Introduction to Business Environment
Business environment is all about circumstances in which organisation operate its operations. It is necessary for every organisation to have focus on internal and external environmental factors to enhance business opportunities. Business environment consider number of factors which can impact the operations of organisation (Binh and et. al., 2010). The factors can be classified as a group, resources, media, government, legislation, economic conditions and culture.
In this report generated for dissertation writing the learning will focus on operations and culture of British airways in order to understand the business environment. It will focus on various organisational purposes that have impact on business. It will also provide information about nature of national environment in which British airways is operating its business. It will also focus on behaviour of various organisations which are operating its business in the same market environment. Furthermore, it also emphasizes on significance of the global factors that shape national business activities.
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Purposes of different organisations
It has been spotted that, there are diverse sorts of organisations which are operating in current market scenario. The classification of organisations can be as international organisation, non profit organisation, partnership, governmental, etc. Every organisation has different purpose that covers diverse mission and vision.
British airways operates its business in diverse nations with a purpose to offer best class airline services to customers and earn more profit as an outcome (Greenwood, 2010). Company offer its services to satisfy needs of customers and generate more income. Company is also termed as private organisation that generates its income for the owners, investors and employees.
Other than this, Red Cross is a non profit organisation that provides number of health care services with an aim to amend the health conditions of people. It also refers as a charitable organisation which consists of 25000 volunteers (Malhotra, 2010). Organisation operates in both international market as well as local market. The social group is committed to provide services to public by considering religion, nationality, ethnicity, political aspects.
Furthermore, the government organisation means firm in which operational power is held by governance authorities. British Broadcast Corporation is subsidiary of UK governance that looks for activities which can control the media sector (Reese, 2003). The key aim of organisation is to control behaviour of media and provide correct information to public about various subjects.
Key stakeholders of the BA
There are number of stakeholders of BA that can impact the business operations so it is necessary for the organisation to meet expectations of all stakeholders. The classification of stakeholders can be as follows:
Owners: It is one of most essential person in the organisation and his key expectation is the advancement in profit margin ratio. In this respect, it is necessary for the management of BA to ensure that the company is having advancement in its sales ratio and proper information is provided to owner regarding various subjects and operational activities (Wellington, 2000).
Employees: It is necessary for the management to make sure that the company is meeting the expectations of employees by providing them with a safe and secure work culture (Jennings, 2010). Company also make sure that all employees are taking part in decision making process and they feel motivated while performing task within the organisation.
Government: In this respect, the management of BA is considering various laws and regulations which are applied in airline organisation. Company pays tax on time and ensure that all laws and regulation of UK governance are implemented effectively in its operational process (Freeman, 2010). Organisation follows different types of taxes like income tax, corporate tax, import/export tax, etc.
Customers: In this aspect, the organisation provides high class airline services at low cost so that expectations of customers can be met in an effective manner. Moreover, British airways offer high class food and beverages at very low cost as compared to its business competitors (Fernando, 2011). Company also provide discounts on its services to meet needs of customers.
Responsibilities of an organization
British airways are operating its business in diverse nations with a motive to meet expectations of diverse stakeholders. In order to this, company has also designed various strategies which can provide continuous change and meet the stakeholder’s expectations (McGovern, 2014). To meet the expectations of owner management of BA is providing best services to customers so that more users can be attracted towards business and profit margin can be enhanced. The advancement in customer bases leads to business expansion and impressive success. Employees of organisation expect good working conditions and basic services to feel motivated (Adler, 2007). They also require compensation and remuneration from management to enhance own motivation level.
In this respect, the organisation has deigned various policies by considering governance polices which enhances the work environment. It also amends industrial standards of work and helps in meeting the expectations of employees. With an improved focus on governance policies the management of BA is also meeting requirements of UK government (Daft, 2009). Company also pay taxes in a correct manner in desired time to accomplish governance needs. Furthermore, in order to meet the needs of customers the organisation is offering better services and products along with improved focus on food, beverages, etc. organisation is constantly focusing on advancement of services and its standards so that goals can be meet in effective way (Savolainen, 2012).
Impact of economic systems in resource allocation
The economic system plays a key role in resource allocation so it is necessary for BA to understand its impacts. Resource allocation can be classified as human capital, finance and technology. In order to have operations in airline industry, it is necessary for the management of BA to take permission from governance (Alcidi, 2011). Without prior permission from government the organisation cannot perform activities in sector. Economic system is classified as traditional, market, mixed and command economic system. In traditional system it is essential for British airways to consider historical success and norms regarding social customs. In this respect, it can be said that the changes in concept of traditional economic system can influence the allocation of resources in diverse manner. In capitalist economic system, governance does not have key role which also impacts the operations and boosts the business opportunities. In this system, company can face issues regarding adaptation of changes (Ghannadian, 2006).
On the other side, mixed economic system considers both economic systems that are classified as market economic system and command economic system. As per the consideration of mixed economic system it can be said that the British airways can have better opportunities and lead business to impressive success (Joseph and et.al. 2013). In this support, it can also be said that the there are less governance restrictions which are applied on British airways so that they can design their policies as per the market trends and customers’ needs. It will also amend the business opportunities and lead business to next level.
Impact of fiscal & monetary policies on business organisation
It has been spotted that the monetary and fiscal policies have a great impact on the business organisations and its operations. Federal Reserve and financial authorities have accountability to change the supply of money in economic system and also impacts the business environment that can create some barriers for British airways (Shaikh, 2010). For example, the governance of UK has increased the airport charges and taxes to boost the fiscal level of government authority. It will impact the business of British airways in a negative manner because it will force organisation to pay high charges and taxes. The advancement in airport charges and taxes will reduce financial growth and its operations.
On the other side, concerning the monetary policies it can be said that business operations can be influenced due to changes in supply of money. For example, the federal bank of UK has increased the interest rate on bank loans and British airways is looking for business expansion for which it needs high investment of money from banks (Arch, 2003). It will increase the operational cost of overall business expansion projects. The changes in other monetary policies were also made during the inflation in UK by reducing expense rate of customer. It has impacted the business of British airways in a negative manner and reduced the sales ratio of company as customer’s expense rate has decreased (David, 2000).
Impact of competition policy & other regulatory mechanism
It has been identified that the competition policies have great impact on the regulatory mechanism of British airways so it is necessary for the management to understand influence of competition policies. In this support it can be said that the European Union has introduced various competition policies to amend the service standards so that customers can have better experience in the competitive market (Hoffman, 2012). It is necessary for management of BA to follow competition policies in order to avoid legal issues.
Other than this, according to EU competition act it is necessary for BA to have merger and acquisition activities as per the standard framework so that equal business opportunities can be provided to all organisations. Moreover, the enterprise act is also applicable on BA so it is also vital for management of BA to ensure that the training and skills policies are followed in a correct manner (OECD, 2000). It is also essential to ensure that operations of BA are not having any kind of employee discrimination so that businesses can overcome issues.
Furthermore, the management of BA also need to ensure that all standards of civil aviation authority are being followed by the organisation in order to manage the air traffic (British Airways Annual Reports, 2010). If organisation will not follow all the regulations in decent manner then it can face some issues which can impact the business and its operational activities in a negative manner.
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Role of market structure in determining pricing & output decision
The market structure plays a key role in determination of pricing and other decisions of British airways. In this respect it can be said that the market structure is classified as monopoly, monopolistic and oligopoly (Hoffman, 2012). If BA is operating the business in monopoly market then organisation can decide price of its services as per company needs because there are no competitors which are available in the market. In this situation, company have total control over the market so that they can take decisions as per organisational needs.
On the other side, in monopolistic market condition the organisation faces perfect competition as numbers of competitors are operating in the same market. In this it is necessary for the management of BA to decide the pricing of services as per the consideration of competitor’s policies pricing (David, 2000). If its competitors are increasing than the pricing of its services, at that time BA can also increase prices but less as compared to competitors.
Furthermore, Oligopoly market structure means few numbers of sellers are present in market but buyer’s ratio is very high. It has been identified that UK aviation market is oligopoly so organisation must take decisions by considering customer’s needs and competitors activities as well (Arch, 2003). It will boost business opportunities and attract more customers towards business.
It has been spotted that in current market scenario customer has become smart and their key expectations are to attain premium products and services at very low cost. It is one of key challenge for aviation industry to maintain balance among expense and income. In this respect it can be said that the changes in demand and supply ratio forces British airways to have modifications in its operational activities (Shaikh, 2010). If demand is high then, organisation can charge high from its consumers as they are ready to have services at any cost in the scenario. It will also amend the profit margin ratio of organisation and lead to impressive success.
Current market conditions are also facing key issue of rapid changes in technology which also impacts the business of organisation. For example, the new technology has introduced in market to reduce the fuel consumption of aircraft then it is necessary for British airways to focus on adapting new technology (Joseph and et.al. 2013). It may also amend the expense of organisation and may lead to decrease the profit margin ratio. Furthermore, the customer perception also plays a key role in success of British airways so it is also necessary for the organisation to focus on customer needs and expectations to meet success standards. If organisation will not have operations as per the changes in customer needs then company may face some failure issues (Ghannadian, 2006).
Business and cultural environments impacts
Political: It means the political stability can also impact the business of organisation. For example, the UK economic system is not stable and government has increases the taxation of aviation services then it will force management to pay more taxes and increase the prices of services in order to have better sustainability.
Economical: The economic conditions of diverse nations are also differed so it is also necessary for the management of BA to consider various economic conditions and taxation policies of the nation (Savolainen, 2012). For example, the UK is facing issues regarding inflation that means it is necessary for the company to cut down the prices of its products and services so that organisation can sustain in the competitive market.
Social: As organization is functioning in number of nations so it is necessary for the management to focus on diverse culture so that business activities can be managed in an effective manner. It has been identified that, the British airways consist of employees who belongs to diverse nations and cultures (Alcidi, 2011). As company is operating its business in diverse nations so it is necessary for the organisation to understand social aspects properly and then design business activities to meet goals.
Technological: In international market the business firm can understand various technological updates that can amend the operational activities in effective manner. Company can use various latest tools in context to aviation sector which will boost operational opportunities and lead business to impressive success. It is also beneficial for improvement in profitability.
Legal: In order to have effective accomplishment of goals the business firm needs to follow regulations of diverse nations then company can face issues regarding legal and cultural aspects. In this company needs to consider civil aviation policies and other regulations that can influence business. Avoidance of these aspects in international business can impact business in negative manner.
Environmental: Every nation has different environmental policies so it is necessary for business to follow environmental policies in appropriate manner to meet goals. If company will not follow environmental standards as per nations then management can face some critical issues.
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Significance of international trade
In the above task it has been spotted that the British airways is operating its business in diverse nations which amends organisational opportunities. In the respect of international market it can be said that flow of capital, finance and technology are key essential factors of market. It facilitates the organisation to improve its operational activities and lead business to impressive success (Adler, 2007). Improved flow of capital helps in effective management of fiscal aspects and increases revenue of business. It also amends the international business opportunities by focusing on import and export policies. Company can expand business in diverse nations and lead business to next level. The taxation relaxations and less tariff barrier also provides better opportunities to business while expanding in international market (McGovern, 2014).
British airways can also generate high revenue by expanding its business in international market. It also provides better opportunity to use new technological tools that can amend the growth ratio of business (Fernando, 2011). It also provides information about various social-cultural aspects which helps in better understanding of customer needs that belongs from diverse nations. It also provides some ways to have effective allocation of resources and reduce the expense ratio.
Impact of global factors
British airways is one of key participant of international airline market and there are number of global factors that have some impact on company operations. The classification of factors can be as international competition policies, competitive advantage, strategic alliances, export and import policies, etc (Freeman, 2010). It is necessary for the management of BA to ensure that the EU competition policy is being followed by organisation in order to meet the international standards. If company is involved in any violation of EU policies then, it will affect the business in a negative manner and lead to various legal issues.
Other than this it is also essential for BA to make sure that all safety measures are followed which are issued by International Aviation Organisation. If organisation is fails to meet the safety measures then it will have direct negative impact on its operations (Jennings, 2010). The prices must be settled according to global economic system so that company can have sustainable growth. Improved focus on economic conditions and customer needs will also enhance the business opportunities of British airways (Wellington, 2000). Furthermore, environmental aspects also need to be considered by organisation to avoid negative impact on the business operations.
Impact of policies of European Union
European Union policies are formed to amend the business opportunities for organisations and to protect rights of customer. There are number of policies which are formulated by EU such as consumer protection act, climate act, trade act, etc (Reese, 2003). Other than this, EU has also developed some policies to have effective regulation consideration in business such as employment policy, taxation, etc. In this respect it can be said that, it is necessary for British airways to consider the consumer protection act in its operations. Company must ensure that the company is providing high quality services at correct price without any violation of act (Malhotra, 2010). If food and other services of airline firm are not according to standards then company can face some legal issues that may impact organisational operations.
Other than this, taxation policies are formed to ensure that all business organisations are providing correct taxes to governing authorities in the desired time period. The tax and trade policies also facilitate business to have its operations in an effective manner and provide various business expansion opportunities (Greenwood, 2010). If business firm is not considering taxation policies as critical aspect then it will influence the overall expenditure and profit margin ratio in negative manner. The civil aviation law make sure that the companies are using correct machines and aircraft that cover all safety measures and reduce the carbon emission. It is necessary for the management to follow all these policies for effective operations and impressive success.
As per the above study it can be concluded that the business environment is all about study of various internal and external factors that have direct or indirect impact on the operational activities of any business. It has been spotted that British airways is operating its business in diverse nations so it is necessary for management to consider the various global factors such as culture, economy, etc. Other than this, EU policies also have direct impact on operations of BA so management must follow all the policies for impressive success.
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