Organisational Structure and Business Environment Analysis of Virgin Atlantic

This case study examines the organisational structure of Virgin Atlantic and the different external and internal factors influencing the organisation's business environment. It includes SWOT and PESTLE analysis.

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Understanding
Business
Organisations

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
Organisational structure of Virgin Atlantic.................................................................................1
Business environment analysis of Virgin Atlantic: ....................................................................3
SWOT analysis:...........................................................................................................................3
PESTLE Analysis:.......................................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business environment is the collection of different external and internal factors and
forces that has a significant influence on the functionality of that business. These forces includes
various factors such as employees, governments, climate, society, demand and supply,
technology etc. the business has control over some forces but some are beyond the control of the
business. The understanding of business environment help organization to identify the threats
opportunities and also it enables the business to identify the strategy of the competitors and
making their own strategies accordingly. The organizational structure is a framework which
defines how activities take place and directed for achievement of the objectives of the of the
organization (Arieftiara, and et. al., 2019). Virgin Atlantic is a British airline company. The
company is headquartered in Crawley, England. The airline was established in the year 1984. the
company has a fleet size of around 36 and covers the different destinations around globe and
domestically such as North America, Africa, Asia, Middle east and Caribbean. This case study
aims to examine the organizational structure of the company and the benefits and drawbacks of
that structure for the organization. Also it aims to examine the different external and internal
factors influencing the organisation's business environment.
MAIN BODY
Organisational structure of Virgin Atlantic
The organizational structure includes five different elements; departments, job design ,
delegation, chain of command and span of control. These elements forms a chart and creates a
structure of organisation. The structure helps organisation in the work flow and helps different
groups to work together within their respective functions to manage work. The organizational
structure in a organization can be different types such as; functional, tall, flat, functional,
divisional, team based, network and matrix structure (Arnold and Bowie, 2019). The Virgin
Atlantic company has Tall hierarchical structure in the business. The tall organizational structure
is which includes different hierarchical orders in it. This structure is very complex and contains
various authorization levels of middle management between the top level and bottom level
employees of the organization.
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The tall structure has its own benefits and drawbacks those are discussed below:
Benefits:
 It helps the company to maintain the strong command from the top to the bottom level of
the organization.
 The employees under the top level have its own responsibilities and individual
departments which helps the company to increase the productivity and the efficiency.
 The company also provides opportunities for promotions to the employees in the
hierarchical order that motivates the employees (Dewi Anggadini, 2018).
 The line manager extends their support to the employees in the department.
 In this structure the company is able to do high level of supervision as there are a limited
number of employees under the superiors.
Drawbacks:
 There are various levels in the hierarchical order. It makes the communication and
decision making slower for the employees.
 This model is expensive as it will cost higher wages for the company.
 The employees is this structure has no freedom for making decisions on their own, they
have to approve it from the managers and supervisors (Fernandes, 2018).
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Illustratio
n 1: Tall hierarchical structure

 The employees at bottom level are not able to connect to the top level of the management
and employee suggestions and ideas do not reach to the top level.
Business environment analysis of Virgin Atlantic:
business environment includes all the things in the surrounding that influences the
business and its operations. These forces can affect internally and from the external environment.
A business has control over the internal factors whereas it has no control over external factors
(Luo, and et. al., 2019).
SWOT analysis:
This analysis is a framework for identifying and evaluating the position of a company in
competitive environment and develop strategies planning. This analyses the internal factors such
as strengths and weakness, as well as external; the threats and opportunities.
Strengths:
These are the key aspects of a business which provides a competitive edge in the market.
The strengths of Virgin Atlantic are;
 The brand has the strong value in the mind of the consumers and brand recall is high.
 The company covers more than 35 destinations and one of the largest in UK.
 The company has improved its support and IT systems.
The company's strengths are helping it to provide the best quality to the consumer and
building a strong and loyal base through the satisfaction.
Weaknesses:
These are the areas in which the business is lacking and it can improve its position further
(Mousavi and Kumar, 2019). The weakness of Virgin Atlantic are:
 The company is facing problems in raising capital due to its private possession.
 The company has very limited global presence.
The organization might face stiff competition from the other competitors. And the less
capital to run the business will impact the smooth functionality of business operations.
Opportunities:
It includes the areas of improvement for a business (Zhuplev and Blas, 2021). Virgin
Atlantic's opportunities are as follows;
 The company has a strong presence in the Heathrow terminal, and it is a major hub the
company can expand here.
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 The company also has the opportunities to increase its global presence through routes and
destinations.
The company can use expansion to global level and more destinations opportunities to further
grow its market share and consumer base (Streuli, and et. al., 2018).
Threats:
These are the factors that can impact the business negatively. The Virgin Atlantic's
threats are as follows;
 The rising cost of fuel in the market and the wages cost is also rising.
 The competition in the aviation market is very high.
The company can reduce the cost by direct flight routes and avoiding unnecessary fuel
burn. The company can reduce the competition by highlighting the differences of the company in
the marketing tactics.
PESTLE Analysis:
This is a tool that businesses use to analyse the external environmental factor influence
on the business (Raeisoon and et. al., 2018). Those external factors are as follows:
Political Factor:
These are the factor that comes from governments policies and the actions. These are tax rates,
fiscal policy, trade disputes etc. these all have the impact on the business of the airline company
(Upadhyay and et. al., 2019). The Brexit deal of the UK government will impact the airline
negatively. Another negative impact is that in the aviation industry the governments uses various
parameters that the company has to follow. The new runway at Heathrow airport approved by
government provides a great opportunity to the company
Economical Factor:
These factor relates to the economy these are; inflation, employment rates, interest rates,
exchange rates, per capita income etc. (Rezaeian and et. al., 2019) The United Kingdom is facing
a economic slowdown and the UK currency Sterling is falling continuously in front of the dollar,
this poses a major negative impact on the company. Also the fuel prices and the interest rates are
high it is also a unfavourable situation for the company.
Social factor:
These factors are related to the society, it includes social trends, demographics, culture, age,
lifestyle and attitude and work conditions. A major negative impact is the strikes that causes
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unconvinced for the customers (Rowlinson, 2020S). Also due top the Covid pandemic the people
fears to travel and it is causing loss for the company.
Technological factors:
These factors relates to the technological change or advancement. These includes online security,
automation, research & Development etc. these factors are most important for the company as
the technology is used everywhere in the aviation industry. The company's cyber security and
safety of the consumer data is very essential, this increases the cost for the company.
Legal factor:
These factors are derived from the law and legislations. These includes the rules and regulations,
permits and licences, employment laws etc. The aviation industry is highly regulated and there
are various strict laws created for the consumers safety (aksonov, Leokhin, and Azarov, 2019).
The company have to strictly abide all the rules and regulations, avoiding these could lead to
penalty to the company. There are various safety standard formulated during the pandemic that
affected the business negatively.
Environmental factor:
The environmental factor are those which emerges from the influences of the ecological
environment. This includes different factors like: carbon footprints, air and water pollution, and
the climate change. The Virgin Galactic is negatively affected by the extreme weather
conditions, this causes the delay and cancellation of flights (Siva and Thavarajah, 2018). Also
the carbon emission is posing a negative impact for the company. The company is working on
environmental policies and green energy.
CONCLUSION
From the above report this could be concluded that the company has a competitive
advantage in the market with different strengths but the company has to improve in the capital
issues and the increasing global presence. Also the company has the opportunities in form of new
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airport at Heathrow airport's new terminal that company can capitalise for growth. Also the
company can reduce the competition by developing new marketing tactics. In the external
environment effect it can be concluded that the company has more negative impact from the
external factors than the favoured results. The company is impacted by the decisions of the
government, economical issues and legal factor issues. The favourable influences are the new
runway approved by the government and the technological advancement in form of the app
development, these provides a opportunity to the company for the growth and increase the
market share.
REFERENCES
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