Business and Cultural Environments

Analysing business environment

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Business environment refers to the sum total of all the factors which influence the functioning of the business organization. The components of the business environment consists of the political aspects, socio-economic aspects, legal framework and the technological aspects. They affect every dimension of business such as its location, prices logistic system or the strategic policies. To establish and maintain the prominent position in the fierce competitive market place, the organization comes up with the optimum strategies. In this report to analyse the operations and strategies of the organization, the world's leading premium Airlines British Airways in taken into account. This report throws light on the functioning of the Airlines by analysing its various aspects. The areas such as the extent to which the organization meet its objectives towards the stakeholders and the impact of fiscal and monetary policies and competition policies. Further the report assess the influence of the factors such as the market forces, international trade and the European policies on the decisions undertaken by the organization (Our strategies and objectives. 2010).

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1.1 The purposes of different types of organization, its vision and mission.

On the basis of the ownership, the business organization is categorized in the following ways:

Sole proprietorship

In this type of organization there is single owner who has the sole right to take all the decision regarding the operation of the organization. There are fewer regulation in this type organization. If British Airways are shaped into the Sole proprietorship, the organization is endowed with all the rights of taking decision without any regulations of the government ((Solomon and, 2014).


In this type there are 2 or three number of owners who share the finances, profits and liabilities. The Memorandum of understanding is sighed between the partners in which the rules and responsibilities are written.


In public organisation, the shared are distributed publicly. There are board of directors who are responsible for the distribution of profits to the share holders. There is minimum number of liabilities in this but with maximum regulations.


The mixed type organisation consists of the features of both the public and private organisation. British Airways in this type of organisation have the rights to take the major decisions but with certain limitations laid by the legislative bodies in regard to the taxes, tariffs and other sectors.


To become the first choice of the travellers.


To become the leading premium airline of UK

Strategies and objectives

By providing the best Customer services

  • By making the prompt disruption management system.
  • By providing the best comfort, varied choices and optimum preventives.

1.2 The extent to which the organizations meets the objectives of the stakeholders

The major stakeholders of British Airways are:


The key stakeholders of the British Airways are the travellers and customers of the organization. They are major factors who influence the decisions undertaken and the strategies made. The organisation always intend to provide the best comfort, varied choices and the optimum privileges to the patrons. With the efficient in-flight and the airport services, the organisation make the journey of the travellers comfortable at every step (Czinkota, Knight and Liesch, 2004).


The Airlines are the customer oriented industry. It demands the best services offered to the travellers. The employees of the British Airways are counted among the most skilled employees in the Aviation industry with the award-winning services in all the departments. British Airways realizes the role of the employees in the organisation. It makes the frequent targeted investments to improve the working conditions and to manage the talents. The Airways make timely performance appraisal and make the performance related pay.


In order to deliver the enhanced flyer benefits, improved customer services and the quality operational management. The organisations maintain the good partnerships with the airports and suppliers. The suppliers endow the organisation with the better customer services and improved hospitality.

Government bodies

Being working as the mixed organisation, British Airways has the rights to take the major decisions but in the limited way (Teece, 2010). The government and the other legislative bodies has laid certain rules and regulations on the organisation in certain areas such as the protection of the environment and climate as the aviation affects the environment in the significant way. The organisation abides all these laws.

1.3 Responsibilities of the organization and the ways it fulfills.

With the aim to become the first choice of the customers as the world's premium leading airlines, British Airways has been at the forefront of innovation to give the experience of supersonic flying to the travellers.


Built on the heritage of excellence the airlines offer the premium services to the patrons. The services of the Airways reflects the British style and sophistication. The organization makes the journey of the travellers comfortable at every step from the airport services to the in- flight services (Wiklund and Shepherd, 2005).


With the aim to give the thoughtful and personalized services, the organization fulfils its responsibilities towards the employees by providing them the healthy and resourceful work place. British Airways ensure the safety of the employees be it giving the services at Airport or in the air.

Environment issues

The Aviation industry affects the environment in the considerable way. British Airways abides the rules and regulations laid by the legislative organization such on the minimization of the carbon and greenhouse gas emissions, the waste reduction methods.

Legal responsibilities

British Airways abides all the legal responsibilities laid for the organisation (Czinkota and, 2009).

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2.1 On the basis of the allocation of resources economic system is categorized in the following manner:

Command Economy

In this economy, the allocation of resources is done by the government. The rights to take the major decisions lies in the hands of the legislative bodies. The organizations run according to the government's regulations. If British Airways shapes into the command economy, it has the minimum powers. The pricing and tariffs are decided by the laws imposed by the government.

Free market economy

The allocation of resources is done the market forces of the demand and supply of the goods and products. The decisions related to the pricing and the output are taken solely by the organization (Hult, Hurley and Knight, 2004).

Mixed Economy

This is the combination of both economies. Some rights to take the decision lies with the organization but with some rules and regulations laid by the Government. For instance, the decisions related to the pricing and market strategies are taken by the organization but has to abide the tariff limits for the tickets. Along with this the Government impose rules for the services it offers such as the employment conditions, in-flight services, fuel related issues and other related.

2.2 Impact of Fiscal and monetary policies on the business organization and their activities.

To stabilize the market conditions the government bodies adopt certain measure. Two such methods are the fiscal policy and the monetary policy (Kovacic, 2004). These policies regulate the functioning of the organization in the country. With the impact of these tools the activities of the organization changes. Following are ways in which the policies affect the British Airways and its operations:

Fiscal policy

To regulate the working of the organization of the country, Government uses the tools such as the spending, the taxation and changes in the structure of policies if the industries. Taxation refers to the imposition of the taxes on the products and the services the company offers. In order to liberalize the economy, government increases its spending like public investment on the social overheads or on particular sector. British airways gets affected by this policy in the significant way (Ayyagari, Beck and Demirguc-Kunt, 2007). For example, governments investments to organize the international events in the country brings the lucrative results to the Airways by increasing the number of visitors. Along with this when the Government increases the taxes on products and services in the aviation industry British airways need to change the fares structure. So at the time of increment in fares it shifts the travelers preferences to the other modes of transport.

Monetary Policies

In order to regulate the money supply in the country central bank uses certain tools such as changes in the interest rates, bank rates, selling and purchasing of the government securities. This changes also affects the pricing of the British Airways. For instance, at the time of inflation when the money supply is more in the economy British airways increases the fares to increase the profitability whereas at the time of recession, the fares get reduced to maintain the customer base (Blocher, Chen and Lin, 2008).

2.3 The impact of competition policy and other regulatory mechanisms on the activities of a selected organization

There are certain organization made in UK in order to protect the illegal and wrong practices in trade. These practices can be related to the consumer protection, hegemony of the single business organization or others

Competition policy

It is the measure to check the wrong practices of the trade in UK. It also monitors the aviation industry and the organization operating in it such as the British Airways.

Competition policy by keeping check on the services given to the consumers monitor the operations (Lambsdorff, 2007). Other regulatory mechanism affecting BA are OFT and competition commission which evaluate the working by their involvements.

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3.1 Determination of the pricing and output decisions of businesses in different market structures

The organization working in different market structures has the different impact on their pricing and the output decisions.

Perfect Competition

In perfect competition, there are large number of sellers and buyers and the prices and output are decided by the market forces. The organization has limited right. British Airways working in the perfect competition has no right to decides the fare tariffs and other taxes.


The market in which there is only one seller and many buyers is Monopoly. The seller has the sole right to decide the fares and other prices. In reality this market structure does not exist (Beck and Demirguc-Kunt, 2006).

Monopolistic competition

Monopolistic competition has few sellers and many buyers. In this competition the competition is tough. The sellers decide their competitive prices and provide the distinguished services and products. British Airways in order to maintain its prominent position in the market it comes with the best customer service and facilities.


The market structure in which there are few sellers whose pricing and output decisions are dependent on the decisions taken by the competitive firms. In reality British airways functions in this type of market structure. The aviation industry has few sellers with the tariff structure dependent on each other. Not only the tariffs and fares bu the services it gives is also dependent on other organization (Dong, Wu. and Hou 2009).

3.2 The way in which market forces shape organizational responses, using a range of examples

Market forces play a crucial role in shaping the policy structure of the organization. With the market forces we mean here the demand and supply of the products and services offered by the organization, elasticity of demand, market trends, technology and innovation.

Demand and supply

The fundamental factor which affect the policies of the organization is the demand and supply of the organization. The changes in these factors affects the profitability. For instance, the at the time of recession the demand decreases, to compensate the customer's base British Airways decreases its prices to prevent the shifting of travelers to the other modes of transport. On the contrary at the time of peak season the demand increases hence to increase the profitability the Airways increases its fares (Craig and Campbell, 2012).

Elasticity of demand

The important factors which affects the policies is the elasticity of demand. British Airways is the premium airways for the long-haul flights hence the elasticity of demand for these flights is very low. So the Airways make changes in the fares and tariffs without any fear. Similarly, in the cargoes the elasticity of demand is high hence the Airways make less fluctuations in their fares and tariffs.

Technology and innovations

Technological advancement proves beneficial for the operations of the business in the smooth and effective manner. The improved database management makes the storage and accessing of data in easier way (Xue, X, Shen and Ren, 2010.).

3.3 Business and cultural environments shape the behavior of a selected organization

The organization functions under the influence of the set of factors. That is known as the business environment of the organization. Along with that one another component cultural environment also affect the working of British Airways.To assess the Business and cultural environment of the organization PESTLE is used

Political Factors

The political framework of the country affects the policies of the organization. The custom duties and import tariffs imposed by the government affect the fares decided by the organization. The other political factors include the process adopted to apply for the visa and related formalities. The ease of accessing the processes increases the customers and travelers number (Chi, Kilduff and Gargeya, 2009).

Economic factors

It refers to the inflation rate, stock exchange fluctuation, disposable income of people and other related. The feasible situation makes the operations easy in the country.
Social factors: It refers to the preferences and choices of the countrymen. The facilities are provided as per the feedback and requirements of the customers.

Technical factors

It refers to the technological advancement of the country in the infrastructure and communication. More advanced the technology possessed by the organization better will be the profitability (Iskanius, Page and Anbuudayasankar, 2010).

Legal factors

It refers to the rules and regulations imposed with respect to the employees issue, consumer protection and environment. British Airways are required to abide all the laws imposed.

Environmental factors

The favorable climate increases the intensity of the flights of British Airways.


4.1 the significance of international trade to UK business organizations

With the vision to establish the prominent position in the global cities, British Airways are focusing to enhance the international trade. By connecting people globally increases the profitability and revenue generation of the organization. These are the certain areas in which the international trade benefits the organization.

Market Expansion

By establishing prominently in the global cities by making its terminals globally, the market of British Airways extends up-to the large extent.

Revenue Generation

The international trade brings the lucrative results to British Airways by increasing the number of travelers all over the world (Welford, 2013).

Technological improvements

The international trade benefits the organization by improving the operational system. The increased connections with suppliers and airport terminal enhance the quality of customer services. For instance, recently British Airways has made an agreement with the Russian airlines S7 and India's Kingfisher Airlines in order to improve the customer services. British Airways has signed a treaty with airport terminals to offer the easily accessible airport services. It increases the speed check in facilities offered at the airports which decreases the time delays.

Brand Awareness

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With increase in services at more number of terminals the larger number of people get to know about the services and products offered by the British Airways (Maclean, 2006).

4.2 The impact of global factors on UK business organization

Global factors has significant impact on the working of the British Airways. The following are the factors that affect in the considerable way:

Economic factors

The economic factors such as the different exchange rates and stock exchange fluctuations in the countries British Airways operating affects its business policies. The pricing structure and the operational management in the country is dependent on these attributes (Björklund, M., 2011).

Science and technology

Advancement in the science and technology make the functioning of British Airways easier. For instance the country with terminals operating their data in DBMS has the smooth operation and makes the journey of the British Airway's travelers easier.

International organizations

There are some international organizations functioning to regulate the operation of the business units all over the country with the aim to protect the consumers, reduces the illegal practices in trade. Such organizations are World Trade Organization and many more (Brown, Earle and Lup, 2005).

Political scenarios

The political scenarios of the countries in which British Airways are operating affect the functioning a lot. The favorable environment of the country makes the British Airways working smooth whereas the unrest in the political situation of the country makes the operation difficult.

4.3 The impact of policies of the European Union on UK business organizations.

European Union functions to make the various aspects of the member countries better. It includes the economic aspects, political framework and socioeconomic factor and the environmental issues. UK is the member country of European Union. EU provides the protection to these member countries through its policies in many dimensions such as in the trade it has laid some rules for the consumer protection, reducing the malpractices in trade and monitor and check the trade issues. The two policies of EU is explained which affects the functioning of the British Airways.

Environment issues

EU has laid the rules and policies for the aviation industry in order to minimize the emission of carbon, nitrogen and green house gases in the atmosphere. The British Airways abide this law (Bitzenis and Nito, 2005). It is using the environment friendly raw materials. British Airways are using the efficient waste disposal techniques. Along with this the Airlines takes care of fuel efficiency and has tied up with the research and development team in order to improve that.

Consumer protection

EU has laid the law according to which the organization has to decide the fares and tariffs in accordance with the facilities and services provided to the consumers (Ruff, 2006).


Business environment imparts the great influence on the working of the business organization. Affecting the various aspects of the business it has the significant role in shaping the policies and strategies the organization adopt. There are other factors which influence the working of British Airways such as the fiscal and monetary policies, market forces, international organization and their policies and many more. British Airways abides the rules and regulations laid by the government bodies and take care of the environmental issues by minimizing the emissions of harmful greenhouse gases and carbon.


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  • Beck, T. and Demirguc-Kunt, A., 2006. Small and medium-size enterprises: Access to finance as a growth constraint. Journal of Banking & Finance.
  • Bitzenis, A. and Nito, E., 2005. Obstacles to entrepreneurship in a transition business environment: the case of Albania. Journal of Small Business and Enterprise Development.
  • Björklund, M., 2011. Influence from the business environment on environmental purchasing—Drivers and hinders of purchasing green transportation services. Journal of Purchasing and Supply Management.
  • Blocher, E., Chen, K. H. and Lin, T. W., 2008. Cost management: A strategic emphasis. McGraw-Hill/Irwin.
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