Strategic Management Report: Virgin Atlantic Case Study Analysis

This report provides a comprehensive strategic management analysis of Virgin Atlantic Airways. It begins with an introduction to strategic management and then outlines Virgin Atlantic's mission, vision, values, and objectives. The core of the report focuses on environmental analysis, including a PESTEL analysis of the UK airline industry and an application of Porter's Five Forces model to assess the competitive landscape. A capability analysis examines the critical success factors for the airline industry and compares Virgin Atlantic to its competitors. The report then proposes a strategic direction for Virgin Atlantic and evaluates the strategic options using a TOWS matrix and other tools. The analysis covers economic, social, technological, environmental, and legal factors impacting the airline. Finally, the report concludes by summarizing the key findings and recommendations for Virgin Atlantic's future strategy.

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