Strategic Recommendations For Business Growth In Virgin Atlantic Essay.

Virgin Atlantic’s brief history and strategic development

The topic illustrates about the business management and management of strategies within the organisation Virgin Atlantic for which, I have been appointed as the CEO. The topic will show how I have managed to provide strategic recommendations for the growth and development of business in Australia. The report will start with a brief history of the organisation and how strategies have been developed at the functional and corporate level. It will also include the internal and external environment of the organisation along with the ways of gaining competitive advantage and sustainability in business. The importance of mergers and acquisition, leadership and strategic alliance will be illustrated here for making major improvements in the structure, control and corporate governance of the organization (Aaker & Joachimsthaler, 2012).  

Virgin Atlantic Airways Limited is a British airlines company with its headquarters in the United Kingdom. The airlines company was introduced in the year 1984 by Randolph Fields and Alan Hellary and the services were mainly offered for London and Falkland Islands. The shares were afterwards sold, and the company was named as Virgin Atlantic Airways (virginaustralia.com, 2017). The first flight took off from London Gatwick to Newark Liberty International Airport. At present, the company operates over 29 destinations, and the number f employees are 8875. The operating income of the company is £153.2 million, and it generates revenue of £2,689 million, as seen from the year 2016 (Barney, 2014). The aircraft of Virgin Atlantic manage its functions with the help of its three-class cabin structure (virginaustralia.com, 2017).

The strategic development of the airlines company depends on the strategic SWOT analysis, and this helps in determining the strengths, weaknesses, opportunities and threats. Virgin Atlantic has several branches all over the world, and it has flights to Australia. The Virgin Australia offers direct flights from Australia and is trying to expand globally by allowing non-stop services to Cancun and Los Cabos. Virgin Atlantic follows a good marketing strategy by focusing on the latest information and electronic technology for providing convenience to the customer and providing ease of travel for the customers too. Virgin Atlantic uses the pricing strategy for providing the customers with airlines services at a reasonable cost when compared to the other competitors in business (Heracleous & Wirtz, 2012). This has helped the company to enter new market segments and attract more customers by influencing their buying behaviour too. The company has provided publicised discounts for early reservations and ticket purchases. 

The internal environment consists of the airlines industry within which Virgin Atlantic operates for serving as many customers as it can. Due to the presence of new entrants in the market, the shares deteriorate for Virgin Atlantic. The competitors of the organisation include British Airways, Delta, AMR, etc. The competitors also interactively run websites for allowing the customers to become aware of the services offered and let them know about the prices of the services, which are offered (Hill & Jones, 2013). The suppliers are considered as important individuals of the internal environment such as Boeing and Airbus, which have agreements with the company regarding delivery of aerospace parts and raw materials used. Currently, Virgin has used Boeing 747 and Airbus 340 planes and even ordered six A380 model aircraft of Airbus for enhancing the ease and convenience of transportation for the customers. The customers are provided with different travel classes like the upper class, economy and premium economy (Hill, Jones & Schilling, 2014).

Internal and external environment of the organisation

The major activities associated with the inbound and outbound logistics include the supply of raw materials and resources by the suppliers and controlling the stocks as well. The marketing and sales activities include flying club membership offered to the customers and other trade incentives. There are additional discounts as well for booking tickets online, which is an essential part of the pricing strategy for Virgin Atlantic. A proper functional unit is developed along with an user-friendly web site for the customers to obtain relevant information and manage the reservations and booking of tickets online (Hitt, Ireland & Hoskisson, 2012).  The internal support activities comprise of the management of human resources through providing training to individuals and mentoring sessions for them to know about sign language. Virgin Atlantic has become a world class flight system with travel seats and beds designed to provide extra comfort to the passengers.

The external environment is assessed with the use of PESTEL analysis for determining the political, economic, social, technological, environmental and legal factors. The political and legal factors include the domestic aviation rules and international laws introduced by the Government of Australia. The competitors manage the market shares, which can also create political influences on the company. Virgin Atlantic has created a good brand image and social perception, which allowed the company to gain a sustainable place in the market. Training is provided to the workers for fulfilling the requirements of stakeholders and meet up to the standards of services delivered (Longenecker et al., 2013).

With the advancement in technology, new generation aircraft are introduced, which have reduced the training and maintenance costs largely. Online services have been provided as well, which shows technological advancements. The environmental concerns are major issues experienced within the airlines industry, and Virgin Atlantic has introduced duty-free bags consisting of recyclable materials according to the requirements of the Ministry of Agriculture. This has reduced pollution and focused on creating a healthy environment, thereby creating a positive brand image among the customers (Lu et al., 2012).

At the corporate level, Virgin Atlantic has diversified its products and services for creating a feasible market and enters new market segments to attract new and existing customers. Another strategy implemented by the company at the corporate level is the acquisition of innovative brand partners for offering services of higher quality at lower cost. The value adding strategy has also paid off with the delivery of value for money services along with great customer services and consistent innovation procedures at various stages (Pearson & Merkert, 2014). At the functional level, Virgin Atlantic has decentralised the structure of organisation for enhancing the process of decision-making and developing new methods and techniques for improving brand name and gaining international recognition as well. At the business level, Virgin Atlantic has sacrificed short terms profits for gaining long-term growth and stay ahead of its competitors in business. Within the business level, the brand strategy has favoured organisational growth and development, and this has attracted customers by gaining a good market value. This has further influenced their buying behaviour and becomes loyal customers (Peppard & Ward, 2016). 

Development of strategy at a business, functional and corporate level

The pricing strategy in business has reduced the operational costs and ensured delivery of services at reasonable prices, thus fulfilling the needs of customers and keeping them satisfied as well. Cost leadership strategy has helped the company to mitigate the power of purchasers and reduce the prices of services lower than its competitors for retaining the existing customers. The buying power of customers often lead to the reduction in the cost of services and this allows the company to stay ahead if its competitors and generate good returns as well (Uggla, 2014). The differentiation strategy is implemented at the business level for making the products and services of Virgin distinguishable from other company products, which will also influence the buying behaviour of consumers in the market. 

Due to the offering of good quality airlines services at lower costs, Virgin Atlantic has gained competitive advantage over its competitors, and this has allowed the company to reinforce strategies, which can create value that is no longer achieved by its competitors in business. Virgin Atlantic has created a strong market presence through a positive brand image, due to its corporate social responsibility tactics and reputation, which has been achieved based on the delivery of good quality services at lower costs (Wheelen & Hunger, 2017). The VRIO framework is utilised by the company for determining the most valuable resources including the brand image and reputation, which has helped the company to gain competitive advantage and remain sustainable within the business environment. The enhancement of efficiency of customers’ services, geographic location and proper management of human resources have further improved the services quality and created a satisfying experience for customers during travel (Aaker & Joachimsthaler, 2012).

Virgin Atlantic has merged with Delta and worked on a joint venture for providing translatic routes and allow passengers to travel in own network. The passengers from Australia would be able to travel to the new locations as well, which was previously not available. The merger would also enhance the effectiveness of UK, and US routes from Australia thereby would provide more convenience for the passengers. This would enhance the customer and generate more revenue in business. The internal strategy and alliance have allowed Virgin Atlantic to work on a joint venture with Delta for enhancing the quality and quantity of services and ensure satisfaction of customers (Barney, 2014). The complementary alliance does not include overlapping routes whereas parallel alliance enables coordination between two airlines companies and ensure sharing of codes, franchising and fulfilling shareholders’ requirements too.

Leadership is an essential aspect of the airlines industry and a good leader cannot only influence the workforce to enhance the productivity but also create a strong brand presence. The leaders of Virgin Atlantic are responsible for implementation of strategies and allow the free enterprise to create a sustainable position. The leaders of the company are responsible for motivating the employees by providing intrinsic rewards like good pay, promotion while the extrinsic motivation is possible through providing of financial rewards, more opportunities to develop the career, etc (Heracleous & Wirtz, 2012).

The leadership within Virgin Atlantic has been originated from the good culture, and this has promoted transformational leadership. Transformational leadership skills have helped the leader to communicate with the employees, make them aware of the changes and vision and guide them in the right direction. This is done to guide the change through maintenance of proper direction and allowing the committed group members to commit themselves fully to the company. The leader had also motivated and encouraged the employees to perform better and bring out the desired positive outcomes for the organization (Hill & Jones, 2013). 

The organisational structure defines the structural framework, which determines the patterns of the hierarchy of Virgin Atlantic. The ways by which tasks are allocated, coordinated and supervision is done have been part of the structure. Virgin Atlantic follows an effective functional structure, which allows grouping the employees in various functional segments based on their skills and expertise level. It is easy to manage and control and thus is suitable for adapting to the changing needs of business. The functional structure promotes good communication between the functional units and creates a good image of the brand (Longenecker et al., 2013). The cost leadership control has helped in managing products and services, which are acceptable by the customers and can fulfil their needs and requirements.

The corporate governance within Virgin Atlantic, Australia has helped in managing the systems of rules, regulations and practices properly for controlling the company and guiding it in the right direction. It has also helped in fulfilling the requirements of stakeholders involved and manage the customers and suppliers properly for ensuring steady functioning and control of business within the competitive business environment (Lu et al., 2012).

Conclusion

The topic illustrated about the ways of managing business and strategies for enhancing the operational efficiency of Virgin Atlantic. At first, a brief explanation of the industry was provided along with the strategic development procedures. The internal and external environments of the company were assessed, which further helps in developing effective business strategies at business, functional and corporate levels. The company, with its resources such as positive brand image and reputation, has helped in gaining competitive advantage and sustainability too. The benefits of mergers and acquisition along with the importance of transformational leadership had been included in this report. Lastly, the functional structure and corporate governance followed by Virgin Atlantic had allowed the company to remain sustainable in the business environment.

• It is recommended to provide exceptional customers’ services for attracting more customers and ensure providing solutions for various queries.
• The recruitment and selection of staffs with proper knowledge and skills in the airlines industry are recommended as well.
• Providing training and mentoring sessions to the newly appointed employees is essential for improving their skills and knowledge level.
• Virgin Atlantic must monitor the changes in buying behaviours of customers and act accordingly for fulfilling their demands and preferences.
• There should be segmentation of customers along with improvement in the quality of food provided by Virgin Atlantic to its passengers on the flight.

References

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Barney, J. B. (2014). Gaining and sustaining competitive advantage. Pearson Higher Ed.

Heracleous, L., & Wirtz, J. (2012). Strategy and organisation at Singapore Airlines: achieving sustainable advantage through dual strategy. In Energy, Transport, & the Environment (pp. 479-493). Springer London.

Hill, C. W., & Jones, G. R. (2013). Strategic management theory. South-Western/Cengage Learning.

Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an integrated approach. Cengage Learning.

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012). Strategic management cases: competitiveness and globalization. Cengage Learning.

Longenecker, J., Petty, J., Palich, L., & Hoy, F. (2013). Small business management. Nelson Education.

Lu, W. M., Wang, W. K., Hung, S. W., & Lu, E. T. (2012). The effects of corporate governance on airline performance: Production and marketing efficiency perspectives. Transportation Research Part E: Logistics and Transportation Review, 48(2), 529-544.

virginaustralia.com. (2017). Virgin Australia | Book flights & holidays with Virgin Australia. [online] Available at: https://www.virginaustralia.com [Accessed 12 Jul. 2017].

Pearson, J., & Merkert, R. (2014). Airlines-within-airlines: A business model moving East. Journal of Air Transport Management, 38, 21-26.

Peppard, J., & Ward, J. (2016). The strategic management of information systems: Building a digital strategy. John Wiley & Sons.

Uggla, H. (2014). Make or buy the brand: strategic direction of brand management. Strategic Direction, 30(3), 1-3.

Wheelen, T. L., & Hunger, J. D. (2017). Strategic management and business policy. pearson.