The impact that marketing environmental issues have on British Airways Free essay! Download now
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The impact that marketing environmental issues have on British Airways
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DescriptionThis report identifies through research, the impact that marketing environmental issues have on British Airways. It clearly outlines the macro and micro environmental factors and internal factors that the new Chief Executive, Willie Walsh, has to consider in order for him to successfully drive the company forward and receive a 10% operating margin.
British Airways (BA) is the UK’s largest international scheduled airline, operating international and domestic scheduled and charter air services for the carriage of passengers, freight and mail and the provision of ancillary services. The airline flies to over 550 destinations globally and is considered to be a leader in the industry.
3.1.3 Social Factors
The social and cultural influences on business vary from country to country however it is important that such factors are considered and include demographic and cultural aspects. These factors affect customer needs and the size of potential markets. Demographic changes have resulted in the development of the ‘grey’ market who are spending more on leisure and travelling. Lifestyles , tastes and fashions are all changing; customers require opportunities to visit new and interesting, often long-haul, destinations.
3.1.4 Technological Factors
Technology is vital for competitive advantage, and is a major driver of globalisation. A key issue will be the extent to which technological advancements can offset upward pressures on prices and costs. Online sales are regarded highly important by BA and they are placing considerable faith in its website presence to boost online-sales which will reduce customer traffic via BA’s call centres. E-Tickets are now the standard ticket format used by BA, making flight ticketing more straightforward, flexible and secure (appendix 3).
BA is focused on improving its customer service in line with modern technology and has opened its first drive-through, offer Wireless LAN systems and communicate through modern SMS texting. A significant long-term threat is the effect of video-conferencing on the demand for air transport and they may have to accept telecommunications companies as formidable competitors for their business customers.
3.1.5 Environmental Factors
Sir Rod Eddington, former Chief Executive of BA stated ‘The whole aviation industry must accept global warming as a reality, and galvanise its efforts to limit generation of greenhouse gases.’ (www.sbac.co.uk) Global Warming also affects the demand for airline travel as warmer UK summers may result in more people spending their holidays in the UK. There is also a threat of a pollution tax being imposed on airlines from the government (Adam and Gow, 2005).
This environment influences the organization directly. It includes suppliers that deal directly or indirectly, consumers and customers, and other local stakeholders.
3.2.1 Industry Analysis
Michael Porter’s (1998) five forces analysis will allow an examination of the amount of power BA has in its immediate environment.
184.108.40.206 Competitive Rivalry
This not only refers to the degree of competition, but also the type of competition occurring. BA operates in two different markets - long-haul and short-haul flights - and therefore faces competition in both. In the long-haul market, competition comes from other large airlines for example Air France, who compete on routes, service, comfort and overall quality. In short-haul, competition is driven by low-prices from airlines including EasyJet. A growing number of tour operators (like Thomas Cook and TUI) are also now selling air only scheduled seats to reduced prices (Feldman, 2002).
220.127.116.11 Bargaining Power of Suppliers
This refers to the extent to which firms who supply a business can dictate prices, contract terms or delivery times. For BA this situation can be complex. As identified in the macro analysis BA’s prices depend on fluctuations in oil prices which it cannot control. Without aviation fuel, planes do not fly and BA will not make a profit. Although one may argue that BA has a choice as to which fuel supplier it uses, the petrol market is alike in terms of prices. In terms of suppliers of the actual planes, the situation is different again. Companies such as Airbus with its new A380 plane and Boeing with its 787 Dreamliner, are desperate to secure long-term orders to recover development costs.
18.104.22.168 Bargaining Power of Customers
There is a high degree of buyer power for BA’s. Customers as they have the ability to vote with their feet if they are not happy with the product. Events such as the check-in and baggage-handlers strike at Heathrow 2005 (in support of Gategourmet employees) seriously affected BA’s revenue as customers had to find alternative airlines to use. Buyer power is strong especially in the low-cost market , as there is little differentiation between market offers, and hence consumers shop around for the cheapest price, supported by the convenience of online-sales. These low switching costs mean that customer loyalty is crucial. Customers also have the Civil Aviation Authority (CAA) on their side.
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