Environmental Forces Affecting British Airways

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Identify the main environmental forces affecting British Airways by undertaking a PESTLE analysis (focus on current trends). Which ones are likely to be drivers for change in the future of the company and why? Analyse the nature of competition British Airways faces using Porters Five Forces framework. Porters five forces analysis looks at factors outside of an industry that influence the nature of competition within it, the way in which firms compete and the industry’s likely profitability conducted by the model. The degree of rivalry is one force that needs to be taken under consideration. Rivalry could lead to competitive practises such as price wars, offering credit terms, adding product features etc. This usually occurs when there are lots of competitors in a market or when the market is declining to attract new customers. Competition in the airline industry is at an all-time high which is challenging providers to reduce costs while improving quality. In this environment, attracting new customers and retaining existing ones through superior customer service is not only a key competitive differentiator but a necessity. Also the rising oil prices have had a dramatic effect on the airline industry. In the year up to September 2008, 26 airlines had gone out of business! British Airways (BA) cater for both long haul and short haul flights unlike the low cost airlines such as Ryanair and Easyjet which only cater for short haul flights. There is little differentiation between BA and their competitors within the long haul flights in terms of prices and service offering whereas the short haul market is more fragmented with many small players. Direct competition in the airline industry is fierce with likes of Virgin, Emirates, Qatar Airlines competing. BA offer high quality customer based service in urge “to be the most exclusive and first choice airline for all airline travellers” . They have a strong competitive advantage through the corporate image that they have...
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