British Airways- SWOT Analysis
British Airways was founded in 1939 by the British administration and remained a state-owned airline till 1987 when it was privatized. Since its incorporation, British Airways has undergone significant transformation in its productivity rising from loss making to become one of the most admired company and leader in the airline industry in the United Kingdom today. Today, British Airways (BA) has at least 97 countries covered by 380 aircrafts flying to more than 270 destinations. The most significant period of BA’s transformation was during the tenure of Collin Marshall as her CEO in the 1980s to 1990s. As it shall be established in the later sections of this essay, a significant turnaround of BA was when Colin Marshall introduced customer focus as a key competitive strategy, (Rakesh 9). But first, this essay considers BA’s SWOT analysis.
Beginning with the strengths, British Airways has a strong brand presence Worldwide. British Airways enjoys a strong UK government backing. With at least 380 aircrafts flying across 6 continents to more than 270 international destinations, BA has grown to become one of the World’s most admired airlines. Having established a very strong hub in the UK, BA enjoys leadership of the Heathrow airport in London and as a result, a strong passenger market position. It is due to this that BA has had monopoly control over routes emanating from Heathrow airport. One of BA’s known strength has always been attributed to her premium brand Concorde. Exhibiting a state of the art technological sophistication, Concorde is also the only known supersonic commercial aircraft in the world, (Rakesh 48). This has positioned BA as offering high class service with passengers enjoying both comfort and efficiency provided by the landmark Concorde aircrafts, (Punzel 11).
Regarding weaknesses, BA lacks strong marketing campaign strategy that would guarantee customer loyalty. BA also faces market share challenges due to lack of clear strategy to deal with strong competition from financially rich airlines originating from the Middle East region. In other words, BA’s competitors are in a better position to offer relatively low travel prices. Another weakness for BA is to do with the huge cost required to efficiently run and maintain her airline facility across the globe. This can compromise significantly on the level of efficiency and quality service delivery on the one hand and lower profitability on the other. BA has also had a weakness to do with lack of satisfaction for her employees. BA has also been prone to cases of baggage loss hence erosion of confidence and trust of her customers, (Punzel 11).
One of the opportunities available for BA is to tap into a low cost airline version as part of the airline’s competitive strategy. Another opportunity for BA is due to the recently completed terminal 5 which unveils exciting customer experience. There is opportunity for BA to expand her global operations and fleet size to cover the emerging new markets in Africa and Asia, (Rakesh 48). British Airways should continue to improve her products in the market to target various groups or class of passengers. For instance, BA can venture more into escort services. Furthermore, there is the opportunity to have corporate responsibility play a key role in the airline’s strategic focus. To help deal with the costs, BA should find alternative low cost fuel, (Punzel 12).
One of BA’s long time threats has been the stiff competition fronted by the low cost airlines. Secondly, the highly dynamic consumer tastes and preferences require strategic change management to meet customer satisfaction and remain competitive and profitable as well, (Rakesh 49). It is a delicate balancing case in which BA needs to spend more on new technology while keeping an eye on revenues so that loses do not drive them out of the market. It becomes even more complicated due to the threat of the volatile exchange rates, the ever increasing fuel prices, and cost of labor. Another threat is attributed to the financial constraints in managing air traffic, (Punzel 12). Having outlined the SWOT analysis for BA, the next section of this essay considers factors that have made British Airways to succeed.
Factors that have made British Airways to succeed
As mentioned in the introduction section of this essay, BA was faced with many challenges in the 1980s. It became apparent to the BA administration then under leadership of CEO Collin Marshall that the BA could not effectively compete on low cost parameters. In order to succeed, Collin Marshall came up with a restructuring plan built around customer service philosophy. He left the BA in 1996 and has remained one of the best known CEOs in Britain History having substantially reshaped the culture of an airline that was prone to inefficiency and losses before. In 1996-1997 trading period for instance, 161,100 slots (39%) of the available Heathrow slots were held by BA while the second largest slot holder that time (British Midland) held 56500 slots which was almost three times lower, (Rakesh 9). This success clearly shows that BA had rightly identified and implemented her competitive strategy tailored towards customer service. Putting the customer first, BA invests in conducting customer research on monthly basis to identify the changing customer needs and therefore be able to satisfy them, (Alkhafaji 233).
The success of British Airways is partly due to the strategic and deliberate investment in more international flights. The long haul capacity coupled with high value services offered to customers defines BA’s success path. It can be remembered as mentioned earlier that BA’s premium brand Concorde became the only supersonic commercial aircraft in the World uniquely designed to give top class service to customers. But this is for the business class customers. For the economy class customers, BA has ensured value addition through services such as onboard catering, extended leg room and extra ordinary lounges too, (Alkhafaji 233).
The use of technology and ICT has helped BA to succeed. Check-in by customers has been greatly improved at BA with customers having variety of options including checking-in by telephone and use of BA’s website for bookings. Customers enjoy wealthy of information available on the website to help them make informed flight decisions regarding the various destinations in a timely and cost effective manner. With e-ticketing, BA’s customers enjoy the checking in flexibility since they do not need to have physical tickets to do so, (Daft 735).
The development of the e-working strategy at BA early 2000 totally transformed the work environment. Introduction of the BA’s famous employee self service (ESS) was a product of the e-working strategy. It became the most cost effective system of working helping BA to cut down substantially on administrative costs. For instance in March 2006, ESS helped BA to save £38 million. Having simplified the back office administration by doing away with unnecessary duplicate channels and the old paper forms, ESS helped BA to meet its cumulative targets with savings growing from the £38million in 2006 to £50million in 2007, (Cisco Internet Business Solutions Group 1-5).
Generally, ESS was designed establish metrics that would facilitate easy and effective online working for many of BA’s employees. The processes covered included: online travel bookings, payroll processes, online staff training, and fault reporting. This was also meant to ensure online availability of information on a 24/7 basis. With ESS, the cabin crews were able to take refresher training while at home. It is this focus on IT and creation of the self service culture that enabled BA to attain their new targets hence success. The process made BA to deliver not only on specific targets, but also quantifiable hard business solutions, (Cisco Internet Business Solutions Group 5). Investing in total quality management therefore informed BA’s future competitive strategy. In line with this strategy, BA has heavily invested in safe keeping measures for both the customers and staff. BA keeps a high profile team of trained security auditors across the globe. They are charged with ensuring that both the ground and air staff is adequately trained and have no criminal records. Furthermore, BA works hand in hand with the Metropolitan police to ensure safety of their staff and customers, (Eckerson 202).
British Airways have succeeded through formation of alliances aimed at enabling organic growth. For instance, partnering with major airlines such as Iberia and American Airlines, BA has been able to connect London and New York’s main financial hubs through offering joint transatlantic flights. Other than this, BA’s commitment to corporate social responsibility has been a source of her success too. BA became the first in the airline industry to identify its forest footprint. To demonstrate the need for carbon footprint reduction, BA invested in the Solena research project aimed at developing alternative fuel for aviation, (Alkhafaji 233).
In a nutshell, BA has undergone significant restructuring since the late 1970s to grow from a loss making organization to become a leader in the airline industry and the most admired airline in the World. Facing difficulty with low cost competition, the customer focus strategy marked a turning point in BA’s business. Pursuing a number of measures aimed at improved service to customers, BA’s success was made possible through investing in high class air craft such as the Concorde and use of the employee self service (ESS) e-working system that revolutionized the work environment to allow for both efficiency and cost reduction in service delivery. Together with commitment to corporate social responsibility, BA’s continued restructuring process has helped deliver better services and remain competitive over time.