Factors Impacting Business Strategy: Virgin Atlantic Case Study

This report analyzes the various factors that impact and influence the business strategy of Virgin Atlantic, including political, economic, social, technological, legal, and environmental factors. It also evaluates the internal environment and capabilities of the organization, as well as its market positioning using Porter's Five Forces model. Additionally, the report discusses various models, theories, and concepts that can be used for strategic planning in the airline industry.

Business strategy

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
P1 Evaluation of various factors that impact and influence on organisational and its business
strategy (545 words)...................................................................................................................3
LO2..................................................................................................................................................5
P2 Internal environment and capabilities that affect organisation (416words)...........................5
LO3..................................................................................................................................................6
P3 Porter Five Force can be used to evaluates market positioning of enterprise (465 words)....6
LO4..................................................................................................................................................7
P4 Various models, theories and concept can be used to strategic planning of organisation
(517 words)..................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................8

INTRODUCTION
Business strategy refers to various plans that are formulated by organisation in order to
enhance its performance and productivity so that it can sustain and grow in competitive market
condition. Pestle analysis is model that is used to identify various macro environment factors that
impact or influence on overall performance of organisation. This report is about Virgin Atlantic
Limited that was established in 1984 to provide qualitative and effective air transportation of
services to large number of customers so that it can earn maximum profit margin. Virgin Atlantic
Limited mission is “To embrace human spirit and let it fly” on the other hand long term vision is
to enhance brand image internationally in terms of qualitative services and innovation so that
customers have better experienced. The report has included various models such as pestle and
Swot analysis to identify internal and external factors that have affected operation of enterprise.
Porter five forces model is also used by report to identify level of competition and position of
firm in industry so that effective strategies can be formulated for achievement of objectives.
LO1
P1 Evaluation of various factors that impact and influence on organisational and its business
strategy (545 words)
There are different factors such as government policies, economic condition, taste and
preference of individual and change in technologies that affect operation of enterprise and its
business strategy. Pestle analysis is one of the powerful models that is used to identify external
factors that impact upon Virgin Atlantic Limited operation such as:
Political factor: There are various policies that are made by government in order to regulate
business so that no harm can be caused to society or economy of country. People of Britain have
voted to leave EU so such government policies have result in economic slowdown and
uncertainty about several events for few years (Lanzolla and Markides, 2020). UK government
has also taken decision to expand UK airport by approval of runway at Heathrow thus it have
provide opportunities to virgin Atlantic and other airline to expand their business operation.
Virgin Atlantic can run to and from flight directly to UK and other various destinations thus
contributed in increase of profit margin.

Economic factors: It can be stated that uncertainty due to Brexit has adversely impacted on
Virgin Atlantic and other British airline of UK. Company finance have been negatively impacted
after Brexit as most of the expense of organisation are in dollar and revenue was generated in
pound that have lead to increased cost and reduce profit thus affected overall profitability and
market share of enterprise. At the same time Virgin Atlantic is able to get fuel at low prices as it
was fell by 21.8% that helps in reducing cost of operation and growth of enterprise.
Social factors: There are various changes in taste and preference of people so company need to
adapt to such changes in order to grow and sustain its business for longer period of time. Social
factors are mostly out of control of organisation such as Air traffic controller strike in France
because of disrupted reform in labour have caused cancelation of many flight from and to
France, UK, Spain and Switzerland (Kim, 2016). Thus, all such social factors have negatively
impacted on British airline and Virgin Atlantic sales volume and profitability.
Technological factors: Digital revolution and technological changes have impacted on company
operation and taste, preference of individual regarding particular services. Customers can easily
compare prices, facilities provided by each airline in order to select best possible option for
travelling form one destination to another. Digital medium and internet have make airline
industry highly competitive and helps in reducing total cost so it can earn more profitability.
Virgin Atlantic has also make use of innovative technology to provide seamless experienced and
personalised services to customers for growth and success of enterprise.
Legal factors: There are various legal rules that need to be followed by Virgin Atlantic while
operating different function such as health and safety, equality and minimum wages to
employees or employment act (Eker and Eker, 2019). All such legal laws help company to build
strong brand image and smooth operate its business for long term.
Environment factor: It most recent factors that have been considered by many organisation for
sustainability and growth in industry. Change in weather condition, flood, global warming and
drought have resulted in cancellation or delay of flights and reduce overall revenue. So, Virgin
Atlantic have considered all such factors while operating its function to retained and maintained
its competitive positioning.
Summary

Therefore it can be concluded or summary that policies of government have positively impacted
as it have approved for airport at Heatthrow. Due to recession people are less spending money
for tour and travel so reduce in fuel prices have provide maximum benefits to individual.
LO2
P2 Internal environment and capabilities that affect organisation (416words)
Internal environment and capabilities includes organisational structure, culture and
employees that are performing different work in the firm so that specific objectives can be
achieved. SWOT analysis is a model that is used to evaluate internal strength and weakness of
Virgin Atlantic that helps in effective utilisation of available opportunities and protect firm form
different threats (Uyar, 2019). Therefore SWOT analysis of Virgin Atlantic is as follows:
Strength: Virgin Atlantic strength lies in its strong brand image and reputation of business that
helps in attracting maximum number of individual to prefer services of company as compared to
other airline firm in UK. It has make biggest technological transformation which have
contributed in effective growth and success of enterprise in airline industry. Improve IT and
support system of Virgin Atlantic has helped in providing qualitative services to customers
beyond their expectancy so that overall objectives can be achieved.
Weakness: It can be stated that Virgin Atlantic heavy rely upon celebrity personality for
promotion of products and services that are offered by it to customers in order to gain maximum
market share. Such as company is depend on Richard Branson for promotion of brand and
services to number of customers so it need to be removed (Yucel, 2018). Another weakness of
Virgin Atlantic is that it gets revenue in pound but have to make expense in dollar that impacted
overall cost of organisation.
Threats: Bexit and increasing competition level in airline industry are two common threats that
are faced by Virgin Atlantic while operating its business. There are many competitors in airline
industry in terms of brand such as British Airways, Lutanasa and Emirates. Brexit also have
reduce number of passenger travelling from one destination to another therefore company have
to suffered a large. Adverse weather condition also resulted in delay or cancellation of flight
which have also impacted on total sales volume and profitability of organisation.
Opportunities: Company have opportunity to expand its business due to change in customers
taste and preference such as most corporate now organised business trip for its employees so that
they can have fun and enjoyment or satisfied to work with such a organisation (Weinrich, 2017).

Number of tourist has been increased over years which stated that people are likely to spend
huge amount of their capital to travel different destination for enjoying vacation and
entertainment. Availability of low fuel and approval of government for third run at Heathrow
have provided opportunity to firm to expand its market share.
Summarise
Thus it can be stated that firm has strong brand image and reputation in the market so it can
easily influence maximum number of people to choose it as compared to others. Company can
utilised its capabilities to gain advantages of available opportunities and earn maximum profit
margin.
LO3
P3 Porter Five Force can be used to evaluates market positioning of enterprise (465 words)
Virgin Atlantic has strong and competitive position in market as it offer qualitative
products and services to large number of people. Porter five forces model included five
component that stated about market position of enterprise such as level of competition, power of
consumer, power of suppliers, threat of substitute products and threat of new entrance in
particular industry (Davids and Van Belle, 2017). Thus porter analysis of Virgin Atlantic can be
illustrated as follows:
Level of competition: There are various firms or organisation in airline industry in which
Virgin Atlantic operates such as British airways, Air France and Cathay pacific. So, it can be
stated that level of competition in airline industry is more therefore Virgin Atlantic have focused
on providing qualitative services to customers. Thus, it has contributed in effective achievement
of company objectives and growth and success of enterprise in competitive market.
Power of consumer: It can be stated that consumer needs and preference keeps on changing so
organisation need to adapt to such change in order to sustain its business in industry. There are
large number of consumer or tourist and number of firm that operates in airline industry so they
have wide varieties of choice to select best possible option for satisfaction of their needs and
requirements (Chang, 2016). Virgin Atlantic in order to reduce power of consumer have make
use of digital and innovative method to attract various individual to select its organisation for
travel so that it can earn maximum profitability.
Threat of new entrance: Virgin Atlantic operates in airline industry that required huge amount
of capital that need to be invested in technologies and effective operation of business so that

needs of end users can be fulfilled (Singh, Gaur and Agarwal, 2017). At the same time Virgin
Atlantic have strong market share, brand image and customer loyalty so it would be difficult for
new enterprise to enter into market that is highly competitive.
Power of suppliers: Number of suppliers with similar quality of raw material are higher in
airline industry so company can get products at cheaper rates to render maximum benefits to
individual. Virgin Atlantic have build strong relationship with supplier and have used its brand
image, time payments to attract more supplier to provide various products and services on timely
basis so that needs of end users can be satisfied and goals of organisation can be achieved.
Threat of substitute products: Some of the competitors in order to cover market share have
copied strategies of company so firm has planned to differentiate from others so that maximum
number of people can be attracted to make purchase (Mangematin, Ravarini and Scott, 2017).
Therefore it can be stated that threat of substitute products is medium so Virgin Atlantic have to
formulate various strategies to retain its competitive positioning in airline industry.
Summarise
It can be stated that firm has competitive market position as threat of new entrance is low
to medium, threat of substitute is also medium and power of consumer is high but company
through better strategies have retained maximum power. At last it can be stated that level of
competition is high but firm by maintain its quality of services have retained its market share.
LO4
P4 Various models, theories and concept can be used to strategic planning of organisation (517
words)
Different model such as Ansoff’s matrix can be used for strategic planning of Virgin
Atlantic so that it can gain competitive advantages. Strategic planning will helps organisation to
face future challenges and make effective utilisation of opportunities for growth and success of
organisation. Various methods that can be used by Virgin Atlantic to achieve its objectives can
be explained by use of Ansoff matrix model such as:
Market penetration: It is strategy in which firm plans to expand its market share with similar
products or services and target market so little or no risk is involved. Virgin Atlantic have attract
existing customers through making modifications in marketing strategies such as use of social
medium or official websites so that customers can easily get information about various services
its offered at particular prices (Maier and et.al., 2017). Thus, it helps them to make accurate and

timely selection of products and services for effective satisfaction of their requirements and
achievement of organisational goals.
Product development: At this stage company plans to manufacture or introduce new products
and services for existing customers so that they can be influenced to make purchased over other
competitors. Company analysis or evaluates about new market trend and preference such as
digital media that is used in booking of ticket so that it can easily promote new products and
service to new customers. Strong brand image and customers awareness of Virgin Atlantic have
helped company to easily introduce new services for target market segment for fulfil of their
requirements and earning maximum profitability. Therefore, Virgin Atlantic by making
modification or addition in services such as by use of digital medium is able to sustain its
business operation for longer run and gain competition positioning.
Market development: It is another strategy which can be used by enterprise to earn more profit
margins that state company by entering into new market with similar products or services can
retained or expand its positioning. Manager of Virgin Atlantic expand business in new countries
to enhance firm brand image and profit share. Lot of capital is required by firm to enter into new
market so that more and more customers can be added and sales volume of organisation can be
enhanced (Misra and Sharma, 2017). Company have effectively understood culture, social
tradition and preference of society in which it is planning to expand so that no challenges have to
be faced by enterprise in future circumstances. Thus, it can be stated that market development
can also contributed in increase of profit margin and market share of enterprise.
Diversification: It is last strategy that involve high amount of risk as company is planning to
enter into new market with new products and services thus it can cause high financial risk to
organisation. Marketer of Virgin Atlantic before entering into new market have analysed needs
and preference of customers, their disposable income and government policies in order to grow
and sustain its business for long term. Therefore market analysis helps in reducing amount of
financial risk that is involved in expansion of business and contributed towards effective growth
of firm. Company by using diversification strategies can easily grow and sustain its market share
for period of 5-10 years.
Tactics:
It by arranging training and development program for employees is able to delivered qualitative
services to customers.

It have also planned to diversified by better market research and introducing of limited services
for growth of enterprise.
CONCLUSION
It can be concluded from above report that for strategic management manager need to
analysis or evaluates different internal and external factors that are affecting operation of
business. Swot model have explained the way company have used its internal strength to make
optimum utilisation of available opportunities to retained maximum market share. The report has
also concluded that Virgin Atlantic through changing its strategies as per environment situation
is able to grow its business for long period. At last it can be concluded that company through
taking risk and entering into new market segment can add more and more customers at the same
time enhance its sales volume.

REFERENCES
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