Virgin Atlantic's Competitive Strategies

This assignment examines Virgin Atlantic's competitive strategies within the dynamic airline industry. It employs a comprehensive analytical framework encompassing SWOT analysis, Porter's Five Forces, and a stakeholder perspective to evaluate the company's strengths, weaknesses, opportunities, threats, industry structure, and key stakeholders. The analysis delves into Virgin Atlantic's unique positioning, focusing on aspects such as its product service, route system, marketing strategies, and employee productivity.

STRATEGIC
MANAGEMENT

TABLE OF CONTENTS
1. INTRODUCTION ......................................................................................................................4
2. MISSION, VISION, VALUES AND OBJECTIVES.................................................................4
3. ENVIRONMENTAL ANALYSIS..............................................................................................5
3.1 Macro analysis of Virgin Atlantic through PESTEL analysis .........................................5
3.2 Industry analysis through porters five forces model .......................................................7
4. CAPABILITY ANALYSIS ......................................................................................................10
5. PROPOSED STRATEGY ........................................................................................................14
6. STRATEGY EVALUATION ...................................................................................................16
CONCLUSION..............................................................................................................................17
REFERENCES .............................................................................................................................18
APPENDIX ...................................................................................................................................20
Appendix 1: Strength rating ................................................................................................20

INDEX OF TABLES
Table 1: PESTEL analysis of Virgin Atlantic .................................................................................7
Table 2: Virgin Atlantic porters five forces model........................................................................10
Table 3: Virgin Atlantic competitive matrix .................................................................................11
Table 4: How Virgin Atlantic airways address its CSF ................................................................13
Table 5: TOWS matrix...................................................................................................................16
Table 6: Strategic option suitability...............................................................................................17
Table 7: Expectation of Virgin Atlantic stakeholders....................................................................17

1. INTRODUCTION
Strategic management depict about tactics which manager uses in order to carry out
better performance in market. In order to gain success in market, manager of firm will have to
formulate an effective tactic. Thus, with an aim to do the same enterprise will have to conduct
through market environmental analysis by using number of tools and techniques. For the present
report, Virgin Atlantic is taken into consideration.
It is the British Airline Company which has its operation situated in Crawley, UK. Here,
in 2012 firm has carried around 5.4 million passengers and thus has gained seventh largest
position in UK airline industry in terms of volume of passengers (Virgin Atlantic, 2016). The
report will give description regarding the challenges which is being faced by cited firm.
Furthermore, the report will also state the ways which manager of Virgin Atlantic can use in
order to mitigate the challenges which firm is facing.
2. MISSION, VISION, VALUES AND OBJECTIVES
Virgin Atlantic airways is the part of Virgin Group. Furthermore, it is being consider as
the trade name of Virgin Atlantic Airways limited. The airline along with Virgin Holiday is in
the control of holding company which is named as Virgin Atlantic Airways. Here, Virgin Group
hold 51% share, however 49% shares is hold by Delta Airline. Firm operates its operation in
around 31 destinations with 9231 employees. In this regard, vision, mission, value and objective
of company is depicted in below: Vision: The firm has the vision to become leading airline on sustainability, and driving
whole airline industry with innovative solutions. With an aim to attain respective vision,
firm is making changes in its sustainability policy and for which it has set number of
targets. Firm has the target to reduce CO2 emission by 30% per revenue tonne KM
between the year 2007 and 2020 (Virgin Atlantic Change is in the Air Sustainability
Policy, 2016). It also has an aim to reduce noise output which occur due to aircraft
movement by 75% between the year 2007 and 2020. The particular vision of company
state that firm give consideration to the environment where it operates its operation.
Thus, it depicts that corporation works for the benefit of society. Mission: Virgin Atlantic has the mission “to embrace the human spirit and let it fly”. This
thing entails that main aim to company is to deliver high quality services to its buyers.

 Value: Firm gives value to customer focused approach and thus it makes all sort of
measures with regard to enhance as well as maintain satisfaction level of buyers in an
effective way (Bourmistrov and et. al., 2015).
 Objectives: To become such airline where people love to work as well as fly. In this
regard, firm makes all sort of efforts in terms of providing seamless travel experience to
the buyers.
3. ENVIRONMENTAL ANALYSIS
It is very essential for the manager that it should analyse different factors which are
prevailing in its external environment. This is because, such type of practice will lead to guide
manager of Virgin Atlantic towards right direction. Here, macro and industry analysis of cited
firm is carried out which are depicted in below:
3.1 Macro analysis of Virgin Atlantic through PESTEL analysis
PESTEL analysis of UK airline industry environment is carried out. The given thing will
lead to cause significant impact upon the cited company. It is depicted in below:
Factor Drivers of change Impact Uncertainty
Political  Change in the policy of
government or firm
updation in the existing
acts such as Civil Aviation
act.
 Change in the rate of
interest for UK airline
companies.
 Trade and taxation policy
of UK government can
also affect expenses of
company (Chadwick and
Cashen, 2015).
4 1
Economic  Fluctuation in global oil
prices.
5 1

 Condition like recession
and inflation can also
affect company.
 UK GDP shows 0.4%
growth in first quarter.
Social  Income shift
 Change in the tastes and
preference of buyers.
 Increasing population of
millennials travellers.
5 2
Technological  Presence of online and e
ticket booking system.
 Mobile application is
changing the way airline
company deliver their
services to customers (Carr
and Hancock, 2006).
5 2
Environmental  Many airline company in
UK are adopting
sustainability approach by
making reduction in
carbon emission of flight.
4 1
Legal  Change in government
policies and safety
regulations are also
impacting company.
4 3
Table 1: PESTEL analysis of Virgin Atlantic

On the basis of conducted analysis, there are three major drivers of change identified
which will lead to cause significant impact upon the operation of Virgin Atlantic. These are all
depicted in below:
Economic: It includes all the factors which lead to cause impact upon the operation of company.
The given factor create threat for company. Changes in the oil prices as well as economic condition of country will lead to cause
threat to the strategies which is being selected by company. For example, manager of
Virgin Atlantic has decided to reduce prices of its flight services in order to lure large
number of buyers towards firm (French, 2009). For the firm, it becomes very difficult
with regard to make implementation of given tactic, if significant increment is being
assessed in global oil prices.
Social: Change in tastes and preference of buyers along with increasing population of millennials
are being regarded as two major factors which are associated with social element.
This create opportunity as well as threat for company Increasing population of millennials travellers will provide opportunity to cited firm with
regard to develop new target market for the firm. This will lead to cause positive effect
on firm's profitability. However, if firm will not do changes in its operation as per
changing need of buyers then it will be proved as major threat for company (Kiamehr,
Hobday and Hamedi, 2015).
Technological: This factor create opportunity for the company with regard to save their cost by
making use of some new and economic mean of delivering services to buyers such as online
ticket booking system. This thing will also help in fulfilling convenience related needs and
demands of buyers. Thus, it will also help in terms of improving sales and profitability related
condition of company.

3.2 Industry analysis through porters five forces model
Porter's five forces analysis of UK airline industry is being carried out. It is depicted in
below: Threat of new entrant: Entering into airline sector is not an easy task. This is because, an
individual will have to make major investment. Moreover, a new entrant will also have to
fulfil varied legal complications which is being created by UK government. Threat of substitute: This is high for airline sector. This is because of the varied other
cheap or affordable means of transportation such as bus and rail etc (Ben‐Amar and
McIlkenny, 2015). Bargaining power of customers: Presence of intense competition between firms is giving
bargaining power to the UK customers. Herein, it is examined that there are many low
cost airline functions in UK which create pressure on other firms which do not follow
such type of approach. Hence, customers of Virgin Atlantic have bargaining power
because of the availability of many options.
Illustration 1: Porters five forces analysis
(Source: )

 Bargaining power of suppliers: Supplier of UK airline industry have high bargaining
power because they are very less in terms of number. Rivalry among competitors: UK airline industry is growing very well. In this context, it
is examined that the profit of UK airline industry is expected to be increase by 12% in
2016. Furthermore, there are many famous airline functions in UK such as British
Airways and Easyjet. These firm give intense competition to Virgin Atlantic.
Porters five forces analysis of Virgin Atlantic
Threat of new entrant This is low for firm Because, of the availability of
many complications in the
process to get enter in
respective industry.
Threat of substitute This is medium Other means of transportation
create threat for cited
company. But, customers who
always prefer to take luxury
travel will not leave company
(Revie, 2015).
Bargaining power of
customers
This is high As there are many options of
travel available in front of
them.
Bargaining power of supplier This is high There are many less supplier
available in market which can
fulfil the need and demand of
Virgin Atlantic.
Rivalry among competitors High Virgin Atlantic is facing
intense competition from
British Airways and Easy jet
Table 2: Virgin Atlantic porters five forces model
Opportunities and threat for Virgin Atlantic from porters five forces analysis

Opportunity Threat
Firm has an opportunity with regard to give
new offers to its buyers. Here, through this
way only corporation can reduce its chances of
incurring losses from different substitute
means such as bus and rail etc (Slawinski and
Bansal, 2015).
Virgin Atlantic has threat from competes who
can affect the tactical plan which is being
framed by it.
4. CAPABILITY ANALYSIS
There are four basic critical success factors are identified which helps airline industry
with regard to achieve success in the market in an effectual way (Raymond and Bergeron, 2008).
It consists of employee productivity, marketing and sales, product and service innovation and
route system etc. Here, these critical success factor criterion are compared with the competitors
of Virgin Atlantic. This is basically done with an aim to analyse strategic capabilities of firm.
Critical Success
Factors
Importan
ce
Weights
Virgin Atlantic British Airways Easy jet
Streng
th
Rating
(10)
Weight
ed
Score
Streng
th
Rating
(10)
Weight
ed
Score
Streng
th
Rating
(10)
Weighted
Score
1. Employee
Productivity and
Morale
0.16 8 1.28 9 1.44 7 1.12
2. Marketing and
branding 0.18 8 1.44 10 1.8 6 1.08
3. Product service and
innovation 0.36 7 2.52 7 2.52 7 2.52
4. Route system 0.3 6 1.8 9 2.7 8 2.4
Total score 10 1 7.04 8.46 4.12

Table 3: Virgin Atlantic competitive matrix
The matrix which is shown above indicate that British Airways is leading the market of
UK airline industry. However, all three airlines have scored high in product and service
innovation category. The given thing depict that these all firms are making significant efforts
with regard to attract large number of buyers towards corporation with the use of their innovative
and creative approach. In addition to this, the workers who are working in Virgin Atlantic are
also giving competitive advantage to the firm (Richardson, 2008). Besides this, detail description
is being given regarding all assessed CSF's which is giving competitive advantage to Virgin
Atlantic. It is depicted in below given table.
Critical success factor Description
Employees productivity and morale  The manager of Virgin Atlantic clearly
understand needs and demands of its
workers. Thus, it takes all sort of efforts
with an aim to enhance motivational
level of the buyers in an effective way.
Herein, with an aim to enhance
efficiency of employees manager of
cited firm tend to organise number of
training and development programs for
them (Freeman, 2010).
 Furthermore, Virgin Atlantic uses
flexible working hour approach which
helps workers with regard to maintain
balance between family and work life.
 Richard Branson uses democratic type
of leadership style which make it very
popular among its workers. Thus, due
to this only they
Marketing and branding  Virgin Atlantic is the company which
has very high brand recall. In addition

to this, firm also give number of offers
to its customers. This is done with an
aim to lure large number of customers
towards the firm.
 It makes use of both modern and
traditional means of marketing
(Cannizzaro and Weiner, 2015). This is
done with an aim to attract large
number of buyers towards corporation.
Product and service innovation  It is being regarded as first company
which has used wearable technology in
its flights. It is the first company which
has used wearable technology such as
google glass with an aim to give
immense experience of travelling to its
buyers. The firm compliance with
given type of approach has provided it
a unique or competitive advantage
(Johansen and Rausand, 2015).
Table 4: How Virgin Atlantic airways address its CSF
Measures of performance
From the above figure, the performance which is being given by firm can be measured.
Herein, it is examined that firm is making all type of efforts with regard to maintain its unique
image in market in an effective way. The efforts which firm is making is providing significant
advantage to the corporation in the form of increased profit and sales in an effectual way. Herein,
measures of performance for the firm could be organisational effectiveness. Here, manager of
cited firm maintain effectiveness of Virgin Atlantic by delivering high quality services to buyers
with the help of their workers (Khondaker and et. al., 2016). Here, it is by complying with given
type of activity only cited corporation attain its goal of giving best services to client.
VRIO criteria

VRIO criteria is used with an aim to assess the strategic capability of company. The
application of given criteria is depicted in below:
Distinctive
Capabilities
Valuabl
e Rare Inimita
ble
Organis
ed Competitive Implications
(Employee
Productivity and
Morale) They are
highly motivated as
well as satisfied.
Yes Yes Yes Yes Sustained Competitive
Advantage
(Marketing and
branding) It is
highly recognised
brand which has
high brad recall
index too.
Yes Yes No Yes Short Term Competitive
Advantage
(Route system ) It
covers around 34
destinations.
Yes Yes No Yes Short Term Competitive
Advantage
(Product and
Service
Innovation) It the
first company which
has make use of
wearable
technology.
Yes Yes Yes Yes Sustained Competitive
Advantage
As per the conducted VRIO analysis, there are two basic distinctive capabilities of Virgin
Atlantic is assessed and it is of employee productivity along with product and service innovation.
These both given aspects are providing sustained competitive advantage to corporation. For any
firm employee plays very effective role (Rosen, 2006). This is because, workers assist

corporation in the task to deliver high quality services to buyers. In the similar way, firm make
use of different innovative technology in order to enhance satisfaction level of buyers.
Summary of Strength and weakness
Strength Weakness
 High brand recall
 Excellent use of marketing and
branding technology
 Limited global presence
 Dependent upon London market
 Does not have much tactic to retain
customers within firm for longer period
of time.
5. PROPOSED STRATEGY
In order to suggest an effective strategic option to cited company, TOWS analysis is
carried out and it is depicted in below:
Strengths (S) Weaknesses (W)
 High brand recall
 Excellent use of
marketing and branding
technology
 Strong in terms of
financial aspect
 Limited global
presence
 Dependent upon
London market
 Does not have much
tactic to retain
customers within firm
for longer period of
time.
Opportunities (O) SO Strategic Option WO Strategic Option
 It has opportunity
to expand its
business in
1. To expand operation of
firm into untapped
1. To launch different type of
offers with an aim to retain

international
market.
 To make
improvement in its
services by making
use of different
developments
which are
occurring in the
field of IT.
market.
2. To use all latest and
modern communication
technology (Harrison
and John, 2013).
customers within firm in an
effective way.
Threats (T) ST Strategic Option WT Strategic Option
 From competitors
 From changing
rules and
regulations of
government.
 To review the tactics
which is being used by
firm's competitors and
apply them in own
operation.
 To adopt market
development tactic
Table 5: TOWS matrix
Strategy options
Option 1: Virgin Atlantic should retain customers by using different sales promotional tactic.
The tactic which firm uses should be different from its competitor.
Option 2: Firm can expand its operation in new market. This thing will reduce dependence of
firm into one market such as London.
Strategy Elements and Organisational Requirements
Ansoff matrix is being used with an aim to state suitable tactical option to the company.
In order to attain firm goal, manager of cited firm can use differentiation approach. In the similar
way, market development method can also be used by cited firm for second option (Sadler,
2013).
However, with an aim to attain above gives options manager of cited firm will require
different type of resources. These are all depicted in below:

Organisation resources Description Strategic element
In order to attain first option
firm will require team of
competent and talented
employees who can thing
innovatively.
For this purpose, firm will
have to organise recruitment
and selection plan.
Diversification
For second option, firm will
require individual who have
good researching skill.
The researching skill of cited
firm can be improved through
training and development
programs (Rocchi and et. al.,
2015).
Market development
Aligned with the Mission/Vision/Objectives
The overall, mission of firm is to deliver high quality services to customers and maintain
their level of satisfaction. These both given thing can be met with assessed strategic options. It
will also give benefit to enterprise in the form of increased profit and sales (Doyle and Von
Windheim, 2015).
6. STRATEGY EVALUATION
Suitability
Strategic options Why this option might be suitable?
Diversification Herein, firm can give number of offers to its customers such
as giving discount to buyers on their birthday. Furthermore,
praising frequent flyers with discount points.
Market development By adopting given method, firm can expand its business in
international market. Thus, it can take action towards its
weakness which is of limited global presence (Rodriguez

and Soeder, 2015).
Table 6: Strategic option suitability
Acceptability
Both two options are acceptable because firm has the team of competent employees who
can assist enterprise in the task to attain the assessed goal. This will lead to corporation in the
form of increased profits and sales.
Virgin Atlantic Key Stakeholders Needs/Expectations
UK Government Timely payment of taxes
Investors Timely return on investment
Employees
Good working condition and
security at job
Customers Getting high quality services
Public/NGO
Make measures towards protection
of environment.
Table 7: Expectation of Virgin Atlantic stakeholders
Feasibility
Both options are feasible also because with an aim to make implementation of both firm
will require huge money. Here, cited firm is not facing any problem with regard to funds. Thus,
the options selected are feasible for enterprise (Hiatt, Grandy and Lee, 2015).
CONCLUSION
From the report, it has been articulated that the strategical managing and controlling the
business operations are highly significant for an organisation in achieving targets and objectives
specified by them. It evaluated the importance of working as per the stated action plan and
structuring the resources accordingly in order to attract the market and gain competitive
advantage.

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Online
Virgin Atlantic. 2016. [Online]. Available through: <
http://www.virgin-atlantic.com/us/en.html>. [Accessed on 25th June 2016].
Virgin Atlantic Change is in the Air Sustainability Policy. 2016. [Online]. Available through:<
http://www.virgin-atlantic.com/content/dam/VAA/Documents/sustainabilitypdf/
SustainabilityPolicy2014_07.05.14.pdf>. [Assessed on 25th June 2016].

APPENDIX
Appendix 1: Strength rating
Critical Success Factors Virgin Atlantic British Airways Easy Jet
1.
Employee
Productivi
ty and
Morale
Available seat
miles
(ASM)/Total
Employee 1
76000/9231=8.3
2
864325/36000=2
4.3 56300/10104=5.57
List of best
long haul
airline
4 position 5 position Not in a list
2.
Marketing
and sales
Market share
by traffic of
world 15 airline
Not in a list 10 position Not in list
3. Product
service
and
innovatio
n
All three firms
makes
innovation in
their inflight
services
4. Route
system 31 183 134
1