British Airways Strategy Case Study
Key Learning Outcomes
By the end of the case, students should be able to:
- Understand what the BCG (Growth-share) matrix is.
- Analyse the various strategic business routes in British Airways's route portfolio and assess which ones are the stars and cash cows generating the most value, or the question marks, and dogs that may need further investment or divesting to achieve a balance of the portfolio.
- Apply strategy business models and frameworks such as the BCG matrix to real company cases.
1.0 INTRODUCTION
British Airways or BA (as it is often shortened) is the largest airline carrier in the UK by fleet size. Founded in 1972 by the government as the main national carrier and later privatised in 1987, BA operates a fleet of 249 aircraft (as of October 2020), down from 290 it operated in December 2016. It is among the few global airline carriers that fly to all the major inhabitable continents of the world. Latest revenues for the year ending 31 December 2019 were approximately £13.3billion on operating profits of £1.3 billion (BA annual report 2019).
This report uses the BCG matrix to analyse BA’s key routes, identifying the stars, cash cows, question marks and dog routes. The growth/share matrix also commonly known as the BCG Matrix is a strategic business tool developed by the Boston Consulting Group (BCG) to aid organizations in identifying and allocating resources in a portfolio of brands or business units. This is important because in a competitive market such as the UK airlines industry, a firm such as British Airways needs to determine which segments (in this case routes) are profitable and bring in a lot of cash even in a mature market to be used to fund routes with a high potential for growth yet have a low market share.