Micro and Macro Economics Analysis of British Airways Coursework

Micro and Macro Economics Analysis of British Airways - Coursework ExampleMicroeconomic Analysis Some of the demand and render f exemplifyors that have affected the gainfulness of British Airways as a community over the years include economic conditions, competition from other airlines, rise and steady down in global oil prices, changes in government policy, and employees expenses. Economic conditions include one important demand and supply factor that affects the profitability of British Airways. For example, in the first few years of the new millennium, global recession has hit hard the companys profitability. Generally, global recession means that the worlds economy is shrinking. A bad economy means that many people will not have a lot of money in their accounts to tour the world and in the bring, affecting the companys demand. This in the long run affects the profits of the company. Competition from other airlines is also a factor that affects the British Airways profitabil ity. In the new millennium, the emergence of many low- speak to airlines has really affected the companys profitability by reducing the demand. ... When global oil prices rise, the cost of jet fuel, which is a by-product of the refined oil, will also rise. This will lead to a significant rise in the price of air tickets and in the long run, reducing the demand as well as the companys profits tremendously. The vice-versa happens when the global oil prices fall. Recently, when oil prices rose, knowing that this would affect the companys profits tremendously, BA executives took part in an illegal act of fixing fuel surcharges. This led to the fining of BA and the executives charged with a criminal act (Thompson and Martin, 2010, p.298) Government policy also affects the companys profitability. When the government issues travel advisories to some destinations in the world due to terrorist attacks, the number of travelers to those destinations goes down and in the process reduces the com panys profits that would have been made in travels to those destinations. For example, the terrorist attacks on the World trade center had the government informing people of how the situation on the ground was and in the process, the number of travelers reduced tremendously bringing down the companys profits. Employees expense is another factor that affects British Airways profitability. It forms a jumbo part of the companys costs which are later passed down to the travelers and which affects demand. For example, in 2002 when the British Airways was restructuring its business operations, it had to have 13,000 job cuts. This job cuts were an attempt by the company to cut its costs by 650 million pounds. This showed how employee expenses as a factor has a big impact on the companys profitability (Young, 2007, p.42) The market structure in which the chosen company operates in is a