Managing the Firm in the Non-Market Environment
The Heathrow Airport in London is one of the busiest airports in the world, and there are even times when it is unable to fully satisfy the demand for flight services. With this limitation in mind, a project was onset in 2008 and it saw the construction of a third runway and a 6th terminal. Still, the decision was difficult to make since the project was faced with numerous issues. These would be approached through two distinctive angles — the SWOT analysis and the Probability — Impact matrix.
Internal strengths
The development project would respond to the increasing need of the London airport to offer better flight and adjacent services
London would as such become a more economically appealing region, attracting more investors through the improved infrastructure
The capacity of the airport — and as such the customers served and the adjacent revenues — could double as a result of the expansion
External opportunities
The project would be funded from the state budget
Improved customer satisfaction and public support for the project as the construction of the runway and the terminal would reduce problems with flights cancelled and other such issues currently tormenting customers at the airport
Internal weaknesses
The development project would be likely to impact the current functionality of the airport, creating as such distress and dissatisfaction for the customers in the Heathrow Airport
Accusations of the damage created upon the environment and the population and the adjacent criticism from the population in London (especially West London)
High financial cost
External threats
The development project would create distress due to noise and other inconveniences for the population in the nearby area
The development project would create more circulation, which would in turn bring about more pollution to the area and general environmental instability through sustained resource consumption
Issues matrix
Impact
Probability
High
Medium
Low
High
Environmental concerns
Financial cost
Economic improvement in the area of London
Medium
Populous discontent
Disruption of normal activities in the area
Low
Temporary customer dissatisfactions
The features considered of the utmost importance — the high cost and the environmental concerns — are assumed of high impact and high probability as they are both essential to the final success of the project. Also, the threats they pose are highly likely to materialize. In this order of ideas, the problem with the financial cost of the airport development is raised in the context of the ongoing internationalized economic crisis. In this situation, the London authorities ought to focus on restoring stability, rather than making investments.
Then, at the level of the environmental concerns, these are likely to materialize in protests and boycotts, created by the population. Still, the populous disapproval is only a medium impact, high probability feature, as an actual impact is not expected to cause major problems. The primary loss from the materialization of this threat would however be represented by the loss of public trust in the authorities, as well as by the loss of trust in the British commitment to environmental sustainability — a much required element in today’s society.
References:
Murray, D., 2011, London airport pollution levels well above safety limits, Airport Business, http://www.airportbusiness.com/web/online/Airport-News/London-Airport-Pollution-Levels-Well-Above-Safety-Limits/4$5,761 last accessed on September 2, 2011
Managing the firm in the non-market environment, You Tube Video available at http://www.youtube.com/watch?v=AMYWgMSwsnI
