Systematic Strategic Analysis on Virgin Atlantic's New Asian Routes

This report provides a systematic strategic analysis of Virgin Atlantic's plan to expand its routes, focusing on connecting Singapore with London and other European destinations. It employs various strategic tools, starting with a PEST analysis to evaluate macro-environmental factors, followed by a micro-environmental analysis and Porter's Five Forces to understand competitive dynamics. Bowman's Strategy Clock model aids in determining appropriate market positioning, while a SWOT analysis elaborates on the company's strengths, weaknesses, opportunities, and threats. The report also utilizes strategic management tools like the ANSOFF matrix, BCG matrix, and Blue Ocean strategies to identify strategic directions and suggest promotional strategies for achieving organizational goals in new market and service development. Ultimately, the analysis serves as a guideline for airline companies interested in expanding their business based on perceived value and customer loyalty.

Running head: SYSTEMATIC STRATEGIC ANALYSIS ON VIRGIN ATLANTIC
Systematic Strategic Analysis on Virgin Atlantic
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1SYSTEMATIC STRATEGIC ANALYSIS ON VIRGIN ATLANTIC
Executive summery
The report examines strategic capabilities of one of the eminent British airlines, Virgin
Atlantic with the help of various strategic tools as the company is on the verge of expanding
its new Asian routes, connecting Singapore with London and various European destinations.
In order to do that given report has been evaluated the company’s potential to execute the
plan. At first, macro environmental factors have been analysed following the PEST model.
Then, after a brief description of micro environmental factors, porter’s five forces analysis
has helped to understand the power of suppliers, buyers and competitors.
Bowman’s strategy clock model has suggested appropriate market positioning for the
company considering the nature of expansion. Then SWOT analysis model has helped to
elaborate its strategic capabilities by analysing its strengths and opportunities and sheds lights
on the threats and weakness, which must be recovered in order to implement the plan
successfully. Finally, with the help of strategic tools, the strategic directions of the company
have been identified and promotional strategies have been suggested to accomplish the
organizational goal of new market and service development. This report can be a guideline
for the airline companies, which are interested to expand their business based on the
perceived value and customer loyalty.

2SYSTEMATIC STRATEGIC ANALYSIS ON VIRGIN ATLANTIC
Table of Contents
Introduction....................................................................................................................4
Background of the company..........................................................................................5
Reason behind revising the strategic approach..............................................................5
PEST analysis of Virgin Atlantic...................................................................................5
Political factors...........................................................................................................6
Economic factors........................................................................................................6
Socio-cultural factors.................................................................................................7
Technological factors.................................................................................................7
Micro-environmental analysis........................................................................................9
Porter’s five forces analysis.........................................................................................10
Market positioning: Bowman’s strategy clock............................................................13
Position 1st: low price-low value.............................................................................13
Position 2nd: low price.............................................................................................14
Position3rd: Moderate price and moderate differentiation......................................14
Position 4th: differentiation......................................................................................14
Position 5th: focused differentiation........................................................................15
Position 6th: standard product/ increased price.......................................................15
Position 7th: low value/ high price...........................................................................15
Position 8th: low value/ standard price....................................................................16
SWOT analysis: evaluation of capabilities..................................................................16
Strengths...................................................................................................................16

3SYSTEMATIC STRATEGIC ANALYSIS ON VIRGIN ATLANTIC
Weakness..................................................................................................................17
Opportunity..............................................................................................................18
Threats......................................................................................................................18
Strategic management tools.........................................................................................18
ANSOFF’s growth matrix model.............................................................................18
BCG matrix model...................................................................................................19
Blue ocean strategies................................................................................................21
Marketing strategies.....................................................................................................21
Conclusion....................................................................................................................23
References....................................................................................................................24

4SYSTEMATIC STRATEGIC ANALYSIS ON VIRGIN ATLANTIC
Introduction
The purpose of framing this strategic report is to understand the potential of a British
airline company, Virgin Atlantic, was founded in the year of 1984, as the authority is
planning to expand routes connecting Singapore to several European destinations. In order to
do that management needs to produce a strategic report and based on that future agenda will
be planned. This report will be made with the help of several strategic tools to evaluate how
capable the company is to execute the plan by receiving assistance of existing resources and
current market position.
At first, a brief description of the company will be given and after that, the reason
behind their decision to consider a strategic approach will be elaborated. As the company
wants to deal with one of the most busiest and popular travel destinations Singapore,external
forces will be revised by presenting PEST analysis followed by an analysis of micro
environmental factors. Then, porter’s five forces model will be appropriate to understand the
competitive position of the airline company within industry. Bowman clock will further help
to determine its market position and elaborate the reasons behind it. Finally, presenting a
SWOT analysis the report will shed light on the strengths and weakness of the company.
Based on that its market opportunity and threats will be examined. By adopting strategic tools
like ANSOFF, BCG and Blue Ocean model, a systematic analysis will be presented to frame
the strategies of gaining competitive advantage in the market for their new expanded route
(Homsombat, Lei and Fu 2014).
This assignment is about evaluating several marketing components. Therefore,
presenting a strategic report, which will work as a guideline for the company while executing
future strategies of route expansion connecting Singapore with some of the busiest
destinations of Europe.

5SYSTEMATIC STRATEGIC ANALYSIS ON VIRGIN ATLANTIC
Background of the company
Virgin Atlantic (VA) was established in 1984 with the former name of British
Atlantic Airways with its headquarter in United Kingdom. It deals with destinations of North
America, Africa, Middle East and selected destinations of Asia from its central base situated
in London, and secondary based which is in Manchester. It is operating business with a
strong brand name because of its fair corporate image, which has been made out of thirty-four
years of excellent service. The quality of the services are worthy for purchasing to experience
a premium journey. These are the reasons, which have made the airline company branded,
travel friendly for the consumers and one of the most recognised and respected brands within
the industry and across the world as well.
Reason behind revising the strategic approach
As the airline company has been experiencing significant growth in business since
years, the authority has decided to explore the opportunity of further expansion of routes
concentrating on the interest of both the Singaporean and European customers. From the year
of 2020, the flights will be on-board to maintain the commitment according to the plan.
Enhancement of the routes will be announced at the end of the 2019, if before that the
management could frame the appropriate strategies for this expansion (Dalby et al. 2014).
Regarding this important agenda, authority has decided to take a serious strategic approach
considering several strategic tools of business.
PEST analysis of Virgin Atlantic
The purpose of PEST analysis is to present a framework of macro environmental
factors, which are used to evaluate the potential of business environment when the company
is in need of a strategic approach.

6SYSTEMATIC STRATEGIC ANALYSIS ON VIRGIN ATLANTIC
Political factors Economic factors
One of the relevant political factors
that influences airline industry is the fear of
terrorist attack. Due to political and
religious conflict as per Lawton, Rajwani
and Doh (2013), terrorism has become main
issues of concern across the world.
Therefore, Airline operators have to ensure
the passengers safe and secure journey. In
order to do that airline companies should
spend more efforts and capital to install
safety tools and required systems on every
flights (Cui and Li 2015). However, to
implement such infrastructure VA can
experience huge financial expenditure. The
political atmosphere of Singapore is
favourable for exploring business
opportunities as being a democratic country,
political risks are low. Although, opposition
parties do not have right to influence people
with derogatory comments on the ruling
party. However, political atmosphere of UK
is going through a turmoil. Britain has not
clearly mentioned future trade restrictions
Acknowledging the effects of
economic recession; it should be
remembered that the rate of unemployment
is high and potential consumers are cautious
against their habit of expenditure (Jean and
Lohmann 2016). For instance, as long as
economic situation remains under such
crisis, tendency of people will be like
cutting down expenses on travelling for
leisure purposes or else the frequency of
business travels as well may reduce in
number. As the views of Pagani (2013),
people can use digital aids to narrow down
the distance between places. This will
decrease the demand of travelling by air or
people can opt for small budget airlines for
fulfilling their purpose. As a result of this,
VA may experience a sudden drop in
volume of passengers. Singapore deals in a
‘free-market’ economy, which is
continuously developing. Apart from the
threat of the recession, recently, Singapore
government has invested to diversify their

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and policies to maintain trade relationship
with Asia, Europe and rest of the places in
the world. The facts will not be cleared until
2019. Therefore, Airline industries along
with VA are in a dilemma whether to plan
according to the market opportunity or trade
policy. Besides, huge aviation industries
need at least two years to make things works
accordingly. That is where the conflict
begins. However, if the policy will not go in
favour of company strategy again the
company can face monetary loss in terms of
changing their plan and infrastructure.
economic structure. The company can save
monetary resources, as labour cost remains
consistently low. Being one of the most
competitive industries, larger airline
companies may have better opportunities as
they possess more monetary resources than
the smaller ones. Although, VA possesses a
brand value in the market still it would be
better to practice innovation and creative
strategies in order to make the company free
from the threat of competitors within Britain
and across Singapore as well.
Socio-cultural factors Technological factors
People living in every corner of the
universe is experiencing considerable effect
of globalization. Based on that, the standard
of lifestyle is rising across the world. Asian
consumers are gradually becoming more
conscious even about their rights and
realising their contribution, which can alter
balance sheet of this business organisation
As the entire business industry is
going through a digital disruption, the
impact of technological factors are intense
as far as new business model is concerned.
As described in Castillo-Manzano and
López-Valpuesta (2013), various
technological inventions are effecting the
business operation of Airline industry over

8SYSTEMATIC STRATEGIC ANALYSIS ON VIRGIN ATLANTIC
(Chew 2017). Therefore, people want
services, which are treating their
investments in the best possible way.
Singaporeans are selective enough regarding
these aspects as literacy rate is high and
citizens have enough knowledge to
communicate in several languages including
English. There is a consistent desire to be
productive to make the lifestyle better. As
people have too many options to choose
from, they can easily compare the features
and choose products and services, which
resembles with personalised standard.
Although, economic crisis is there, due to
the impact of globalization tourism
activities are increasing maintaining a subtle
rate (Martín, Rodríguez-Déniz and Voltes-
Dorta 2013). It has been observed that the
rate of visitors has been increasing since
past one decade rapidly. As per Guntoro and
Hui (2013), Singapore can be considered as
one of the popular tourism destination
across Asia and their culture is a blend of
western and eastern traditions (Li, Ngin and
Teo 2013). Considering that, Singapore’s
the past twenty years approximately. Both
positive and negative impact can be
identified due to extensive use of internet.
Digitalization enables VA to reach greater
percentage of tech-savvy Asian passengers
and provide them services in much lower
involvement of cost. Singapore’s
technological infrastructure is well develop,
which attracts multinational business
organisations to invest on operations based
on this country. Almost 70% of the
household has in-house broadband services
as well as handheld smart devices. Airline
industries like VA has already installed
central revenue management and customer
relationship management programme into
their system to increase the profit keeping
the operations cost low. Increasing usage of
internet and e-commerce websites have
made the booking operations easier
(Escobar-Rodríguez and Carvajal-Trujillo
2013). Moreover, promotion activities has
become much easier with social media
spending little monetary resource. As a
result, of this positive shift in technological

9SYSTEMATIC STRATEGIC ANALYSIS ON VIRGIN ATLANTIC
demand as a tourist destination is
increasing. It is may be because of the trend
amongst people of experiencing different
culture, lifestyle and people of various parts
of the world. This trend of exploration is
undoubtedly beneficial and acknowledging
that if VA expands news rotes to Singapore,
high possibility is the company will
experience a great deal of profit.
aspects the expectation among the
consumers for better service has elevated.
However, competition has increased as
consumers can check and compare the deals
offered with just one click (Escobar-
Rodríguez and Carvajal-Trujillo 2014). On
the other hand, adaptation of advanced
technologies might be helpful to strengthen
the position of Virgin Atlantic within the
airline industry.
Micro-environmental analysis
There are several micro-environmental factors, which have a serious impact on
business environment. Those are as follows.
 Satisfying Customers are one of the central concerns, as generating revenue is
dependent upon them. Therefore, organisations focus on framing effective marketing
strategies to attract the potential customers and it is helpful to retain existing
customers as well. It can be said, if the services have been designed with the help of
advanced the advanced technologies keeping the requirements of the customers in
mind then customers will feel satisfied enough to travel with VA repeatedly (Leon,
Szmerekovsky and Tolliver 2013).
 Skilled and efficient human resource is the backbone of any business organisation as
far as accomplishment of the goal is concerned. Employees with several years of work
experience or qualification can execute regular business operations more efficiently

10SYSTEMATIC STRATEGIC ANALYSIS ON VIRGIN ATLANTIC
and their work has always been towards gaining customer’s trust. Behind the
efficiency of employees, the company’s contribution is the most. In order to possess
such effective human resource VA needs to revise the hiring policy and following
training programme for development of employees. Especially in service industry,
development programmes and consistent motivation help to execute regular
operations effectively.
 Presence of competitors has direct impact on framing business and marketing
strategies. In order to gain a competitive edge the airline company should practice
creative ideas and innovative models to add value to their provided service unlike
their competitors (Purkayastha and Sharma 2016). There should be a non-imitable
unique selling point, which will make the company different from the existing
airlines. Virgin Atlantic should make their idea clear about their competitors and the
way they would react at the time of transformation of market environment. In this
case, several strategic tools like PEST, SWOT and analysis of marketing mix can
deliver ideas about the competitors and their nature. Major competitors of this airline
company is EasyJet, which operates in Singaporean routes and the name of British
airways can be taken into account.
 Shareholders, investors are important components, as without monetary resource
none of the activities can take place. As far as new business model is concerned,
realising the risk factors company can think of shifting ownership to public from
private as private shareholders have a pressure on the company to return a
considerable amount of profit against their investment.
Porter’s five forces analysis
i. It is known to all that, airline industry is much saturated and new carriers are
entering into the market with the central idea making profit consistently.

11SYSTEMATIC STRATEGIC ANALYSIS ON VIRGIN ATLANTIC
Although, not all the airlines can make profit throughout the year yet it cannot
restrict the entry of new airlines into the industry. Therefore, it can be easily
assumed that high intensity of industry rivalry is effecting the market
opportunity of Virgin Atlantic on a large scale. Acknowledging the effect of
globalization into the aviation industry, fare war is increasing and so the
competition on every aspect. Again, the trend of acquisition can be spotted as
well because of rivalry within the industry.
ii. Aircraft manufacturers are one of the major suppliers. Boeing and Airbus are
the main suppliers for the airline company along with the fuel companies
(Sarlioglu and Morris 2015). Fuel is the necessity of airlines in order to
execute daily operation. The airport itself supplies the basic needs of aircrafts
(Dursun and Soutis 2014). Besides, multinational IT companies support the
company by providing IT solutions. As fuel is a premium product the numbers
of buyers are low, therefore, Virgin Atlantic carries an advantage and aviation
fuel companies consider them as one of the premium customers (Lee, Seo and
Sharma 2013).
iii. The airline company is eminent enough to carry a brand name for serving the
passengers with quality. Airfare is affordable too in a market of economic
recession as well. Previously, passengers used to buy tickets directly from the
airlines so power of the buyers were low in terms of bargaining and comparing
fares with other existing airlines. However, distributions channels has been
increased like, with technological advancement ad globalization people can
easily compare the deals and can choose the best deal according to the
requirements (Suki 2014). Moreover, presence of low budget airlines is
successfully conquering the market share of established airline companies.