The study is directed at examining the various elements of business that are adopted by companies in their operations. Two organizations in the airline industry have been chosen as the subject of the study to help in achievement of the study objectives. These organizations are; British airways and Emirates airlines. These are giant organizations in the airline industry which have been able to perform excellently in a highly competitive airline industry. This is a definite sign that they adopt the most effective concepts of business operations to keep them on top of other organizations in that industry. The paper shall, therefore, take an in depth analysis of the companies’ legal, social and economic environments so as to develop a comprehensive comparison and contrast of their business policies. In addition, the study will also revolve around the managerial, operational and financial concerns that tend to impact the organizations in their operations. Some of these issues include; company culture and performance, promotion policies, decision making styles, management styles, leadership styles, communication styles and the use of SWOT tool. We shall compare and contrast these issues in both organizations based on the level of their utilization by each company. Finally, the study will also investigate the impact of the changing external conditions in the airline industry, and how they relate to the managerial functions in both organizations.
British airways operate mainly in Europe where comprehensive legal policies have been formulated to regulate the fast growing industry. The European Union (EU) in liaison with the airline industry has spelled out various regulations that govern the airlines. To begin with, there have been comprehensive laws crafted to regulate the airlines with regards to security concerns that are a global issue in the airline industry. British airways have also had to comply with the new environmental regulations which are meant to ensure that airline companies become environmental conscious. This has been implemented to facilitate the achievement of a green economy. These legal issues are believed to impact on infrastructure problems associated with route flights and slot capacity in airports. Consequently, the legal issues that prevail in UAE where Emirates operate have also been found to impact the company’s business operations. To begin with, the regulatory environment asserts the need for a consistent legal mechanism to launch individual identity for public and private sectors. The legal environment of this airline also seeks to put into action the population register law so as to increase the number of registrants.
There is also a regulation that requires national cadres to deal with particular important authentication duties. As a result, Emirates is expected to ensure compliance with these legal requirements that govern the airline industry. This presents a scenario where the company would incur compliance costs (Herberberg & Rieple, 2008). However, compliance with these legal considerations is also viewed to be beneficial for the maintenance of the company’s status in the industry. The social issues prevailing in British airways have mostly been influenced by the economic crisis that was experienced in the Eurozone that had significant impacts on customer behavior. The crisis has made the majority of customers to become more prices sensitive. Hence, customers are interested in the value for money. This has resulted to travelers demanding superior quality values and exceptional heights of service at lower costs due to the economic downturns that have rocked the region. Consequently, customer loyalty has also declined with a majority of customers opting to try new airlines so as to receive real value for their money. Lastly, the technological progress that is present in Europe has enabled customers to make informed decisions regarding air travel.
These social issues have had major impacts on the business of British airways in Europe. However, the social issues that are prevailing in the UAE are advantageous for Emirates as compared to those of British airways in Europe. There has been a rapid increase in the population of UAE thus, increasing the number of passengers for the airline. This is believed to have a positive impact on the business of the airline. There has also been an improvement in job earnings among the working professionals of UAE. As a result, majority of the people have the purchasing power for air travel. Lastly, a social problem that exists in the UAE is that the majority of cardholders limit themselves to the benefits of electronic services offered by the cards. This presents a situation that will reduce the number of passengers accessing the electronic services provided by the airline. The airline industry is highly delicate to economic crunches that occur in a country. The Eurozone crisis that was experienced in the majority of European countries had devastating impacts for the business.
The crisis has led to a significant drop in the level of business travels for the airline, hence resulting to a reduction in profitability (Lawton, 2007). Other economic conditions that have affected the business of British airways include; increase in prices of oil and products, increased unemployment in Europe, crumpling of the sterling pound, continued credit squeeze and vagueness of the capital markets. Conversely, the economic conditions that prevail in the UAE are also different from those of Europe hence providing different impacts on both airlines. The Emirates identity card is believed to be expensive and hence, the majority of the UAE population cannot afford it, thus putting the company at a less privileged position. The ministry of finance in UAE has also increased regulations associated with implementation of zero based financial plans that are difficult to be achieved by Emirates. Consequently, the increased economic regulations have necessitated advanced financial management for the company so as to comply with the requirements. The organizational culture of British airways is guided by the company’s mission and vision.
The company seeks to build a rewarding and inspiring working environment where talents are utilized to satisfy the needs of customers and to ensure corporate social responsibility. The airline has recently undertaken restructuring of their organization design so as to accommodate the culture of quality leadership and improved customer focus. This organizational culture has been deemed to improve the company’s efficiency and performance. The organization has developed a high performance leadership (HPL) system that has enabled the airline to develop high quality leaders. This leadership has been in the forefront in improving the company’s performance, particularly using the performance measurement tools put in place. Emirates’ organizational culture is demonstrated by its innovative way of achieving global connectivity. The organizational culture adopted by the airline aims at connecting cities, countries and continents around the world by providing quality services to the customers. Emirates strives to develop a lifestyle brand that would be appreciated around the world, this has been signified by the introduction of a global brand termed as “Hello Tomorrow”. It is a culture that is focused at empowering the company’s product and service. This culture has been significant in improving the performance of the airline.
Both companies have a strong belief in efficient rewarding of employee talents in order to benefit from increased productivity and performance of the workforce. The promotion policies that have been formulated by both airlines are guided by the employee’s performance and competence on the job. Promotions are accorded as a reward tool by the companies, as well as a way of ensuring employee retention. Decision making in these airlines follows a vertical style where decisions are made from a high level personnel to the junior staff. Strategic decision making is, however, undertaken by the top executives of both airlines. Strategic decision making is believed to be regarding decisions that reflect on the long term organizational objectives of both airlines. British airways exhibit a management style that is responsive to change. The airline undertook a reorganization of their top management to ensure a comprehensive organizational design that would be effective in driving the company to achieve its set objectives (Flouris & Oswald, 2006). On the other hand, Emirates has developed an innovative management style which is in line with their organizational culture that embraces innovation.
The company has recently launched the Emirates ID card that is meant to ensure a technological responsive management style which will be facilitated by the electronic cards. The adoption of this high tech innovative management style is expected to improve service delivery through integration. British airways adopt a participative leadership style that has been strengthened to effectively lead a world premium airline. The company introduced HPL system that sought to develop leadership that would; communicate on a common vision, motivate and inspire each other and agree on accountabilities. However, the leadership style at Emirates can be described as a collaborative leadership where the top management of the company is retained to offer their expertise for the success of the company. Both airlines demonstrate a vertical communication style where information emanates from the top management to the subordinates.
It is also evident that both airlines have developed comprehensive SWOT analysis which represents the situation of their industry of operation. The changing external conditions in the airline industry have resulted to various impacts on the management of the airlines. For instance, the changing economic conditions have ensured that airlines seek ways of cutting on costs so as to maintain their profitability. However, majority of these external conditions have presented adverse effects for the airlines (Worthington & Britton, 2006). The changing legal conditions also affect the management strategies adopted by the airlines so as to ensure compliance with the regulatory authorities. Conversely, some of these changing external condition ns have offered favorable opportunities for these airlines to improve their efficiency and performance in the market.
Flouris, T., & Oswald, S. (2006). Designing and executing strategy in aviation management. Aldershot, England: Ashgate.
Herberberg, A., & Rieple, A. (2008) Strategic management: theory and application, Oxford University Press.
Lawton, T. (2007). Strategic management in aviation: Critical essays. Aldershot, Hampshire, England: Ashgate.
Worthington, I., & Britton, C. (2006). The business environment. Harlow: Financial Times Prentice Hall.