Academic Report of British Airway
Academic Report of British Airway
Academic Report of British Airway
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BIBLIOG
RAPHY
Walsh has been appointed as CEO by the BA since October, 2005. When the BA lost
its profits in May 2009, Walsh considered that there was a need to do something in
order to lift the profits back up. Finally, he implemented the cost reduction plan which
included cutting the number of the cabin crews and freezing payments in spite of open
discussions with the employees about the difficulties they confronted. There was a
situational leadership rather than a transformation in the BA organization. Far from
collaborating and coordinating with each other, everyone has to follow any decision
made by the very top. With reference to the Kaleidoscope, it was a time to change
immediately to retain profitability intact and raise potential profits by eliminating the
unwarranted expense and to preserve anything that could be efficient and effective in
the firm's operation. According to the structure of the BA, Walsh had the right to
manage the needed change process which he considered is extremely important for
survival.
1.2 The strategic change itself as outlined by its management
During the financially chaotic streak that affected all institutions all over the world,
each and every management team in each and every organization felt obliged to resign
to conducting a change process in its pertinent area to be able to survive in the long
run. Vis-a-vis the BA, the change process outlined by Willie Walsh pertains to "cost
saving" which consists of cutting the number of cabin crews, overtime working, payfreeze, self-voluntary unpaid work, paying little to the pilots, and also cutting the service
in the long-haul flight. According to the kaleidoscope context or scope, Walsh
underestimated the depth of the changes and redesigned the very changes with no
sufficient attention whatsoever prior to the veritable implementation; which led to
negative impacts on stakeholders, including crews, pilots, as well as customers.
1.3 The nature and extent of the strategic changes
The change process implemented by Willie Walsh had a terrible negative impact
on the stakeholders. Although the prevailing threats might have been because of both
internal and external factors, it was true for Walsh that 'reducing the amount of costs
incurred means saving the operational costs and recovering from loss', but Walsh failed
to consider widely the consequence of the changing process. Following his decision,
the BA fired about 1700 cabin crews, 1000 of whom were asked to accept voluntary
redundancy with an unpaid condition. Even another 3000 employees inevitably had to
be working just as part-time workers. Furthermore, the BA reduced the number of
the cabin crews in long-haul flight from 15 to 14, placed the service at the same
level to short-haul flight, and scraped meals in short-haul flight. On December
14, 2009, the BA imposed contractual changes on cabin crews by dint of not just
the extended working hours but also the reduced pay rate of wages of 11,000
pounds per year for new workers.(BBC News Business, 2009). The crews were
very dissatisfied and went on strike. This affected the passengers and everyone else
relevant to this process. In accordance with the context of the kaleidoscope, the
diversity of the BA was adversely affected. The different groups under the impact of the
cost reduction were unhappy about, uninterested in, and disheartened with their
respective work. To summarize,although the management team and the cabin crews
were under the same roof of cooperation, they were not in the same views about the
change.
1.4 The Change Management Strategy
When the economy got crippled by dint of the recession, it spelled income level
in decline for business persons. As a result, they had a tendency towards travelling less
and less, as and when they found it unnecessary. The recession had an impact on the
BA, too. Because of the rising fuel price, the BA had to turn towards increasing the
ticket price in comparison with the budget airline. The result is that the number of the
BA's passengers plummeted stunningly. In such arduous situation, Willie Walsh
implemented the cost reduction plan in order to remain alive. During the recession,
there were complicated situations. Consequently, the firm could not even forecast the
nearest future and was shocked by the financial collapse. So the management team
implemented change at once to overcome any sort of loss. Furthermore, Walsh's
change was a top-down and revolutionary change. The cabin crews were astonished
by the change and had little time to adapt the change. Thus up came a disruptive
tension which lasted into 2 years. According to the kaleidoscope context (readiness),
the management team, in spite of being aware of the changes, neither communicated
well with the crews nor got them involved in the process.
Part 2: Academic Report
2.0 Kotters 8 step of changing process
This report is going to examine about the BA change according to the theory of
John P.Kotter (1996) : The eight steps of change process are widely applied by many
multinational corporations as an outline for change process. Kotter's theory is just an
outline which helps firms to change the strategies and improve the performance of
their process over the course of difficulties. The change management strategies which
were applied by BA brought a conflict; which led outright to reducing the number of
cabin crews on long-haul flights and making a change in payment in October 2009. The
conflict lasted nearly two years from the end of 2009 to 2011 and it obviously affected
the revenue of the BA, the customers, the suppliers, the brand image and the
employee relations.
wages to intimidate and put them under control on 29 March, 2010. Union raised the
fund up to 7,000,000 pounds to support the crews for further industrial actions.
Nonetheless, the solution that the BA thought would help them to remove the threats
made the situation got worse than before.
2.6. Generating short-term win:
At this stage, people tend to work hard towards the vision, because of being
curious about their achievement. So as to improve the level of productivity, managers
should make short-term goals first and then correlate them with the achieved result.
But, vis-a-vis BA, the situation was arduous and sudden. This resulted in the BA's
incapability of thinking about the rewarding plan to motivate people who could help the
BA reach the desired target.
2.7. Consolidating gains and producing more changes :
Kotter (1996) stated that many change programs failed because the victory
was declared too early. Actually, real change takes a long time many resources to
complete. After getting the short-term wins, companies should analyze what is the stem
of the problems and what are necessary to get improved again for the best outcomes in
the future. At the same time, the motivation towards the employees and the trust from
the stakeholders are also important at this stage. That is why the managers should
inform them of the change process. BA management and Unite Union finally agreed on
the 'new' pay deal and ended the dispute in May, 2011. However, the BA did not hold
celebration for it because it still faced several challenges and difficulties when
implementing it.
2.8. Anchoring new approaches in the culture:
Ultimately, it is important to ensure that both the existing and new staff continue
to support the change. Besides, in order that the very change could be conspicuously
seen in every aspect of the organization, as an impetus, the staff were told about the
success stories in the change process. The impetus led to the staff's participative
position. Thus, the tension between the BA and the crews eventually was totally solved
since Keith Williams took over the CEO post. People thought that he was different
from Willie Walsh, and they had confidence with him and the new pay deal (BBC
News,2011).
3.0 Change Readiness:
Change readiness means the measurement of workforce for the purpose
of getting set for the change. Balogun J. and Hailey V.H. (2008) concluded that
change readiness has two levels. the first level is the extent of staff's awareness
of change needs; the second, personal commitment towards changing individual
skills, attitudes, behaviors or work practices. The level of awareness is low in the
BA's change procedure; which means that only the top managers had realized change,
but they didn't communicate well with the crews and, what is worse is that the top
managers did not so much as give the crews time to build resistance over the change.
As a result, the crews became very discontented and dejected with the cost reduction
plan, misunderstood it, turned out low in morale, and went on strike.
4.0.Resistance to Change and Strategies
All change initiatives should be treated as projects, since they are limited
by budgets and deadlines (Cabanis-Brewin, 2011). There are three stages of
resistance: effective resistance, which means how the staff have a negative impact on
change; behavioral resistance, which involves the intention to act in response to
change; cognitive resistance, which indicates what people think about the change.
Common factors, which influence change resistance include lack of trust,
economic threats, beliefs that change is not feasible or unnecessary, resentment
of interference, fear of personal failure, loss of power and status, threats to
values and ideals, and relative high cost (Long & Spurlock, 2008). The employees
were ambivalent about the change because the change plan brought a negative sense
to them. The cabin crews resisted the plan by taking a strike, because the change plan
that BA imposed made them lose their jobs and salaries. The problem stopped when
BA management successfully negotiated with the crews by raising the salary rate for
them.
5.0 Stakeholder Analysis
The analysis of stakeholders provides the necessary data about the group of
people which has an enormous impact on the operations of the business and would
help support the success of the company. It also is helpful in drawing a business plan
and strategy of the firm. Before making the decision on what to do, the manager should
carefully choose right people to do the right thing, because once there had an action, it
would have a great influence on a larger group of people. This means that the BA
should keep a close relationship with their stakeholders to get to know their demands
and expectations. Before the company makes any decision, they should consider and
think about the stakeholders who will be impacted by the change project. The important
key of stakeholders of the BA includes Governors, Local board members, Mayors,
Media, Community activist, Funders, Community leaders, Competitors, Shareholders,
tourists and so on. For example, the profit and sales revenue of the BA depends on the
customers and therefore it has a great impact on the survival of the firm. Likewise, BA
has to conduct its business under the term and conditions which was provided by the
government. BA also has to take care of shareholders, as it has the right to choose
board members and approve of the decisions that was imposed by the top. Therefore,
the management has to keep eyes on the stakeholders from every perspective to make
them informed and satisfied. The management of British Airways should consider
the effects of the various stakeholders on performance, during the strategic
planning process (Kipley & Lewis, 2008). Failure to recognise and respond to
major stakeholders adequately can impede a firms operations (Stoltzfus, Stohl &
Seibold, 2011).
6.0 Change Leadership
There was a threat in the internal organization of BA, because Willie Walsh
implemented bureaucratic and centralized systems to control the entire organization.
People who related to BA have to follow Walshs decisions as he didnt use to spend
time and build a close relationship with the employees. Actually, there should have
been an open communication and working closely together to reach the mission. As a
leader, he should have motivated the employees, made them know clearly about the
mission statement, discussed and taken advantage of good practices from the past.
But he didnt change his leadership style to fit with the situation. Colleagues thought it
was difficult to approach him and take part in decision-making with him (Walsh,
2009).
7.0 Managerial Challenges and its difficulties
BA had quite a few challenges in the change process as it had not planned
enough and it was overwhelmed by the external forces such as the threat of financial
crisis, tough competition, rising in the operation cost and so on. When the dreadful
situation got it engaged in the cost reduction plan, it did not effectively communicate
with the stakeholders and made it aware of the companys limitations and
responsibilities. As a result the BA was strongly defended against by the crews. Once
the crews went on strike, the BA tried to stop them by withdrawing travel perks. In spite
of solving the problem, it made the BA lose more in terms of revenue and reputation.
Actually, the Company representatives must learn, listen to affected
stakeholders, seek advice from experts, and contribute towards solving the
problem (Roloff, 2008). Therefore BA failed although it attempted to deal with all
arisen problems. Moreover, Brand image and corporate identity are interconnected and belong to all the stakeholders (Balmer, Stuart, & Greyser, 2009).
BA must be careful of every stage of their actions to protect the brand image, keep in
good relationship with the public. When dealing with disputes, the management
should focus on effective solutions to the issues, and avoid victimizing the
stakeholders or the unions (Milmo, 2010). The Strikes and the removing of the long
haul service ruin the reputation of the BA, as it broke the trust of the public. Overall,
the way it operated their cost reduction plan is not a way of creating an opportunity to
cope with the problem but passive adaption towards the plan.
8.0 The public perspective on BA
When the oil prices increased, BA increased the thicket prices and cut the flying
schedule in order to save more cost and be more profitable. During this period, as the
income level of the people dropped, most couldnt afford to fly with BA and shift to
another low cost airlines. Moreover, BA removed the customer service in long haul
service. This resulted in the dissatisfaction of customers and non-fulfillment in the
customer expectations and reduced the customer trust and willingness . Another point
is that, when BA implemented the retrenchment plan and broke the labor laws, the
unemployment rate was upping and this led to conflict with, and negative perspective
on, government and worker union. But when BA struggled for its survival with such
problems in its organization, it signified the opportunities for the competitors to compete
with BA and acquire the market share of BA. As the situation was becoming worse, the
share of BA was dropped and it affected the dividends of shareholders; which means
that the shareholders achieved the dividends less than before. Therefore, before BA
decided to do any actions, they should take account of their stakeholders first and be
more concerned about them. By doing so, it could be beneficial to all the members.
9.0 Recommendation:
The core issue that BA faced during 2009 to 2011 is because of the downturn in
the economy and the tight competitions from the budget airlines, the unstable political
issues and the changing in the customer behavior. At first when BA was suddenly
shocked by the threats, they simply thought cutting cost would lift the profit up. In fact,
to be competitive in the airline market, BA should expand its market by acquisition or
get alliance with other airlines. If BA had expanded its network, then it would have got
great financial convenience to cover all the operation costs and reduce losses. To get a
positive response and reduce change resistance, British Airways should motivate and
get the stakeholders involved in the change process. Therefore, BA needs to make the
communication within the organization more effective by making the employee
understanding and support the mission and value of the company; the management
has to keep the close relationship with the stakeholder whatever they are going to do.
Furthermore, the management team have to monitor and evaluate the changing
process and upgrade it whenever it need to change to be competitive in the future.
10.0 Conclusion:
The most terrible problem that BA faced is because of the fact that management failed
to communicate well with their stakeholders and work closely with them to achieve the
desired goal. According to its top-down structure, in spite of listening carefully to the
employees' voice, they never think about them. But all the problems were solved, when
BA made an effort to change their structure by offering the employees a new deal.
Furthermore, BA recovered from this financial crisis strongly when they had
successfully merged with Iberia airline by extending their networks and improving their
customer service.
11.0 Reference:
Balogun J. and Hailey V. H. (2008) Exploring Strategic Change. 3rd ed.
Balmer, J. T., Stuart, H., & Greyser, S. A. (2009). Aligning Identity and Strategy:
CORPORATE BRANDING AT BRITISH AIRWAYS IN THE LATE 20TH CENTURY.
California Management Review, 51(3), 6-23.
BBC News Business. 2009. [online]. [Accessed 23 August 2012]. Available from World
Wide Web: < HYPERLINK "http://news.bbc.co.uk/2/hi/business/8174009.stm"
http://news.bbc.co.uk/2/hi/business/8174009.stm >
BBC News Business. 2011. [online]. [Accessed 23 August 2012]. Available from World
Wide Web: < HYPERLINK "http://www.bbc.co.uk/news/business-13370204"
http://www.bbc.co.uk/news/business-13370204 >
Cabanis-Brewin, J. (2011). IN PRACTICE: MANAGE PEOPLE FIRST TO KEEP
PROJECTS ON TRACK. Chief Learning Officer, 10(11), 40.
John P. Kotter (1996). Leading Change. Boston: Harvard Business School Press
Kipley, D., & Lewis, A. O. (2008). Examining the Efficacy of the Multi-Rater Analysis
Methodology as an Alternative Approach in Determining Stakeholder Power,Influence
and Resistance. Business Renaissance Quarterly, 3(4), 101-12.
Long, S., & Spurlock, D. G. (2008). Motivation and Stakeholder Acceptance in
Technology- driven Change Management: Implications for the Engineering Manager.
Engineering Management Journal, 20(2), 30-36.
Milmo, D. (2009, November 6). British Airways makes record loss of 292m | Business
| guardian.co.uk. Retrieved April 7, 2013, from
http://www.guardian.co.uk/business/2009/nov/06/british-airways-record-loss.
Roloff, J. (2008). Learning from Multi-Stakeholder Networks: Issue-Focussed
Stakeholder Management. Journal Of Business Ethics, 82(1), 233-250.
doi:10.1007/s10551-007-9573- 3
Stoltzfus, K., Stohl, C. & Seibold, D.R. (2011). Managing organizational change:
paradoxical problems, solutions, and consequences. Journal of organizational change
management. Volume 24 (3)
Walsh, W. (2009, December 14). I can't let this union drag us to destruction, says BA
boss Willie Walsh | Mail Online. Retrieved April 7, 2013.
Part 3: Seminar based portfolio evidence
Portfolio 1
I am in the position to discuss about the model of changing process that I have
done to improve myself. As Aristotle said: We are what we repeatedly do. Excellence
then, is not an act, but a habit., but for me I never dare to take a risk, try something
new because I am in negative thinking that I would fail to do if I do it. It was when first
leaving my home country to another country, Singapore for studying, although I know it
could have a big different with my country and then I have put it in my mind that I must
be strong and more independent. However, I never think that it would be a very big
different from my mother country, self service in restaurant, different people speak in
different language, different culture, simple ethnic, and these all things make me in fear.
When I first came to school, I actually hope there will be a student that came from the
same country with me but no one. Although everyone in the class was happy and
relaxed, I stayed in quiet with sadness and got no friend because I have no confidence
to talk with other and I think it is a shame to talk with others with my bad English. In the
class, not only the unfamiliar teaching and learning method but also the strange social
environment make me down. When the third week of Monday start again, a student
came and asked me: Why do u always be alone and not making friend with other?, I
am just look at her with fear and no answer, then she whispered me, It is ok, dont be
anxious just speak out, if u dont try to speak it, how could u know what is wrong?.
Actually it true that in the ordinary days people face with problem, trouble, difficulty and
challenge, we just need to find way and solve it not escape it like Barack Obama said
Change will not come if we wait for some other person, or if we wait for some other
time. We are the one weve been waiting for. We are the change that we seek. Thats
why I changed myself to be more confidence, and try to communicate with them with
my language, finally although my English improves only a little, the surprising things is I
have got a lot of friends and become happier than before. Despite of cowardice and
avoiding the problem to solve, we should be take a venture and try to know that
whether it is an ocean or a sea suggest by C.JoyBell C as The only way that we can
live, is if we grow. The only way that we can grow is if we change. The only way that we
can live is if we learn. The only way we can learn is if we are exposed. And the only
way that we become exposed is if we throw ourselves out into the open. Do it. Throw
yourself. Although it is not a big thing, I got a great changes in my behavior, so do in
my emotion. Indeed to improve in our single moment is to change and to be perfect is
to change often. In addition, it would be never too late to take action for what is worth to
us, whoever we want to, we can choose to change or stay at the same, we can also
make the best or the worst of it, and all of our single movement will mark our shape.
Portfolio 2:
Last week I lost my phone at somewhere and this week I am getting a new one.
Although I am delight with its new features, on the other hand, I am not totally happy to
get a new one. Sometimes we are better at handling changes than others, but none of
us really likes it. However, for a business to survive and remain competitive in the fast
growing changes World, the change management is an essential toolkit for the
company. Change Management is the application of appropriate planning, tools, and
processes to effectively implement change and ensure its successful adoption in the
changing people and the way they behave which requires more than a plan and some
changes to organizational structure and system. There are some driving forces that
lead the organization change which is a requirement in business, to get a competitive
advantages and to get more profit or market share, etc. If Apple was satisfied with the
Mac and made no changes in their technology, then the iPad would not have appeared
in the market. Sine change is happen all the time and there are two option that is we
will manage change in our own or let change happen on its own and try to adapt. To be
successful in change management, the agent needs to develop their analytical
judgmental and implementation skills to be able to know in deep about organization, to
understand the nature and motivation of the workers. Therefore, the agent might
examine both the internal and the external of the organization to understand the current
state of the organization and what actually has to change and the nature of the future
state. For example, in 1993 when Lou Gerstner became CEO of IBM, he had to do
some job to rescue IBM from its malaise. He had drawn a new strategy of customer
orientation and expanding into services whilst attempting to fix, close or sell product
lines. Today IBM is a provider of integrated hardware, networking and software
solutions and no longer a mainframe maker 1. In the dynamic global world, no
organization can stand still without an on going changes process.
REFERENCE
1. See Applegate, L., Austin, R. and Collins, E. (2006) IBMs decade of
transformation (A); the turnaround, Harvard Business School Case, 9.895.130.
Also Hemp, P. and Stewart, T.A. (2004) Leading change when business is
good, Harvard Business Review, (Dec),pp. 60-70.
Portfolio 3
When the price of the sky-high home in the United States turned towards
downturn, it shocked the financial conditions of the world and adversely affected most
of the firms. During the financial crisis, there was the price of oil risen; which led to the
decision of the BA management to cut the number of cabin crews from 15 to 14 on long
haul flights and freeze the payment for 2 years to be competitive in the market places
as well as to retain the profit. The cabin crew announced to strike for 12 days over the
course of Christmas, on 14 December 2009, because cutting the number of staff
brought more work to do, making the staff depressed and reduced in morale. If the
strike came into reality, then it would affect millions of passengers and the BA itself.
Thats why BA tried to prevent the strike from coming up by bringing the issue to the
court. Unfortunately, the strike came up and resulted in the very attenuation in the
income level of the BA and the high cost incurred at the same time as expense was
high. To overcome all these problems BA reduced the service in long haul and placed
them as the same level as short haul service. In April, 2010, the BA merged with the
Spanish flight carrier Iberia and thus the BA got a chance to conduct its business in
Latin America, too. The combination of these two organizations saved nearly 230
million in annual cost-saving for the BA. On the other hand, as the result of the
discontent of the BA image on the public, the BA had to make a peace offer to the
cabin crew who went on strike. Although the offer was rejected by the cabin crew, it
could, at least, attempt to postpone the strike from the peak travelling days in August to
the less or least travelling days in September. Additionally, when the fuel price rose
again by early 2011, the BA solved such this problem by cutting the flying schedule and
increasing the ticket price. After that, the BA brought the conflict to an end by making a
new deal and new work arrangement for the cabin crew. In brief, in the times of the
global financial crises, all the business affairs fluctuated all over the world. In such
situations, the BA could not know in advance what difficulties and barriers it might
undergo. Accordingly, the BA had just to manage to adapt to these changes in order to
be able to survive.
Portfolio 4: Presentation
1.0Chorological problem that effect to Public:
06/12/2009-reduce cabin crew number and freeze the employees salary for two
years
22/02/2010- Ba cabin crew vote to strike again after the high court rules
strike was denied
The British Airways cabin crew has said its members will go on strike for
three days from 20nd March to 22nd
The strike has postpone it again from 27th
2.0 How they approach and solve the problem
Willie Walsh offer a new condition but the Len McCluskey denied that the offer
was ever conditional
The flight has been officially cancelled and the passengers whose flights are
cancelled should get refund or be able to rearrange their BA flight date
However, that wont compensate for the time and money lost on hotel bookings
or tour dates
BA move more than 60% of passengers to other airlines with no-frill flight
attendants.
BA removed striking cabin crew of their discounted travel perks.
BA passengers have the right to ask for their delayed/ cancelled flights
compensation