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Virgin Atlantic SWOT, PESTLE and BCG Analysis

Keywords: virgin atlantic pestle, virgin atlantic bcg

Jump to: BCG Matrix | PESTLE Examination of Virgin Atlantic | Porter's 5 Causes Analysis | Ansoff Matrix | SWOT Examination of Virgin Atlantic

The Virgin Atlantic Airways is a UK-based private international air travel that started procedure in 1984. Soaring up to 35 areas in THE UNITED STATES, Asia and Africa, it is 51% owned or operated by Virgin Group and 49% possessed by Singapore Airlines (Wikipedia). Its fleet size is 37 (31 to be able) It competes with other local and international airlines including Uk Airways, the largest and leading in UK. In the year to Feb 2009, Virgin Atlantic carried 5. 77 million passengers and made an twelve-monthly earnings of Ј68. 4 million on turnover of Ј2, 580 million. [2]). With this information, it suggests firm's excellent future and industry reasonable share of the market. However, external and industry environment research is a continuing process (Hitt, Hoskisson & Ireland 2003) that every now and then makes prediction and preparedness an integral part of strategic actions of businesses to efficiently manage opportunities and dangers outside its company.

Today, the Virgin Atlantic is one of the world's most recognized brands and being accepted and respected through their being successful awards because of their products and ground breaking marketing ( 2008).

Internal Environment

  • Resource Audit/Value Chain
  • Portfolio Analysis
  • Core competencies
  • bCG matrix
  • Stakeholder Analysis
  • Organisational Culture/Structure
  • Financial Analysis
  • Resource Audit/Value Chain(8500 staff worldwid)

The resource audit recognizes the resources open to a business. A few of these can be owned or operated (e. g. place and machinery, trademarks, shops) whereas other resources can be obtained through partnerships, joint projects or simply supplier preparations with other businesses whille

Value Chain Evaluation describes the activities that happen in a company and relates these to an analysis of the competitive strength of the business enterprise. Influential work by Michael Porter suggested that the activities of a business could be grouped under two headings: (1) Primary Activities - those that are directly worried about creating and delivering something (e. g. component assembly); and (2) Support Activities, which whilst they aren't directly involved with development, may increase effectiveness or efficiency (e. g. human resource management). It is rare for a small business to undertake all major and support activities. Value Chain Examination is one way of figuring out which activities are best carried out with a business and that are best provided by others ("outsourced")

Core Competence Analysis:

Core competencies are those capacities that are critical to a small business achieving competitive benefit. The starting point for analysing key competencies is recognising that competition between businesses is as much a race for competence mastery as it is for market position and market power. Mature management cannot give attention to all activities of a business and the competencies required to undertake them. Therefore the goal is perfect for management to focus attention on competencies that really have an impact on competitive advantage

Performance Analysis

The resource audit, value string analysis and core competence analysis help define the tactical capabilities of a business. After completing such examination, questions that can be asked that measure the overall performance of the business enterprise. These questions include:

How possess the resources deployed in the business changed over time; this is "historical analysis"

  • How do the resources and functions of the business enterprise compare with others on the market -"industry norm evaluation"
  • How do the resources and functions of the business enterprise compare with "best-in-class" - wherever that is usually to be found- "benchmarking"
  • How gets the financial performance of the business enterprise changed as time passes and how will it really equate to key rivals and the industry as a whole? Ratio examination.

Portfolio Analysis

Portfolio evaluation is defined in the Marketing Management Text message as the aid to marketing managers to help develop effective marketing plans. Portfolio models are used to classify Strategic Business Units (SBU's) to look for the future cash contributions that may be expected for each and every SBU as well as the future resource requirement that all will require. Portfolio models generally look at the competitive position of the SBU and the probabilities for improving the SBU's contribution to success and cash flow.

The model we will be using for Virgin is the Boston Consulting Group (BCG) model.

This model is dependant on the partnership between relative market show and progress of the marketplace The BCG model classifies products under four areas. They are superstars, cash cows, question marks and dogs. Celebrities are SBU's with high talk about or high development market

Virgin Atlantic is plainly the cash cow of the Virgin Empire but we have undertaken a Profile examination from the viewpoint of Virgin Atlantic. With regards to Virgin Atlantic Airways we believe there is no star. The money cow is the top Category section. Cash cows have high talk about of a minimal growth market and create higher cash profits. This high end product targets prosperous customers and business travellers. This is actually the highest costing ticket available, usually around $9, 000, and there are 50 car seats available in this category. Therefore, upper course generates much higher revenues compared to premium market and economy. Pups are SBU's which may have low market share in low growth market. We see Virgin Atlantic's current economic climate class as your dog. Question markings are SBU's that have high potential but will require great resources to build market share. We think that Premium Overall economy is a question tag as they have potential to be a cash generator. Premium economy focuses on cheaper flying business class travellers and top quality couples. You can find 38 seats in this course and tickets generally sell for around $3, 000. Market class targets families and groupings flying together. Tickets for economy school are costed around $500 and there are 271 car seats.

BCG Matrix

Virgin Culture

Virgin Atlantic is a unique air travel with great people and has a distinctive culture and it is not easy to sum up our culture in simply a few words. Ours is a demanding and fast changing business and all of our people really needs the intellect to plan and deliver amazing airline operations, to think on their ft and be responsible and respond to change and development. All the while, of course, we are all working hard to provide our unique mix of product and service that we could famous. All of this creates a lively, collaborative environment where everyone knows what's expected of these and works mutually to accomplish it. We pride ourselves on being as honest and unpretentious once we are encouraged and professional - everyone has a chance to voice their thoughts and no one's too pleased to ask questions. We adopt advancement - wherever it comes from. If someone, a worker, customer or traveler - has a brainwave we'll pay attention. If we enjoy it - we'll take action which is another way in which our people will be the driving power behind our success. Needless to say, it requires a certain sort of person to flourish in that fast-paced, freethinking environment. Talented, self-motivated, enthusiastic, you'll have to share inside our enthusiasm for providing only the very best. Put people such as this together, and also you create a winning performance culture that thrives on inspirational authority, positive attitudes, commercial flair and underpinned by sound accountability.

Financial Analysis

Virgin Atlantic has monitored a pretax profit of 41. 6 million pounds ($76. 1 million) on record annual sales of just one 1. 91 billion. The carrier shared that a go up in business course travel helped more than increase its pretax, pre-exceptional performance, which stood at 20. 1 million pounds for the year ago period. Sales were up 17 percent because of its financial yr, which ended on February 28 Carrying an archive 4. 9 million travellers, Virgin possessed a 2005-06 pre-tax, pre-exceptional items income of Ј41. 6m - more than increase the physique for 2004-05. Virgin's results announcement comes after reports that it was Virgin that "blew the whistle" on British Airways which is currently being investigated by the UK's Office of Fair Trading (OFT) and the united states Section of Justice over alleged cartel activity including BA and other airlines. Virgin has said that it's supporting the OFT and the justice team with their inquiries. Leader Steve Ridgway reportedly said the strong performance came on the trunk of a ten percent increase in the amount of passengers which consists of Upper Course cabin and the grabbing of market talk about on the North Atlantic.

According to advertising, Ridgway denied, however, that Virgin possessed used the petrol surcharge - like BA's, Ј70 on the round-trip ticket - to bolster earnings. "The gas surcharge has not kept tempo with the increased cost of gas, " he reportedly said. "They have only enabled us to recuperate around half our fuel costs. Whereas gasoline used to be around 15-16 percent of our costs it is now nearer 30 percent. "Ridgway dropped to comment at length on why Virgin had blown the whistle on alleged discussions between it and BA, which prompted an OFT probe into alleged gasoline surcharge price-fixing. Corresponding to a report: "BA and VA impose the same surcharge of pound stg. 35 ($87) per person long-haul air travel (pound stg. 70 for a return trip). While BA experienced often been one of the leaders in elevating the energy surcharge, on some situations Virgin Atlantic, its main long-haul competitor at Heathrow, got also considered the lead. Of all occasions the other airlines quickly followed the business lead of the first mover. Last September, VA increased the long-haul surcharge from pound stg. 24 to pound stg. 30. It had been followed in the same week by BA with the same increase. Virgin reduced the surcharge again in November to pound stg. 25, but BA did not follow suit and in January Virgin came back to pound stg. 30. In March, VA raised the levy to pound stg. 35. BA implemented to pound stg. 35 in Apr. The Office of Good Trading said last week that the investigation was at a very early stage which there should be no assumption that there have been any wrongdoing.

The Alternative Environment:

PESTLE Analysis

PESTLE research if you are including legal and environmental.

Airlines are a good one because so many different things have an impact on them.

Political - Fees that they get charged in several countries for landing, fuel taxation etc

Economic - e. g. So how exactly does interest rate motion affext their longterm credit debt? How as their monetary performance set alongside the market sector? P/E ratios etc. Petrol prices increasing, is this influencing their earnings from increased fuel prices?

Social - Safety measures they employ up to speed and on the ground. Polulations growth - does an ageing poulation impact them i. e. seniors, lots of individuals in that lifestage have significantly more disposable income to spend. . . .

Technological - As things improve technology becomes cheaper. How can this have an effect on them? Does indeed this suggest the entries to hurdle are lower for rivals to join? Do easyjet have a large R&D dept?

Legal - Different legalities of different countries - some stricter than others. . .

Environment - carbon offsetting, what's their CSR policy?

The Industry Environment: Five Forces

New entrants on the market in essence face two problems: obstacles to entrance and retaliation from present companies (2003) In the aviation industry, specially the service passenger-based ones like Virgin Atlantic Airways, in modern economies are privately-operated that demands substantial financial requirements at the fore. Since travel services are produced demand (), new entrants should be able to cut a talk about in the pie in the presently saturated market. This undertaking could lead to another substantial source to be deployed. However, with such new entrant engagement, it does not assure of expected results because opponents like Virgin already created proper links to other country-routes including its alliance with Asian gigantic Singapore Airlines that makes it easy to produce counter-strategy. Boeing, the most significant supplier of jetliners and company of Virgin's aircrafts, had recently signed long-term agreement with largest aerospace parts distributor Satair for an Integrated Materials Management (). As a result, Boeing could reduce its inventory and minimize warehousing costs because extra parts will be provided only when needed. A cost reduction strategy from a provider can assure customers like Virgin of price management structure, if not, its another company, Airbus (the once number 1 airline maker) could be resorted. Competition in the industry have the same capabilities in terms interactivity with their web pages like Virgin. That is supported almost fifty percent prevalence of internet connection among UK market, not forgetting other countries. Because of this, the energy of buyers to gain usage of prices and services of organizations increase making them educated of distinction of 1 from the other. Companies on their part are appreciated to become more competitive especially in maintaining and updating their sites. The country's sea travel industry got developed super ferries while the 2003 documented 17. 4% increase of UK individuals who took cruise holidays that reached nearly one million in that yr (). This development would seem sensible to airline industry travel and leisure and leisure market especially foreigners that prefer to see the countrywide endowments. With demand for air travel transport go up at faster rate than resource for this, the flight industry is required to effectively allocate its resources in a manner that exploit this source shortage. Other flight competitors in famous brands AMR Corp. , British Airways and Lufthansa are functioning in at least 150 locations compared to Virgin's 20 Because of this, rivalry among these firms against Virgin is relatively insignificant although strategic actions of Virgin that directly and significantly threat their market could spark retaliation in the detriment of relatively small company. The company should focus in its target market and avoid competing with these large companies.

Ansoff's product / market matrix

Introduction

The Ansoff Expansion matrix is a tool that helps businesses make a decision their product and market development strategy.

Ansoff's product/market progress matrix suggests that a business' endeavors to grow rely upon whether it market segments new or existing products in new or existing marketplaces.

The result from the Ansoff product/market matrix is a series of suggested development strategies that place the route for the business strategy.

What is a Critical Success Factor?

Critical Success Factors (CSF's) are the critical factors or activities necessary for ensuring the success your business. The word was initially used in the world of data examination, and business analysis.

( bringing in customers; handling its fleet; handling its people, and handling its funds)

Most smaller and much more pragmatic businesses can still use CSF's but we need to have a different, more pragmatic procedure.

Critical Success Factors have been used significantly to present or identify a few key factors that organizations should give attention to to be successful.

As a classification, critical success factors make reference to "the limited range of areas in which satisfactory results will ensure successful competitive performance for the individual, department, or organization".

The connection of the Virgin Air travel is outrageous because of the media that assists as an enormous market competency edge. Their strategy is using the multimedia such as television, radio, internet, and even magazine gave the business an opportunity for advertising.

KEY POINTS

 

Virgin Atlantic established the strategy in advertising. They need to talk to their customers for his or her initiatives in offering special deals that effectively make an appeal with their customers

The benefits are anticipated to gain the Airlines 3-month payback on the investment; can utilize the advantage of the business above the technology such as computers; lowering the expenses of the promotional materials due to interaction of the business in the different forms of marketing; prioritizing the communication to the customers; and getting the complete control on the advertising campaigns

The Virgin Atlantic lately tested the creativity and can continually apply this in all their system. This strategy handles the environment change has a great impact in the internal operation of the business enterprise like the investment in the additional technology, better flying planes, building and working a competent infrastructure, and positive economical arrangements.

 

Strategy:

Is going to design a desired future and figuring out ways to take it about by stenier1979

. a strategy is the pattern or plan combine an organisation 's major goals polices and activities into a cohesive whole.

Strategic Planning

Strategy is the course and scope of your organisation above the long-term: which achieves benefit for the company through its configuration of resources in just a challenging environment, to meet up with the needs of market segments and to fulfil stakeholder expectations".

In other words, strategy is approximately:

* Where is the business trying to get to in the long-term (direction)

* Which market segments should a company compete in and what kind of activities are involved in such marketplaces? (markets; opportunity)

* How do the business enterprise perform much better than the competition in those market segments? (benefits)?

* What resources (skills, possessions, finance, relationships, technical competence, facilities) are required to become able to be competitive? (resources)?

* What external, environmental factors impact the businesses' capability to be competitive? (environment)?

* What exactly are the values and expectations of these who have vitality in and around the business? (stakeholders)

Strategy at Different Levels of a Business

(Basic safety, security and consistent delivery of the basics are the foundation of everything we do.

The success in our three year strategy requires us to develop on these foundations by concentrating on the business enterprise and leisure markets and travelling efficiency andeffectiveness. )

Strategies exist at several levels in virtually any organisation - ranging from the entire business (or band of businesses) through to individuals working in it.

Corporate Strategy - is concerned with the entire purpose and scope of the business to meet stakeholder objectives. This is an essential level since it is closely influenced by buyers available and acts to steer tactical decision-making throughout the business enterprise. Commercial strategy is often mentioned explicitly in a "mission statement".

Business Device Strategy - is concerned more with how a business competes efficiently in a particular market. It concerns tactical decisions about selection of products, getting together with needs of customers, getting advantage over competitors, exploiting or creating new opportunities etc.

Operational Strategy - is concerned with how every part of the business is organised to deliver the organization and business-unit level tactical route. Operational strategy therefore focuses on issues of resources, techniques, people etc.

How Strategy is Managed - Proper Management

In its broadest sense, strategic management is about taking "strategic decisions" - decisions that answer the questions above.

In practice, an intensive tactical management process has three main components, shown in the figure below:

Mission Statement

"To increase a profitable air travel that people love to take a flight and where people love to

Work. "

SWOT Analysis

The next segment of researching a firm's strategic plan is to perform a SWOT research. This entails figuring out a firm's interior advantages and weaknesses and their external opportunities and hazards. After analyzing the exterior environment and internal resources, proper decision designers have the info they need to formulate commercial, business, and financial strategies of the business. A comparison of talents, weaknesses, opportunities, and hazards is normally known as a SWOT research. A SWOT analysis helps executives summarize the major facts and forecasts produced from the exterior and internal examination. From this, professionals can derive some assertions that identify the primary and secondary strategic issues confronting the organization. Strategy formulation creates on SWOT research to utilize advantages of the business to be able to capitalize on opportunities, counteract risks, and alleviate internal weaknesses. In short, strategy formulation steps from simply evaluation to devising a coherent plan of action. The findings of an SWOT analysis will be the basis for expanding targets and strategies that may be implemented in a company's proper plan. Therefore, it is important for companies to keep to execute SWOT analyses, because external and interior factors influencing companies are constantly changing. New strategies need to be developed and old ones have to be revised in order to reflect the current internal and external conditions that have an effect on a business Internal talents and weaknesses are activities that a company performs particularly well or improperly. These internal activities stem from all departments and the different parts of a business. After having a company identifies its advantages and weaknesses, it will then develop strategies that capitalize on its talents and reduce or improve its weaknesses External opportunities and threats are happenings that occur beyond the business and are events that the company does not have any control over. Companies reap the benefits of external opportunities and are harmed by exterior threats. It's important for a business to recognize its external opportunities and threats so it can formulate ways of take advantage of future opportunities and avoid future risks.

(S)trengths:

  • Virgin Brand identified by 98% of British Public.
  • Clients expect good customer service in each individual class Business/Market.
  • Virgin Atlantic released ground breaking technology: including in trip music, glaciers cream, games, and videos.
  • New in journey innovation emerges to gold club holders or J-class with lounges offering quality food and comfort.
  • Quality trained employees recruited from other airlines.
  • Virgin Atlantic is spawned from as a private company enabling other Virgin brands and much more control.
  • Richard Branson's impressive entrepreneurial management.
  • Competitive costing for business course offers more services.
  • Partnership with Singapore airlines because they are the minority shareholder at 49%. The reason why this partnership is beneficial is because their routes are non-overlapping and the collaboration allows the transfer of main competencies.
  • Load factor is better than competition; therefore, profits are higher and value is greater.
  • Positive publicity, when it comes to earning every quality prize that you can buy.

(W)eaknesses

  • Flight delays: need to improve airline flight efficiency.
  • The travel routes are limited.
  • Hot Air journal distinguish from traditional airline advertising magazines
  • including articles and marketing advertising.
  • Cut routes to Chicago, Toronto, and Cape in relation to the Sept 11 tragedy.
  • Late getting on the Internet "Neglected the Vessel" for site, web page, and ecommerce.
  • Richard Branson is a one man administrator being the dog owner and director of multiple companies.
  • Costs associated in the overhead of keeping two 5 star chefs, lounge, and limo service.
  • Virgin's reliance on Trans Atlantic traffic makes them more vulnerable to the drop popular for happen to be and from the U. S.

(O)pportunities

  • Strategic Marketing that beats all others utilizing by being innovative, fun, preserving values, caring, and produce quality.
  • Technology adds advancements (Galileo) an advanced inventory system.
  • In flight Internet connection.
  • Web site needs to be improved possible weakness for e-commerce and regular website navigation.
  • Generate additional routes.
  • Virgin Galactic, we could flying into space.
  • Warehouse facility -Heathrow, London.
  • Recession may be an urgent opportunity for investment.
  • On-line strategy in targeting branding and ongoing advertisement campaigns, through on-line media planning and buying account.

(T)hreats

  • Recession, Sept 11th will and has afflicted the entire flight industry, order cancellations, risk aversion for soaring customers
  • Brand Dilution by a rapid expanding brand image may be too global and not focused to the important products.
  • Competition for routes English and United.
  • Fuel prices are fluctuating, which makes up about 15% of total airline expense.

Objectives

The results an organization seeks over a multiyear period are its long-term goals. Such goals typically involve some or all of the following areas:

profitability, return on investment, competitive position, scientific leadership, productivity, staff relations, general public responsibility, and employee development.

Eric Starks, Virgin Atlantic Regional Director, explained the following aim: "To keep a safe customer environment through the necessary security types of procedures. Also to concentrate on core competencies by consolidating routes, immediately related to downsizing workforce, to remain profitable while focusing on business class people. "

Strategies

Strategies are claims of how objectives are to be achieved. They are usually long- term strategies and necessitate a number of approaches, such as, product development, joint ventures and proper alliances. Generic strategies such as low cost, differentiation, or target strategies characterize the competitive orientation of the organization available on the market. In order to remain profitable Virgin Atlantic has focused on its center competencies. The company is currently focusing its strategies on sustaining great quality. service and keeping relationships using their Upper Category customers. It has led to the closing of routes to Toronto, Chicago, and Cape Town. The company in addition has reduced the amount of flights a day and workers by 20% per option over the North Atlantic. For example, the SAN FRANCISCO BAY AREA routes were reduced from two plane tickets to one trip per day.

Competitive Strategy Analysis

Segmentation

Market segmentation is thought as the procedure of dividing market into sets of similar consumer and selecting the most likely group(s) for the firm to serve. This idea is achieved through the following six steps

  • Define firm's current situation.
  • Determine consumer would like and needs.
  • Divide market segments on relevant proportions.
  • Develop product setting.
  • Decide segmentations strategy.
  • Design marketing combine strategy.

Targeting

Targeting is when a firm chooses a number of market segments as a particular target market segments. Virgin Atlantic is a company that considers every customer to be important and so offers individualized services to customers. They are nine basic conditions for targeting

  • Who purchases our product?
  • Who will not buy our product?
  • What need or function will our product help?
  • What problem will our product solve?
  • What are customers currently buying to gratify the necessity or solve the situation for
  • which our product is targeting?
  • What price are they spending money on the merchandise they are buying?
  • When is our product purchased?
  • Where is our product purchased?
  • Why is our product purchased?

Upon evaluation of the questions the business must then evaluate opportunity in target markets predicated on portion size and development probable, competition, company's aims and feasibility of success in this market. Virgin Atlantic has targeted top class customers who are mostly business passengers vacationing on transatlantic routes.

Positioning

Positioning identifies the function of locating a brand in customers' heads over and against other products in conditions of product qualities and benefits that the brand does indeed or does not offer. 38 There are various general approaches for positioning products Feature or benefit, quality and price, use or request, competition, high-tech and high-touch, can perform desired positioning. Most significantly, Virgin Atlantic has positioned itself as immediate competitor to English Airways on all routes. First of all, Virgin Atlantic was extremely hostile in obtaining slot machines at Heathrow International Airport. Secondly, Virgin Atlantic attacked the suggested Uk Airways and American Airlines partnership saying that it was unhealthy for competition. Finally, Virgin Atlantic has strived to contend with Uk Airways on all routes into and out of London. Virgin Atlantic appeals to customers by being fun and progressive. On the aircraft travellers experience spacious establishing arrangements, state of the art in-flight entertainment system, and most importantly a higher level of customer support. In addition, Virgin Atlantic offers a unique upper category service at business course prices. Furthermore, Virgin Atlantic is putting in Internet capabilities and it is employing Galileo's Inside Supply (R), a high-tech inventory management system.

  • Option one - low price/low added value.

likely to be segment specific.

  • Option two - low price.

risk of price conflict and low margins/need to be a 'cost innovator'.

  • Option three - Crossbreed.

low cost base and reinvestment in good deal and differentiation.

  • Option four - Differentiation.

(a)with out a price high grade:

perceived added value by consumer, yielding market show benefits.

(b)with a price premium:

perceived added value sufficient to to tolerate price prime.

  • Option five - focussed differentiation.

perceived added value to a 'particular section' warranting a premium price.

  • Option six - increased price/standard.

higher margins if opponents do not value follow/risk of shedding market share.

  • Option seven - increased price/low principles.

only possible in a monopoly situation.

  • Option eight - low value/standard price.

loss of market talk about.

Conclusion

By studying this external and industry examination on environmental facts, it could be said that Virgin Atlantic Airways is situated in standard pattern markets wherein its competitive advantage is moderately shielded from imitation. In general, flight industry belongs to decrease cycle marketplaces, however, scheduled to relatively smaller capital and procedures of some companies like Virgin, companies in this industry are unable to assure their long-term above average dividends because they are relatively susceptible to standard environment (low lobbying power) and relatively unsecured to industry causes (potential entrants or bigger competitor predation). Because of this, Virgin should focus in a specific market market or specific routes to obtain value apart from price and endure your competition.

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