|
|
|
|
You are here: Home > Educators > Business Studies > Marketing > British Airways: Asset-led or Market-led? - Activity |
|
|
British Airways: Asset-led or Market-led? - Activity
British Airways - 'the world's favourite airline', so their advertising message used to proclaim. In recent years, however, the airline business has suffered a range of problems, some self inflicted, some outside its control. In response to the problems, the company have tried to implement a number of strategies. In so doing the business may well have shifted the emphasis from a market-led approach to an asset-led approach. But, in so doing, did it create more problems than it solved? This Activity will investigate some of the problems facing BA, look at some of the strategies used to overcome the problems and encourage you to evaluate the extent to which BA is asset-led or market-led and what the implications for its strategic direction might be. Image: British Airways - to what extent is the company asset led or market led? Copyright: Jenny W, from stock.xchng. Task 1Identify the key assets that BA possesses that might give it some competitive advantage. Think about the physical assets, human assets as well as its image when compiling your list. Now turn your attention to the market in which BA operate. Task 2Use Porter's Five Forces model to analyse the market. You will need to think about the extent of the competition it is facing - how this has changed, the different needs of its customers, who its suppliers might be and what influence they can have (think oil prices, for example!) and the nature of the substitutes to air travel (are businesses finding new ways of putting people in touch with each other, for example?) 
Michael Porter's 'Five Forces Framework' Some of BA's problems are not those which have come from outside like the impact of the attack on the World Trade Centre in 2001. BA has been in the news for a wide variety of reasons from pilots testing positive for alcohol to its decision to end Concorde flights. 
Image: September 11th 2001. The moment of impact as flight 175 from Boston hits the South Tower of the World Trade Centre in New York. The effects of 9/11 had a significant impact on airlines throughout the world - British Airways amongst them. Task 3Using the following links to the BBC, construct a timeline of key events in the history of BA over the last ten years.
Constructing the timeline should have exposed you to some of the key problems the company has faced in recent years. There may be a wide range of problems you could identify but we want to try to narrow these down to a small number of 'important' ones. This task is part of the skill of analysing - breaking down an issue into smaller parts to enable greater understanding to be gained. Task 4Identify six problems that BA has faced in the last ten years. Put these problems into rank order of how important you think they may have been in affecting BA's performance. Having looked at the aspects of the business so far, we need to look at some of the strategies BA has put in place to deal with the problems it has encountered. In essence, a business has very few major options open to it. Think of it in this way: If profits are declining, then there are two things that can be done. Remember: So:
In reality, they may try a combination of the two but this is where an understanding of market-led versus asset-led comes into our thinking. We can look at this from the perspective of Theodore Levitt's 'Marketing Myopia' - myopia is 'short sightedness'. Levitt, a professor at the Harvard Business School, offered a critique of management thinking which suggested that businesses that focused on product rather than the needs of the market and the changing circumstances of the market, would start to experience problems as their business became almost obsolete. Levitt and another key thinker in the field, Philip Kotler, developed new ways of thinking about the marketing function in a business, but have businesses like BA taken notice of their research? Task 5Identify the key strategies put in place by BA to deal with the problems you have identified in Task 4. 
Image: Did BA's obsession with costs mean that it ignored the needs of its market? Copyright: Stefanie Wichmann The next stage is to make some judgements. This part is the crucial element in the whole Activity. So far the tasks have been reasonably straightforward; the information is generally available and as such the tasks should be achievable. The tasks have guided you through the background research necessary to help you understand the nature of the business under discussion and to break it down into smaller, more manageable parts. The Activity though is about market-led and asset-led marketing. What you must now do is to use the information you have collected and make some judgements about the extent to which BA is a market-led or asset-led business. It is important to note that there is no single answer to the question; some people may argue BA has become more market-led whereas others could argue the opposite. The important thing to remember is how you support your argument. It pays to arrive at some decision from your studies so far before you embark on the final task. To give you a hint, think about the following: BA decided that it had to reduce its costs to help deal with its problems. Thousands of staff have been shed at the company since 2000. In the summer of 2004, the company faced a number of problems caused by staff shortages, which led to delays and cancellations. Task 6In the light of the evidence you have collected, to what extent has BA adopted an asset-led approach to its marketing? What strategies would you advise the management to pursue to deal with the challenges the airline faces in the next five years? Useful References
|
