as the force and strengths of the organization to find its way in the international business market (Aluya, 2009, pp. 27).

Apart from all, the organization has brought action plans for international business expansion. Over taking companies running out of the businesses has been part of the VAs action strategy (Aluya, 2009). The company acquired failed brands and promoted them by its stable name and logo.

This was a risk taking strategy but eventually came out well for Virtual Airways international business. The Virgin group expanded in the form of Virgin Blue (The Australian affiliation of VA). It expanded to US, New Zealand, Thailand, and South Africa, which brought intensive prospects for the company in the next few years of time.

Similarly, with on-board innovation VA worked out on design and service (Aluya, 2009). Providing exceptional flying experience to the customer and taking alternates of the biofuel have been strategies of VA to determine its first place in the international airline market. This was a technological move assessed by the companys leaders to make VA an international business organization (Walenius, 2010).

British Airways

Culture, mainly acquired from the macro side (National level), and micro side (internal trends) has been the problem for BA. Since from the last decade, the company has shown good progress, and this is because the culture has been changed and improved. Thanks to Long King and Sir Collin Marshall who worked out aggressively to change the culture of BA. The improvement in service is a result of such cultural change which was engineered by both of revered former leaders (Mayle, 2006).

After the company recognized its problem culture, it started to change it by personnel management and team leadership. Under the leadership of Sir Collin Marshal, BA acquired revolutionary approach. It was for changing the culture by using human resource as a force of change (Mayle, 2006). In Collins period, the company launched the programme of MFI (Managing People First), which was to assert individuals as a source of cultural change.

This was to bring an intrinsic change that is a long term, sustainable and effective for BAs international business operation. Today, British Airways has acquired a dominant position in the international market, and the secret behind it is not technology nor advancement but in-fact an intrinsic cultural change initially proposed and suggested by Sir Collin and Long King (Mayle, 2006, p. 177).

Apart from all, Nick Georgiades (former head of the human resources BA) introduced a three leg stool approach. The approach was there to establish MFI programme. The first leg of the stool was about communication, coordination and team building; the second on performance appraisal and the third on rewarding employees. After completing the stool and establishing it at the organizational level, the organization was transformed with new principles and trends to achieve progress (Burke, 2010).

This improved segmental performance including performance of engineering, operation and management which overall boosted the performance of BA in the international business market. Hence, by establishing a new culture (a revolutionary one), BA acquired a new place in the market (Burke, 2010, p. 238).

Conclusion & Recommendation

After analyzing both companies, it can be said that culture is a central influential factor for organizations. It affects all areas including, leadership, management or administration. Virgin Airways acquired culture through leadership while BA attained it through learning and experience.

There were significant differences of how culture evolved and affected both organizations and their systems. Meanwhile, British Airways was affected by conventional culture, which was based on Government rules and decisions. As soon as the company realized that it should adapt change, things turned out well for the organization and its system.

Similarly, Virgin Airways, which was more on the innovation side, headed forward by a strong leadership vision. Richard Branson the head of the company had a strong vision and ideology. He established a unified culture within the organization system, which ultimately brought strength for VA to move in the international business perspective.

Based on the analysis, it is recommended that BA should work on the technological aspect. Moving on with innovation has become a requirement and hence has to be adapted within BAs system. Similarly, for Virgin Airways it is recommended that organization concentrate on price aspect.

Moving on with low price can create a competitive advantage for the company. Apart from all, Virgin Airways should prolong its innovative principles. By sustaining innovation, the company can become more dominant in the international business spectrum.

Reference List

Aluya, J. (2009). Complexity of Leadership, Organizations and the Real Estate Industry: Disrupting Existing Systems. Bloomington: Author House.

British Airways. (2012). Our History and Culture. Web.

Burke, W. (2010). Organization Change: Theory and Practice. London: SAGE.

Hall, D., 2007. Business Studies. New Delhi: Pearson Education India.

Hauser, M. (1999). Cultural Influences on Leadership and Organizations: Project Globe. Zurich: University of Zurich.

Hoovers. (2013). British Airways Plc Company Profile. Web.

Kinicki, A., & Kreitner, R. (1999). Organizational Behavior 3E. New York: Tata McGraw-Hill Education.

Mayle, D. (2006). Managing Innovation and Change. London: SAGE.

McClendon, J. (2009). Richard Branson: Virgin Entrepreneur. Web.

NDU. (2013). Organizational Culture. Web.

Paul, J. (2011). International Business. New Delhi: PHI Learning Pvt.

Virgin Atlantic. (2012). Culture. Web.

Virgin Atlantic. (2013). Profile: Virgin Atlantic. Web.

Walenius, M. (2010). The leadership style of Sir Richard Branson. Web.

Abstract

Automated Storage and Retrieval System has become one of the very popular systems used in managing materials in warehouses. Soon after designing its new warehouse, the management of the British Airways Avionics Engineering realised that they needed this tool to enhance efficiency and cut costs of their operations. This study has revealed that the system was indeed appropriate for this firm at the time of its implementation. The study has also identified several deficiencies in the layout of the firms new facility. The main issue identified was the use of vertical space.

Introduction

The British Airways Avionic Engineering Limited (BAAE) was founded in 1993 as a subsidiary of the British Airways Group (Pathak 2005). The firm has its headquarters in Llantrisant, Wales, and it specialises in the repair of avionic equipment for British Airways. According to Tan (2002), this company was established as a way of reducing overreliance on other companies to handle repairs at this firm.

The new subsidiary grew rapidly as it had a major client which was also the parent company. One of the main issues that this firm faced soon after starting its operations was effective warehousing strategies. Most of the equipment and spare parts require proper storage to ensure that they are protected from damage and rust. As the firm grew in size, its inventory also increased considerably and the management realised that much time was wasted in the warehouses.

Sometimes the firm would be forced to purchase parts and equipment that were available but misplaced within the warehouse. This was a serious impediment to the success of this company given that the client was becoming a dominant player in the aviation sector. According to Reeves (2008), for a long time, many companies have always ignored the need to develop technology-based systems to manage inventories in their warehouses.

For British Airways Avionic Engineering Limited, a time had come when it had to re-evaluate its warehousing strategies and find the best ways of using modern technologies as a way of achieving success. One of the most appropriate technology-based systems that were available for this firm was the Automated Storage and Retrieval System (AS/RS). In this paper, the researcher will critically analyse the relevance of this system for this firm.

Automated Storage and Retrieval System (AS/RS) as the most cost-effective and efficient warehouse handling system

The British Airways Avionic Engineering Limited handles a wide variety of equipment and spare parts meant for the maintenance of the British Airways planes (Meghanathan, Nagamalai, & Chaki 2013). As shown in the case study, these items are very sensitive and require handling with care. It is, therefore, very important to come up with a warehousing system that can meet the specific needs of this company. Automated Storage and Retrieval System is the most cost-effective and efficient warehousing system for this firm because of the following reasons.

This computerised system keeps data of every item that is within the warehouse specifying the quantity, quality, and any other relevant information. In the past, this company relied on manual records to store such information, and sometimes it was not easy to retrieve the required information as per the required efficiency. Automated Storage and Retrieval System has solved this problem. It made it possible for the data needed to be retrieved without any difficulty.

The management also knew what was available in the warehouse and what needed to be replaced (Wang 2009). This system has also helped in addressing one of the major problems of buying items that were still available within the firm. Sometimes the firm would be forced to purchase new spare parts and equipment simply because those that are available were misplaced. The company was also finding it problematic knowing when important equipment and spare parts needed to be purchased. The poor recording system made it difficult to know when it was necessary to look for additional resources.

Within the warehouses of the British Airways Avionic Engineering, there was a problem of constant damages due to physical handling by the attendants. This was costing this firm a lot because every time an item was broken, it had to be replaced. The case study gives a clear example of how the handling of the items within the warehouse was not only physically demanding for the employees but it was also costing the firm a lot due to the damages.

The use of AS/RS has offered a perfect solution to this problem. The attendants no longer have to handle these tools and equipment. Everything is controlled remotely using a computer. When there is an item within the warehouse that needs to be retrieved, the instruction is fed into the system. Using the conveyor belt, the specific item would be moved from the position where it was stored to the point where it should be picked without any manual labour. This has significantly reduced cases of damage to materials within the warehouse.

This system is very cost effective for this firm. Since the initial cost of installation is high, once installed the system eliminates the need for attendants to handle goods in the warehouse. Most of the physical activities previously done by employees can now be done by the machine. It means that the cost of labour will be reduced significantly within this firm. These are reasons that justify the relevance of this system for the British Airways Avionic Engineering. It is also important to note that this system plays a critical role in strategic management (Jessop, Morrison & Morrison 2005). It provides management with information such as the flow of inventories which can be used to make important decisions.

Deficiencies in the layout of new BAAEs facility in Llantrisant

The layout of the new British Airways Avionic Engineering was designed precisely to function under the new Automated Storage and Retrieval System that the firm had just employed. According to Moore, Grammich, and Bickel (2007), AS/RS is a unique warehousing system that cannot work in poorly designed warehouses managed through manual labour. It needs a layout that will make it easy for the conveyor belts and other components of the system to coordinate very closely and ensure that instruction issued is followed efficiently.

That is why the management of this firm considered having a new facility that would meet the basic expectations. It is important to appreciate the good work that has been done in coming up with the layout. The designer was also interested in coming up with a beautiful structure besides the issue of functionality. However, this new layout designed in 1995 had several fundamental deficiencies that reduced its functionality.

As shown in the design, one of the biggest deficiencies in the layout of the new facility was space utilisation. According to Taniar and Rusu (2010), in the past emphasis was laid on the size of the warehouse in determining its capacity. However, this has changed in modern society that is highly based on technology. Emphasis is now laid on the inventory turnover rates and efficiency. The design given in the case study has not maximised the use of available space as would be expected given that this firm was planning to fully implement Automated Storage and Retrieval System.

Given the scale provided in the figure, it is clear that the distance between the east wing and the central command center is over 15 meters. The same space has been left between the central command center and the west wing. It means that the layout has been spread within the compound. This is a design that goes against the modern-day designs where architects and engineers are keen on taking advantage of the vertical space instead of the horizontal space.

As the population continues to increase, pressure on the horizontal space continues to increase. As such, designers are keen on taking advantage of the vertical space, something that was not taken into consideration when developing this design. As Morrison and Jessop (2006) say, warehouses that embrace Automated Storage and Retrieval System are expected to maximise on the horizontal space more than the vertical space. This is so because most of the goods in the warehouse are handled by machines. These machines work more efficiently in the vertical space than they do in the horizontal space.

The layout shows that the automated warehouse is in the middle of the two main workshops. This might have been designed purposefully to ensure that materials can move to either of the workshops with ease. However, this may be considered a deficiency despite the rationale. Since most of the physical activities will be done by the machine, an engineer should be concerned about the amount of energy that will be used when the system goes operational.

If the layout involves more work per unit for the machine, then it also means that there will be more energy use per unit. As stated above, the distance between the central command center and the two wings which are the workshops is over 15 meters. What this means is that the machines will use more energy even when delivering a small item from the store to another. The layout should have been designed in a way that each of the two workshops has its warehouses.

Both of them can be controlled from the command center to make coordination of activities easier. These two workshops are responsible for distinct functions in the repair and maintenance of the planes. As such, it is known the type of equipment and spare parts needed in each of the two warehouses. It will be reasonable to reduce the distance covered in delivering products to the targeted area. These fundamental flaws in the layout of the new warehouse can be attributed to the emphasis that was laid on the beauty of the shape. The identified weaknesses should be avoided when coming up with future designs for this firm.

The most effective internal distribution system for BAAE in the new facility

British Airways Avionic Engineerings new facility needs an effective internal distribution system which will ensure that goods move from where they are stored to places where they are needed. According to Crocker, Jessop, and Morrison (2011), several systems are currently used in ensuring that there is an effective distribution of the materials within the stores and from the stores to the workshop.

Given that the management has decided to automate its warehousing activities, Automated Storage and Retrieval System would be the most appropriate for this firm. As suggested above, the physical gap between the warehouse and the workshop should be minimized as much as possible. When this is done, it becomes possible to move items through the system from the warehouse right to the workshop. This system is recommended because of the number of benefits it offers.

When this system is used effectively, the need for human labour will be significantly reduced. Most of the tasks previously done by the employees will now be done using the system. It means that occupational safety will be enhanced within this firm because the risk of people getting physical injuries in the stores will be significantly reduced. The costs of compensations and treatment of such employees will also be eliminated. The warehouse and the workshops will, therefore, be run cost-effectively.

Compact picking of materials is a task that can be very challenging when it is done using manual labour. This is so because the capacity of humans is always limited in terms of the amount of weight they can carry. However, this is not the case when the Automated Storage and Retrieval System is used. The system makes it easy for a compact of materials to be delivered to the desired location within the warehouse or workshop irrespective of the weight. This capability of the system enhances efficiency in internal distribution.

As shown in the above discussion, the Automated Storage and Retrieval System is multipurpose. It goes beyond ensuring that materials are safely stored within the warehouses. It also takes care of the internal movements and automatic stock-taking within the warehouse. According to Wasserman and McLean (2003), organisations are currently keen on embracing systems that can perform more than one task. This is one way of reducing the costs of production.

The British Airways Avionics Engineering will benefit a lot from this system in terms of efficiency and cost-effectiveness. As Treebhoohun (2011) notes efficiency and cost-effectiveness are issues that are critical in the aviation industry. This firm is often under pressure to ensure that the planes of its parent company are serviced in time and as per the expected standards. The maintenance process should also be conducted using the least cost possible to ensure that operations of the firm are conscious of the need to be profitable.

Conclusion

The British Airways Avionics Engineering was established with the primary purpose of offering repair and maintenance services to British Airways, its parent company. Soon after starting its operations, the management of this firm realized that it needed an inventory management system that does not heavily rely on human labour. Automated Storage and Retrieval System came out as the most efficient system that could address the challenges faced in managing the materials in the warehouse. The system not only increases efficiency in operations but also reduces the overall cost of operation.

References

Crocker, B, Jessop, D & Morrison, A 2011, Inbound logistics management: Storage and supply of materials for the modern supply chain, Pearson, Harlow.

Jessop, D, Morrison, A & Morrison, H 2005, Storage and supply of materials, ELBS with Pitman, London.

Meghanathan, N, Nagamalai, D & Chaki, N 2013, Advances in computing and information technology: Proceedings of the second International Conference on Advances in Computing and Information Technology (ACITY), Springer, Berlin.

Moore, N, Grammich, C & Bickel, R 2007, Developing tailored supply strategies, Rand Corp, Santa Monica.

Morrison, A & Jessop, D 2006, Storage and control of stock: For commerce, industry and public undertakings, Pitman, London.

Pathak, J 2005, Information technology auditing: An evolving agenda, Springer, Berlin.

Reeves, L 2008, A managers guide to data warehousing, Wiley, Hoboken.

Tan, F 2002, Global perspective of information technology management, IRM Press, Hershey.

Taniar, D & Rusu, L 2010, Strategic advancements in utilising data mining and warehousing technologies: New concepts and developments, Information Science Reference, Hershey.

Treebhoohun, N 2011, Promoting IT enabled services, Commonwealth Secretariat, London.

Wang, J 2009, Encyclopedia of data warehousing and mining, Information Science Reference, Hershey.

Wasserman, P & McLean, J 2003, Consultants and consulting organisations directory, Gale Research Co, Detroit.

Introduction

British Airways (BA) is an airline that prides itself as the Worlds Favorite Airline. The airline has terminals around the world and in a bid to attract more customers it has to make sure that people view its services as both classy and affordable. This is the message that is carried in most if not all of its advertisements and marketing campaigns. In this discussion, we shall analyze two of BAs print media advertisements and a press release, with the aim of establishing whether or not the company uses Integrated Marketing Communication (IMC) techniques as part of its marketing strategy.

Advertisement 1-Terminal 5

This advertisement was meant to let the public know that Terminal 5 was in operation and that it had helped cut the clearance time per customer to 4.7 minutes (Terminal 5). The advertisement shows a lady checking out the flight board while leaning on her luggage trolley. She appears relaxed and from the explanation provided, we get to know that she is headed to Beijing to watch her boyfriend compete in a rowing competition.

Advertisement 2-Sea of Tranquility

This advertisement employed the use of graphic design techniques to depict an island in the sea. The island takes the shape of a relaxing man. The sea has branded the Sea of Tranquility and the island has been named the Isle of Comfort (Sea of Tranquility).

Press release-World Records

On March 10^th, 2013, BA decided to use a unique technique to raise funds for its charity project named Flying Start. For this purpose, the airline held an exclusive performance for 128 passengers aboard one of its flights (British Airways 1). In the process, the airline entered the Guinness Book of Records for holding the Worlds Highest Concert. After the show, the passengers aboard the plane took part in a recording of the Harlem Shake, which was the biggest internet craze at the time. Coincidentally, this became the Worlds Highest Harlem Shake. The press release describes how the two records were achieved in detail.

From the advertisements and press releases, BA is presented as a time-efficient and caring airline in terms of ascertaining customer-comfort and provision of on-board entertainment. The Terminal 5 advertisement assures the customers that they will save time by using BA, while the Sea of Tranquility artwork guarantees that passengers using the airlines flights will enjoy the utmost levels of comfort and peace of mind. The World Records press release describes BA as a fun airline and one that cares about society through its Corporate Social Responsibility (CSR) strategies.

In developing all the three forms of public communication, the advertising specialists at BA clearly went through all the stages of a good IMC technique. Their approach has been summarized below:

1. Awareness: Through the Harlem Shake it is clear that BA strategists are always tracking the changing social and cultural trends.
2. Image integration-BA maintained the message that it is reliable in all aspects through all advertisements.
3. The functional integration-The airline may have analyzed popular airline advertisements and found that most of them seem too serious. This could explain why the Harlem Shake, the Sea of Tranquility, and the Terminal 5 advertisements take a seemingly casual approach.
4. Coordinated integration-All the three advertisements describe BA as better than competitors.
5. Consumer-based integration-The Terminal 5 and Sea of Tranquility advertisements present BA as an airline that is concerned about the needs of its customers.

Works Cited

British Airways. British Airways flies into the Guinness World Records Book. 2013. Web.

Sea of Tranquility n.d. Web.

Terminal 5 n.d. Web.

British Airways was formed in 1974 and it is the flag carrier company of the United Kingdom. These last two decades, the company experienced rapid growth and now has become one of the most prestigious worldwide flying carriers. In the beginning it was formed based on a public ownership scheme but later it undertook a series of transformations throughout the 70 and the 80. These transformations culminated in February 1987 when it was privatized by the Conservative government in Britain. At the same time it was indexed at the London Stock Exchange and made a constituent of the FTSE 100 Index. Since that time the airline boosted and, in a period when most big airlines struggled to gain profits, it remained on top of the preferences of worldwide customers. Since that time it had passed a turbulent era of high competition, rising oil prices (which meant cost increase) and even financial scandals, like the 2007 fine for price-fixing.

Companys Mission Statement

According to its current Chairman, the mission of British Airways is to serve the customer with the highest quality service possible and make all the necessary financial operations to satisfy its shareholders too (2007/08 Annual Report, par. 1).

Companys products.

Being a flying carrier company, British Airways is part of the airline industry and airline marketplace. The airline industry market has been under serious difficulties in the last decade. The last was the oil price rapid increase of the last few years, which disfavored the company by raising the fuel costs for its jets. This meant a rise in total operations costs. As stated on their official website, British Airways offers two basic services to the market: passenger flight services and cargo flights service (What we offer par. 1). These are the main products that the company operates. These two basic services are differentiated into categories for business purposes. The cargo flights service remains intact and has no category but the passenger flights service is composed of four categories and one mix-category package. The four categories offered are first class flights, business class flights, premium economic flights and economic flights (Travel Classes, par. 1,2,3,4). The first class and business class are part of the business flights service within the passenger flights service offered and the other two are part of the economic flights service for passengers. Also, the company has operative the mix-category Holiday package. This service comprises hotels, resorts and flight offers. The company has signed agreements with hotels and resorts around the world and offers the flight, along with return, to those places.

Competition and position on the market

As valuated by the 2008 Barclaycard Business, British Airways has a leading position in the airline market (Press Release, par. 2). From the same source, a couple of paragraphs below, we found the identities of the companys main competitors. Above all, the strongest direct competitor is the German flag carrier company, Lufthansa. Then two other big companies come to Air France and the Fly Emirates. This is on a global market scale. All of the mentioned companies, including the one we are discussing here, operate in almost all of the worlds markets: Europe, North America, Middle East and Central Asia, Far East and Australia. Of course the competitiveness is different according to the market British Airways is competing in. In the European and North American market the company we are discussing has a leader position on the market and its expanding more its market share (Press Release, par. 6). In the Middle East/ Central Asia and the Far East it may not be the leader but it has a relatively good market share (Press Release, par. 8).

References

1. What we offer. 2008. The British Airways Plc. Official Website.
2. 2007/08 Annual Report. 2008. The British Airways Plc. Official Website. Web.
3. Travel Classes. 2008. The British Airways Plc. Official Website. Web.
4. Holiday package. 2008. The British Airways Plc. Official Website.
5. Press Release. 2008. Barclaycard Business.

Introduction

Undoubtedly, British Airways is one of the largest carrier airlines in the world. British Airways has its headquarters in Waterside, United Kingdom, and operates into various destinations in the world. Mainly, the company operates from three hubs in United Kingdom, that is, London Heathrow Airport, Gatwick Airport and London City Airport.

So far, according to statistical reports, British Airways has grown to become the one of the largest airline companies on fleet size, international flights and destinations. From Africa countries to Asian destinations to Europe and South America, British Airways flies its flag high. Since its establishment in 1971, British Airways has undergone major changes that include merging of the then small airlines such as Northeast Airlines, Cambrian Airlines, Newcastle upon Tyre and Cardiff Airlines.

Precisely, in 1974, the four airline companies merged to form British Airways. However, thirteen years later, the then government of United Kingdom plotted a plan and privatised British Airways. Having undergone privatisation, the carrier embarked in a mission to expand its territories by acquiring British Calderon and Dan-Air airlines in 1987 and 1992 respectively (Marriott, 1998, pp. 4-13).

With time, the carrier went a step further to purchase new aircrafts for example, Boeing 787s and Airbus A320 family thus, expanding its operations and services. On 30 July 2008, British Airways and Spanish carrier Iberia embarked on discussions that will see British Airways takeover Iberia. One year later, the two carriers announced a pilot concurrence to merge the two carriers. The paper will examine the merging of British Airways and Iberia, the initial bid paid and other subsequent prices.

The paper will also examine the bid premium, the financing of the takeover, and the implications for the shareholders in the two companies. Lastly, the critical analysis into this takeover will establish the successes of the takeover. It is also important to note that in terms of corporate affairs, British Airways trades in London Stock Exchange following the successful Iberia takeover. This means that shareholders played a significant role in the realisation of the merger (British Airways, 2010, p.1).

Iberia /British Airways Bid

In normal bidding processes, the initial offer opens for 21 days, followed by 14 days of revision and finally, 60 days for the official bid. The bid involving Iberia and British Airways underwent the three stages. The market value of Iberia was 3.74 billion Euros and this was the initial bid totalling to 10 percent.

British Airways later increased this value to the current 13 percent. The desire to dominate the world airline industry prompted British Airways to engage in discussion that will see it take over Spanish carrier, Iberia. However, it is important to note that the bidding process of British Airways and Iberia took two and half years to complete. Although retaining their separate brands, the takeover between British Airways and Iberia had its own significance of establishing one of the most successful profit-making organizations in the world.

Undoubtedly, the successful takeover of Iberia/ British Airways established the third-largest carrier firm in the world in terms of annual proceeds. It is also important to note that the takeover saw British Airways/Iberia become the second largest airline group in the entire Europe.

So far, the two carriers now merged together are operational having commenced their services as an alliance in October 6, 2010. It is imperative to note that shareholders play a significant role in the management of organisations such as British Airways and Iberia. Without their consent, it is sometimes hard to carry out major operations aimed at attaining targets or acquisition. This is the same case with British Airways and Iberia takeover.

Financial experts drawn from the two carrier companies estimated the cost of the takeover to be 5.7 billion pounds (or US$8.9 billion). The two carrier companies agreed on this estimated value and consequently sought the consent of the shareholders. The shareholders of the two carrier companies had to vote in favour of the issue in order to grant permission for the merging of the two carrier companies. Interestingly, over 99 percent of the shareholders of both British Airways and Iberia voted in favour of the bid thus, allowing the merging of the two companies.

In separate investor meetings held in London and Madrid, the executives announced the vote results marking the deal with investors’ rubber stamp. Nevertheless, the deal did not go well especially with the cabin crew workers of British Airways. Just like the shareholders, the cabin crew workers had to vote on the issue. However, their plan did not mature to fruition (British Airways and Iberia sign merger agreement, 2010, p.1).

The potential motive of merging the two companies was to create a brawny business empire that will withstand the global credit squeeze. It is paramount to note that due to the prevailing economic downturn, many people had opted out of leisure activities. Consequently, the airline industry faced declining demand in terms of business and leisure voyagers.

Perhaps, the merging of the two carrier companies in an all-stock transaction was a sure way of sustaining the industry and preventing it from collapsing. According to the Chairman of British Airways, Martin Broughton, the merger of British Airways and Biers was a gripping, tactical and financial logic aimed at benefiting all stakeholders: cabin crew workers, travellers and shareholders.

On his part, the Chief Executive of British Airways retorted that the successful merging of the two carrier companies would bring competition among carrier companies. Once completed, the deal will see shareholders possess 56 percent of the shares and the remaining 44 percent to go to Iberia shareholders.

Financing the Takeover

The taking over of Iberia was not an easy task as the merger involved huge sums of money. British Airways had to look for modalities of raising the required US$9 billion in order to seal the deal. Luckily, the presence of private equity investors strengthened the surge to acquire Iberia and make it part of the Global Airlines empire. Initially, British Airways had approached numerous credit lending bodies with an aim of raising the required money for the financing of the deal.

The Spanish airline, Iberia has a market value of 3.74 billion Euros, which is an equivalent of US$5.1 billion. Additionally, being Spain’s largest carrier, the company dominated in Latin American routes. Thus, the deal was so good to loose pending the fact that some airline companies like that of France had shown interest.

The better aspect of the bid is that British Airways was under no obligation to add supplementary capital investment, as the bid engulfed everything. Throughout the bidding process, British Airways maintained confidentiality and it did not want to disclose information regarding private equity companies. Nevertheless, British Airways had to pay an initial of 3.4 billion Euros and then pay the rest later (Brothers, 2008. p.1).

The American firm, Texas Pacific Group (TPG) had managed to buy a stake in Iberia before the merger. Thus, just like the American firm, British Airways had an obligation to pay the initial bid of 273 million Euros. However, later on, British Airways went ahead to acquire one percent of America’s state in Iberia. This brought the major stake of British Airways in Iberia to ten percent, thus, making it the biggest shareholder at least according to data released by a research firm, Bloomberg (Rowley, 2010. p.1).

Implications for shareholders in both British Airways and Iberia

For the merger to be successful, both the shareholder and the acquirer must be satisfied with the takeover price and the mode of financing. The shareholders from the two carrier companies voted in favour of the deal. According to the two airlines, the move will expand their business empire and generate more revenue. This means that if the two carrier firms generate more revenue, the share price will automatically be affected and hence, dividends.

For instance, after the completion of the deal, the new company accumulated a combined market value worth 9 billion dollars. Without any further delay, the new company started trading in London and Madrid stock markets. Upon the completion of the deal, the shares listed in London stock market (British Airways) fell in price by 2.2 percent while in Madrid’s stock market, Iberia a single Iberia share traded at 3.18 Euros, which was 1.5 percent drop from the previous price (Rhys & Tracy, 2010, p. 1).

The shareholders from the two companies believed in the existence of a strategic rationale for the deal. In other words, the takeover would spawn twelve-monthly synergies of over 400 million Euros, which to them was a good deal. With such huge sums of money generated as revenue, the shareholders, workers and customers would greatly benefit.

Moreover, the shareholders believed that the British Airways/Iberia takeover would create on of Europe’s strongest airline company that will compete with other global airlines. This clearly demonstrated the synergetic effect where values of combined entities always exceed the cumulative value of individual entities. PV (A+B) = PV (A) + PV (B) + extra.

In addition, many people deemed the deal to reduce the market power characterised by competition, absence of barriers and minimal cross-subsidization. Thus, given this scenario, the probability of attaining financial synergy is high and shareholders will rest assured of their investments.

Undoubtedly, the two companies were bound to benefit a lot financially including saving 33 percent of the generated revenue. Additionally, the takeover highlighted positive advantages such as revenue management, networking and joint venture- things that will not only increase shareholder confidence but also generate more income for them.

Nevertheless, the two companies agreed to retain their respective brands and operations although their international market portfolio changed greatly. For instance, British Airways increased its accessibility to Latin America by entering 59 new destinations from the initial 13, while Iberia gained access of 98 new destinations under the auspices of British Airways (Brothers, 2008, p.1).

The relative successes of the takeover

So far, the British Airways/Iberia takeover has achieved great success. Undeniably, the new company has increased its operations and connections across Europe and South America. With over 400 million Euros generated each year as annual synergies, the new airline projects to compete favourably with other global airlines. The new airline group had also acquired additional 419 aircrafts and increased its flying destinations in and out of Europe by 205.

Noticeably, each of the two carriers has benefitted form the other through network accessibility. On the other hand, shareholders are perhaps the greatest beneficiaries of the deal pending the increase of the share price. The takeover has also led to profit announcements, increase in dividends and expansion of assets owned by the two carrier companies.

References

British Airways and Iberia sign merger agreement. 2010. BBC News. Web.

British Airways., 2010. Explore our past: 2000- Present. Web.

Brothers, C., 2008. British Airways in Merger Talks. The New York Times. The New York Times. Web.

Marriott, L., 1998. British Airways. Vergennes: Plymouth Toy & Book.

Rhys, J. & Tracy R., 2010. British Airways and Iberia shareholders back merger. Web.

Rowley, E., 2010. The EC approves BA alliance with American Airlines and Iberia. The Telegraph (London). Web.

Introduction

British Airways commonly known as BA is one of the most renowned flight service operators in Europe. Located in the UK, the flight services use the Heathrow airport to carry people and cargo within and outside Europe. BA makes international flights and the company derives credibility from many years of service irrespective of the scandals it faces and accidents. In business, stakeholders develop a workable strategic plan that equally highlights crisis management. Within the UK, the flight offers services in Waterside in London. British Airways operate in several continents including Africa, the Americas, Asia, and the Middle East. British Airways is a result of the merger between British European Airways and British Overseas Airways Corporation among other minute airline entities in 1974 (Berenbak & Lanser 2002). Since then, British Airways adopted mergers and acquisitions as the main strategy of expansion within the European market and at the international level. After thirteen years of operation as a public organization, a private owner acquired British Airways changing its operations. The 1990s marked a period of capitalization and industrialization. Privatization became a normal thing because it helped in creating job opportunities for people while helping in economic growth. This paper intends to explain the history of British Airways, its current position and its future after a comprehensive assessment of PESTEL factors.

British Airways

In 1974, British Airways rivaled British Caledonian forcing the company to leave ownership to a private investor. The main idea was to help the firm grow independent from government policies and bureaucracy. This enabled the firm to explore other continents peaching tents in the US and Africa among other places. It continued with mergers and acquisitions enabling it to pair with Iberia Airways over a decade ago. When companies form mergers, the one with the largest share in the deal retains the name. The same happened in 2011 enabling British Airways to retain its name. Some organizations have strict policies disabling the greatest shareholders from retaining the original name. 16 years ago, British Airways could not retain names from Oneworld Alliance whose constituents merged with British Airways. The merger made the group of companies the third most affluent airline companies in the world generating about £560 million as annual turnover in 2011. Even though British Airways owned the largest share within the merger, it could not claim that it owned the stakeholders completely. British Airways is the second largest provider of domestic and international airline services in the UK. It also transports mail, cargo, and passengers within and outside the country in addition to other States. British Airlines lost its first position to a competitor equally in the private sector in 2008. Most people access the services of the company at Heathrow even though other private airports including Gatwick, Manchester, and London City Airport among others (Berenbak & Lanser 2002).

Industry analysis

The airline industry remains very competitive in Europe and the rest of the world. Hawker Siddeley Trident, Virgin Atlantic, Caledonian, and Air France are rivals for the available consumer base. All of them trade shares in the London Stock Exchange and they keep improving, which threatens the existence of British Airways. The airline industry serves people at the domestic and international levels enabling the involved stakeholders to profit from the booming business (O’neill 1990). In the early 19^th century, people associated planes with the most affluent individuals in society. Until now, airlines are more of a necessity as opposed to luxuries. The demand for planes is very high prompting companies to expand the industry while other people equally have private jets. In the UK, most companies use Heathrow including Virgin Atlantic and this increases the amount of competition faced by British Airways.

Organizational stakeholders

Stakeholders represent a group of people who take interest in British Airways including workers, employers, competitors, the media, and sponsors. The workers in the firm include the pilots, air hostesses, cabin crew, and receptionists at Heathrow among others. British Airways ensures that they live and work in an excellent environment and the company pays for the mortgages acquired by their workers. In addition, employees have trade union representation at the British Airline Pilot Association, which offers non-partisan intervention when labor conflicts ensue between the company and the staff (Prassl 2011). Another group of stakeholders includes the sponsors who purchase British Airways shares from the London Stock Exchange Market. In a recent report, the shareholders requested the firm to pay them dividends to compensate for the years they worked with the firm. Shareholders are important for British Airways because they build a good reputation for the firm enabling it to acquire new customers and to increase its profits. When shareholders dissociate with a firm, the bad reputation leads to consumer defection, and this affects profitability. The renowned stakeholders associated with the firm include Iberia, Oneworld Airlines, Cathay Pacific, Qatar Airways, Etihad Airways, American Airlines, and Canadian Airlines.

Competitors are also stakeholders in the industry that influence the performance of British Airways in the target market. Currently, the company holds third place after Star Alliance and the Sky Team (Berenbak 2002). The group of airline companies strives to provide the best services to consumers through mergers and acquisitions because this strategy helps it in dealing with competition. Suppliers are also important to British Airways including companies that provide spare parts for its Boeing planes. Other companies offer shipping services while others offer human resource outsourcing services. British Airways deals with suppliers by increasing their bargaining power while reducing the bargaining power of consumers. Other suppliers provide fuel services to the planes while outsourcing firms provide food to the employees of British Airways. Customers are the last group of stakeholders and they are the passengers. They board different planes and pay different amounts depending on age, plane type, and class. This company has flights from Singapore, Qatar, the US, and America enabling it to acquire a large consumer base in comparison to other rivals.

SWOT analysis

Strengths and weaknesses

Strengths and weaknesses represent internal factors that organizations can control. The greatest strength of the company is an established brand name since its inception. Through its corporate affairs, the company wins public goodwill easily enabling it to strengthen its already established image. The company managed to attain the standards after establishing excellent corporate relations with the relevant stakeholders. The company advertises its products through celebrity endorsements, which increase public appeal. In addition, the company has its own engineering firm, which reduces the cost of consulting experts. This also enables the company to planes because the engineering branches in Glasgow, Cardiff, and Prestwick provide customized services to each plane (O’neill 1990). However, the company also has weaknesses including the high costs of its tickets to various destinations in comparison to other competitors. Inability to settle on a particular tag line since its inception confuses consumers. However, the company can handle the weakness. In 2001, Lufthansa became one of the most admirable airline service providers because of its tagline.

Threats and opportunities

Threats and opportunities are external to an organization even though they directly influence organizational placement in a conditioned setting. Uncontrolled factors such as climatic conditions influence the safety of passengers. Sometimes the weather departments predict weather differently making it impossible for the company to determine the right weather to travel, which could change over time (Rolfe 2002). This might cause accidents for the firm, which it deals with in different ways. Sometimes accidents occur due to technical hitches and this affects the ability of passengers to use the flight. In such a situation, the reflective model by Gibbs applies. The cycle below summarises Gibbs’ school of thought.

Analysis

According to the illustration, companies have a reason to reflect on their current position while reflecting on a sustainable action plan that would change their situation forever (Black & Plowright 2010). The engineering firms might not be the only solution to the manufacture of excellent Boeing flights that have a low propensity for accidents.

PESTEL factors

Rolfe et al (2001) focus on a network of natural factors within the environment that influence business operations for most firms. The author provides an opportunity for a researcher to assess the prevailing condition of an organization, the things that the firm would do to improve, and needs for the future. For each action an organization takes, there is a consequence and British Airways only strives to achieve the best by avoiding threats and focusing on opportunities.

Political

On the political platform, British Airways enjoys good political relations in the country and other States enabling it to invest in almost all continents across the world. The only political problem it deals with includes internal conflicts of mergers and labor relations (Prassl 2011). Consequences of the same include image daunting shareholder withdrawal to other firms. For instance, in reparation to Virgin Atlantic, British Airways spent over half a million euros and this affected the political stability of the firm. In handling the same, British Airways manages merger issues by allowing each firm to retain its name. In 2008, the company acquired companies in Oneworld Airlines, but it allowed each of the acquired firms to have their original names. The political strategy helps British Airways in reinforcing relationships with its partners (Black & Plowright 2010). This enables it to win goodwill from the public and to progress in the future. Communication coupled with other subtle tactics often helps the firm in solving its political problems and the same applies to how it addresses accidents to the public. The company attorney plays a significant role in legal representation while its corporate team communicates consistently to the public. In the future, the company will have to formulate ways of handling its political issues so that they will not become threats. This includes setting up a media-monitoring unit that assesses public sentiments towards the firm in order to the management to make relevant changes before scandals occur. Finally, the firm should establish a uniform management structure so that managers would not introduce personal management plans into an existing company.

Economic

Economic recession is the worst thing that could happen to an organization. When inflation occurs, the purchasing power of consumers reduces and this affects financial returns for the firm. After 2008, British Airways faced a financial crisis between the major Global Financial Crisis (GFC) in 2009. This forced the company to form mergers with Oneworld Airways and Iberia. Iberia owned the largest shares of 45% while British Airways had 13.5%. British sought ways to maximize its profits in order to remain relevant in the merger. In 2010, it became the largest shareholder and attained public goodwill enabling it to acquire stability even after the recession. A new leader, Bob Ayling helped the company survive the crisis by saving over 700 euros in a year. In the future, British Airways should identify global outreach as opposed to physical acquisition or merger, which is very costly (Industrious times at British Airways and Ryanair 2004).

Environmental

Many rivals within the competitive environment are very careful about green living. Virgin Atlantic has green businesses promoted by its green buildings, protection of animals, and conservation of trees. British Airways strives to use jet fuel that has the least amount of greenhouse gas emissions that would destroy the environment. In the future, the company should participate in campaigns against global warming (Roberts 2009).

Conclusion

In summary, British Airways’ placement in the competitive UK market forces it to adopt realistic objectives that would help it acquire the largest consumer base. In addition, it could improve its technology in order to match the laser technology in the development of safety measures for flights. With such an opportunity, it would be easy for the firm to retain consumers while acquiring new service users.

References

Berenbak, J., & Lanser, A 2002, ‘ The structural design of the “British Airways London Eye” (Zum Tragwerksentwurf des “British Airways London Eye”)’, Stahlbau, vol. 71, no. 4, pp. 285-288.

Berenbak, J 2002, ‘The “British Airways London Eye” the greatest observation wheel in the world (Das “British Airways London Eye”)’, Stahlbau, vol. 71, no. 4, pp. 278-284.

Black, P. E., & Plowright, D 2010, ‘A multi-dimensional model of reflective learning for professional development’, Reflective Practice, vol. 11, no. 2, pp. 245-258.

‘Industrious times at British Airways and Ryanair: Winning the battle for the skies’, 2004, Strategic Direction, vol. 20, no. 4, pp. 4-6.

O’neill, B 1990, ‘The top-flight initiative at British Airways – Part 1’, Executive Development, vol. 3, 2, pp. 60-67.

Prassl, J 2011, ‘To Strike, to Serve? Industrial Action at British Airways. British Airways plc v Unite the Union (Nos 1 and 2)’, Industrial Law Journal, vol. 40, no. 1, pp. 82-91.

Roberts, 2009, ‘Encouraging reflective practice in periods of professional workplace experience: the development of a conceptual model’, Reflective Practice, vol. 10, no. 5, pp. 633-644.

Rolfe, G 2002, ‘Reflective practice: where now?’, Nurse Education in Practice, vol. 2, no. 1, pp. 21-29.

Introduction

British Airways was started in 1974 as a result of merger between two airlines, British Overseas Airways Corporation (BOAC) and British European Airways (BEA). BA is known to be one of the Leading Airlines in the world.

By the year 2001, the company had approximately 360 aircrafts and operates in ninety seven countries covering 270 destinations. BA owns stakes in other airline companies such as Australia’s Qantas and Iberia from Spain.

Business within the global market demands a great change within the operational and management practices of international business companies. Management team should ensure maintenance of excellent working conditions within companies.

They should have the ability of creating new business models for the purposes of satisfying current human needs and at the same time for profitability purposes.

Implementation of up-to-date business plan and appropriate business models ensures change in image of business companies. Great level of confidence and creativity is required for the purposes of achieving the expected financial goals.

SWOT analysis of British Airways Company

Problem definition

British Airways was faced with the threat of terrorism, since there was plan to shoot down any aircraft in space. The company was also faced with financial problems with the prediction of low revenue growth within successive years.

This would be as a result of political instability within the Gulf and economic downturn which would affect international traveling. These shortcomings gave the management of the airline very hectic time leading to loss of working esteem amongst workers.

British Airways Company was previously known to comprise of highly motivated staff. The merger of BOAC and BEA created some administrative and operational conflict amongst the staff leading to poor service provision.

The two different cultures from the two airline companies could not merge easily. This is since each of the airlines served different class of passengers jeopardizing the culture of working as a team.

There was pronounced blame-game amongst workers since no one was accountable for the poor services rendered (Vedpuriswar 1). There was sign of intense internal politics caused by the presence of massive workforce.

Reward system also involved lots of politics since employees were rewarded based on political affiliations instead of performance measures.

Justification

The management team within BA Company kept on changing CEOs due to reform issues. This signified instability on corporate culture from within the company. The CEOs barely served for five years, Bob Ayling served for four years but failed to achieve on the implementation of the reform agenda.

This was especially on cutting costs and creating conducive working environment for workers. Rod Eddington on the other hand concentrated on empowering the staff and maximizing costs on premium travels. The existing war within the Middle East threatened BA operations in 2003.

Politics were as a result of serious communication gaps existing across the organization and the authoritarian kind of management.

At the same time the structure of the airline Industry within Europe tends to offer high priced services to consumers, ignoring the plight of the middle and low income earners.

There’s need to consider consumers from all market segments through offering of affordable, cost-effective and quality services to various destinations covered by BA. Such like considerations requires thorough restructuring of the various companies within the airline industry.

Customer services within viable market niches needs to go beyond consumer expectations and cover wide population segment.

Critical Analysis

The British Airline industry suffered a lot due to its unfairness in dealing with work force and consumer prices. Expansion and success of BA is basically based on comprehensive business plans and financial models.

Part of the success also lies on BA’s ability to spend higher percentage of its operations on air which automatically results into profitability based on the level of efficiency.

The nature of BA’s organizational structure was of prime importance since it determined the nature of communication, delegation of duties ensuring good social and interactive environment. (Vedpuriswar 13).

British Airways at some point implemented the strategy of sharing its profits amongst all the employees which provided a good incentive for motivation.

However, the previous strategy provided by ‘Survival plan’ on cutting down on employee salary increment and any other leisure activities could have easily led to demotivation (Vedpuriswar 7). The major challenges within the airline industry are high competition and high operation costs.

The other challenge as outlined was availability of massive workforce that the company was unable to support efficiently. However, BA ensured that all employees receive quality training enabling professional execution of duties.

Previously all employees including pilots were considered to operate within the same level as any other employee including managers. Such consideration at some point led to unrest situations amongst the pilots (Vedpuriswar 9).

Installation of modern technology facilities enabled easier communication and also encouraged freedom of expression amongst employees.

The new management structure encouraged bottom-up style of management, where junior employees executed their duties with minimum interference from the top management team (Vedpuriswar 10).

The management team ensured existence of cooperate culture which encouraged team work and integrity within workplace. The kind of positive attitude created within the work environment focused on customer-oriented services is capable of ensuring high productivity levels.

The issue of reducing the workforce occurred on several occasions during recession periods. However, this was a good initiative capable of cutting the cost on operations. The idea of giving more attention on prime class of service within the flights and inclusion of on-line services assisted BA in improving the customer base.

Other measures undertaken to cut the costs included reduction in coordination activities with other airline companies.

As portrayed from their management strategies British Airways prefers strengthening of good employee relationships rather than forming unions. However, recruitment should be done based on professional qualifications and integrity of character.

This enables easier implementation of training programs and also ensures maintenance of discipline work environment.

The company’s integral culture has been maintained through organization of behavioral trainings and team building outings. Employees are considered crucial part of the company, hence recruitment and promotion activities done based on credentials and not political affiliations as previously experienced.

Alternative Courses of Action

In order to save BA from the spiraling losses and bankruptcy, King introduced ‘survival plan’ which was stemmed with tough immediate measures.

One of the actions was downsizing the workforce, freezing salary increment, reducing the number of destinations as well as closing two engineering bases within a year. The plan also aimed at causing massive cuts on administrative duties (Vedpuriswar 5).

Setting of an aggressive marketing team, assisted on the issues of marketing and customer services. The change in the management structure necessitated efficiency in communication across departments and coherence between operational activities and services rendered.

Profit sharing program was also introduced for the purposes of motivating employees. Besides, the staff had to undergo thorough training in order to boost corporate culture and management practices (Vedpuriswar 5).

Taking employees through trainings such as Putting People First (PPF) and Managing People First helped improving the corporate culture since employees were able to work with positive attitude and treat fellow workers with respect.

This action also helped in building new leadership skills and stable managerial behavior (Vedpuriswar 7). Team building workshops were organized, installation of feedback programs undertaken.

BA through the leadership of Ayling worked on creation of new image brand for the airline company which replaces the traditional designs.

Expansion and renovation plans included renovation of terminal at JFK airport, improved of entertainment services, offering on-line services and entering into partnerships with other airlines (Vedpuriswar 9).

In place of workers union within the Company, efficient channels of communication were created. This was provided by proactive communication team acting as a voice between management and subordinates.

The team was endowed with the responsibility of setting salary scales and also putting personnel management into check.

On the other hand diversification of skills is necessary and leadership tactics of the management team. Various means can be invented for the purposes of dealing with economic downturn; this includes forming joint ventures with discount airlines.

Evaluation of Alternatives

The operations of British Airline to different destinations of the world market including Middle East brought to consumers affordable alternative means of travel. Stiff competition from other established airlines requires thorough review of BA’s structure for the purposes of capturing both high and low market segments.

In addition to sharing of profits, the management should think of granting employees the opportunity of buying shares from BA’s stock. This would ensure high level of employee satisfaction and hence help in improving the nature of the social environment within the workplace.

Such culture of rewarding employees’ inputs based on their innovative and creativity offers conducive environment for invention. Transacting business with single plane manufacturer for long periods of time and reducing fuel consumption levels assist in cutting down expenses.

Solution

The management should adhere to the proposals on recruiting based on individual’s professional qualifications. At the same time the art removing bureaucratic hierarchy helps in efficient management practices.

The company requires installation of modern and sophisticated equipment to assist in operational practices. The issue on cost of fuel can be tackled by hedging and sealing contracts from the various suppliers.

Lots of emphasis should be placed on enriching internal culture in order to counter the wave on economic crumbles and other external pressures.

Reports reveal that Airline companies stand as some of the multi-million companies providing their shareholders with reasonable returns originating from massive asset background. Airline companies especially British Airways is identified as one with strong and liquid balance sheet.

Most of the achievements can be attributed to the nature of their facility expansion, increasing trend in customer base and the company’s policy and strategy concerning acquisition of properties.

The aggressive nature of BA management team and acquisition policy remains a threat to the rest of the companies within the airline industry.

However, environmental threat presents one of the potential operation risks the company since they have to regulate their level of carbon emissions based on different policies laid by companies.

British Airways can as well utilize the long-term growth strategy based on its strong operational performance as well as potential acquisitions. The company’s growth profile and assets makes it outstand as one of the leaders within the industry.

Conclusions and recommendations

The culture within the workplace determines the level of success of the Company. Emphasis should always be placed on marketing activities and customer care services. Success of BA as a Company could be attributed to excellent management tactics derived from frequent trainings and also professional marketing principles.

The growth was evident after implementation of reasonable organizational structure and reinforcing the communication channels including marketing strategies. Such programs ensured increased earnings per share on an annual basis.

Maintenance of a corporate culture encouraged mutual co-operation amongst employees hence providing avenues to high performance levels.

Airline industry despite being capital intensive venture is also considered to be highly risky. This shows that efficient operation within the industry requires higher margins for proper running and maintenance of equipment.

The rising demand for airline services, calls for quality and efficiency in management and marketing strategies. Conclusively, even though there seems to be significant increase in profitability of BA Company, improved customer-oriented services is constitutes big percentage of the margins.

The lucrative margins makes the stocks of Airline companies more appealing to investors, hence call for high productivity levels.

Works Cited

Vedpuriswar, AV. British Airways: Leadership and Change, ECCH Collection, Hydershad: ICFAI Knowledge Centre, 2003.

Introduction

This report gives a comprehensive overview of the business organization processes of British Airways (BA). Several aspects of the organization’s structure, including the structural style, management style, leadership style, motivation style, organizational design, organizational control structures, and the organizational culture constitute this analogy.

This assessment will be an interesting analogy of British Airways because the company experienced managerial and leadership changes in the recent past.

For a long time, British Airways has been the national flag bearer of the United Kingdom (UK). The airline is the largest airline in the country, based on its fleet size and international presence. It operates in 160 destinations around the globe and has a market presence in more than 70 countries (Ganesh 1999, p. 269).

BA’s inception occurred after four small and large airline companies (BOAC, BEA, Cambrian Airways, and Northeast airlines) merged (Meyer 2007).

Before 1987, the government ran British Airways, but in the same year, it was privatized as part of the British government’s efforts to seize control of most of its national corporations (McGowan 2011, p. 3). After the privatization, British Airways was able to expand its operations to new locations and new market segments.

Currently, the airline is part of the one world alliance, which is an association of several airline companies including American Airlines, Cathay Pacific, Qantas and Canadian airlines (Meyer 2007). British Airways also operates under the International Airlines Group (IAG) and its association with this business outfit marks its participation in the London Stock exchange.

Company Structure

British Airways is a public limited company with three subsidiaries: British Airways city flyer, open skies and British Airways World cargo (Plunkett 2009). The BA city flyer is a franchise of BA and operates a domestic fleet of airlines in the European market (from the London city airport) (Plunkett 2009).

The subsidiary carries passengers, cargo and mail. Open skies is also a fully owned subsidiary of British Airways with operations in France and America. The subsidiary started operations in 2008.

Though Open skies was rumored to offer only business class services (during its inception), it also offers economy class (which later upgraded to premium economy class in 2009) (Plunkett 2009). The subsidiary is however not part of the one world alliance (which its parent company (BA) is a member of).

Since the aviation market is a competitive industry, BA was motivated by internal changes in the business environment (changes in consumer tastes and preferences) and external forces (competition) to transition its ownership from a government-run corporation to a private-run corporation (Raktabutr 2007).

For example, since BA was a government-run company, it was difficult to change its travel fares according to the market environment.

In this regard, it was difficult for BA to compete with its rivals. This transition (from government to private ownership) marked the main legal change for BA but it also set-forth a series of other organizational changes such as organizational culture changes, corporate culture changes, mission statement changes as so on..

Model Application

Lewin’s change model is widely applicable in BA’s company transition from a government-run organization to a private-run entity. As noted in previous sections of this paper, the transition from a government outfit to a private organization marked significant changes in the company’s structure.

Lewins model explains that, organizations often undergo three stages of transition: “unfreezing, movement and refreezing” (Cummings 2008, p. 23). These stages have different effects on the organization and their employees. British Airways underwent the three stages.

In the unfreezing stage (as a response to market changes), BA had to unfreeze its operation patterns which were characterized by strong government control. This was a strategy formulated by the organization’s management to manage change.

The second stage of Lewin’s model (movement stage) also occurred in BA’s transition because the organization’s management was determined to disseminate its ideas to lower-level employees.

To support this transition, BA introduced a new set of programs such as the employee bonus system and the opening of a new airport terminal at the company’s main operating hub (Heathrow) to synchronize employee tasks with the management’s vision.

The company also invested a lot of money in purchasing a new training facility at Chartridge house to improve the synergy between the company’s management and its employees (Raktabutr 2007).

The last stage of Lewin’s model is the refreezing stage. BA transition is characteristic of this stage because it tried to cement its new organizational changes by creating a new behavioral system to support the changes. For instance, a new performance appraisal system, which was designed to recognize employee excellence (concerning customer service and marketing), was established (Raktabutr 2007, p. 12).

By implementing these changes, it was expected that the company’s employees were going to be motivated to implement the new organizational changes to receive monetary rewards.

To complement these changes, BA introduced new symbols that were printed on employee uniforms, company aircrafts, and other public places of display to symbolize the company’s new commitment (customer service). The motto “we fly to serve” was part of the new changes adopted by the company during this transition (Raktabutr 2007).

Leadership Control Styles

Due to the sheer size and extent of BA’s operations, BA’s leadership has often practiced the autocratic leadership style (Northouse 2009). This autocratic leadership style is the main reason for BA’s poor performance between the year 1996 and the year 2000 (Raktabutr 2007).

In fact, BA’s shares plunged by close to 40% during this period (Raktabutr 2007). Basic company values such as customer quality and service excellence eroded because of this leadership style as well. However, with the overhaul of BA’s operations, the company is now synonymous with the transformational leadership style.

The company’s CEO, Willie Walsh, first introduced this leadership style because previous systems and procedures were not effective (Rivers 2010, p. 2). Some of the operational changes mentioned in previous sections of this study highlight the changes made by Willie Walsh after he took over the leadership of the company.

The rigid hierarchical leadership structure reduced to reflect the CEO’s vision of operating an efficient company. BA’s hierarchical structure is now very simple. It only has one level of distinction between the top-level management and the bottom-level management (Raktabutr 2007).

This management structure supports the company’s transformational leadership style because it has made it easy to pass down the CEO’s enthusiasm of the organization to bottom-level employees. This management framework has also made it easy for the company’s CEO to have a “detail team” to help him realize the organization’s vision.

After evaluating the transition from the autocratic leadership style to the transformational leadership style, we see that BA’s leadership transition is explained by the contingency theory of leadership. The contingency theory explains that prevailing environmental factors determine the type of leadership style to be adopted.

According to the contingency theory, there is no leadership style, which is suitable for one organization (Rivers 2010, p. 2). Different situations demand different leadership styles. It is also from this basis that the contingency theory explains that organizational success does not only depend on the leadership qualities but also the loyalty and performance of the followers (plus the environmental support).

BA was initially operating in a highly rigid environment dictated by little or no competition and a lot of government control. This situation supported the autocratic leadership style. However, when the market liberalized and the company was privatized, the company’s leadership style changed to transformational leadership (Rivers 2010, p. 2). This transition is explained by the contingency theory as described above.

How Management and Leadership Styles Affect the Direction of the Business

BA’s management and leadership styles are bound to affect the direction of the company because they are the main wheels behind the efficiency and productivity of the company. Furthermore, the realization of BA’s organizational goals highly depends on the leadership and management styles of the company (Management Study Guide 2008, p. 1).

Considering BA operates in a highly competitive industry, there needs to be constant innovation and improvement of customer service. These elements require a constant change of operational processes but considering BA is a large organization, initiating change may be difficult.

It is at this point, where management and effective leadership need exercising to ensure the company implements such changes. This analogy presents a guiding role for management and leadership styles because managers and leaders show the rest of the employees where the company is heading (Management Study Guide 2008, p. 1).

Through effective management and leadership, employees are bound to get the confidence to undertake their tasks and ultimately realize the organization’s goals. This confidence materializes best if leaders and managers show the subordinates that their roles are crucial for the organization.

Furthermore, optimum productivity occurs if management shows the lower-level employees how they can achieve such goals. Complementary to this role is the role of leadership and management to build morale among employees (Management Study Guide 2008, p. 1).

A high morale materializes if a sense of cooperation develops between the employees and the management. Leadership styles and management styles create this synergy.

Comprehensively, an organization’s direction is outlined by its leadership or management styles because both aspects determine the productive levels of the organization. In addition, an organization’s leadership style is likely to improve an organization’s level of competitiveness because it defines the blueprint of where the organization should be (viz-a-viz its competitors).

Company Culture

Types of organizational Culture

Depending on the nature of organization, different companies adopt different organizational cultures. Tharp (2009) observes that there are four main types of organizational culture: collaborative, creative (adhocracy), control and competitive (market) cultures.

The collaborative culture is a friendly and open type of culture. This type of organizational culture is very inclusionary and it perceives leaders as mentors or parents of one big extended family.

In this type of culture, group cohesion is paramount and relationships are forged for long-term benefits (Tharp 2009, p. 7). Teamwork, participation and cohesiveness are also highly emphasized in this type of culture because there is a strong concern for people.

The creative culture lays a lot of emphasis on innovation and risk taking because the philosophy of “thinking out of the box” is highly emphasized. Individualism is also encouraged and success is measured by being a leader among many (Tharp 2009, p. 7).

The control culture is different from the creative and collaborative cultures because it defines a highly structured form of interaction between employees and their bosses. There is also a lot of emphasis on rules and procedures because stability is perceived to be the ultimate goal of organizations that adopt this culture (Tharp 2009, p. 7).

Finally, the competitive culture focuses on job completion. There is a lot of push from leaders that run organizations that adopt this culture because the ultimate goal of such organizations is job accomplishment. The idea of winning is a major unifying factor for employees and managers (Tharp, 2009, p. 7).

BA’s Organizational Culture

After understanding the above leadership styles, it is important to note that, BA applies the competitive organizational culture. The competitive organizational culture was adopted after the company was privatized. BA’s emphasis now lies on being the best airline company in the region.

For instance, after privatization, BA changed its corporate mission objective from “safety” to “competition”. This is a response to the competition in the aviation industry. Now the company focuses on being effective and high performing.

Similarities between BA and Secondary Data

Concerning the competitive organizational culture, BA’s organizational culture bears many similarities with secondary research information (regarding the competitive culture).

In books, it is mentioned that the competitive organizational culture emphasizes a lot on success and accomplishments while British Airways also strives to show that it is succeeding. For instance, the company now focuses on posting good profits (De-Witte 2000, p. 501).

This push to post good profits is part of a move to keep the company afloat, amid growing employee tensions and increased shareholder demands. Furthermore, existing literature outline that, leaders in organizations that adopt the competitive culture are hard-driving and demanding.

BA’s leadership exudes these traits because it puts a lot of pressure on its employees to show results. Part of the pressure emanates from past periods of failure, which have seen BA suffer significant losses in revenue.

Motivational Framework

BA uses financial rewards to motivate its employees. This motivational framework is mentioned in earlier sections of this paper where BA’s bonus program was introduced to cement the company’s operational changes by focusing on customer service and quality. This motivational framework defines the scientific management theory, which was advanced by Frederick Taylor (Waring 1994, p. 1).

The theory proposes that, people are mainly motivated by financial reward. The theory also maintains that, people are not naturally motivated to work, and they need rewards to boost their productivity.

Complementarily, Maslow theory of motivation also outlines BA’s motivational framework because it explains that workers strive to satisfy basic needs before they satisfy higher-level needs such as safety needs and self-actualization needs. Maslow’s theory categorizes worker needs on five levels as outlined below:

(Waring 1994, p. 94)

Incidentally, these needs are often satisfied through financial upgrades. For instance, if a worker has already satisfied basic needs such as food, shelter and clothing, they need more money to satisfy the next level of need (safety needs).

This motivational dynamic therefore supports BA’s motivational framework because workers strive to improve their productivity to get more bonuses, and consequently satisfy higher-level needs. BA and the workers benefit here.

Conclusion

Weighing the findings of this report, we can see that BA’s organizational culture and processes are influenced by its transition from a government entity to a private entity.

However, BA’s new organizational culture (based on competition), is expected to increase the company’s odds of being an industry leader, as it was before. The competitive organizational culture (coupled with the company’s motivational framework) is set to increase the company’s profitability.

The scientific management theory seems to affirm this success because it lays a lot of emphasis on guaranteeing company success if an employee reward scheme is employed. BA’s organizational structures therefore outline the blueprint for its future success.

BA can improve its future profitability if it focuses on product innovation strategies to meet varying customer group demands. Most of BA’s competitors (such as Emirates airlines) are reaping huge profits from such strategic shifts. The product innovation strategy has also worked in other industries where a company understands its different customer groups and develops new products to meet these needs.

Finally, to improve the company’s profitability, BA needs to adopt more hedging practices. For instance, the unstable price of crude oil may significantly affect the company’s bottom-line. Hedging such a cost is likely to improve the company’s prospects of posting good returns. Such a strategy has worked with other airline companies such as Southwest airlines. BA’s success will be guaranteed in this manner.

References

Cummings, T. (2008). Organization Development & Change. London, Cengage Learning.

De-Witte, K. (2000). Organizational Culture. Michigan, Psychology Press.

Ganesh, G. (1999). Privatisation Competition And Regulation In The United Kingdom: Case Studies. London, Mittal Publications.

Management Study Guide. (2008). Importance of Leadership. Web

McGowan, R. (2011). Privatize This?: Assessing the Opportunities and Costs of Privatization. London, ABC-CLIO.

Meyer, S. (2007). Acquisition of EasyJet Plc. by British Airways Plc. London, GRIN Verlag.

Northouse, P. (2009). Leadership: Theory and Practice. London, SAGE.

Plunkett, J. (2009). Plunkett’s Transportation, Supply Chain and Logistics Industry.

Almanac 2009 (E-Book): Transportation, Supply Chain and Logistics Industry Market Research, Statistics, Trends and Leading Companies. London, Plunkett Research, Ltd.

Raktabutr, T. (2007). Analysis of Organization: British Airways. Web.

Rivers, M. (2010). British Airways Strike Can Be Averted. Web.

Tharp, B. (2009). Four Organizational Culture Types. Web.

Waring, S. (1994). Taylorism Transformed: Scientific Management Theory Since 1945. London, UNC Press Books.

Executive Summary

Information security management plays an integral role in the performance of every organization. In the era of advanced development of information technologies, numerous companies have become attractive victims of hackers in terms of customers’ information. British Airways, as a noticeable member of the airline industry, actively integrate the collection and processing of personal data to improve the passengers’ experience and enhance performance. As a result, the company experienced several data breaches that had substantial effects on the business and the stakeholders. British Airways had significant financial losses in the penalties due to the last violation in 2018, following the provisions of the new GDPR. It is critical for the company to implement new information security management strategies and policies, to involve top management in protection measures’ development, increase awareness, and provide the customers with the most effective security level.

Introduction

Information technology advancements and the integration of numerous services that require the users to provide personal data impose challenges for organizations in terms of security and protection. Data breaches and violations represent significant risks for the companies in terms of their image, reputation, and potential financial losses. Due to the high stakes, security awareness becomes “the most important factor that mitigates the risk of information security breaches in organizations” (Safa, Von Solms, & Futcher, 2016, p. 15). Consequently, different businesses have a threat of breaks in the data security system, which implies the necessity of rigid and thorough information security management. British Airways is an example of a large company that has severe data security issues, which had a critical impact on the organization and the consequences of which it is still bearing. The purpose of this paper is to analyze the fundamental principles and practices of information security management within British Airways, considering the requirements for managing digital data. Below you can see the outline for the paper.

• The description of personal data collection and processing within the airline industry organizations.
• The history of the information security breaches at British Airways.
• A thorough investigation of the 2018 data breach at British Airways and its implications for the company.
• Information security risks at British Airways and the significance of proper protection measures within the organization.
• Recommendations to integrate to improve data security management at British Airways.

Big Data as Top Priority

British Airways is operating within the airline industry that portrays the field with substantial usage of personal data due to the nuances of the industry’s primary activities. Every airline is seeking to improve the services to the customers, which motivates them to utilize big data technology in the operations (Chang, Ji, & Arami, 2019). In such a way, the companies in this type of business aim to optimize existing services, such as booking, searching for flights, or payment options, making them more satisfying to customers. The statistics show that 61% of the airline companies’ CEOs view big data as a “top priority” because collection and assessment of information are crucial for the improvement of customers’ experience (Chang et al., 2019). Hence, the airlines gather and analyze the passengers’ data, which makes the companies within this industry the huge producers and storages of individuals’ information.

British Airways Data Breaches History

British Airways became a target for hackers, as an attractive source of information because, today, data represents one of the most valuable assets. First, the company had a program for frequent-flyers that offered bonuses and privileges for loyal customers. The problem occurred in 2015 when the frequent-flyer accounts were hacked, and British Airways became the victim of the breach, along with such companies as Lufthansa and United Airlines (“Global data leakage report,” 2015). Another critical incident occurred to British Airways in 2017, when the disruption of the information system caused the cancellation of hundreds of flights, resulting in substantial financial losses (Spremić & Šimunic, 2018). Besides those information security issues, one of the most considerable problems became the breach of 2018, connected to the payment cards, which resulted in a severe scandal for the company (Foulsham, 2019). Consequently, it is possible to state that British Airways experienced several breaks in data security and protection, which imposes critical challenges for the organization and highlights the need for rigid regulation.

The fact that British Airways went through several breaches and disruptions highlights the necessity of strict information security management in the company. The work of the data protection department, similar to the work of other departments within such a large organization, often relies on the key objectives and mission of the business. After the redefinition of its mission, vision, goals, and values in 1997, British Airways decided to focus on the competition challenge, the desires of the customers, and the employees’ demands (Karami, 2017). The paragraphs above mentioned that the aim to provide the best experience to the customers motivates the airline companies to use big data analysis. In such a way, intending to meet and understand the client’s needs and preferences and to overcome harsh rivalry within the industry, British Airways needs to collect and process data. Moreover, with a substantial volume of information coming into the company’s possession, it is critical to have robust security and protection measures.

2018 Data Breach

At this point, it is crucial to investigate the data breach of 2018, which had a significant influence on the company’s finances and image. The approximate numbers show that the information about more than 400,000 reservations completed between the last week of August and the first week of September was stolen during the breach (Murugesan, 2019). The data provided to the airlines can include specific financial information and personal facts, which makes it valuable to cybercriminals. During the attack of 2018, the stolen data consisted of names, addresses, passport numbers, e-mails, and payment card details (Murugesan, 2019). This event represents a severe information security violation, which implicates that British Airways did not manage to protect the data and follow all rules that aim to eliminate related risks.

The fines imposed for the business follow every information security breach, which becomes a result of ineffective data protection. With the GDPR implementation in 2018, the financial losses for the companies in case of security violations have significantly increased. As a result, the Information Commissioner’s Office (ICO) issued a notice that it intended to fine British Airways for more than £180 million for breaking the GDPR provisions (“Intention to fine,” 2019). It is possible to say the breach placed information of numerous passengers at risk, imposing a potential threat to their personal and financial security. The ICO investigated the breach and found that the data “was compromised by poor security arrangements at the company” (“Intention to fine,” 2019, para. 4). Consequently, British Airways failed to protect its passengers’ data, violating their privacy rights.

Thus, British Airways did not manage to provide an adequate security level to its customers, which essentially deterred the company’s image and reputation among the stakeholders. The ICO’s investigation also concluded that the hack involved the redirection of the customers to the fraudulent site (Calder, 2019). With the rapid advancement of information technologies, it can be challenging to keep up with the website updates, which can lead to severe issues. Besides, the Information Commissioner stated that “when you are entrusted with personal data you must look after it”, implying the failure of British Airways to protect their customers (Calder, 2019, para. 19). As an airline business that actively uses customers’ data, the organization has to be ready for the external threats and risks, and the events of such substantial breaches emphasize the inefficiency of information security management.

It is crucial to take a look at the fine imposed on British Airways one more time. With the introduction of the GDPR that came to the arena to replace the Directive, the financial penalties for the companies that violate data security have significantly increased (Houser & Voss, 2018). According to the GDPR, in severe cases of data violations, the authorities would have the right to fine the organization for up to 4% of the global turnover (Houser & Voss, 2018). The paragraph above mentions that the fine for British Airways constituted almost £200 million. According to the IC, the imposed punishment does not reach 2% of the company’s turnover, and British Airways CEO believes that the penalty is unfair because they responded to the incident immediately (Calder, 2019). Thus, the data breach happened in this airline company after the integration of the GDPR, which led to substantial financial losses for the business.

Information Security Management at British Airways

Hence, British Airways needs to reconsider the information security management principles to address possible threats and ensure personal data safety. According to Karyda (2017), information security represents “a major challenge for organizations due to the proliferation of digitalisation and constant connectivity” (p. 28). Consequently, British Airways has to understand the necessity of placing data protection measures in the first place among the priorities. Possessing an understanding of the importance of the issue can help to generate required strategies and effective tactics to improve the situation. Besides, it is integral to remember the technological advancements that do not necessarily provide more effective protection (Karyda, 2017). Thus, following the standard programs and policies and integrating new technologies might not be enough for the information security management in the company.

It is particularly critical for British Airways due to the incidents that the company has experienced and the recent statements about the vulnerability of the electronic ticket system. According to the researchers, the links that British Airways sent for check-in to the customers were unencrypted, which makes them vulnerable to unauthorized parties (Narendra, 2019). This situation represents another risk for British Airways’ data breach. One of the solutions that the organization implemented was requiring explicit user authentication, and encrypting the links for the check-in processes (Narendra, 2019). Moreover, it is critical to remember to fulfill all the aspects of proper information security management. Every organization, always, should focus on preserving the principles of “authenticity, accountability, non-repudiation, reliability, and privacy from unwanted incidents” (Karyda & Mitrou, 2016, p. 64). Consequently, British Airways should continue dedicating its resources to strengthening data security management and carefully following the required principles.

Thus, British Airways needs to remember the critical aspects of information protection to utilize necessary improvement strategies. According to Peltier (2016), “information protection requires a comprehensive and integral approach” (p. 2). In other words, it is vital to undertake all of the stages, such as the initiation and analysis, risk analysis, and the investigation of potential impacts. It is possible to say that the most useful information security management system will go through the stages of the life cycle to create the most efficient protection measures (Peltier, 2016). Therefore, British Airways can consider re-evaluating the information security process within the organization and introduce a new model that will comply with the new GDPR requirements and will consider all possible risks.

Recommendations and Conclusion

British Airways, due to the history of information security violations, needs to consider the process of data protection rigidly. Some of the proposals for the existing information security management include the active support of top management because its involvement in the generation of policies concerning security can positively influence the effectiveness (Soomro, Shah, & Ahmed, 2016). Besides, it is critical to implement data privacy awareness as it can propose knowledge to the working team and expand the perception of successful security management. Another suggestion that applies to British Airways is the establishment of communication between the information technology managers and the risk analysts within the company (Soomro et al., 2016). Through collaboration, the professionals can get new insights and generate more influential security policies and strategies.

In conclusion, British Airways, as an influential organization in the airline industry, represents an attractive source of personal data for hackers and related security violations. Throughout the last couple of decades, the company has experienced several events of information breaches, which shook the business’s stability and reputation. British Airways must evaluate its current information security strategies and conduct a thorough analysis of the potential risks that it might face in the future. Rigid compliance with the GDPR policies, raising awareness among employees, involving top management, and working on strengthening protection measures will positively impact British Airways’ image and performance.

References

Calder, S. (2019). What is the British Airways data breach, and how does it affect passengers? Web.

Chang, V., Ji, Z., & Arami, M. (2019). Privacy and ethical issues of big data in the airline industry. In 4th International Conference on complexity, future information systems and risk (pp. 139-148). Heraklion, Greece: SciTePress.

Global data leakage report. (2015). Web.

Foulsham, M. (2019). Living with the new General Data Protection Regulation (GDPR). In M. Krambia-Kapardis (Ed.), Financial Compliance (pp. 113-136). Cham, Switzerland: Palgrave Macmillan.

Houser, K. A., & Voss, W. G. (2018). GDPR: The end of Google and Facebook or a new paradigm in data privacy. Richmond Journal of Law and Technology, 25(1), 1-70.

Intention to fine British Airways £183.39M under GDPR for the data breach. (2019). Web.

Karami, A. (2017). Corporate strategy: evidence from British Airways plc. In F. Analoui (Ed.), The Changing patterns of human resource management (pp. 46-64). New York, NY: Routledge.

Karyda, M. (2017). Fostering information security culture in organizations: A Research Agenda. In 11^th Mediterranean Conference on information systems(pp. 28-38). Genoa, Italy: Association for Information Systems.

Karyda, M., & Mitrou, L. (2016). Data breach notification: Issues and challenges for security management. In 10^th Mediterranean Conference on information systems(pp. 60-72) Paphos, Cyprus: Association for Information Systems.

Murugesan, S. (2019). The cybersecurity Renaissance: Security threats, risks, and safeguards. IEEE India Council Newsletter, 14(1), 33-40.

Narendra, M. (2019). Privacy: Further vulnerabilities found in British Airways cyber-security. Web.

Peltier, T. R. (2016). Information security policies, procedures, and standards: Guidelines for effective information security management. Boca Raton, FL: Taylor & Francis Group.

Safa, N. S., Von Solms, R., & Futcher, L. (2016). Human aspects of information security in organizations. Computer Fraud & Security, 2016(2), 15-18.

Soomro, Z. A., Shah, M. H., & Ahmed, J. (2016). Information security management needs a more holistic approach: A literature review. International Journal of Information Management, 36(2), 215-225.

Spremić, M., & Šimunic, A. (2018). Cybersecurity challenges in the digital economy. In Proceedings of the World Congress on engineering (pp. 341-346). London, U.K.: IAENG.

PESTLE Analysis

Political factors affecting British Airways are Brexit and the removal of travel restrictions. Brexit may impose certain barriers to companies operating globally, including British Airways, forcing them to search for ways to overcome these barriers (Brezonakova, Badanik and Davies, 2021). In contrast, the removal of travel restrictions is a positive political factor. The restriction-free environment facilitates the aviation industry’s recovery and increases the demand for airline services (Department for Transport et al., 2022). Thus, British Airways’ situation is likely to improve with new regulations.

Economic factors include the pandemic’s impact and increasing fuel prices. The government measures taken to contain the virus caused British Airways to report a total operating loss of €7.4 billion in 2020 (Sweney and Topham, 2021). As for fuel prices, the International Air Transport Association (2022, p. 18) states that “in 2021, the airline fuel bill increased by almost 30%.” In 2022, fuel expenses will rise further due to a surge in oil prices resulting from the Russia-Ukraine conflict (International Air Transport Association, 2022). Since fuel is one of the key expenses in the airline industry, this change is crucial for British Airways.

The most important social factor is customer attitudes toward the brand. In the annual report, British Airways Plc (2021) regards the erosion of the brand and a failure to meet customer’s expectations as principal risks. This risk is significant because a recent survey of customer satisfaction revealed that British Airways was the second worst in a ranking of the six best short-haul airlines in the UK (Hobbs, 2022). Flight cancellations and refusals to refund damaged British Airways’ brand image, which may affect the company’s future profitability.

Technological factors include IT systems and IT infrastructure. The need to invest in solid IT infrastructure is driven by high fixed costs, security dependence, and competition intensity since technology assists companies in fleet planning, reservations, flight management, and other operations (Heiets, I. et al., 2022; Lubbe, B. and Potgieter, 2018). Flawed or obsolete IT systems in airline companies can lead to operational issues and a loss of competitive advantage.

The most important legal factor is non-compliance with laws and regulations. For example, in 2018, a data breach occurred in British Airways, affecting over 400,000 people and resulting in a fine of £20 million (BBC News, 2021). Although this legal claim was subsequently settled, it shows that a company’s failure to comply with laws and regulations can result in fines, financial losses, and reputational damage.

The most important issue among the environmental factors is decarbonization. Since airline companies are criticized for greenhouse gas emissions, many companies in this industry include emission-reducing activities in their corporate social responsibility agenda (Mayer, 2018). Thus, since British Airways has to comply with international environmental regulations and meet customers’ expectations regarding sustainability, the company is motivated to invest in developing fuel-efficient aircraft models and transitioning to carbon-neutral flights.

An analysis of different factors influencing British Airways suggests that political, economic, and legal factors seem to be the most important. In particular, Brexit influences how British Airways will operate on new terms with European countries. The consequences of the pandemic and an increase in fuel prices directly influence the company’s revenues and profitability. Finally, non-compliance with regulations can lead to substantial financial losses and reputational damage.

Financial Analysis

British Airways is a segment of International Consolidated Airlines Group SA (IAG). Its financial performance was stable until 2019; for example, in 2018, the firm’s net income was $3.4 billion, decreasing to $1.9 billion in 2019 (see Figure 1). In 2020, the company had a loss of over $7 billion and then began a slow recovery (Macrotrends, 2022). As Figure 1 shows, other companies in the industry also had negative net incomes in 2020-2021.

Further, some key financial ratios will be analyzed and compared. According to Perçin and Aldalou (2018), important solvency ratios include Quick Ratio, Current Ratio, and Debt-to-Equity Ratio, while profitability ratios are Return on Sales (Operating Margin) and Return on Assets. Quick Ratio shows the company’s short-term liquidity; in British Airways, this indicator was at its lowest in 2020, similar to Ryanair (see figure 2).

While both Quick Ratio and Current Ratio measure liquidity, the former refers to highly liquid assets, while the latter considers current assets. British Airways’ Current Ratio changed over time similarly to its Quick Ratio, like in other airline companies (see figure 3). Since 2019, airline companies have increased their reliance on debt (see figure 4). Figure 5 demonstrates that since 2020, British Airways and similar companies have begun to earn less money on their assets. Finally, figure 6 indicates that in 2020, airline firms had a low proportion of revenues available for covering non-operating costs.

The real-world events explaining these changes are related to the COVID-19 pandemic. This crisis led to lockdowns and travel restrictions, anxiety in global financial markets, and a reduction in workforce and fleet in airline companies (British Airways Plc, 2020; Institute for Government, 2021; Maneenop and Kotcharin, 2020). From the figures, one may conclude that the pandemic led airline companies to financial losses. The graphs also reflect that the situation improved in 2021, and the airline industry is experiencing a recovery.

Reference List

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British Airways Plc. Annual report and accounts: year ended 31 December 2021. Web.

Department for Transport et al. (2022) ‘All COVID-19 travel restrictions removed in the UK’,GOV.UK, Web.

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Hobbs, G. ‘Best and worst airlines in 2022’, Which?, Web.

Institute for Government (2021) Timeline of UK government coronavirus lockdowns and restrictions. Web.

The International Air Transport Association (2022) Global outlook for air transport: times of turbulence. Web.

Lubbe, B. and Potgieter, T. (2018) ‘The role of technology in airline management and operations’, in Halpern, N. and Graham, A. (eds.) The Routledge companion to air transport management. New York: Routledge, pp.331-343.

Macrotrends (2022) International Consolidated Airlines Group SA net income 2010-2022 | ICAGY. Web.

Maneenop, S. and Kotcharin, S. (2020) ‘The impacts of COVID-19 on the global airline industry: an event study approach’, Journal of Air Transport Management, 89, p.101920.

Mayer, R. (2018) ‘Airline sustainability and corporate social responsibility’, in Halpern, N. and Graham, A. (eds.) The Routledge companion to air transport management. New York: Routledge, pp.277-296.

Perçin, S. and Aldalou, E. (2018) ‘Financial performance evaluation of Turkish airline companies using integrated fuzzy AHP fuzzy TOPSIS model’, International Journal of Economic and Administrative Studies, 18, pp.583-598.

Sweney, M. and Topham, G. (2021) ‘British Airways owner IAG hit by record €7.4bn loss’, The Guardian, Web.