British airways (BA) is a world renowned airline, with it being the United Kingdom’s airline leader in terms of number of passengers (Mazareanu, 2020) Their website offers its customers various options to book single, round trip and multi city flights, from economy to first class, with the choice to add on purchases of a hotel room or rental cars on arrival.
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In this article we will be anaylsing the online marketplace of British Airways, looking into the macro and micro-environmental factors that impact the organisation.
Macro-environment
Macro environmental factors can be analysed and identified using a PEST analysis which takes into consideration Political, Economical, Social and Technological factors which affect an organisation.
Political
With the recent confirmation of the UK leaving the European union, with Brexit deals being finalised towards the end of 2020, it is good to note how this will affect companies like British Airways. Flights are likely to run as normal (Pratap, 2020) however airlines like BA will have to take into consideration new border and immigration laws. Additionally, the political stability of th UK has direct affects on the profits and growth of airlines like BA. (Pratap, 2020)
Economic
Fuel prices have decreased, lowering the costs of production and therefore rising the profit margins for BA. However, Brexit also had an economic impact on airlines such as BA. When it was announced that the UK was going to leave the EU, it created high levels of uncertainty for future investors, reducing the ‘investment by UK carriers’ , potentially reducing the growth of BA (SWOT & PESTLE.COM, 2020)
Additionally, because of the ongoing COVID-19 pandemic and the restrictions on travel, the national economic growth has dramatically decreased, causing the UK to enter a recession. This mean less passengers are flying and less flights are occurring, damaging revenues and profits.
Social
Attitudes towards climate change and sustainability are changing for the better; more people are looking for more sustainable ways to operate, including sustainable ways to travel. Governments are also involved in cutting down carbon emissions. Therefore British Airways have to take this into consideration in order to maintain. positive reputation and brand image (Pratap, 2020)
Attitudes towards British airways themselves has been changing, from a once perceived high cost carrier, to an ‘increasingly low cost carrier’, increasing their sales as now as a company they appeal to more social demographics. (SWOT & PESTLE.COM, 2020)
Technological
The development of smartphones and apps over the past decade has allowed more people to book holidays online, which is way quicker and convenient. British Airways have acknowledged this and as result have enabled their services to be purchased online. To ensure that they maintain high sales and god brand image, this online system needs to be carefully maintained to ensure the booking process is at optimised efficiency (Ismail, 2017) https://prezi.com/p/wp5fcl8un0jj/pestle-analysis-on-ba/
Micro-environment
When analysing a firms micro-environment, we mainly look at 3 aspects;
Customer
There is an absence of cost switching for customers to switch to a substitute airline. This means that the bargaining power of buys is fairly high. However, BA is a leading airline for long distance flights, meaning that for customers, there is not likely to be a reasonable alternative when comparing BA to competitors. (Dudovskiy, 2016)
Supplier
Suppliers have a lot of power compared to airlines like BA; There are not many suppliers from which British Airways can acquire the high quantity of fuel needed. If suppliers decide to increase prices, it would force BA to increase their flight prices in order to maintain high profit margins. furthermore, if supply delays occur, the impacts of this are then relayed onto the customers, which can damage the social image of BA (CreativeLearningVision, 2019)
Competitors
For British Airways, there can be considered a low amount of substitute services for flights. The threat of new entrants too is very low, due to the insane quantity of capital needed to establish an airline as well as all of the government rules and regulations which airlines have to follow. (Dudovskiy, 2016)
British Airways as a company has managed its Micro and Macro environment incredibly effectively, allowing it to be one of the biggest airlines globally.
Heres a link to the British Airways website https://www.britishairways.com/travel/home/public/en_gb/