Organisational Structure and Business Environmental Analysis of Virgin Atlantic

This case study analyzes the organisational structure of Virgin Atlantic and the macro environmental factors affecting the company using PESTLE analysis. It also includes a SWOT analysis of the company and its strengths, weaknesses, opportunities, and threats.

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Understanding
Business
Organisation

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY ..................................................................................................................................3
Organisational structure of Virgin Atlantic:................................................................................3
Business Environmental Analysis................................................................................................4
SWOT Analysis...........................................................................................................................4
PESTLE Analysis........................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Businesses of all sizes and shapes uses organisational structure heavily for smooth
functioning in the organisation. Organisation refers to a group of people who come together to
form a business, company or an entity in order to achieve the organisational goal (Ramanadham,
2019). In this case study we are going to do analysis and discuss about the organisational
structure of the virgin Atlantic company and about various macro environmental factors which
effects the working of the organisation by applying PESTLE analysis tools and here we are also
going to find out strengths, weaknesses, opportunities and threats of the organisation by using
SWOT analysis tool. Virgin Atlantic is British one of the leading Airlines that provide domestic,
international flights and other services to its customers. The company is headquartered in
Crawley, United Kingdom. The airline was established in 1984 as British Atlantic Airways,
founded by businessman Richard Branson and owned by virgin Atlantic limited. It is the seventh
largest passenger’s carrier in the world carries around 5.5 million passengers till date. It also
provides cargo services and holiday packages. The company's cargo business connects
manufactures, retailers and consumers across 100 countries. It offers daily services to Africa,
china, Australia, the Caribbean and Hong Kong etc.
MAIN BODY
Organisational structure of Virgin Atlantic:
Organisational structure refers to a system that contour how certain activities are carried
in order to achieve the organisational goal, these activities can involve roles, rules and
responsibilities of the people working in the organisation. This structure also helps to know how
information flows between different levels within the company. Organisational structure is of
two types namely Functional structure in which employees are group together on the basis of
their specialization, skills and other related roles. This structure is based on levels of hierarchy
which include different departments under the direction of leaders. Flatter structure in which all
employees are shared authority and decision making.
Virgin Atlantic is British airline company which provides various international and
domestic flights and other services in various countries such as in China, Hong Kong, Africa etc.
Virgin Atlantic company follows functional organisational structure in which the company group
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their employees on the basis of their skills and specialization into different functional
departments such as information technology, finance departments etc. it also follows flatter
organisational structure where the leader gives power to their employees in taking important
decision.
Advantage of functional structure to the organisation:
 Enhance productivity: Employees in functional structure have skills and specialisation
that helps them to work more efficiently which enhances their productivity in the
organisation. It also boosts their confidence level which enable them to complete their
task with less supervision.
 Skill development: organisation following this structure have various departments made
up of small teams. Each teams have experienced leaders that teach their fellow members
the same skills which they possess, this result in skill development of all the members in
the team.
Disadvantage of functional structure to the organisation:
 Competition among departments: when employee's within each department work
together they begin to work as a team and focus on achieving the organisational goals but
this may put negative impact on employee's and prompt to competition among
departments.
 Poor decision making: In this type of organisation structure the employees require
approval from higher authorities before making any decision and when managers are not
available for giving feedback of any important projects, then it may hinder the overall
progress of the team.
Business Environmental Analysis
The term Business Environment refers to the sum and collection of the institutions, government,
individuals, investors, media, market trends, supply and demand, customer’s expectations and
needs, economic changes and other factors that are outside the power of the business enterprise
but affects the working and performance of the organisation directly or indirectly (Gogokhia and
Berulava, 2021).
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SWOT Analysis
Swot analysis is a framework or strategic tool which is used by organisations, industry to find
out its internal strengths and weaknesses as well its external opportunities and threats. Below is
the SWOT analysis of the Virgin Atlantic Ltd company:
STRENGTHS
Strengths refers to the factors in which the
company grasp expertise in and that factors
helps in achieving the success in the
organisation.
 Strong brand image: virgin Atlantic
has successfully maintained a vigorous
image in the air lines industry and also
laid a strong foundation by providing
 Improved IT system: Virgin Atlantic
has improved its IT systems by
outsourcing its revenue accounts which
contain complex air lines tracking and
billing system.
WEAKNESSES
weaknesses refer to those factors that thwart
and organisation from achieving its goal and
hampers the success and growth of the
organisation (Gupta, Gupta and Gupta, 2019)
 Difficulty in raising finance: due to
Brexit, virgin Atlantic is facing lot of
problem in financing because the
airlines makes most of its funding in
dollars but receive revenues in pounds
and when pounds drop it faces serious
financial problem.
 Less diversification: the company do
not have any diversification strategies
do to which at the time of pandemic the
company faces a lot of difficulty in
surviving the business because there
was complete lockdown in the whole
nation.
OPPORTUNITIES
opportunities refer to the events that help the
company to compete in the competition
market.
 variation in customer choices: as
more competent people are entering in
the corporate world it has increased the
scope for business travel also and
THREATS
This are the factor that exist in the external
environment and jeopardize the profitability of
the company.
 Huge competition: the competitors of
virgin Atlantic are Air India, Qatar
airways, Air France and many more
airlines which gives a huge competition
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people are willing to spend on airlines
if they provide them comfortable travel.
The company can use this as a
advantage.
 relationship with delta: due to the
positive joint venture with Delta Air
Lines the company has witnessed a
growth in passenger’s revenue seat so
the company can focus on maintaining
its relation with delta positively.
to the to the company for the same set
of customers.
 Brexit policy : The Brexit policy has
critically affected the company due to
which company has to face a lot of
financial crisis in the competition
market.
PESTLE Analysis
PESTLE is a strategic framework tool which is used by management teams and researchers to
measure the external factors in business environment in which a firm operates.
Below is the PESTLE Analysis of Virgin Atlantic:
 Political factors: virgin Atlantic is a British airline with headquarters in Crawley. The
UK mainly has two important political parties such as labour party and conservative
party which directly affect the political environment of the company. Because of the
slowdown in various countries people started to adopt for low- cost airlines due to the
financial problems. Brexit policy also have an adverse impact on people travelling to UK
which create huge loss to the company.
 economic factors: The COVID-19 pandemic has slow down the airline industry across
the globe because there was complete lockdown in the whole nation and travelling was
totally banned. Virgin Atlantic has really hit hard due to the pandemic. The company
went through very tough time because it was not able to meet its operation cost and have
to cease its employees. As people are left with very less income after COVID and they
not want to use this income on luxuries activities rather they will spend it to meet their
basic necessities (Troyer, and Bidaisee, 2022).
 social factors: Virgin Atlantic run its operations in many countries, so the company has
to keep a close eye on various social factors such as gender ratios, culture, demographic
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factors and spending habits of the people in which the company is operating. The
company earns major of its revenue from the UK so the company has to carefully look
after the social factors of the UK.
 technological factors: The technological factors play a very crucial role in the airlines
industry because timely advancements in technology helps the airlines to enhance their
safety measures and it also reduces cost of operation. The company can use this as a
advantage to win over its competitors because digitalisation has created various
opportunities for airlines company. The company can also focus on latest trends in
technology to improve its efficiency (Donnelly, 2020)
 Legal factors: Legal factors such as patents, copyrights, data safety, intellectual
property rights have a great influence on every business. The airlines industry has to
follow strict rules for ensuring safety of the passengers. Virgin Atlantic has to follow
these rules and regulations strictly and if they ignore these factors then have to bear
heavy penalty and it may result in temporary cessation of the company.
 environmental factors: The environmental factors are becoming very essential for the
airlines industry because people are becoming more aware towards the environment.
People now understand the impact of high carbon emission on their health and on
environment. Various countries have made laws regarding to the environment to save the
nature and airline industry has to follow this laws to avoid the interfere of the
government and various NGO's in its working.
CONCLUSION
From the above case study, we can conclude that organisational structure of virgin
Atlantic airlines has helped them to achieve their desired specific goal. The company follows
functional organisation structure that helps in improvement of skill development of employees
and also enhances their productivity level. But this structure has some drawbacks also which are
explained above. The SWOT analysis helps in identifying the strengths, weaknesses,
opportunities and threats of the company which plays a essential role in survival and growth of
the company. PESTLE analysis of the company helps in highlighting the various macro
environment factors such as political, economic, social, technology, legal and environmental
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factors which impacts the performance of the business. This study also helps us to evaluate the
seriousness of external factors for any brand.
REFERENCES
Books and Journals
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and fuzzy MARCOS methodology for digital transformation strategy analysis in airline
industry. Journal of Air Transport Management, 97, p.102142.
Donnelly, B., 2020. Coronavirus: Virgin Atlantic to cut more than 3,000 jobs. The Herald
(Glasgow, Scotland), pp.NA-NA.
Gogokhia, T. and Berulava, G., 2021. Business environment reforms, innovation and firm
productivity in transition economies. Eurasian Business Review, 11(2), pp.221-245.
Gupta, A., Gupta, N. and Gupta, M., 2019. British Airways-A SWOT and PESTLE Analysis-
The impact of Europe 2020 policy. NOLEGEIN-Journal of Corporate & Business
Laws, 1(1), pp.1-11.
Isherwood, N.J., 2022. Coronavirus and Corporate Insolvency: A Comparative Analysis of the
Corporate Insolvency and Governance Act 2020. Aberdeen Student L. Rev., 11, p.100.
Madsen, D.Ø. and Grønseth, B.O., 2022. PESTEL Analysis. In Encyclopedia of Tourism
Management and Marketing. Edward Elgar Publishing.
Mokele, B., 2021. The impact of the pandemic on the companies' organisational structure.
Ramanadham, V.V. ed., 2019. Public enterprise: studies in organisational structure. Routledge.
Troyer, H.L. and Bidaisee, S., 2022. The impact of COVID-19 on the aviation industry: A
literature review. International Public Health Journal, 14(1), pp.13-21.
Wright, D.T. and Burns, N.D., 1998. New organisation structures for global business: an
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