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History of British Airways Free essay! Download now

Home > A Level > Economics > History of British Airways

History of British Airways

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Downloads to date: N/A | Words: 1650 | Submitted: 31-Oct-2009
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British Airways (BA) faced diverse problems in 1980. Following World War II BA inherited numerous war veterans who brought their military mentality with them. BA initially formed through the merger of two government agencies. These two factors created an organization that provided the cut and dry service of taking off and landing on time. Nothing else mattered.

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British Airways (BA) faced diverse problems in 1980. Following World War II BA inherited numerous war veterans who brought their military mentality with them. BA initially formed through the merger of two government agencies. These two factors created an organization that provided the cut and dry service of taking off and landing on time. Nothing else mattered.
In the early 1970’s BA turned profits. This caused neglect to foster amongst BA’s overseers. During the 1970’s, BA focused only on minimizing cost to the state. Like government agencies, BA had become extremely inefficient due to too many employees and too many managers. BA’s productivity level was about half the average of the other eight foreign airlines. BA management recognized that 58,000 employees were too many; however, unrealistic passenger growth forecasts allowed management to overlook their obesity year after year.
Customer service was not of much importance at BA. The rigid culture at BA did not infuse its employees with a need to put the customer first. BA treated customers as though the customer did not have a choice in service and as though the customer had received a benefit in getting to ride the airplane. Numerous bad experiences tarnished BA’s public image.
In 1980 external problems revealed the festering internal problems. In 1980, Britain soaked in its worst recession in 50 years, which reduced passenger numbers and sent fuel costs through the roof. Faced with a recession teamed with an archaic fleet and high staffing costs, BA was running out of funds at a rapid pace and teetered on the verge of bankruptcy. Due to its soiled image, the planned privatization of BA to the investing public would not save the airline. British Airways needed immediate radical change in order to survive.
British Airways, one of the most prominent airlines in Europe, had a major crisis in the late 1970s and early 1980s. It was on the verge of bankruptcy. Management had to make drastic changes to get rid of their “bloody awful” image, to get the airline back to profitability. The change process implemented at BA reflected most of the features mentioned in John Kotter’s eight-step model for implementing a successful change. Following is a description of these steps.
Establishing a Sense of Urgency: In 1981 BA’s management realized that it needed a drastic change in its business model and culture to avoid bankruptcy. The challenge was to change the operational culture of people who believed that their job was simply to get an aircraft into the air on time and to get it down on time. As Roy Watts (CEO of BA) stated in his special bulletin to the staff, there was a high possibility of BA going out of business unless they took decisive actions to cut their costs sharply and immediately. The problems at BA became worse when Britain’s worst recession in fifty years reduced passenger numbers and raised fuel costs. These situations created increased sense of urgency for BA management to bring about a transformation. The first step taken by BA management to address this problem was the hiring of Sir John King as the Chairman who believed that a change was necessary. King had a successful track record of starting businesses and restructuring companies in trouble. King was a respected individual in society with government connections. This fostered his ability to implement a change process. Thus by hiring King, BA successfully implemented the first step in Kotter’s eight-step change model which states that “Transformation often begin, and begin well, when an organization has a new head who is a good leader and who sees the need for a major change.”
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