Strategic Management of Virgin Airlines

This article analyzes the strategic implications of Virgin Airlines by conducting an internal and external analysis. It includes a PESTLE analysis, industry analysis, gap analysis, and business strategy. The article also suggests a strategic option for the company to improve its performance.

Strategic Management

Contents
Introduction......................................................................................................................................3
Environmental Analysis...................................................................................................................3
Internal Analysis..............................................................................................................................5
Business Strategy.............................................................................................................................6
Gap Analysis....................................................................................................................................6
Strategic Option...............................................................................................................................6
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

Introduction
Virgin Airlines entered the Australian Aviation market in 2000 for the very first time to bring
actual competition in the vacation sector of the market. The mission statement of the company is
to embrace the human spirit and let it fly. The vision statement of the company is to revolutions
the air travel again (Virgin Atlantic, 2018). The company is more focused towards hiring right
people for the right role and the culture of the company is encouraged innovation. The
employees of the airlines keep huge importance in their business and they want to make sure that
they are rewarded fairly for their dedication as well as hard work.
The main aim of this assignment is to focus on the strategic implication by taking consideration
of Virgin airlines that is why the environmental analysis will be focused. The core competencies
of Virgin Airlines will be demonstrated. Along with that the business strategy and their
importance over the business will be evaluated with the help of the gap analysis.
Environmental Analysis
Pestle analysis of Virgin Airlines is demonstrated below in order to bring superior perceptive
regarding the impact of various factors over the performance of the company.
Political Factors
Virgin Airlines is facing a number of challenges in the context of the political environment that
is featured by major terrorist attacks in a major destination like Paris, Brussels, and Nice. The
airline got great shocked at the time of Brexit (Chiang Leong, 2008). The changes in the political
term impact the entire procedure of airlines operation.

Economic Factor
The vagueness subsequent Brexit had a negative impact of the economy on a number of British
airlines entailing Virgin Atlantic. As per the annual report of 2016, it has been found that the
sterling of Pound’s value dropped which put adverse impact over the economy. in the term of
positive, it has been found that the Virgin Airlines advantageous from low fuel costs as fuel
prices of Brent crude oil which is fallen by 21.8% at the time of first half of 2016 (Pearson,
Lloyd, Ferry, Wells, and Miles, Virgin Atlantic Airways Limited, 2008).
Social Factor
The peak summer season brings a lot of benefits for a number of airlines including Virgin
Atlantic, hugely because of the social aspects outside of the airline’s control individually
(Whyte, Prideaux and Sakata, 2012). There are ATC strikes on passenger which impose threat
for the airlines that is why it has been requested by airlines to keep consider the action plan to
reduce the impact of them.
Technological Factor
The role of the technology is increased day by day that makes aware people check and evaluate
in a proper manner before taking any action regarding the booking of airlines as well as hotels. it
has been found that the internet shows the cost-cutting opportunity for Virgin for which it is able
to launch AIR4, Virgin Atlantic’s biggest technological amendments in the history of the
company.
Legal Factor

In 2016, the pilots of Virgin Atlantic have determined to take business accomplishment in a
range of over union gratitude after the pilots union. The legal changes in the policy can impact
the overall performance of the company.
Environmental Factor
The climate change, environmental change, global warming become the latest topics today
everywhere. People are much bewares regarding the effects of climate change. Adverse weather
conditions put a negative impact on the operation of the company as flights can be delayed and
cancelled which make customer dissatisfied.
Industry analysis
Power of suppliers
The suppliers of Virgin Airlines are the aircraft makers such as Airbus and Boeing furthermore
to the aviation fuel companies and the handling vendors. Moreover, the suppliers also entail
those who develop spare parts to the airlines. In case of supply of jet fuel, the airline can have
huge benefits because this fuel is expensive that shows the less number of buyers for it
developing Virgin Airlines favored customers for the aviation fuel organizations (Merkert and
Hensher, 2011).
Power of buyers
Virgin Airlines is considered as the low-cost carrier while the fact that in last year’s, the number
of airlines have imitated the business model successfully that they are taking away fliers from it.
The power of buyers is high in the context of Virgin airlines as they have a number of option to
switch from one airline to other as per their affordability (Heracleous and Wirtz, 2012).

Industry rivalry
There are many competitors of Virgin Airlines that can compete with them to a high extent. It is
necessary for the company to implement latest strategies for the purpose of remaining in the
competitive market.
Threat of substitutes
The threat of substitute for this company is high as there is number of business fliers who before
used to fly are now referring as other options such as effective meetings and teleconferencing.
Threat of new entrants
The threat of new entrants for this industry is not that much easy as it entails huge investment
and skilled manpower which will take a lot of time to establish. It represents the low rate of
threat in the point of view of the company (Ferry, et. al., 2009).
From the above discussion, it can be demonstrated that the company can expand its business
globally as it has the potential to handle a number of crisis. There are some opportunities which
can be grabbed by the company. Virgin airlines can offer direct flights to more destinations
instead of focusing the UK as it will facilitate to grow the market capacity.
Internal Analysis
The company has core competencies of social media presence, managing the mix, actionable
analytics and changing the course in revenue generation. A core competency is considered as the
attribute which helps the organization to generate the performance above the average for the
industry. The main aim of Virgin Airlines is to give an economy higher level of value for money

with in flight entertainment and other facilities (Shaw, 2016). The company provides various
options to the customer in the context of choosing the flight type for various destinations with a
number of optional facilities such as drink facility, food facility, space-seating facility and many
more. The company has below mentioned strengths, weaknesses, opportunities and threats.
Strengths
 Virgin Atlantic has a strong brand reputation all over the world and stood on sixth
position in the survey of the world’s best airlines.
 The fleet of Virgin Airlines has been modernized (O’Connell, 2011). AIR4, is the huge technological transformation from the side of Virgin Atlantic. Along
with that, this airline has invested in IT new support systems like new crew tablet devices
that facilitate them to provide more seamless services to the passengers.
Weaknesses
 Virgin Airlines has intensified competition with British Airways or American Carries that
increases the fear of them to get back in comparison of their competitors.
 The global presence of the Virgin airlines is minimal as the main focus of this airline is
on Europe and especially North America. The airline is unable to take benefit from
emerging markets such as Asian Market (Cadle, Paul, and Turner, 2010).
 The company has less focused towards their employee in order to attain the competitive
advantages.

Business Strategy
The business strategy of the company is quite different from other airlines as the main motive of
the company is to make satisfy the customer from the services of the airlines. The company has
focused on the differentiation strategy where advanced technology and ancillary strategies are
keeping huge importance in the growth of the business. It has been found that the government
has approved the third run away at Heathrow which is a massive opportunity as it would be able
to decrease the cost of process from Heathrow which is well known and costly hub airport of the
globe. The favourable economic factor is another opportunity for the airline company to attain
the determined goals and expand the business globally (Guo, Yeh, Song, Xu, and Wang, 2015).
The business strategy of Airline is able to remain in the competitive advantages for a long time
as there is number of threats that pose on the strategy of the company that is Brexit has brought
bad conditions for Virgin Airlines and digital disturbance carries on creating risk. The company
has many competitors that deal on an international level and provide huge quality of good
services to the customer (Nataraja and Al-Aali, 2011). The business values of the company are
helpful in reducing the impact of bad position on the customers.
Gap Analysis
It has been found in the context of gap analysis that Virgin Airlines should focus on a different
aspect to get competitive advantages. There are many competitors of this airline that have
numerous features to attract the customers. Virgin Airlines should focus on them to attract

customers. Virgin Airline has various options to analyze the growth of the business but due to
the traditional approach, the company is unable to run the operation in an effective manner.
There is a lack of R&D department to focus on latest technologies and ongoing situation of
existing airlines so that they can implement new strategies and develop techniques in order to
attain the competitive advantages (Lacar, 2009).
Strategic Option
It has been found that Virgin Airlines offers differentiated services to its customers such as
superior in-flight entertainment, special movies, spate system for television, different choices of
music and games and menus for children and many more. The company is well known for its
quality services but there are many competitors of this company that can beat them and it is vital
for the company to apply various options to attain competitive advantages. The company should
have a strategic option so that in case of an emergency and loss of revenue, the company could
apply them to improve the efficiency of the company.
Conclusion
It has been concluded from the above discussion that the strategic management has a significant
impact over the performance of the company. Virgin Airlines has taken for this assignment in
which internal, as well as external analysis has been elaborated by taking help of pestle analysis
and industry analysis to represent the external environment. Internal analyses have been
considered under this assignment in which the core competencies of the company have been
defined. Along with that the gap analysis and the business strategy of Virgin Airlines have been
demonstrated so that the comprehensive understanding regarding the company can be known for
the readers. At last, the discussion has been made in the context of the strategic option in which it

has been suggested by the company to improve the performance of the company to focus on
various strategies.

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