The basic strategies utilised by Virgin Atlantic
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Published: Mon, 5 Dec 2016
Apart from its other management strategies, Virgin Atlantic has used Porter’s basic strategies to dwelling itself in the marketplace.¬†¬†Accordingly, a corporation positions itself by consuming its strengths.¬†Today, more and more people and collections are struggling to be known in the business arena.¬† With this objective, these supervisions had been able to adeptly and effectively adjust to the situation in the market place by using general strategies that enhanced their enthusiasm.¬† There are five different common strategies that a company can choose.¬†
These include leadership, diversity, focused management and integrated cost leadership/differentiation.¬† Each standard strategy helps the company to establish and exploit a modest advantage within a particular competitive scope. By applying these assets, three generic strategies are resulted: leadership, strategic differentiation and focus (Johnson.&.Scholes.1997).¬†
One of the strategies operated by Virgin Atlantic is its ability to professionally promote its brand names all over the marketplace. This strategic promotion has made the airline companies to continuously be known locally and internationally when it comes to travel fulfilment and convenience. Alternative strategy that can be recognised to Virgin Atlantic as a whole is its skill to value their customers.¬† Here, the company has been able to shadow other airline industry to cut their service cost while providing outstanding service to their target marketplace. Lastly, the ability to strategically line up modern technology and it business strategy is the most important strategy that can be involved to Virgin Atlantic.
In contrast, the Virgin Atlantic has considered their neighbour airlines as its competitors. Due to the deregulation of the European Airline, many airlines have been talented to cope with the changes and make a tactical move of entering in this travel business. One of the industries that open its marketplace to the airline industry is the Virgin Atlantic. Virgin Atlantic is regarded as one of the UK’s largest planned airline. It is known for being such because of the strategies executed by the management of the airline industry (Hitt, Ireland & Hoskisson 2003).
TASK – 1.2
A company’s strategy helps as the game plan management and is use to rod out a market position, manner its operations, attract and please consumers, compete successfully, and achieve structural objectives.¬† Thus, Total Quality Management (TQM) as a strategy is certainly appropriate for such situation.¬†
¬† ¬†¬† ¬†¬† ¬†¬† ¬†Total Quality Management is a viewpoint of management that is driven by the constant achievement of customer satisfaction though the nonstop improvement of all organizational procedures (Robbins, 1998).¬† It is a management viewpoint that seeks to integrate all organizational purposes such as finance, design, marketing, engineering, customer service production, customer service, and others to focus on achiving customer needs and organizational objectives (Hashmi.2000).
It is known that every organization’s main purpose is to stay in business, so that it can promote the steadiness of the community, generate products and facilities that are useful to customers, and provide condition for the satisfaction and growth of organization associates.¬† From this perception, it can be said that TQM strategy for accomplishing its normative outcomes is embedded in different management and leadership styles.¬† ¬†
Total Quality Management is a strategic procedure¬†for satisfying internal and external customers and dealers by integrating the business surroundings, continuous improvement, and come through with growth, progress, and safeguarding the cycles while changing organisational philosophy. Furthermore,¬†TQM is an array of management scheme throughout the organisation, geared to ensure that the organisation to continuously attain or exceed customer requirements. TQM places strong focus on process measurement and controls as means of continuous improvement (McNamara.1999).¬†Furthermore, Total Quality Management is extremely variable and adaptable. Although originally applied to manufacturing operations, and over the years only utilized in that area, TQM is now being recognised as a standard management appliance, just as applicable in service and public sector groups like the Virgin Atlantic airline industrie (Hashmi, -2004).
The Total Quality Management (TQM) philosophy of management is customer-oriented. Hence, the Virgin Atlantic operations must be developed in order to gradually deal with the improvement of their operation through the on-going contribution of all employees in problem solving determinations across functional and hierarchical borders. TQM incorporates the concepts of service class, process management, quality declaration, and quality perfection. Therefore, they must be able to control all alteration processes with regards to their operations and services to better satisfy customer requirements in the most economical way.
In applying total quality management to this particular airline procedure, they must be able to chain it with the core strategy of the industries. This does not mean that such airline companies must have entire variations. It is important that in application of the Total Quality Management to the Virgin Atlantic operations and services they must also consider that an suitable strategy should be used in order to employ a total quality operations and facilities that would satisfy all clients and customers.
TASK – 1.3
CHALLENGE – 1
Cost Reduction Strategy
To achieve its goal of having a reasonable position in the airline market, Virgin Atlantic uses a cost reduction strategy. Such cost reduction strategy trusts on five main aspects like contracting out services, fleet commonality, airport charges and route guidelines, managed staff costs and productivity and managed marketing charges. With their purchase of aircraft Boeing 787- 9, Virgin Atlantic has been able to gain capacity and decreases the average age of fleet which means savings on maintenance costs and evading the fit of European Union-conform equipment on old feet.
The next factor under the cost reduction strategy of Virgin Atlantic is narrowing out services.¬† In this manner, aircraft handling, handling, ticketing, and other functions are contracted out by Virgin Atlantic to third parties. In addition, in order to limit their expenses engine and weighty maintenance are also contracted out whereas the staff of Virgin Atlantic carries out routine maintenance.¬†
Another issue for the cost reduction strategy of the company is in terms of airport charges and route policies. Herein, Virgin Atlantic has made sensible choice of dealing with secondary and regional airports, where the traffic is not blocked and fees incomparably lower. Since Virgin Atlantic, is a true bonus for such airports, the airline company has a bargaining power which enables it getting¬†favourable¬†access fees. In addition, Virgin Atlantic provides only a point-to-point provision, thus, it has no cost concerning connecting passengers.¬† Furthermore, the company pays special focus to on-time departures because it means maximising aircraft use.
Managing staff budgets and productivity is another factor used for reducing the cost for Virgin Atlantic. In this manner, the company pays its staff on modest salary but has set up a performance related pay structure which impulses employees to maximize the number of sectors flown daily. This way, Virgin Atlantic both controls productivty and keeps staff costs down.
CHALLENGE – 2
Critical Success Factors
¬† ¬†¬† ¬†¬† ¬†¬† ¬†Although the company had encountered different difficulties, precisely in line with its cost structures, the company had been able to survive and grow in the market.¬† Virgin Atlantic implement different marketing strategy to make the company last in the competition and to be able to gain competitive position in the airline market.¬† It is said that the company was regarded recently as the most prompt airline between Dublin andLondon. And because of the strategy of the industry, Virgin Atlantic is now known as the second largest airline in United Kingdom having a network of over 57 routes in 11 countries and served by a number of fleet.
In order to position itself in the marketplace the company continuously concentrates on driving own its costs to offer the lowest fares possible and remain profitable.¬† In addition, Virgin Atlantic offer minimum standards of service and very low prices for point-to-point, short haul flights.¬† The goal of Virgin Atlantic is to meet the needs of¬†travelling¬†at the lowest possible price.¬† The Critical Success Factors (CSFs) are as follows in airline industry: the strategic focus of having the lowest prices, being reliable within the marketplace, comfort and service and frequency.¬†
It is noted that low-cost companies concentrate on this first critical success factor by trying to offer the lowest prices.¬† Although Virgin Atlantic has eliminated extras such as in-flight meals, advanced seat assignment, free drinks and other services, it still prioritizes features which remain important to its target market. Such features include frequent departures, advance reservations, baggage handling and consistent on-time services.
TASK: – 2
TASK – 2.1
First is the Virgin Atlantic Strengths, there is no doubt that influence, values and legacy of Mr Bronson is one of their major strengths. Other advantage is that the business is privately owned which means they can manage the business well without the aid of following the government’s restrictions. The business also set the good image and good marketing strategy which reflects in promoting each other’s business as part of the alliance. Since it is the first company that offers low prices, they also get a chance to lease the aircrafts. Another factor is the strong leadership team of the seniors who are qualified enough in leading the entire organization toward the competency.
Second are the Weaknesses behind the Virgin Atlantic. Because of the different business try-outs of MR. Branson, he is also part of his business’s weakness. All of his proposed projects or business’ strategies affect his other business although it is successful and stable. Another weakness is the low return of cash flow because they offer low prices for the passengers and there is a high expenditure for maintenance of the aircraft and sustaining the quality of their service.¬† ¬†¬†
Third are the Opportunities for the Virgin Atlantic. There are more cities open for another hospitality service and based on the smooth record of the airline, it is another success for them. Some of the large airline companies had experienced bankruptcy and it is a great opportunity and in addition, the European Union is on their side to support.
Threats are the fourth analysis on the airlines. The rapid growth and change in the world economy is a factor of threat because of the New Airline Restrictions. Another is the competition and high prices on the cost of fuels, threats on the terrorism, over flight restrictions, and the new airline companies are the other existing threats.
The possible strategies of the airline can be through the expansion of partnerships to broaden the service of the Virgin Alliance and start providing the quality of service in smaller markets. They can also try to invest in U.S. for there is a great possibility to capture the markets. Since the airline id popular because of their service offered, they can answer the needs of the customers in the cities where there is a large group of jetsetters and business class which is another advantage to increase the rate of return of the customers (2000).
Although the advertising is effective, the company should make it more intense to stay well in the market competition. This will keep the airline be above the standard of their service. In addition, they can even try other marketing strategies. The existing credit cards can be valued and it is more applicable if the advertisement they will create is in the language the potential customers can understand.
TASK – 2.2
CLASSIC AIRLINE STRATEGIES
Issue and Opportunity Identification
Classic Airlines COULD commands a fleet of more 375 jets that serve 240 cities with more than 2300 daily flights. In the 25 years since it inception, Classic Airlines has grown to an organization of 32000 employees, and it earned $10 million on $8.7 billion in sales (Simulation, 2009). Classic in no stranger to the challenges that plague today’s airlines. Increased uncertainty about flying has affected industry stock prices across the board, and Classic has seen a 10% decrease in share prices. The airline has been operating under a microscope watch, subject to scrutiny from all sectors.
In addition, the raising cost, particularly of fuel and labor has limited Classic’s ability to compete for the valued frequent flier. To alleviate this problem, Classic’s Board of Directors recently mandated a 15 percent across-the-board cast reduction (Simulation, 2009). Although Classic has charge the company to implement a cost reduction, they must still find a way to increase its frequent flier program with methods that will demonstrate a measurable return on any investment.
Stakeholder Perspectives/Ethical Dilemmas
Classic stakeholder perspectives are to increase profitability and market share. It must also strengthen its programs and competitive position, while reducing their costs. The ethical dilemma that Classic Airline is facing is the morality of the company. The union representative has steered Classic relatively clear of major obstacles in an increasingly volatile union climate. However, they are concerned that Classic will be unable to meet its current and future obligations to its employees on their importance to the organization (Simulation-2009). This can become an ethical dilemma since must union work with contracts and not meeting their obligation can cause a legal problem as well.
Frame the Right Problem
This Airline aspires to remain a competitor in the industry. Their goals are to reduce cost and increase customer satisfaction. Furthermore, the company needs to increase sales and target customers that left to other airlines. Scorecards measurements will give results of marketing strategies in order to see if results are favourable.
Describe the End-State Vision
Airlines will implement marketing strategies to entice existing customers and new ones by delivering quality service and introducing better Classic Rewards programs. Utilizing more the CRM system will help monitor area that require improvement and deliver products that customer wants. To implement the changes a timeline will be put in place. The first half of the year improvement to the CRM system will take effect. This produce statistics needed to see results when the second half of the year new products, programs, and savings are implemented.
TASK – 3.1
Identify and Assess Risks
Virgin Atlantic identified the need to improve their Classic Rewards program. The step that companies recently take in the new-product process to provide a needed focus for ideas and concepts developed in later stages. This statement help one understand that there a several steps to a new product that a company needs to take. Within those steps, many risk are taken that can affect stakeholders and different areas of the company, such as the budget of the company, Changes require new budgeting that a company might not have.
Identify the Alternatives and Benchmarking Validation
They need to identify alternatives for marketing strategies to help increase customer satisfaction, retain their loyal customers, acquire new cliental, decrease cost, raise morale, and establish new programs or enhance existing ones. To accomplish this, they need to perform benchmarking validation, with other companies, such as British Airways (BA). Some of BA’s experiences can help set Classic Airlines in the right direction.
To accomplish the changes Virgin Atlantic needed, the executive vice president and chief marketing officer should announce the expanded role of BA’s marketing department with the establishment of an Innovation and Strategy group comprised of the following functions: Research and Development, Strategic Insights and Innovation, and Operations Innovation (Restaurant new resource, 2006). They also need to indicate that they have completely retooled and reinvigorated their development process, and their product pipeline is filled with a wide array of exciting options, this was accomplished by creating a single team responsible for driving and enhancing innovation at all levels.
Evaluate the Alternatives
Airlines marketing strategies were to increase customer satisfaction. As a result, this will increase profit, retain customers, and acquire new ones. Comparing to BA’s, they were decreasing revenues, customer satisfaction, and certainly not acquiring new customers. In fact, the ones that stayed with Classic were flying less.
Another alternative solution suggests is that they may want to get better CRM system that will help then products reports that tell them where they stand. These reports can segment for different elements such as customer evaluations, customer trends, and customer flying habits.
Identify and Assess Risks
They identified the need to improve their Classic Rewards program. The step that companies recently take in the new-product process to provide a needed focus for ideas and concepts developed in later stages (Kerin, R A, 2006). This statement help one understand that there a several steps to a new product that a company needs to take. Within those steps, many risk are taken that can affect stakeholders and different areas of the company, such as the budget of the company, Changes require new budgeting that a company might not have.
TASK – 4.1
Analysis on the future existence
The airport dominance has grown competitive in the hospitality industry of every country. Accommodating this competitive growth is the role it plays in the helping the economy to survive. There is always a different philosophy in every business venture in the heads of the entrepreneurs and airlines are a huge investment that still on the case-to-case basis for survival. In addition, there is a regulation that is strictly implemented in the market which makes the competitive advantage hard to catch. The specific strategy that can be applied is out of interest in finding dominant position. This is the evolving issues for the changes that might happen inside an organization. The similarities, differences and crossing out of the unlikely process and procedures are the continuous methods applied in the intermediate term of the company’s existence.
Sustainable Competitive Advantage
The Virgin Airline’s outrageous connection to media gave the business a huge market competency advantage. The accessibility to the media such as television, radio, and even newspapers gave the business and the other business under the Virgin Group give the opportunity to promote each other. The leadership of Mr Richard Branson gave an incredible impact on this matter.
TASK – 4.2
MrBranson incorporated the business under the certain criteria or conditions.it should be in high quality; the business should promote innovation; provide a good value for the money; it should introduce a kind of challenge to existing alternatives; and it must be also with the sense of fun.
Virgin Atlantic started back in 1984 with a single 747-200 and flying in route of London to New York. Aside from the gasoline, the business was fuelled with two ideas – to offer low price and have a better service. Passengers are the treated as visitors and the business thought of the things to serve better meals, offer more entertainment, create fun, and acquire smiling and enthusiastic flight crews. For over the years, the airlines shook the industry with the project for innovation to provide the quality of service and entertainment. The airline is the first to offer two choices of meals, even in economy class, and spa-services. Thus, they became the industry most favourite in airlines and second largest long-haul carrier on the route of London to New York.
The leadership of Mr Branson is felt by all of his flight crews and supports them in every step they create. The ingredients to success that Mr Branson formulated is first, he is unafraid to failures and instead of sticking with one you know, he proposes the idea of making great things – if an entrepreneur knows one business, then he will know any business. Another is to focus on his employee and staying the course as if in placing the control over the business.
The different entered businesses of Mr Branson are not all successful and there are many problems which are different on the leader’s idealistic mind. Even if the Virgin Group failed at the other invested business, they still keep the values which is unique than the other organizations.
The Bransonism, taken from the name of Mr. Branson, believes in the idea that if the company grows larger and larger, the leader should treat the people working under him as human beings and as essential players of the organization. Moreover, he believes that a business will fail if he doesn’t give it try for failures are the start of great things. And a leader should find the people who are good at motivating the others and getting the best out of people.¬†Virgin Airlines has expanded and reached the United States, Asia, and South Africa. Only Mr Branson set sights in building the domain in United States if he can tear down the barriers blocking foreign-owned airlines from offering routes the United States.
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