Virgin Atlantic, the UK's second major long haul flight, works a fleet of 38 airplane to 30 areas in Africa, Asia, Midsection East, Indian Sea, THE UNITED STATES, the Caribbean and Australia. In a very deal which was finalized in 2000, Branson sold 49% stake of Virgin Atlantic to Singapore Airlines for £600. 25 million to form a unique global collaboration. Richard Branson is still the controlling authority as he keeps 51% stake in the air travel.
This essay analyses the principle internal and exterior factors that donate to the success of the company as well as give a critical diagnosis on the potency of the strategies hired. It further talks about several strategic options that exist to the Virgin group for the next five years with regards to appropriate academics models and concepts.
(Source: http://www. virgin-atlantic. com/tridion/images/studentinformationkitmarch2009_tcm4-622791. pdf)
In order to comprehend the strategies, it is important to analyse the inner environment of the company. Internal analysis is performed through the value chain of the Virgin Atlantic.
Porter's (1990) Value chain framework can be an interdependent model that really helps to analyse specific activities through which an organisation can create value and gain competitive benefit. (Pathania-Jain, 2001). To conduct the value string analysis, the company is put into most important activities (those that are related with development) and support activities (those that provide the backdrop necessary for effectiveness and efficiency of the company like human resources management) (Porter, 1985). These activates are discussed below:
In Inbound logistics, the key activities are those associated obtaining the raw materials from suppliers and handling them within the organization. These activities includes Stock Control (storing and managing petrol, snacks, food and refreshments. ), traveler service system, facilities planning etc (Fig. 1. 1). It provides adequate of facilities to its customers, it gives choice of three entrees with main food, free drinks, an amenity set up for outbound quest, complimentary papers of passenger's choice. The facilities maintains on increasing if you move from economy to upper course. The upper-class traveler gets limo service to go to airport terminal where check in formalities are already completed before they check in hotel style lobby area and via a dedicated security area solely for virgin flight customers. The upper-class UK travellers gets a complimentary airport copy in chauffeur motivated Volvo or Virgin Limo Bike making there outbound logistics noiseless impressing to customers.
(Source: http://www. virgin-atlantic. com/tridion/images/studentinformationkitmarch2009_tcm4-622791. pdf; http://www. virginatlantic. com/en/gb/allaboutus/ourstory/forstudents. jsp#operation)
Virgin Atlantic is the second largest long term airline in the united kingdom and the third largest Western carrier on the North Atlantic. It runs to numerous of the very best destinations round the world including vacation spots in the Caribbean, US, India, Far east and Africa. It has won many prizes almost generally in most categories that travel industry offers.
Virgin Atlantic uses an array of marketing techniques. Advertising activity includes newspapers, TV, taxi edges press, outdoor posters and direct email. Also promotional strategies plays vital role during traditionally low seasons. To encourage devotion, Virgin Atlantic offers flying club membership where in people gets free mls that can be exchanged free of charge plane tickets and other rewards. Furthermore, Virgin Atlantic also advertises through travel agents and runs huge range of promotional techniques, offers trade motivation, organises outings and sociable/educational happenings.
The website (www. virgin. com/atlantic) also takes on vital role as it offers full electronic reservation, give home elevators destination, informs mileage balance to associates and different promotional strategies.
(Source: http://www. virginatlantic. com/en/gb/allaboutus/ourstory/forstudents. jsp#operation)
Virgin Atlantic has triumphed in numerous awards for its service and cases to set up new standards of service by pioneering range of innovations. For example, with respect to comfort during journey, its upper-class collection has longest & most comfortable flat foundation and chair in airline industry for which alone it received twelve awards. For traveling from air-port, virgin Atlantic offers limousine service and Cycle service to its customers.
It includes planning and control systems, such as corporate and business strategy, accounting and finance. (Lynch, 2003). Virgin Atlantic expends closely on technological solutions and infrastructure. The Financing office analyse the bills anticipated and financial condition of the group and accordingly plans the bills necessary for expansion of company.
Virgin Atlantic recruit people through newspaper adverts and through its website. Existing staff can also recommend and earn motivation through the same. Virgin Atlantic gives world-class training to its employees and builds up their employees from time to time by organising educational events. Also they recruit and coach people with sign words skill to accomplish to disable passengers
Virgin Atlantic not only considers technological developments as essential for expansion but also spends a whole lot on it. It offers award winning in-flight entertainment system, travel seating and beds made to give extra comfort. Also it is continuously focusing on innovative aeroplanes design and scientific solution to lessen carbon emission
Virgin Atlantic comes with an efficient procurement team, which obtains quality goods and services at lowest price so that the individuals can avail these world-class facilities at competitive prices. The section takes good thing about large procedures of and thus achieve economies of level. The department also interacts with lots of organisations offering managing services at international airports, Including baggage handling, refuelling, maintenance, cleaner services and security. These services are provided by a number of companies and can assist in minimizing costs.
(Source: http://www. virgin-atlantic. com/tridion/images/studentinformationkitmarch2009_tcm4-622791. pdf; http://www. virginatlantic. com/en/gb/allaboutus/ourstory/forstudents. jsp#operation)
To have a knowledge of the existing market as well as consumer and stakeholder conception, an awareness of external factors is vital. This section will spotlight the positioning that Virgin Atlantic retains regarding competitors, social understanding, etc.
An organisation's business environment is invariably governed by exterior factors which may be broadly analysed as Political, Economical, Social and Technological factors. To gain an advantage in the present and future market the organisation must reduce inefficiency and sustain cost performance (Grant, 2005). As Virgin Atlantic performs within Europe, North America, Africa, Asia and Oceania, these factors change to a certain degree and the manner in which rivals, political systems and social communities react and respond to the brand needs to be anticipated with some treatment.
As Virgin Atlantic operates across the globe, it must adapt its procedures to suite countrywide and international laws as well as domestic aviation rules and regulations. The manner where competitors react to new market shares may also involve political affects. When the United Kingdom opened Heathrow Airport terminal to Virgin, thus abolishing the London Air Traffic Syndication Rules, angered the chairman of Uk Airways and lead to BAA donations to the Conservative Get together being halted. Virgin also incurred the wrath of Lord Ruler when two unused slot machine games performed by BAA at Tokyo Narita International Airport were awarded to the airlines (BAA, 2009).
It must be stated that the simple financial meltdown of the first 1990s required the then Conservative British government to open up Heathrow to Virgin despite opposition from BAA. This shows how exterior economic conditions can often be favourable to a increasing organisation in grabbing a hitherto inaccessible monopolised market. Among the main financial factors that have an effect on the flight industry generally is the gasoline hike. Conrady (2009) notes that the low cost fuel costs provided to the united kingdom flight industry has greatly helped in it escaping the fate of several of its Western counterparts.
The social notion and acceptance of a brand is of essential importance to any company and Virgin Atlantic has were able to do that in a relatively short period. Virgin Atlantic has been vying for the position to instil in the English open public the brand image of a national and international organisation. When British Airways released in 1997 that it will take away the Union Flag from its tailfins in favour of more international images, Virgin was quick to bring in the Union flag prominently in its winglets and noses with the tagline 'Britain's Flag Carrier' thus challenging BA's traditional role as UK's Flag Carrier.
The training of its personnel is also a major issue and is vital in getting stakeholders and achieving stakeholder targets (Nadal, 2009). The service personnel have to have proper training to meet the high benchmarks of service which is expected of it by the consumers as a hallmark of the flight industry.
As a business that heavily relies on technology, the technological factor is the most essential element in increasing efficiency in the long run. Virgin has managed to bring in more than 700 next technology aeroplanes, which gives a marking distinction to most of its competitors. Relating to Briggs and Burke (2009) this also minimises maintenance and training costs over time. Virgin's initiative to give attention to providing online service will likewise have a marked gain as more and more individuals are being introduced into the INTERNET on a regular basis. Consumers are in that way permitted to get up-to-date information regarding airfare schedules and compare flight prices.
Environmental concerns are also a frequent concern as the airline industry is notorious as a major polluter. Many campaigns have tried to befriend or at least quiet environmentally friendly lobbies but more work must be put into projecting the image of your company that is 'doing its tad' for the surroundings. Virgin has focused on informing consumers about the CO2 pollution before each flight. The duty free bags are now composed of a significant percentage of recyclable material in compliance with the Ministry of Agriculture (Wheeler and Elkington, 2001).
The above-defined analysis conforms the strategy of Virgin Atlantic as being excellent company, it makes its path by providing distinct service. The corporate strategy of the organisation is to provide world-class service at a competitive price. The company's strategy is well reinforced by statement of Porter (1996), which says that executing the same activities in different ways than that of traditional competitors helps in attaining better position in lasting manner. The company enters oligopoly market where customer usually receives poor deal and there's a range of acquiring market giving better services.
To raise knowing of their products and services and new routes, Virgin Atlantic advertises through TV, press, magazines etc. Another strategy that organisation use is to make customers devoted by making them person in there flying team. The flying team offers numerous world-class facilities that will not only assist in satisfying the client but also gaining customer loyalty. The more customers travel through them, the more a long way they get that can be exchanged with free airline flight and other rewards. In addition they get special support service and clubhouse access.
Also during traditional low seasons, tactical marketing promotions and price advertising are done to a large extent to maximize the plane capacity. In addition to all or any these, Virgin Atlantic also market through travel companies by offering them familiarisation outings, trade bonuses.
(Source: https://www. virgin-atlantic. com/en/gb/frequentflyer/index. jsp; http://www. virginatlantic. com/en/gb/allaboutus/ourstory/forstudents. jsp)
According to Johnson (2005) SWOT (Talents, Weaknesses, Opportunities, and Threats) is a useful tool to look at financial accounts and growing healthy work place of a company. It is a significant step towards any tactical planning in a company. It is considered to be very important way to obtain information for judging and understanding any sort of situations in the company. Given below is the SWOT analysis for Virgin Atlantic.
Virgin Atlantic is headquartered in country where competition is enhanced and tolerated scheduled to deregulation
The virgin Atlantic gets the hq in the country where the competition is heightened and tolerated because of the deregulation, which means the business is managed without aid from following government restriction. The top feature of the Virgin Atlantic is the collaboration with Singapore airlines that made them one of the better airlines in the world. This has shown to be useful for virgin in many ways like huge market gain access to, restructuring, converging technology to build up new one, gaining knowledge and extending source etc.
The strength of the Virgin group perhaps, is its importance to best customer support and innovation coupled with brand name provides a big advantages to Virgin Atlantic. Virgin thinks in creativity, adding its importance to customer support and creativity with the brand name virgin demonstrates out to be the largest durability of Virgin Atlantic. Its has presented many firsts in the business like first to unveiling entertainment systems, onboard pubs which increased communal activities in-flight, providing complimentary limousines services, beauty treatments in-flight. It further launched business overall economy cabin. In addition, it has a website that dedicated to just what a customer can expect from the airline and all other conclusive information on interest.
Virgin has a powerful e-business structure which makes communications simpler and easier with the clients. They continually measure the performance supplied by each crewmember on flights. Yet another feather with their cover is the exceptional service tin providing assistance to disabled/visually-impaired travellers. It not only helped in making good reputation but also being successful EASE honor consecutive four years.
(Source:http://www. virgin-Atlantic. com/en/gb/whatsonboard/index. jsp;http://www. virgin-atlantic. com/en/gb/allaboutus/ourstory/history. jsp)
The major disadvantage Virgin Atlantic encounters is limited market reach as unlike other major international airlines. It works in limited countries only like UK, Caribbean, South Africa, India, Australia, and US
The companies reach in code posting is bound hence it isn't able to enjoy the benefits associated with code sharing that your members of leading Global alliance are able to do such as insufficient transferable priority position, lack of smooth travel, lack of improved frequent-flier program benefits, limited expanded lounge gain access to and lack of greater network access. It is because Virgin Atlantic is not part of any leading global alliances.
(Source: http://www. virginatlantic. com/en/gb/allaboutus/ourstory/forstudents. jsp)
Virgin Atlantic is mostly of the airline companies operating successfully in African countries, gradual liberalisation in UK/south African market resulting in 53% go up in plane tickets and 62% upsurge in passengers. The business has increased incredibly.
There are few more cities, which may be considered for hospitality service predicated on the clean record of the airline. A number of the very well known and large airlines have observed bankruptcy recently providing them a great opportunity. Also europe is on the side providing to a be great support.
Going forward, Virgin still have a great scope to expand in African market as only the British and African airways in dominating the continent and virgin comes at third position. It should give attention to increasing the marketplace share in Africa. Another opportunity available with Virgin Atlantic is getting customers by aggressively promoting the clubhouse facilities and introduction of its latest Heathrow clubhouse. The amount of tourist approaching to UK is increasing daily which is an opportunities available to them but in competitive environment, its calm tough but strategic and ambitious marketing can make it possible.
The current situation across the world has lead to increase in competition so there exists high likelihood of threat anticipated to competitiveness in the market which in turn creates pressure to keep up continuous profit. This would subsequently lead to forceful alliances, mergers and acquisitions which might not be in the eye of the business. Other problem of concern is accommodation of passengers on the aeroplanes. Other threat may be the legislations i. e. changing insurance policies and rules by authorities in the united states where Virgin Atlantic works. This might slowdown the functions and business of the business. Another major threat is introduction of new airlines, which can increase competition. Also if new airlines or existing rivals adopt Virgin Atlantic's principle and structure, it'll be a major danger to the company
The Ansoff matrix (Ansoff, 1957) developed by Igor Ansoff who's also known as dad of Strategic Management and was initially printed in Harvard business review in 1957. It presents the product and market choices available to an organization. In this marketplaces may be defined as customers and products as items sold to customers (Lynch, 2003).
Main areas of Ansoff Analysis
The Ansoff matrix supplies the basis for an organization's objective environment process and pieces the building blocks of directional policy for its future (Bennett, 1994). The four strategies entailed in the matrix are elaborated below.
Ansoff Product-Market Progress Matrix:
It occurs when an company accesses a market using its recent services & products. The marketplace penetration strategy starts with the existing customers of the organization. This strategy is often use by companies in order to increase sales without wandering from the initial strategy of product-market. (Ansoff, 1957).
Firm develops new products catering to the same market. This strategy refers to the significant new development of products not merely small changes to the existing products (Lynch, 2003).
In this particular strategy, a company moves beyond its existing customer bottom part searching for new customers because of its existing products and services. This strategy involves looking of new section of market, searching of new area to appeal to new customers, different/new use of products and services. (Lynch, 2003).
Another good strategy that comes under market development is selling existing products in new international market segments. (for example British isles organizations can consider of selling there products in complete Western european marketplaces).
Levitt (1983) rightly whispered that world these days is becoming common market and people no matter where they live are demanding similar product and lifestyle. There's been a massive raise in international trade because of globalisation and liberalization. Diversification strategy essentially includes activity of current products and services in new markets (Lynch, 2003; Macmillan et al, 2000).
All four strategic options described above in the Ansoff's model bears risk aspect with them. Although Market penetration is often considered as a minimal risk strategy but diversification is recognized as a high-risk progress strategy as it involves huge investment that increases due to together movement into services and new marketplaces. When applied to Virgin Atlantic, this model results in to two vital strategic possibilities. Product development strategy and the Market development strategy, to be the most successful corporation Virgin Atlantic should follow both of these.
The product development strategy advised through Ansoff's matrix can be a very good strategy for Virgin Atlantic because of the type of customer base, the business possess. The company has good customer platform of upper course families and corporate and business tycoons. If the company introduce services or sub products, they can market it to these existing customers. The company should give attention to strengthening the relationship with existing clients generally known as Relationship marketing. One of the ways to attain it is being in contact with them, providing them with special offers, and at times offering them concession. If they are given special facilities and excellent services then it will develop brand devotion in them.
Another option available with Virgin Atlantic is market development strategy which involves search of additional physical regions and extra market portion. If we compare the plane tickets/services provided by Virgin Atlantic with British airlines, there may be a large difference. Although Virgin Atlantic is UK's second greatest air travel but it functions flights to only 26 major spots whereas against BA has flights to more than 150 unusual areas. Virgin Atlantic should raise the number of locations, which may be done after carefully analysing the facts and figures about the populace, operations, plane tickets of competition etc.
Also Virgin Atlantic group should concentrate on producing country (Asia Pacific Region) as the growth prospects ate higher than developed countries. China and India are two developing countries with highest inhabitants and expected compounded growth rate in this area in 2007-2012 will be 5. 2%. The production cost is relatively low in these countries making them attractive vacation spot for business. And yes it is a acoustics decision to outsource functional work to these countries.
Virgin Atlantic is famous for luxurious plane tickets as it provides world-class facilities with their passengers however in this competitive environment they are not offering anything price conscious economy class people. They should present no frills journey with the aim of earning profits on market of scales. With this plan they will not only diversify their risk but can potentially capture a fresh segment using their brand name and service.
To conclude, after analysing internal and external factors of the Virgin Atlantic, it has been discovered that Virgin group is continuing to grow massively and became world-class brand following a journey of virgin group but it is still in way as there's a massive scope of growth that can be realised by mixture of two strategies. They can be product development and market development and market development. If used correctly, they can help Virgin Atlantic to