Rather than produce an essay I would advise you to produce a report with an introduction which states how you intend to approach the report. Conclusion and Recommendation.
2_ You have been asked to provide critical analysis and evaluation on the nature of the changes taking place with reference to the models
3_ Produce a structure that is linked to the model
4_ You were not asked to recommend a strategy going forward for the company. This assignment is about application of theories of change to the airline industry in general and BA in particular.
PS_ British English Harvard referencing system.. U can find the relevant theories on this book: Exploring Corporate Strategy: Text and Cases’ by Johnson, Scholes and Whittington
2000 words
PS_PLEASE READ THE CASE TUDY CAREFULLY, THIS IS THE 3 TIME IM PAYING FOR THIS REPORT, FOLLOW THE INSTRUCTION AND READ THE guide to weighting for the assessment. Use academic websites only, books and journals.
Consider the case study and then:
1. Using the application of relevant change management theories and models provide critical analysis and evaluation on the nature of the changes taking place.
2. Explain and justify the specific recommendations towards managing change within British Airways you will make as a result of your investigations.
State clearly the conclusions that you draw from your investigations, you may use further research to evidence your views
British Airways – case study Within an Industry in Transition
The airline industry is going through a period of profound transformation. A fundamental restructuring is under way, attributable to four simultaneous phenomena: first, the shrinkage of high-end demand for air travel that began in late 2000; second, the emergence of a new cadre of low-cost carriers; the third, the increased transparency of alternative airline offerings made possible by the internet and other technologies and finally the high cost of fuel and its overall impact on costs
Analysts believe that the collapse of high-end demand at the end of 2000 was not simply another cyclical change, but rather an important structural change driven by a powerful combination of economics and technology. While leisure travelers have always chosen an airline primarily based on price, there is growing evidence that business travelers have become significantly more price sensitive. For many, the change is likely to be permanent. Together, the economic downturn beginning in the latter half of 2000 and 9/11 engendered some major changes in business travel purchasing habits.
Because cutting travel budgets became a corporate imperative, businesses embraced lower cost travel alternatives, including low-cost air carriers. Many trips that would have been routine just a few years ago simply weren’t taken because clients are more attentive to such costs and because it is so easy to exchange documents electronically. Businesses in every sector made similar changes in their travel patterns, substituting web conferencing and other technologies for face-to-face meetings.
Second, the new generation of low-cost carriers like Ryanair, and Easyjet are bigger and better than the previous generation of low cost carriers (LCCs), most of whom ultimately failed. Having said that some me too carriers without a robust business model (e.g. Zoom) have failed and many more are scheduled to fail in the coming period of tightening of credit.
A third factor underlying the structural changes in the industry is the internet not as a substitute for travel but as a perfect purveyor of information about travel. Carriers everywhere have embraced online ticket sales as a means of reducing distribution costs. Low-cost carriers were often in a better position to take the greatest advantage of internet distribution channels because they were unburdened by the legacy of existing distribution systems and technologies. Travelers now have the wherewithal to compare price and service offerings of all airlines quickly and efficiently, and to act on those comparisons instantly with only a few keystrokes.
The demand for more affordable air travel is extremely healthy. The carriers earning profits in this market appear to be the ones charging the lowest prices an important clue to the different kind of structural transformation that is currently under way.
One important difference is that high-end legacy carrier fares have declined not merely on routes served by LCCs, but also on routes where there is no current LCC competition. Very clearly, the fare transparency delivered by the internet and the expansion of LCC services has increased the price-sensitivity of all travelers, even business passengers. The airline seat is rapidly becoming a commodity, and as a result the pressure on legacy carriers to reduce their cost structures has been enormous.
Despite these difficulties, legacy carriers remain an invaluable part of commercial aviation. Through the legacy carriers networks and those of their alliance partners, people can reach any corner of the globe, often with just one connection. We should not underestimate the continued importance of these networks to the economy. Nevertheless, it is clear that this time we are witnessing a true watershed in the development of deregulation, and legacy carriers can no longer simply follow each other through the ups and downs of the normal business cycle.
The architects of deregulation predicted that new airlines, unburdened by higher costs, would enter the market and exert pressure on pre-deregulation carriers either to compete on cost or fail. The first 25 years of deregulation did not follow this script, largely because of the unexpected economies of scale and scope on the revenue side that enabled carriers to pursue a strategy focused on higher unit revenues rather than on lower unit costs. For years, large network carriers were able to avoid cost-side pressures by focusing on a revenue-side strategy largely centered on high-yield business traveler. The strategy generally worked because the business traveler, who grew accustomed to paying high fares, had no attractive alternatives. The airlines also kept tight control over the number of seats available to discretionary travelers. In a market now characterized by declining high-end demand and widespread availability of attractive low-fare options, legacy carriers no longer have the ability to do that. As a result, revenue-side strategies are no longer sustainable
What does all this mean for the future? The difference between the legacy carriers and the LCCs in cost per available seat mile remains very high, even for carriers that have gone through a round of restructuring. It will be a continuing challenge for the legacy carriers to further shrink that gap in the current environment, particularly because low-cost carriers continue to make improvements and drive costs down still further.
It also seems likely that today group of successful, well-equipped, low-cost carriers will continue to expand. They are pushing the limits of the traditional low-cost carrier business model, in which low-fare carriers only operated successfully in dense, short-haul, point-to-point markets. Furthermore, LCCs are now rapidly expanding into transcontinental markets and some even into international markets as well. (Shane, 2004)
Another major environmental factor has been the growth of new markets, in the last fifteen years there has been huge growth in demand for long haul flights to the emerging economies of China and South East Asia. With this growth has come increasing competition from airlines based in these countries. These include national carriers such as Air China, Cathay Pacific. There has also been a growth in carriers from Middle Eastern countries which would be considered hub airlines, (i.e their geographic location makes them ideal to serve the major markets of Asia, Europe and Australia). These airlines include Emirates Airlines and Royal Brunei Airlines. The long haul industry also has some Low Cost Carriers. Air Asia is an example of a rapidly growing low cost long haul
These factors have had a major impact on British Airways (BA) who, as a so called legacy carrier, are burdened with high costs. Management is attempting to change the working practices and pay of the staff but are meeting with a lot of resistance. In Early 2010 when BA staff were balloting their members on strike action the Independent commented
It is hard to overstate the weakness of BA’s financial situation. The airline lost £400m in the last full financial year and £342m in the nine months to December 2009. Business passengers, which traditionally generate the bulk of the airline’s profits, have fallen dramatically since the recession broke and are showing no signs of returning. BA’s staffing overheads are too high. And because the airline is in competition with some ruthless cost-cutting rivals, action to bring these down cannot be delayed.
This should be bearable. BA’s cabin crew are well remunerated in comparison with the employees of other airlines. And the extent of the airline’s non-staff economies so far has been to stop serving food on some short-haul flights. There is scope here for efficiency savings.
The union should not expect much public sympathy if they withhold their labour this weekend. The two-year pay freeze that BA intends to impose is no different from what tens of thousands of people across the British economy are being forced to endure as the price for keeping their jobs. And workers everywhere are being asked to cope with cuts in total staff numbers.
This action could backfire on the union. Since the union voted to strike last December, BA’s management has been developing contingency plans. Some 1,000 individuals from elsewhere in the company have been trained to work as cabin crew to cover striking workers. And BA says it hopes to run a 60 per cent service this weekend, even if the industrial action goes ahead.
Yet this is not to argue that the strike cannot inflict grave damage. BA has no God-given right to exist. Air passengers have greater choice than ever before. The company’s lifeblood is not its landing slots or its size, but its reputation. And what the union seems likely to undermine is not the company’s management, but BA’s reputation for reliability. Serious harm has already been inflicted by the strike that was threatened last Christmas but called off at the last minute on a legal technicality
Independent (2010) Leading article: Industrial action will be a disaster for British Airways
http://www.independent.co.uk/opinion/leading-articles/leading-article-industrial-action-will-be-a-disaster-for-british-airways-1921849.html accessed 6 December 2010
Shane (2004) Adapted from 2004 report by Jeffrey N. Shane
Under secretary for policy
US Department of Transport
Consider the case study and then:
2. Using the application of relevant change management theories and models provide critical analysis and evaluation on the nature of the changes taking place.
3. Explain and justify the specific recommendations towards managing change within British Airways you will make as a result of your investigations.
3. State clearly the conclusions that you draw from your investigations, you may use further research to evidence your views.
A guide to weighting for the assessment:
40% for critical analysis and application of relevant models & theories
Critical analysis and evaluation in light of the models you have reviewed and interpreted so as to give an understanding and appreciation of how the change processes happened.
30% for literature review & research
Evidence of appropriate academic literature to substantiate your conclusions and recommendations offering a balanced analysis of the situation that is occurring.
20% for conclusions and recommendations
Coherent and structured conclusion identifying clear recommendations for the future of the industry.
10% for presentation, clarity of writing and references
Well presented document, double line spaced, pages numbered and a range of appropriate and current academic references
Learning outcomes: 1.3 and 1.4
1.3 Critically evaluate change management theories and models applying these to the analysis and solution of business problems.
1.4 Analyse the change management processes of organisations and demonstrate an understanding of the contexts within which change management occurs.
