PEST and VIRO Model for Strategic Model

RUNNING HEAD: MANAGEMENT 0
STRATEGIC MANAGEMENT

MANAGEMENT 1
Executive Summary
The aim of the report is to understand the external factors which influence the functioning of
Jetstar Airways Pty Ltd and also focuses on providing information about the capabilities of
airline to gain competitive advantage. The information received by using PEST model, Five
Force model, VIRO model and by describing the functional level strategies. Through
investigation, it is revealed that population growth, tax rate, interest rate impact Jetstar operation
in both positive and negative manner. There is more competition in the aviation industry of
Australia which is the major challenge for Jetstar because of capturing low cost marketplace. The
investigation also describes that human resource, values is the capability of Jetstar and it also
adopt total quality management theory to manage operations. Further, to reduce issue from more
competition it can invest more on marketing strategy, increase services by focusing on the
government rules and regulations.

MANAGEMENT 2
Table of Contents
Introduction.....................................................................................................................................................................3
External analysis.............................................................................................................................................................4
PEST analysis............................................................................................................................................................4
Political factor.......................................................................................................................................................4
Economic factor....................................................................................................................................................4
Social factors.........................................................................................................................................................4
Technological factors............................................................................................................................................5
Industry life cycle process..........................................................................................................................................5
Five force model........................................................................................................................................................6
Threats of New entry..................................................................................................................................................6
Bargaining power of purchaser..................................................................................................................................6
Bargaining power of supplier.....................................................................................................................................6
Threats of substitutes.................................................................................................................................................6
Competition................................................................................................................................................................6
Internal analysis..............................................................................................................................................................7
VRIO Resource model...............................................................................................................................................7
Human resource.........................................................................................................................................................7
Valuable................................................................................................................................................................7
Rare.......................................................................................................................................................................7
Imitate....................................................................................................................................................................7
Organized..............................................................................................................................................................8
Raw material..............................................................................................................................................................8
Valuable................................................................................................................................................................8
Rare.......................................................................................................................................................................8
Imitate....................................................................................................................................................................8
Organized..............................................................................................................................................................8
Competitive Advantage..............................................................................................................................................8
Profitability of company............................................................................................................................................9
Value creation of the company..................................................................................................................................9
Functional level strategy............................................................................................................................................9
Conclusion....................................................................................................................................................................10
Recommendations.........................................................................................................................................................10
References.....................................................................................................................................................................12
Appendices....................................................................................................................................................................14

MANAGEMENT 3
Introduction
Jetstar Airways Pty Ltd, trading as Jetstar, is an Australian low-cost airline headquartered
in Melbourne. It is a wholly owned subsidiary of Qantas, the airline provide quality services in
Australia as well as also provide several international services from its main base at Melbourne
Airport (Doyme et al., 2019). In the year 2016 the revenue of the airline was A$3.636 billion and
also increase the income of the airline that is in the 2016, the income of the airline was
A$452million. Jetstar Airlines make code-share agreements with several other airlines which
include American Airlines, Emirates etc.
The company adopts various marketing strategies to engage number of passengers and this
results increasing relationship with the passenger. It Increase the satisfaction of the passenger
because of meeting the demands and expectations of the consumers at cheaper rates (Gregson et
al., 2015). In this external analysis of Jetstar is done through using PEST model, procedure of
industry life cycle and Five forces model. The internal analysis of the airline is done through
using VIRO model, describing competitive advantage strategies and functional level strategies,
Further, recommendations are also provide to the airline.
External analysis
It is the objective assessments which reveal describe the factors in the external environment and
affects the functioning of the business (Burdon & Dovey, 2015). Therefore, it is the early
warning signals which analyze the threats and opportunities for the organization. External
analysis also supports the organization to describe the factors which support the organization to
gain competitive advantage. Further, the external environment of Jetstar is described by
analyzing the factors which affects the functioning of the airline and sometimes reveal the
aspects which become opportunity for Jetstar.
PEST analysis
Political factor
The changes in the tax rate that is in the year 2017 the tax rate is 37% for the income between
$87,001 – $180,000 in Australia. This leads in affecting the efficiency of Jetstar to increase their
revenue in highly competitive environment. The necessary policy of the government that is