British Airways PAPER

Of innovation: Competition, Consumer needs and feedback, Resources and Competences
Organizational knowledge, knowledge transfer and cross-functional cooperation: Importance

Leadership and planning for innovation

Executive Summary (NOT included in word count)

Contents

Introduction, Purpose of the Report & Structure

Assessment of capabilities and blockages: VRIO and Porters Five Model application

Drivers Innovation roadmap and discussion

Conclusion

SAMPLE PAPER

British Airways

Introduction

British Airways is one of the major airlines in Europe and the world at large. The organization operates in a highly competitive industry that requires that its management works around the clock to maintain keep it competitive (Jarvis, 2014). The airline’s strengths lie in how it can exploit its resources and distribution networks to augment its capacity to compete in the industry. Each airline carrier attempts to come up with innovations that can help its outsmart competitors and attract customers (Belobaba, Odoni, & Barnhart, 2016). In the last three decades, airlines have focused on improving the customers’ experience and lowering the cost of operation, including the tickets. Innovations are a major factor in building competitiveness in the modern business world.

Purpose of the Report & Structure

The aim of this report is to give insights into the capabilities, weaknesses, and opportunities the British Airways can explore to drive innovations. The report will offer a roadmap to innovation that leadership can explore to improve the airline’s market performance. The report is structured into an introduction, assessing the strengths and weaknesses, organizational aspects, leadership and planning for innovation, innovation roadmap and discussion, and conclusion.

Assessment of capabilities and blockages: VRIO and Porters Five Model application

VRIO Analysis of British Airways

VRIO Analysis of British

The analysis of value, rarity, imitable, and organization of British Airways reveals strengths, weaknesses, and opportunities of the company.

Value Ø The VIRIO analysis reveals that British Airways is a highly valued company in the UK, a factor that helps it combat external threats. Ø The company is viewed as the pride of Britain, assuring its value among the locals and international clients. Ø British Airways has highly qualified employees who are valued, adding the company value that supports its competitiveness. Ø The VRIO analysis also reveals that British Airways plies valuable routes in Europe and beyond, which contributes to the strong value the company enjoys in the industry (Katie, 2013).

Rarity Ø The British Airway possesses rare resources that give it an edge over the rival firms. The company enjoys a healthy financial muscle, something that is rare for many aviation companies. Ø British Airways enjoys a rare distribution network strength, which only a few firms have in the industry. The competitors would require much resources and time to catch up with British Airways if they wanted to build a formidable distribution network. Ø The company enjoys a rare patent, which is anchored in its name the British Airways. The patent is hardly available for competitors, for it is only one company that enjoys the rights of identifying itself as British Airways (Media Centre.British Airways, 2020). Ø British Airways also has highly trained employees, something that is rare with other firms. Only a few aviation firms have highly qualified employees as British Airways (Katie, 2013).

Imitable Ø British Airways has patents that cannot be imitated by its competitors. Other companies in the industry cannot imitate the identity of the company. There is only one British Airways (Jackson & Tozer, 2020). Ø British Airways enjoys a strong financial base that is hard to imitate because of its high cost. The company has developed its financial muscles over a long time, making it costly to imitate resources and time. Ø The food products sold by British Airways can be easily imitated because they are cheap, implying that the competitors can acquire them at a low cost.

Organization Ø The resources British Airways enjoy are structured to capture the value of the company. The resources are strategically invested in ensuring that they are maximally utilized to produce maximum value (Jackson & Tozer, 2020).. Ø The VRIO analysis reveals that the patents of British Airways are not well organized to ensure their maximum use. Underutilization of patents means that there is an unexplored competitive advantage (Burke & Noumair, 2015). Ø The British networks have a well-organized distribution network, which helps the company to serve its clients well. The distribution network ensures that the products and services of the company reach customers. In essence, the resources are well distributed and utilized by British Airways to gain a competitive advantage (Katie, 2013). Ø The VRIO analysis reveals that British Airways has leveraged the distribution networks and financial resources to gain a competitive advantage in the industry. The company’s patents remain an underutilized competitive advantage that can be explored to bolster competitiveness (Katie, 2013).

Porter’s Five Forces Model of British Airways

Threat of New Entrants

The threat of new entrants in the airline industry is low because entry requires huge financial muscles to buy the aircraft, hire employees, secure routes, and acquire licensing. The new entrants will also face strong competition from established carriers, making it hard for a new entrant to gain the market share from existing firms (Kerzner, 2019). The products are less differentiated, which makes it hard for new entrants to gain market share from existing firms.

Threat of substitutes

The substitutes for air transport include the use of trains, cars, ships, buses, and trucks. The substitutes may only pose a serious threat to local air transport. International or long-distance traveling favors air transport systems. Even with local transport, the convenience makes air transport the preferable means over the rest. Customers who use air transport do not consider the cost much but convenience. Those who value low-cost transport often use alternative means of transportation to move from one place to another.

Bargaining Power of Buyers

The customers are usually price-sensitive, which means that they will opt for a competitor if British Airways makes its air tickets too expensive. The company is forced to price its tickets within the competitors’ rates, not too high or too low to its competitors. Ticketing through agents gives customers a wide range of options, which brings into play the issue of pricing. Customers go through available options, looking at prices and services offered before deciding which airline to use. Only loyal customers who value the services and products of the company are insensitive to prices. In this respect, customers have high bargaining power.

Bargaining Power of Suppliers

British Airways has a myriad of suppliers who form an integral part of the company’s success. The suppliers include providers of fuel, aircraft, spare parts, and labor. The suppliers of airplanes are limited because one needs billions of dollars and highly qualified employees that are rare to acquire to produce airplanes. Suppliers such as Boeing dominate the industry, giving them strong bargaining power over the buyers. The airline must use fuel and get qualified employees to function. The suppliers of airplane fuel are not many as well as labor suppliers. While there may be many pilots, engineers, air hostesses, and other personnel who can work in the aviation industry, getting highly competent and experienced is not easy. A company has to maintain the best employees it has. Consequently, the major suppliers have strong bargaining power, an aspect the British Airways must deal with by establishing good relations with these important stakeholders in the aviation industry.

Industry Rivalry

Rivalry in the airline industry is very high because of the availability of local and international airlines that ply the same route that British Airways ply. At the local level, the company competes with numerous domestic carriers that have specialized in serving local customers. On the other hand, the competition is so stiff at the international level because of available national carriers for various countries and other international airlines that are strong in terms of resources and distribution networks. The US, Canada, Germany, France, Italy, China, Qatar, and UAE are some of the countries that have competitive airlines that the British Airways competes at the international level. The competition includes pricing, convenience, and the type of services that airlines offer to clients. Airlines operate on different terms, which impacts each’s the ability to compete. Some countries such as Qatar support their airlines, directly and indirectly, enabling them to trade their services at lower prices.

Drivers of innovation: Competition, Consumer needs and feedback, Resources, and Competencies

Innovations are driven by various forces that influence the need for change to bolster competitiveness in the industry. The aviation industry is not immune to new ideas, which implies that a company must come up with or embrace new ideas. The drivers of innovation in the aviation industry include:

Competition

In the airline industry, competition is very high, driving companies to develop new ideas that can help them gain a competitive advantage over their rivals. Online ticketing, use of agents, and introducing new services and products are some of the new ideas that British Airways has explored over the years to remain afloat amid stiff competition from rival firms (Katz,2020).

In 2014, British Airways unveiled short-haul interiors in response to previous innovations similar to Lufthansa and Air France. The competitor had fitted more slimline seats on their short-haul airplanes to lower the cost of operations and enhance their competitiveness in the industry. Failure to come up with this innovation would mean that the company loses competitive advantage to Air France, Lufthansa, and other airlines that had changed their interiors by fitting inside slimline seats (Deal, Mills & Mills, 2018).

Consumer Needs and Feedbacks

Consumers are an important factor in the aviation industry, which means that the airlines must be able to meet their needs to maintain their trust and loyalty to services and products that are offered. Passengers need comfort while traveling, an aspect that major airlines have tried to address. At the same time, the consumers of airline services need low-cost services. All these needs are drivers of innovations that include redesigning seats and airplanes interiors (Jarvis, 2015). As highlighted in the preceding section, British Airways has come up with innovative ideas on designing the interior of its planes to give consumers the comfort they need and lower the costs of tickets.

British Airways introduced state-of-the-art, completely self-driven vehicles to support customers who need special assistance to navigate the airport terminal freely and autonomously. The use of autonomous vehicles is in line with British Airways’ goal to enhance consumer experience (Media Centre. British Airways, 2020). Moreover, British Airways came up with tablet-holders as part of its response to consumer needs. The increase in the use of laptops by passengers while traveling led to a demand for new aircraft features that will accommodate tablets and mini-laptops (Light, 2020). British Airways was among the early airlines to introduce tablet-holders for its passengers.

The need to lower prices to accommodate consumers who prefer low cost over convenience led to the rightsizing of BA’s A320 to reduce the size of seats and their weight, leading to increased seating capacity from 162 to 168 or 174. The change allowed the airlines to charge passengers relatively less than what it could have charged with a lower seater capacity airplane.

Resources and Competencies

Innovations require the support of financial and human resources to materialize, especially in a costly industry such as aviation. British Airways invests millions of dollars in research and innovations each year. Innovative ideas such as automatic vehicles to support people who need assistance to move in terminal took the company a lot of financial resources to implement. The use of resources also requires the availability of competent employees to implement innovative ideas. British Airways has competent engineers, managers, and researchers whom it leverages to idealize, develop, and implement innovations (Jackson & Tozer, 2020).

Organisational knowledge, knowledge transfer and cross-functional cooperation: Importance

The knowledge of the management about the structures and organization of its resources is critical in supporting innovations. The leadership must have strategic knowledge about the distribution networks and the organization’s resources to aptly adopt new ideas (Lange, Geppert, Saka‐Helmhout, & Becker‐Ritterspach, 2001). British Airways has management that holds a superior knowledge about its organization. The knowledge about new ideas is transferred across various levels of management to the lowest relevant levels through a predictable communication network.

Cooperation between various levels of management and stakeholders is cultivated and enhanced to ensure that there is efficiency in how the airline operates. The engineers, air hostesses, pilots, and the management of the airlines work in collaboration with one another to service customers (Burke, et al., 2015). The company collaborates with the employees to avert strikes, which often affect passengers while collaboration with suppliers ensures that the operations of the airlines smoothly. British Airways operates on a strong organizational structure that prevents overlapping roles and wastage of resources.

Leadership and planning for innovation

The leadership of any given organization is critical to driving innovation because change is a major issue that requires the management’s approval and support. Authoritative leadership style applies to how British Airways is managed (Northouse, 2009). The top management enjoys firm control over the major decisions that are made at other levels of the management. Superior leadership styles that encourage new ideas are closely linked to innovative behaviors and absorption of new ideas (Katie, 2013). The nature of organizational goals leaders come up with also impact changes that may be implemented in an organization. British Airways has had leadership that is pro-competitiveness and enhances the value of the entity in the airline industry. Lowering the cost of operations and giving the consumers comfort are some of the major goals that the leadership of the airlines has pursued in recent decades.

In 2014, the then CEO announced that the British Airline was going to install slim chairs to low the cost of operations and improve passengers’ comfort. Innovations do not just happen; they have to be planned for in advance in terms of finances, human resources, and implementation (Media Centre.British Airways, 2020). The leadership of the airlines is both reactive and proactive in implementing changes.

Moreover, British Airways CEO Alex Cruz set a goal to improve customer service, triggering new innovations that targeted customers. One such innovation was the launch of autonomous vehicles in early 2020 to service customers with special needs requiring assistance to navigate terminals (Media Centre.British Airways, 2020). The other innovation was the introduction of a specialist accessibility team to support the ease of movement of customers. All these innovations were in line with the CEO’s goals, underscoring the role of leadership in planning and innovation. Therefore, the British Airways leadership has been supportive of innovations the company has come up with and adopted.

Innovation roadmap and discussion

Innovations do not happen overnight but require a detailed plan on how to achieve them, taking into account resources, time, and stages of developing a new idea. The roadmap provides guidelines on what should be done and in which order to realize and implement new ideas. Innovations at British Airways can follow the following steps:

Ideation stage

The organization tries to come up with new ideas based on existing goals and challenges that the organization may want to address. British Airways is faced with various challenges that need innovative ideas to address. At the ideation stage, the organization may hold workshops, scenario engineering, ideations contests, gather suggestions from employees and customers, and use business intelligence to zero in on areas that need changes and how to go about it (Jarvis, 2014). The new ideas should be tailored to solve existing challenges or initiate progressive changes.

Allocation of resources and development of a new idea

After ideation, the next step is to allocate resources – human and financial – towards molding a new idea into a real product or service that can be implemented. There is no innovation without spending of resources, hence the need to allocate enough resources to facilitate among other research and production of a product that is necessary to implement change (Vittorio, n.d.). The resources must be commensurate with the demands for innovation. Also, the company comes up with a prototype of the product or service that the company intends to introduce at this stage.

Test the market

At this stage, the British airline conducts tests of the new ideas of targeted entities and people to assess the reception. The test should include lead customers or consumers and other stakeholders who may be impacted by innovations (Goodman & Dingli, 2017). Also, an insight Clinique will be required to establish the validity and value of innovation. The test for an innovation aims at understanding how fitting it is in an organization’s objectives and goals.

Fine-tuning the new ideas

New ideas can be improved to ensure that they achieve the maximum good for an organization. The feedback from the test is used to determine if the innovation can be improved, discarded, or implemented as it is. Feedback from testing is utilized to improve new ideas, products, or services (Morghen, 2016). Innovations that are not well developed can lead to failures, hence the need to fine-tune everything to align with the organization’s needs and interests.

Implementation

Innovations that are tested and proved to be worthy of improving the airline’s performances are implemented through changes in relevant areas. The implementation should be carried out in a meticulous way to ensure that the end results are congruent with the goals of embracing an innovation (Vittorio, n.d.). For instance, British Airways implemented the changes in the interior design of its short-haul airplanes to lower the cost of tickets while improving passenger comfort (Katie, 2013). The company also implemented an autonomous vehicle in airports it operates to help passenger with disabilities move around. The implementation requires financial support, an aspect that the management must approve. In essence, the implementation stage is an adaptation of innovation to the company’s needs to maintain a competitive advantage.

Implementation Summary

Innovation	Goal	Resources needed
Redesigning the interior	Lowering the cost of productionImprove passenger comfortEnhance competitive advantage	Financial resources Human resources

Conclusion

In conclusion, British Airways enjoys strong financial resources, patents, and employees that can be leveraged to implement innovations to enhance and maintain the competitiveness of the airline. The company has not fully exploited its patent potential to bolster its competitive advantage. The patents offer an opportunity for innovations that will guarantee maximum use of patents to benefit British Airways. The company enjoys a strong corporate brand name that can be leveraged to develop new ideas to better its performance in the aviation industry.

Reference list

Belobaba, P., Odoni, A. R., & Barnhart, C. 2016. The global airline industry. Chichester, West Sussex, United Kingdom: Wiley.

Burke, W. W., & Noumair, D. A. 2015. Organization Development: A Process of Learning and Changing. FT Press.

Deal, N. D, Mills, A. J., & Mills, J. H. 2018. A modern and modern warfare in the making of a commercial airline. Management & Organizational History, 13 (4) 373-396.

Goodman, M. & Dingli, S. M. 2017. Creativity and Strategic Innovation Management: Directions for Future Value in Changing Times. Taylor & Francis.

Jackson, S. & Tozer, J. 2020. A Vision for Data Science At British Airways, Impact, 2020,1, 15-19.

Jarvis, P., & Timmers, M. 2018. British Airways: 100 years of aviation posters. Amberley Publishing.

Jarvis, P. 2015. Better by design: Shaping the British Airways brand. Amberley Publishing.

Jarvis, P. 2017. Engineering an airline. Gloucestershire Amberley in association with British Airways.

Northouse, P. 2009. Leadership: Theory and Practice. London, SAGE

Jarvis, P. 2014. British Airways: An illustrated history. Stroud: Amberley Publishing.

Katie, J. 2013. Strategic Management: British Airways. GRIN Verlag.

Katz, B. 2020. British Airways CEO Departs as Parent IAG Seeks Revamp. The Wall Journal. https://www.wsj.com/articles/british-airways-ceo-departs-as-parent-iag-seeks-revamp-11602503270.

Kerzner, H. 2019. Innovation Project Management. JOHN WILEY & SONS.

Lange, K., Geppert, M., Saka‐Helmhout, A., & Becker‐Ritterspach, F. 2001. Changing Business Models and Employee Representation in the Airline Industry: A Comparison of British Airways and Deutsche Lufthansa. British Journal of Management, Vol. 26(3)388-407.

Light, L. 2020. British Airways Needs to Revitalize Its Brand. FOBES. https://www.forbes.com/sites/larrylight/2020/08/14/british-airways-needs-to-revitalize-its-brand/.

Media Centre.British Airways 2020. British Airways Looks to the Future of Inclusive Innovation as It Trials Autonomous Mobility Devices. https://mediacentre.britishairways.com/pressrelease/details/86/Technology-379/12133.

Morghen, S. 2016. Innovation Karma. Books ON DEMAND.

Vittorio, D. n.d. Management Innovation Roadmap; What the New Manager 3.0 Has To Do In Order To Enable Employees To Do Their Best And To Be Fully. EGEA.