Virgin Atlantic Business Strategy Analysis
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Published: Tue, 13 Jun 2017
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 policy helps the company to establish and achieve 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 determined 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 economics, design, marketing, manufacturing, customer service production, consumer service, and others to focus on achieving 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 emphasis on process measurement and controls as means of constant improvement (McNamara.1999). Furthermore, Total Quality Management is extremely flexible and adaptable. Though originally applied to industrial operations, and over the years only used in that area, TQM is now being recognised as a standard management appliance, just as valid in service and public sector groups like the Virgin Atlantic airline industrie (Hashmi, -2004).
The Total Quality Management (TQM) viewpoint of management is customer-oriented. Hereafter, the Virgin Atlantic operations must be established in order to steadily deal with the development 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 procedures with regards to their actions and services to better satisfy customer requests in the most efficient 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 Reducing Strategy
To accomplish its goal of having a sensible position in the airline market, Virgin Atlantic uses a cost reduction strategy. Such cost dropping strategy trusts on five main facts like contracting out services, airport charges and route guidelines, fleet commonality managed staff costs and efficiency and managed marketing charges. With their achievement of aircraft Boeing 787- 9, Virgin Atlantic has been able to gain capacity and reduce the average age of fleet which means savings on maintenace costs and avoiding the fit of European Union conform apparatus on old feet.
The next aspect under the cost reduction strategy of Virgin Atlantic is narrowing out services. In this method, aircraft handling, ticketing, and other functions are contracted out by Virgin Atlantic to third parties. In accumulation, in order to limit their expenditures engine and weighty maintenance are also contracted out however the staff of Virgin Atlantic carries out routine maintenance.
Additional issue for the cost reduction strategy of the corporation is in terms of airport charges and route policies. Here, Virgin Atlantic has made level-headed 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 bartering power which enables it getting favourable access fees. In addition, Virgin Atlantic provides only a direct provision, thus, it has no cost concerning concerning passengers. Furthermore, the company pays superior focus to on-time departures because it means exploiting aircraft use.
Managing staff budgets and productivity is another issue used for reducing the cost for Virgin Atlantic. In this manner, the company pays its staff on modest wage but has set up a performance related pay arrangement which impulses employees to maximize the number of sectors flown regularly. This way, Virgin Atlantic both controls productivty and retains staff cost down.
CHALLENGE – 2
Critical Success Factors
Although the company had encountered different difficulties, more accurately in line with its cost structures, the company had been able to persist and grow in the market. Virgin Atlantic implements different marketing strategy to make the enterprise last in the competition and to be able to increase competitive position in the airline industry. It is said that the company was viewed 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 UK having a network of over 48 routes in 18 countries.
In order to locate itself in the market the company continuously concentrates on motivating its costs to offer the lowest fares possible and stays profitable. Furthermore Virgin Atlantic offer minimum principles of service and very low prices for point to point and short haul flights. The goal of Virgin Atlantic is to meet the needs of travelling at the lowest possible price. The Accurate Success Factors are as follows in airline industry: the focus of having the lowest prices, being trustworthy within the marketplace, comfort service and frequency.
It is well-known that low-cost companies concentrate on this first critical success factor by try to offer the lowest price. Though Virgin Atlantic has eliminated extras such as in flight meals, advanced seat arrangements, free drinks and other services, it still prioritises features which remain important to its focused market. Such features include frequent departures, advanced reservations, luggage handling and consistent on time services.
TASK: – 2
TASK – 2.1
First is the Virgin Atlantic Strengths, there is no question that inspired, values and heritage of MrBronson is one of their main strengths. Further advantage is that the industry is privately owned which means they can handle the business well without the support of following the government’s restrictions. The business also set the good appearance and good marketing strategy which reflects in sponsoring each other’s commerce as part of the alliance. Since it is the first corporation that offers low prices, they also get a chance of aircrafts tenancy. Another factor is the strong leadership team of the people who are qualified enough in leading the entire corporation toward the competency.
Second are the Weaknesses of the Virgin Atlantic. Because of the different industries try outs of MR Branson, he is also part of his business’s weakness. All of his future projects or business’ strategies affect his other trades although it is successful and steady. Another weakness is the low profit of cash flow because they offer low prices for the customers and there is a high expenditure for conservation of the aircraft and maintaining the quality of their service.
Third are Opportunities for the Virgin Atlantic. There are more capitals open for another hospitality service and based on the successful record of the airline, this is another success for them. Some of the large airline companies had experienced liquidation and it is a great opportunity and in addition, the European-Union is on their side to support.
Threats are the fourth analysis of the company. The swift growth and change in the world budget is a factor of threat because of the New Airline Limitations. Another is the competition and high prices on the rate of fuels, threats on the terrorism, over flight boundaries, and the new airline industries are the other existing threats.
The possible strategies of the airline can be through the expansion of partnerships to extend the service of the Virgin Alliance and start providing the quality of service in smaller marketplaces. They can also try to invest in United States, for there is a great possibility to capture the markets. Since the airline id common because of their service offered, they can response the needs of the customers in the capitals where there is a large group of jet-setters and business class which is another advantage to increase the rate of return of the customers.
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 370 jets that serve 230 cities with more than 2200 daily flights. In the 25years since its inception, they have grown to an organization of 31000 employees, and it earned $11 million on $8.5 billion in sales (Simulation, 2009). It is in no stranger to the challenges that infect today’s airlines. Increased uncertainty about flying has affected industry stock prices across the board, and they have seen a 11% decrease in share values.
In additionally, the rising cost, especially of fuel and labour has limited Classic’s ability to compete for the valued frequent flier. In improvement this problem, their Board of Directors recently mandated a 15 present across the board cast reduction (Simulation.2009). Though Classic has charge the company to implement a cost reduction, they must find a way to increase its frequent flier suite with methods that will determine a measurable return of any investment.
Stakeholder perceptions are to increase productivity and market share. It must also support its programs and competitive point, while reducing their costs. The ethical problem that Classic Airline is facing is the decency of the industry. The union evocative has steered Classic relatively clear of major problems in an increasingly volatile union situations. All though, they are concerned that they 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 impasse since must union work with bonds and not meeting their obligation can cause a lawful 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 fresh ones by providing quality service and presenting better Classic Rewards programs. Exploiting more the CRM system will help observe area that require perfection 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 acknowledged the need to improve their Classic Rewards package. The stages that companies recently take in the new products 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.
Benchmarking Validation and Identify the Alternatives
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 advertising department with the formation of an Invention and Strategy group embraced of the following tasks: Research and Development, Strategic Insights and Innovation, and Operations Inventions (new resource.2006). They also need to indicate that they have completely retooled and reinvigorated their development process, and their products way out is filled with a wide array of sensational options, this was accomplished by generating a single team responsible for controlling 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 should identify the need to improve their Rewards programs. The step that enterprises recently take in the new-product process to provide a needed focus for ideas and concepts developed in later stages (Kerin.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 actuality
The airport supremacy has grown competitive in the generosity industry of every capital. Accommodating this inexpensive growth is the part it plays in the helping the market to stay alive. There is always a different viewpoint in every business scheme in the heads of the entrepreneurs and airlines are a huge share that still on the case to case basis for existence. Furthermore, there is a regulation that is strictly applied in the market which makes the inexpensive advantage hard to catch. The specific policy that can be applied is out of attention in finding leading position. This is the growing issues for the changes that might happen inside an corporation. The similarities, differences and crossing out of the improbable process and procedures are the continuous procedures applied in the intermediary 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 preferred in airlines and second largest long haul carrier on the route of London to NY.
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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