Strategic Management & Leadership : Virgin Airlines
Added on 2021-02-19
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Strategic Management &Leadership
Table of ContentsINTRODUCTION................................................................................................................................3EXECUTIVE SUMMARY..................................................................................................................3MAIN BODY.......................................................................................................................................3Section 1. PESTEL analysis........................................................................................................3Section 2. Porter's 5 forces model analysis.................................................................................5Section 3. SWOT of virgin airlines.............................................................................................7Recommendations.....................................................................................................................10CONCLUSION...................................................................................................................................11REFERENCES...................................................................................................................................12
INTRODUCTIONStrategic Management involves framing of main strategies and plans in line with thebusiness major goals, objectives and aims. All the strategies formulated are implemented as per thecore business aims. Strategic management is related with the process of making continuous plans,its monitoring, analysis, evaluation for determining any changes or modification required or not.With the help of strategic leadership, strategies made are utilised for managing the employees oforganisation. Strategic leadership defines the potential of a manager in defining vision for thebusiness firm thereby motivating employees so as to accomplish it in better and effective manner.The present report is based on Virgin Airlines which is one of the British Airlines carrier started in1984. It is considered as one of the best air carrier in terms of quality, speed, punctuality. This reportwill focus on macro factors having influence on working of company. Further, analysis will be doneof micro environment factors with the help of Porter's 5 forces model. At last, it will shed light ondetermining all the strengths and weaknesses by doing SWOT analysis on the business operationsof Virgin Airlines.EXECUTIVE SUMMARYVirgin airlines has come up with its first business loss in the last four years i.e. £48.5 millionnet loss in the year 2017 as compared to £187.3 million net profit in previous year. As a resultcompany has to face many economic, operational as well as significant challenges for surviving inthis tough competition market. The problem was arises because of difficulty in Roll – Royceengines which has power its Boeing 787 Dreamliners and thus has weaken pound thereby affectingthe demand in the UK market (Virgin operational and economic challenges, 2017). It has affectedthe cost making disruption so much that Virgin Airlines is required to group up its four aircraftwhile under repairing situation. Also, it has resulted in leasing of some of its additional aircraft andplanes. Lastly report will also contain findings and recommendations such as Virgin airlines need toincrease its global presence by leveraging its business, company need to invest in research anddevelopment area and invest in digital technologiesMAIN BODYVirgin Airlines is one of the British Airlines carrier started in 1984. It is considered as one ofthe best air carrier in terms of quality, speed, punctuality. The main issues and challenges in thecompany is that there was difficulty in Roll – Royce engine which affected the demand in UKmarket.
Section 1. PESTEL analysisPESTEL analysis is one of the strategy with the use of which every business organisationcan determines all the macro environmental factors which are having negative impact on theworking as well as on its business operations. It helps in analysing future trends in respect ofpolitical, economic, social, environmental, technological as well as legal aspects (Gupta, Gupta andGupta, 2019). With the help of PESTEL Analysis, it will help Virgin airlines in making use of all ofits internal competencies and seeking competitive advantages from current market opportunitiesthereby neutralising all the threats coming in its business operations.Political – As per the political aspect, different factors such as government policies, rules,regulations have impact on the working of Virgin Airlines. The environment in which suchcompany is operating is having high regulatory frameworks which is in favour of passengers andcustomers irrespective of airlines. Due to the fact that passengers safety is of utmost need in case ofall the aviation industry business, it is required to follow all the norms and regulations as laid downby government of different countries and places where it is conducting its business operations(Zahari and Romli, 2018). Further, due to deregulation on the supply side results in morecompetition for Virgin with regulation on demand aspect depicting more passengers can haveimpact on increase in amenities and low price level.Economic – Because of huge decline in the pound Sterling value as compared to last 31year, it has created negative impact on the revenue margins of Virgin Airlines to a large extent. Sucheconomic loss arises due to its business operations expenses basically depends on pound Sterling.But it has get some benefits as well, i.e. due to decline in fuel prices especially of Brent Crude oil inthe first half of 2016 by 21.8% (PESTEL Analysis of Virgin airlines, 2019). Economic instability,declining in passengers and fliers traffic, increase in aviation fuel prices, maintenance and operatingcost, high competition due to minimal and low cost carriers has contributed in making loss toairline. Also, it has come up with situation of bankruptcies, business closure because Virgin hasbecome no longer capable of performing its business operations in profitable manner. Social – Many airlines has to face social factors which are out of control of airlines whichgives rise to increase in difficulty on both the operational as well as economic level. Factors such asstrikes of Air traffic controller, emergence of Millennial generation in the consumer class hasresulted in social changes which is giving rise to instant gratification, high demand in terms ofservice quality and types. This is required on part of Virgin airlines to maintain a proper andeffective balance among its operational and economic cost expenses so that it cannot hamper its
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