Business Strategy Analysis: Virgin Atlantic Airlines Report

This report provides a comprehensive analysis of Virgin Atlantic Airlines' business strategy. It begins with an introduction to business strategy, followed by an examination of the external environment using PESTEL analysis, including political, economic, social, technological, environmental, and legal factors. The report then delves into the internal environment and capabilities of VAA, utilizing a SWOT analysis to assess its strengths, weaknesses, opportunities, and threats. Furthermore, the report evaluates the competitive landscape of the airline industry through Porter's Five Forces model, assessing the threat of new entrants, rivalry among competitors, bargaining power of buyers and suppliers, and the threat of substitutes. Finally, the report discusses the design of a strategic plan for the company, supported by the environmental analysis, offering insights into tactical management decisions and directions, and concludes with a summary of the key findings and recommendations.

Business strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
Task 1...............................................................................................................................................3
Analysing the impact of external environment on the organisation............................................3
Internal environment and capabilities of VAA............................................................................5
Task 2...............................................................................................................................................6
Evaluate the level of competitions faced by the Airline industry................................................6
Appropriate strategies and interpretation of data for analysing tactical management decisions
and directions...............................................................................................................................8
Task 3...............................................................................................................................................9
Designing of a strategic plan for the company supported on the environmental analysis...........9
CONCLUSION..............................................................................................................................12
REFERENCES................................................................................................................................1

INTRODUCTION
Business strategy is basically a long standing plan made for the organisation which helps
them to attain their craved objectives and targets. This strategic planning includes factors like,
the sort of services and products they wanted to offer and manufacture, what will be their target
customers and market, and determine organisations goals, mission, vision and also identify the
techniques to implement them. Virgin Antarctic airlines was formed in 1984 with its origin in
England. The company has declared that, because of this COVID situation they are going to
exclude thousand of employees and reducing their passengers count in upcoming years. This
following report will analyse the impact of macro-environment and its tactics. It will also
examine the capabilities of the organisation and their internal environment. Further the report
will evaluate the competitive forces of the market as well. Lastly it will examine the applications
of various theories, concepts and strategic plantings and models.
Task 1
Analysing the impact of external environment on the organisation
The external factors of a business are knowns as its macro factors, these are
uncontrollable and unmanageable because these aspects include sociology, environmental,
governmental component etc. It is not depend on a particular business or organisation it is a
national or regional components which a company need to be manage in order to function
seamlessly (Soltanizadeh and et. al., 2016). For a brief understanding of macro-environment
PESTEL analysis is applied below:
PESTEL model:

Political: Virgin airline have to face various political implications like national and international
taxes and charges obligated on custom duty. Airlines have to authorised several licensing and
routes of their operations. As they function internationally they have to pay different charges on
arrival and fuel taxes also differ from one country to another. There are other juridical factors too
like complying with employee law and custom duty charges etc. The custom cost create issues
for the airlines as they are restricted to trade many products in US markets. Establishment have
to obey the labour regulations by providing minimum wages, take care of tormenting,
exploitations and bullying of workers within the workplace.
Economic: Establishment is compelled to lower down their flight prices to maintain the
competitive advantage in their line of work, as they are facing extensive competition from
various airlines industries (Çitilci and Akbalık, 2020). That cause them a huge loss in terms of
profit. One of the other monetary factor firm have to handle is the increased prices of fuels and
also have threat from the new participants in the industry, which provide better modified services
with lower prices in order to secure their place in the economic market. Increased unemployment
is also a cause for decreased spending power of people which financially effected Virgin airlines.
Social: They have to be socially responsible in managing and ensuring passengers safety and
security on the flight. They have to be equipped with all the necessities and essential equipments
and tools which should be needed at the time of emergency. Virgin Atlantic put a major
Illustration 1: PESTEL model
Source: How to do a PESTEL
analysis. 2016

emphasise on ensuring that their crew staff is well trained and able to manage panic situations
and can provide medical aid to passengers if needed.
Technological: As they are an aviation industry they should always be well aware with the latest
technological advancement and their functions because an aeroplane is basically fully automated
and computerised and installed with heavy and complex technological machinery and tools.
They tend to conduct a daily trial check and quality check of the proper functionality of the
machinery and systems installed. Virgin company needs to work on their online websites which
will be used by the people to book tickets online and initiating web check-ins and customer
handling services. There is always a need to be adhere with the latest technology and invention
as it will help in enhancing the operational activities, quality and productivity.
Environmental: Due to the continuous climatic changes aviation companies as well as the
passengers are concerned about the climate and environmental condition. Industries are advised
to follow eco-friendly practices and green flying or act more responsible towards the nature. A
single flight produce lots of pollution, so company decided to decrease their carbon emission by
using good quality fuel and take proper maintenance of their aircraft so they produce less
pollution (Hausladen and Schosser, 2020). As increased air traffic and drastically increasing air
pollution is causing dangerous effect which leads to aircraft accidents and also be dangerous for
specious and birds who fly as air become more polluted.
Legal: There are always some major judicial factors which an airlines have to face because every
country or region have their different set of rules and laws and they impose several taxes on
different services like, landing, fuel taxes, custom tariffs etc. Legality also includes in visa
applications and safety is mandatory for the airlines that they should make sure that not a single
passenger can fly without the legal documentation and authorisation. Organisation have policies
in regards with carrying certain products for example: passengers can not fly with huge quantity
of gold, liquor, tobacco or metal equipments or any illegal substance etc.
Internal environment and capabilities of VAA
Micro-environment have direct impact on all the internal functionality of the business
because it consist of all the components which have straightforward relativity with the
productivity and operational activities of the company. It is also referred as task or serviceable
environment. To analyse the micro-environment and the capacity of Virgin airlines SWOT
analysis is performed which is discussed below:

SWOT:
Strength: VAA are famous for maintaining their quality of services. They fulfil the TQM criteria
in all aspects. This establishment is found and renowned as one of the best airlines globally.
They are very prompt service providers and received appreciation from their customer base in
providing best customers handling and reverting compensation and claims responses. The
company provide luxurious services at affordable pricing which help them acquire loyal
consumers (Bull and et. al., 2016). They are the ones who facilitate their entire flight with Wi-Fi
accessibility. Company uses strong promotional techniques which help their airlines to get
popularity, people have tendency to stole sachets and salt dispensers from flights but they saw
this as a positive opportunity and labelled their supplies with companies name so that it reach
more customers through the person who stoles these products from flights (Pan, Chen and Zhan,
2019). VAA have gear up their technological practices by using software which have advanced
features to track passengers details, their baggage and ticketing and web cheeking etc.
Weakness: Company have to face financial issues because of Brexit situation, due to this there
will be various changes in the political and economic decisions. Airlines deals in dollars as they
do all of their expenditure and transactions in $ currency but they receive the income in Pounds
and world has encounter the decrease in exchange rates of currency which cause a huge loss to
the company. In the present time there are so many aviation commercial enterprises have come
Illustration 2: SWOT analysis
Source: SWOT Analysis–What is it and
How to do it. 2017

in the competition who are following and practising some of the good policies of Virgin Atlantic
and succeeded in providing more better and modified services at low cost. They should take
safety measure to protect their business model and strategies from exploitation and imitation by
their rivals which use these against them and snatch their share of profit.
Opportunities: One of the best growth possibility for the industry is their alliance with Delta and
other airlines. They are also covering new and convenient paths and targetted at serving new
locations in upcoming future to expand their flying horizon and be known as a establish brand in
other countries too. (Vlados, 2019). Developing new aerodromes at Heathrow. Providing their
passengers with in build internet connection on flights.
Threats: Unsteady pricing of fuels, Brexit is one of the main reasons of these ups and downs in
taxes and petrol prices. New aviation establishment coming up into the market also turns out to
be problematic for the enterprise. As to attain competitive advantage they tend to keep their fair
prices very low which gave birth to profit loss for the Virgin company. Inflation is an another
reason which bring changes in customer flying behaviour as people avoid using air transport
until unless its too necessary.
Task 2
Evaluate the level of competitions faced by the Airline industry
To understand the extensive rivalry VAA is facing and their impacts on the industry, an
analysation is done using Porters model of forces.
Porters model

Threat of new entrants: It is not that easy to enter in airlines industry as the initial capital and
investment required is very high and neither exiting the market is piece of cake because they are
restricted by stakeholders of the company as they wont let them shut down the whole operation
without fulfilling their contract or bond. Virgin airlines have to face extensive competition if
once a new participant came into the market they will effect the profit margin at initial stage but
the macro factors have so much pressure on this industry that with time all the inexperienced or
weak competitors will hit the bottom.
Rivalry among the contenders: There is a huge contention between the VAA contenders in the
aviation field as every industry wanted to grow and gain more profit and be on top. Companies
target their customers to gain advantage by providing them best service and pamper them and
enhance their flying experience by providing them complimentary meal or cheaper tickets etc.
Although the competition is very high and to overcome that many establishment follow the route
of mergers and amalgamation of firms to expand their business and achieve competitive
accomplishment.
Bargaining power of buyers: The fliers have strong grip as the arrangement system is very huge.
They have liberty to choose the cheapest fair price available as they are facilitated with wide
variety of options on online platform. There are various websites and apps. Through which
Illustration 3: Porters model
Source: Porter's Five Forces Analysis. 2016

customers can book tickets online as best available price. The purchasing ability of people effect
the establishment. As the commercial enterprise model of the institution is re-created by other
rivals.
Bargaining power of suppliers: The providers of VA airlines are manufacturers who assemble
jets and Airbuses the other one is fuel suppliers which prices are fluctuating and never constant
due to the economic and political changes in the market, their distributor also include the spare
parts producers (Holloway, 2017). The bargaining power of providers for V Antarctic are very
low as these products are only be used by specific industry and there is not much buyers of them.
In case of fuel in their aircraft they uses jet fuels which is a premium and costly substance which
is only be used in aeroplanes and Atlantic airways are their premium purchaser. That's why they
are valuable customer for the fuel industries.
Threat of substitute: The high percentage of population in western areas chooses aircraft to
travel. The substitution terror is very low for Virgin aircraft in general. But in recent era due to
recession and COVID pandemic most of the frequent fliers for various business purposes choose
to opt. for online conferencing, video calling, they also discuss or transfer documents over emails
and phone calls which reduces the air travel. There is also a new trend going on among the travel
enthusiast to do rad trips and going through cruises or railways in order to enjoy the journey and
view.
Appropriate strategies and interpretation of data for analysing tactical management decisions and
directions
For evaluating the suitable strategies and examining administrative decisions Ansoff's
model is executed. This model provide a base for understanding establishment objective and
procedure and develops a bridge to accomplish future targets.
Ansoff's Matrix:

Product development: This will proved to be a very useful strategy for VAA as they have a large
customer count. They have acquired a good relation with commercial class fliers. It will be really
profitable and beneficial for their establishment if they introduce or launch any product of
innovative service because it will be easy to present and sell it to their consumer as premium
fliers would like to receive luxurious services which is totally worth their money. They are
advised to develop better services for people who are currently associated with them in order to
retain them an maintain long term relationship. This will improve loyalty and trust and market
reputation as well (Schawel and Billing, 2018). In terms of service they can avail new offers,
discounts, complimentary services, free lounge options etc.
Market development: They should consider to expand their regional and operational areas. In
comparison with their rival airlines industry who flies to hundreds of locations but Virgin AA
only fly to some major spots which covers approx 20-30 locations. They need to broaden their
servicing areas and spots after a detailed analysation.
Market penetration: The industry is looking forward to penetrate in different market area they
should consider to get into developing and emerging countries such as India and China. These
nations have better growth opportunities in regards with Aviation (Loredana, 2017). The overall
manufacturing and operation cost is comparatively lower in these locations which makes them a
suitable place to establish business.
Diversification: This aircraft organisation have very less diversification as they are focused
towards catering high class fliers, or we can say business fliers. They don't have much offers or
options for economic or middle class customers as they are quite conscious about the ticket costs
etc. V Antarctic aviation company were earning their fare share of profit from these premium
Illustration 4: Ansoff's matrix
Source: Porter's Five Forces Analysis. 2016

consumers, this strategy of theirs may become problematic or can create risk situation for them
in long term.
Task 3
Designing of a strategic plan for the company supported on the environmental analysis
A strategical plan is the efficient procedure of collecting, managing the written
documents and determining the vision or target of the establishment by statistically analysing the
current position and deciding where to lead the institution in the future. It is a combination of
industries mission, objective, purpose, long term and short term goals and all the techniques
which they will utilise to attain the desired target.
Vision of the industry: Their vision is to emerge as a brand or symbol of quality and innovation,
who is famed for their customer relationship and friendliness, which is working towards bringing
out evaluation in the aviation field.
Mission: Companies mission is to to be known as a establishment which is safe and secure and
people will love to fly and employees will willingly work with us.
Organisational Objective: It refers to identify and monitor the requirements and wants of the
marketers, investors and the stakeholders of the institution. They are directed towards enhancing
industries image and quality service through the contribution of their efficient workforce and by
collecting feedback and grievances of the consumers and taking active actions.
Product & service description: They are advised to focus on the development of service instead
of manufacturing or launching a new product. Enterprise can enhance their customer relationship
, service an satisfaction on and off flight. They should keep their focus on existing consumers
and work on understanding their advanced needs and demands so that they can improve their
overall functionality and acquire loyalty and trust of their elite customers which can help the
industry to attract more people which results in achieving larger market share.
Marketing mix
Product: They are one of the best aviation company serving internationally. Their aeroplane is
categorised into three parts i.e. Premium economy class, economy and business class. The first
category that is the premium economic class passengers have separate designated entry areas and
they are also privileged as they have provided with special priority while on-boarding the plane.
Their sitting facility is also luxurious as they have plenty of leg space. In business cabins they
have convertible seats facilities which can be transformed into beds when needed, those were

also provided with additional drive around benefits. They also have a superior membership cards
which avail the passengers free access to lounges which are in alliance with the industry.
Price: The pricing of Virgin airlines is very precise. In the individual evaluation this airlines is
quiet expensive. They have specific tag line which refers that when it comes to superior service
quality, price is not a constraint. As their focused consumers are upper middle class people, they
don't hesitate to pay little extra in return of luxurious services.
Place: VAA has a vast organizational and operational channel, they operate on a global level.
They cater to nearly every continent. They are serving in many nations to a wide variety of
customers ranging from top elite class and to upper middle class. Company is targetting to serve
and cover all the location in upcoming future.
Promotion: The founding father of the establishment personally involves in all the PR and
advertising activities of the company. This can be seen in many promotional videos over the
internet where the founder is seen with the celebrities promoting their company. Another
promotional strategy of theirs is quite creative and unique (Išoraitė, 2016). Management believe
that people tend to buy or attracts to things in which females are featured so according to this
theory they have named their flights after female names like the lady bird, Island lady, ruby etc.
Physical evidence: Airline runs from three distinct locations in UK. They are recently serving
mostly every continent. The functions carried out in their main office are lost and misplaced
luggage tracking and claims, marketing functions, operation, Customer service and grievance
handling services etc.
People: VAA have thousands of workers employed. Their employees as well as customers are
equally important for them. Staff are valued, rewarded and recognised in accordance with their
performance and efforts they put in their work (Thabit and Raewf, 2018). Organisation act fully
responsible towards their people as they provide them a safe and secure environment to work in.
Consumers were treated with so much of respect. Employers hire people who are pleasant and
generous in their personality. They emphasise on hiring young and beautiful women to attend
passengers which will enhance the overall flight experience of the fliers.
Process: This establishment conduct a trial process of all of their products before offering them
to the end consumers i.e. the passengers. Whole procedure of booking or securing a flight with
Virgin Airlines have made quiet convenient for the fliers as they have updated website and
applications and have partnership with various agents through which one can book tickets