Strategic Leadership
Strategic leadership envisions the future with the consideration of current situations in the organisation. A strategic direction can deliver excellent results regarding productivity, performance, as well as wealth creation. Strategic leaders focus on the financial stability in the short-term while having in mind the expected achievement in the long-term. In the face of fast-changing business contexts and environments, strategic leadership seeks and enforces innovation as well as the change needed in moving forward. In addition, strategic direction is always mindful on how an organisation functions and hence, there is no chance that it will fall into the trap of arrogant risk-taking, which might destroy the resources of the organisation.
Successful Strategic Leadership
Successful strategic leadership leads to a number of results for a company that ultimately are connected to share values. First, strategic leaders tend to focus on competencies, organisational resources, capabilities to gain sustained competitive advantages, as they know that paying attention to short-term objectives while ignoring main competencies in the turbulent market environment may cause organisational failure. Second, strategic managers consider human capital as the most crucial factor in creativity and innovation as well as the establishment of core competencies. As a result, strategic leaders expend a significant effort to sustain the health of human capital. Strategic leadership has a dual focus on both optimisation and exploration of resources, which are a prerequisite for the long-term success of an organisation. Lastly, companies that managed by strategic leaders gain more success in terms of organisational learning. Strategic leadership helps spread, reinforce, and steer existing learning plans. Organisation learning and knowledge sharing are essential for long-term productivity and performance.
The organisational behavior of the airline industry
Strategic planning refers to the process undertaken by organisations to ascertain their vision, mission, as well as long-term plans (Gavetti 2011, p. 118). Strategic planning helps in the formulation of strategic decisions that enhance the productivity and performance levels in organisations (Carter and Greer. 2013, p. 375). The airline industry is facing unprecedented pressure to produce economic outcomes sustainably due to the constant increase in fuel, labor, and assets as demand keep on decreasing (Doz and Kosnen 2010, p. 370). The airline industry is positioned for success as well as recovery from time to time due to anticipated competition. The future and success of the aviation sector will rely on the ability to bring together the emerging technologies to enhance customer service, foster customer loyalty, and consistent improvement of operational effectiveness (Bloos and Kopfer 2011, p. 191). Making strategic plans as well as choices is vital for companies in the airline industry.
Typically, strategic planning and strategic decisions heavily depend on the leadership of the company (Ko 2016, p. 53). Low-cost carriers that regularly acquire market share by attracting both the business as well as the leisure segment (Schoemaker, Krupp and Howland 2013, p. 131), cause the intensity of competition in the aviation industry. Moreover, new operating business models, creative and innovative entrants, and airline consolidation are expected to create more managerial implications in the aviation industry (Bruno, Esposito and Genovese 2015, p. 5580). As a way of response, airlines have shifted focus to short-term strategies such as seat capacity reduction and product unbundling. Such short-term plan could have potential long-term consequences on the profitability, experience, as well as customer loyalty (Lee and Moon 2016, p. 111).
British Airline generic analysis
British Airways is the most substantial airline company in the United Kingdom, and its central office is situated at Waterside in Harmondsworth, which is a village close to London Heathrow Airport (Yu 2016, p. 33). The airline serves about 40 million clients in a year, travels to more than 170 destinations in over 70 different countries all over the world (Topham 2018). The BA brand is easily recognizable, has won numerous accolades over the years, and has been number one super brand in 2014, 2015, as well as 2016 (Carter and Greer 2013, p. 391). The airline's current mission is to offer services that appeal customers across the world. The British Airways ensures that its clients enjoy unique premium services whenever and wherever they contact the company (Anon 2017). The airline remains focused on aviation as transporting people and cargo is the core business of the airline. Currently, the company seeks to create and develop new products and services to complement their central financial model (Yu 2016, p. 15). The airline is licensed to transport passengers, cargo, as well as mail on airplanes with a capacity of at least twenty seats (Anon 2017). The main base of British Airways is at London Heathrow Airport alongside with Gatwick as well as London City Airports, in which its subsidiary known as CityFlyer is the most significant operator (ReTiernan, Rhoades and Waguespack 2008, p. 99).
The central objective of British Airways is to offer quality service to its clients, stakeholders, as well as its workers (Topham 2018). The workforce of British Airways is a significant factor that works to enhance consumer experience (Mills 2017, p. 255). In addition, the mission statement of the company reiterates their purpose of attaining the status of the best airline in the world. For success, the leadership team of British Airways must show commitment and dedication to their business model (Anon 2017). Correspondence of all portions of the purpose of the company to all the stakeholders is an essential facet of British Airways (Yu 2016, p. 51). The airline company always ensures that departure is always on time. Proper time management is one of the significant determinants of excellent customer services relations in the aviation sector (ReTiernan, Rhoades, and Waguespack 2008, p. 102).
Alex Cruz is the current Chief Executive and chairperson of British Airways, and he has been at the helm of leadership since April 2016 (Topham 2016). The chief executive has extensive knowledge and experience in the airline industry as he has previously worked with American Airlines and Clickair, a low-cost airline he founded in 2006 (Anon 2017). In the next five years, BA seeks to be the airline of choice for long-haul premium clients, who are vital to the profitability of the company (Topham 2018). The company also looks forward to delivering exceptional service for consumers at every touch by a revolution in the way it offers leadership, training, and reward systems to enhance consumer experience in all routes and classes (Yu 2016, p. 52). The airline has the vision of growing their presence in strategic global cities through expansion of the network of airline alliances.
In addition, the airline seeks to build its leading position in London, as the city is its home city, the emotional as well as the financial heart of its business (Anon 2017). London city is also the largest and most competitive global air industry hence making sure that Heathrow airport remains a high-class airport is crucial in providing BA with a strong base to serve the most prominent global long-haul markets (ReTiernan et al. 2008, p. 101). Lastly, the airline plans to meet the needs of its customers as well as improve margins through new revenue streams (Topham 2018). Therefore, the company seeks to explore how it can develop new products and services that can utilize the assets and capabilities and meet its core clients, foster loyalty, and enhance the consumer experience.
Problem Statement
The airline industry has significantly grown in the last two decades. Some factors influence the transportation business in the airline industries in the United Kingdom; the cost of conducting such activities is enormous. British Airways has continuously remained profitable despite the 2008 global recession and its effects as well as Brexit. The airline industry across the world carries service-oriented operations where complex situations are in a highly unpredictable business. Strategic leadership facilitates and enhances formulation and implementation of strategic decisions. The process involves the identification of available alternatives, their evaluation against the preferred criteria, and the selection of the most apropriate option. Proper choices influence identification as well as the mobilisation of opportunities within the organisation in a given sector to give it an edge in the market. Stiff competition from global players in the airline sector is continually influencing national carriers to be more conscious of their vulnerability and motivate them to be proactive in enforcing sustainable strategies.
Different industries across the world are brimming with signs of change as companies scramble to survive in the face of constant competition in the global market. Due to globalisation, the global market is characterised by stiff competition as well as the motivation to make necessary changes to remain relevant as well as operational in the market. Many companies focus on the formulation of various strategies. Due to growth in traffic, British Airways now boasts an 80% load, factor system-wide. The airline is now more aggressive in its approaches and revised strategic decisions. Irrespective of previous, strategic choices such as the route expansion, efficiency, partnership agreements, and optimisation made by British Airways, the airline has not fully utilised their potential in the global market. This calls for an intensive as well as extensive evaluation of the management decisions and underlying challenges. Strategic leadership provides a conducive environment for strategic planning in the airline sector. Strategic choices can range from effective implementation of management programs to staff empowerment to improve customer service. This study, therefore, seeks to fill the identified research gap by assessing what makes successful strategic leadership in British Airways as well as the aviation sector in general, which is highly competitive in recent times.
Study Objectives
The central purpose of this research was to find what makes successful strategic leadership in the airline industry. Mainly, the study sought to offer an understanding of the strategic leadership and also provided an in-depth analysis about the airline industry through an intensive as well as extensive research of the British Airways and identify success factors that enhance strategic leadership in organisations.
Specific Study Objectives
a) To evaluate the impact of organisational resources on strategic leadership in British Airways.
b) To determine the influence of leadership on strategic leadership in British Airways.
c) To investigate the effect of industry competitiveness on strategic leadership in British Airways.
d) To assess the influence of industry challenges in strategic leadership in British Airways.
Research Questions
The research sought to provide answers to the following research questions
a) How do organizational resources influence strategic leadership in British Airways?
b) In what ways does industry leadership style affect strategic leadership in British Airways?
c) To what extent do industry competitiveness influence strategic leadership in British Airways?
d) To what degree do industry challenges affect strategic leadership in British Airways?
Research Hypotheses
Question: What Makes Successful Strategic Leadership in the Airline Industry
a. If organisational resources affect strategic leadership, then proper allocation and utilisation of organisational resources will enhance successful strategic leadership
b. If strategic leadership is influenced by industry competitiveness, then sustainable competitive advantage facilitates successful strategic leadership
c. If industry challenges have an impact on strategic leadership, then creativity and innovation to counter the challenges will lead to a successful strategic leadership
d. If the leadership type affects strategic leadership, the proper leadership will significantly contribute to successful strategic leadership
Justification of the Study
The research will be beneficial to the management of British Airways as well as other airlines in the sector to understand the practical strategic response to the international through the strategic decision making by the management team. Leadership would be able to respond global competition through expansion and diversification or specialisation. In addition, the findings of the research will be beneficial to various governments and policy-makers in the aviation sector as they would be able to offer a much-needed leadership in the airline sector.
Scope of the Study
The research would concentrate on what makes successful strategic leadership in the Airline industry at British Airways in the United Kingdom. The research would specifically place focus on leadership, as it is in a strategic position to provide reliable information.
Porter Five Forces Model
This model provides techniques for examining different sectors as well as individual companies and their competitors. The model was developed by Michael Porter to help organisations identify where there strength in the industry in which they operate lie (Ormanidhi and Stringa 2008, p. 56). Porter Five Forces approach assists in the assessment of how attractive an industry is as it enables companies to access and analyze their competitive position as well as the position strength they are planning to achieve. The porter's model is considered a vital element in planning as it plays a critical role in identifying where the power of a business lies (Porter and Heppelmann 2014, p. 65). Therefore, a company can take advantage of their strengths and improve its weak points to compete effectively as well as efficiently. The approach has a significant effect on business insights as it involves relationships among various parties such as competitors within the same industry, buyers, potential competitors, suppliers, as well as alternative solutions to challenges.
Resource-based theory
The theory shifts focus to the strategic value of workers and workplace learning, which makes the model appear to embrace of human resources perspective. The scholars also conceptualised an organisation as a collection of productive resources (Barney, Ketchen, and Wright 2011, p. 1300). The scholars went further to distinguish between physical as well as human resources in a firm, which drew attention to learning, knowledge as well as the experience of the management team. Various studies reveal that sustainability of competitive advantage is attained through an intensive evaluation of the company's skills and abilities and not through the analysis of the external position in the market (McWilliams and Siegel 2011, p. 1482).
In strategic management, the resource-based theory emphasizes that the primary sources and drivers of competitive advantage and excellent performance in a company is associated with the characteristics of their resources and abilities that have a high value and expensive to be replicated elsewhere (Barney, Ketchen and Wright 2011, p. 1305). The primary resources in a firm include all assets, the nature of the firm, capabilities, information, and knowledge, and organisational processes. To attain sustainable competitive advantage, the resources, and flow of variables should be combined with a specific set of skills to enable the bundle of products, as well as market-oriented sources requires a business to be distinguished (McWilliams and Siegel 2011, p. 1485). The resource-based theory shows the need for the association between the external market environments and internal capabilities as the model is founded on the perspective of the internal situation of a firm concerning its skills and resources. The internal environment of a firm is more vital to its strategic action when compared to its external environment (Yang and Konrad 2011, p. 19).
Contingency theory
According to contingency theory, one choice relies on a number of factors and for companies to be effective and efficient; there must be a good link between their structure as well as external environment conditions (Fiedler 2015, p. 39). This management tool is contingent on the circumstances of organisations, which is an unprecedented occurrence that tends to cause interference. Concerning the contingency theory, the chosen strategic choice, and its application in different sectors should adjust and adapt to factors in context (Villona 2016, p. 5). The approach represents a mixture of strategic decisions and organisational structure. In its use, organisational effectiveness in areas that require strategic management should consider all factors that relate to the strategic choice decisions, which include strategic competitiveness, strategic leadership, regulatory challenges, organisation structure, as well as other factors that reflect the state of the firm (Fiedler 2015, p. 49).
Development of Hypotheses
In statistical tests, a null hypothesis (HO) and the alternative hypothesis (H1) for this research are developed, and statistical tests outcomes affect the null hypothesis as it can either be accepted or rejected.
The following hypotheses were the central focus of this study:
Hypothesis 1
Ho: No significant association exists between organisational and strategic leadership
H1 : A significant association exist between organisational resources and strategic leadership
This is written statistically as follows:
Ho: P = 0 (organizational resources and strategic leadership have an independent relationship)
H1: P ≠ 0 (organizational resources and strategic leadership have a dependent relationship)
Testing method: Alternative hypothesis will be accepted if the significance level is 0.5 whereas null hypothesis will be rejected.
Hypothesis 2
Ho: No significant association exists between industry competitiveness and strategic leadership
H1 : A significant association exists between industry competitiveness and strategic leadership
Statistically, this is written as follows:
Ho: P = 0 (industry competitiveness and strategic leadership have an independent relationship)
Hypothesis 3
Ho: No significant association exists between industry challenges and strategic leadership
H1 : A significant association exists between industry challenges and strategic leadership
Statistically, this is written as follows:
Ho : P = 0 (industry challenges and strategic leadership have an independent relationship)
Hypothesis 4
Ho: No significant relationship exists between leadership type and strategic leadership
H1 : Significant association exist between leadership type sand strategic leadership
Statistically, this is written as follows:
Ho:
P = 0 (leadership type and strategic leadership have an independent relationship)
Conceptual Framework
The conceptual framework illustrates the association between the independent and dependent variables of the research. In this framework, Strategic leadership is the dependent variable and industry competitiveness, leadership, industry challenges, and organisational resources are the independent variables.
Factors Making Successful Strategic Leadership
Organisational Resources
The link between the resources of the firm and sustained competitive advantage is essential in the development of assumptions that organisational resources are unevenly distributed across companies (Polychart 2006, p. 869). The evaluation of the potential of resources in British Airways for the generation of sustainable competitive advantages, the company will be in an excellent position for better strategic decisions. Organisational resources include all assets, abilities, corporate culture, information, knowledge as well as organisational processes, which allows the company to conceive and implement strategic plans to enhance its effectiveness and efficiency (Kraatz and Zajac 2001, p. 641). As discussed in the resource base model, the company makes predictions of specific types of resources monitored by organisations but have a potential to establish strong strategic leadership, which ultimately creates a superior company.
Studies reveal that technology, equipment, machinery, and other physical resources positively contribute to the productivity and excellent performance of the company (Polychart 2006, p. 887). Experiential resources, which include brand name and product reputation, can be helpful in accounting for variations in organisational performance. Human resources help in the assessment of opportunities and strengths in the organisation with a purpose of enhancing and improving the overall performance level (Eddleston, Kellermanns and Sarathy 2008, p. 43). The successful strategic leadership has the responsibility of enhancing profitability levels, waste elimination, as well as streamlining cost (Polychart 2006, p. 868). Strategic leadership understands that staff members are critical to the success of any organisation even in the face of challenging financial times (Daley 2012, p. 121). Laying off employees with crucial skills and abilities, expertise, as well as experience, might bring relief the affected firms some pressure but may hurt the long-term productivity and performance of a business (Eddleston, Kellermanns and Sarathy 2008, p. 26). Hence, there should be a shift of focus on improving internal resources to enhance productivity levels.
Strategic leadership ensures that improved project delivery helps in minimizing expenses and increasing profits. Studies reveal that companies that have effective strategies on their distribution have significant cost reductions, which is a common characteristic of high industry performers (Becker and Huselid 2006, p. 907). Proper resource management facilitates the correct allocation of resources, which ensures that skills, abilities, talents, as well as qualifications, are allocated to the right positions (Polychart 2006, p. 888). Improved resource management allows companies to gain real-time visibility into resource capacity and capability to future projects delivery, which enhances better control of consumer expectations while reducing the negative influence on future revenue opportunities and customer satisfaction. Strategic leadership offers a solution to this challenge through the implementation of resource management, which will help in the reduction of common challenges that are attributed to poor management of organisational resources (Becker and Huselid 2006, p. 900). Common problems include lack of understanding of the abilities, skills, as well as talents available within a firm, many conflicting resources, under or over-utilisation of workers, and lack of clear visibility of who should do what, where and when (Crook et al. 2008, p. 1142). Standardisation of the resource management processes of a company can enhance control as well as visibility, which leads to substantial benefits for any sector as talents represent the most significant source of revenue.
Industry competitiveness
Strategic management is concerned with creating, gaining, as well as maintaining a sustainable competitive advantage (Syverson 2011, p. 327). Competitive advantage is all about the survival and can refer to what a company does in the face of competition from rival firms. A company gains the competitive edge when it owns or performs activities that competing firms cannot own or do (Ghodeswar 2008, p. 4). For example, some organisations competitive advantage in difficult economic times could mean a hoard of cash that can be used to buy out struggling companies to heighten their strategic positions in the market. In addition, competitive advantage could mean organisations with lesser-fixed assets, which is a plus during bad economic times (Voola and O’Class 2011, p. 247).
Competition in the marketplace is likened to a battlefield, where there are causalities and injuries, and the team with a better strategy wins. Competition is an act of seeking to excel or survive against other forces with the aim of attaining dominance (Syverson 2011, p. 328). Competition leads to the establishment and development of new products and services, and technology, which provides customers more excellent selection as well as better products and services (Ghodeswar 2008, p. 8). Typically, an enormous selection of products lower prices by the creation of either bigger or smaller market shares of the company. The strategist attention shifted focus from diversification to optimisation of the competitive strategies and the total business portfolio of the company in the 1970s as different markets have different prospects of growth and are blended and turbulent (Voola and O’Class 2011, p. 249). Before the estimation of new possibilities, it is vital to differentiate environment of a firm into distinctive sections to determine both proactive and competitive strategies (Kumar et al. 2011. p. 18). Knowing the strength, as well as the intensity of competitive forces, can enable British Airways to develop alternatives to steer the operations of the firm to an improved competitive position.
Sustained competitive advantage
It is essential that organisations create and maintain a sustainable competitive advantage as the sources of the advantage can last for a particular time before rival firms can imitate and copy the strategies (Kumar et al. 2011, p. 17). Sustained competitive advantage can be attained through a constant and consistent adaptation and adjustment to the ever-changing external business environment, which can be enhanced by matching internal capabilities and strengths (Syverson 2011, p. 331). In addition, formulation, implementation, and evaluation of strategies in an efficient way can also be a source of sustainable competitive advantage. The advancement of information and communication technology, competitive advantage has become more significant as companies are now able to interact with customers directly and interconnect with other stakeholders such as suppliers, consumers, and creditors to its value chain (Voola and O’Class 2011, p. 252).
Companies are now able to improve productivity and performance, which leads to high profits due to the removal of intermediaries (Ghodeswar 2008, p. 6). Strategic leaders are aware that technology has fundamentally changed how businesses are conducted and therefore sources of competitive advantage in the digital era is mainly about how well companies optimize the available technology to gain a sustained competitive advantage(Kumar et al. 2011, p. 21). Therefore, agile and highly responsive firms to the constantly changing business conditions and whose internal capacities and capabilities are best placed to survive in the turbulent market landscape. More often, competitive advantages do not last for long periods, as they are subject to change hence the need to adopt strategic leadership.
Industry Challenges
Companies in the aviation industry do business in a highly complex and volatile commercial context. The airline sector is continually experiencing changes; thus, the ability to respond and adapt smoothly is imperative (Klein and Knight 2005, p. 244). The pressure for safety improvement, dependability, as well as customer relations, is ever challenging in the aviation industry (Gollan 2005, p. 21). Airlines should evaluate all aspects of their businesses, which requires fast, flexible, readily accessible information that enhances strategic decisions. A high level of service to the customer distinguishes a firm from the rest and assists in securing and strengthening customer loyalty (Okpara and Wynn 2007, p. 61).
The aviation industry has experienced drastic changes on both sides of supply and demand. Different from other sectors, the aviation industry is subject to rapid changes in government regulations, consumer expectations, supplier developments, competitor moves, and worker dynamics (Klein and Knight 2005, p. 245). The degree of competition has risen amongst airline companies due to increased globalisation in significant airline transport markets (Okpara and Wynn 2007, p. 71). The modern era presents a period in which adoption of strategic changes means survival hence management must select smart strategies to do well in the industry (Gollan 2005, p. 29). The likely choices that leaders in the airline sector will concentrate on will emphasize on the utilisation of sources of funds, monitoring, and evaluation of changes in the airline industry, efficient and sustainable implementation of energy, commercial business developments, and economic growth.
Sustainability in the Airline Industry
Environment Sustainability
It is expected that any business should be sustainable, which can be challenging for companies in the airline industry that use fuel in their daily operations (Klein and Knight 2005, p. 244). Strategic leadership in the airline sector commits to very ambitious goals. For instance, the industry seeks to cap emissions from the year 2020 and reduce its net emissions back to half or less level that were emitted in 2005 by the year 2020 (Okpara and Wynn 2007, p. 58). The primary industry driver will be technology as new airlines entering the industry fleets are designed to bring fuel efficiency gains of between 20 to 30 percent (Gollan 2005, p. 21). Research shows that billions of euros are spent yearly to achieve this type of sustainability. Technology will also help in the development of sustainable biofuels as evidenced by at least 1,500 flights that have used the sustainable biofuels. However, there is a problem as biofuels are expensive and in short supply (Klein and Knight 2005, p. 243). The biofuels are costly because fewer quantities are demanded whereas the low demand can be attributed to the high price. Strategic leaders are working with governments to sensitize the use of sustainable biofuels as they have actively promoted the other power alternatives such as the use of solar.
