Introduction
The report will define the strategic purpose of the company through examining their values, mission, and vision and their existence within the value paradox formulated by Friedman and Freeman (1984) and use Porter’s Five Forces framework and the Blue Ocean Theory by Kim and Mauborgne (2005). Virgin Atlantic is founded on the belief that safety, dependable product delivery, and security are critical in the airline passenger transport sector. According to Virgin Atlantic (2020), these factors are crucial in growing profitable carriers where travelers fly and love to work. The airline’s objectives comprise identifying various stakeholders of the company and their needs towards the firm. The company’s vision is to build people-friendly equity and create a culture of creativity (Virgin Atlantic, 2017). This makes the airline an innovation, fun, and value icon in the air travel industry by making all the difference. The firm’s goal is to re-enter dormant markets with fresh ideas in the airline industry and create new development by giving its customers diverse and widely varied services meeting their budgets and needs.
Their purpose is to “inspire everyone to take on the world” by embracing their values and taking on new challenges. During their start-up, Virgin Atlantic aimed to create value for their shareholders through their differentiation strategy Virgin Atlantic Airways has now adopted Freeman and Mile’s (1944) Stakeholder view and aims to create value for their stakeholders in their decision making. The primary stakeholders are the employees, customers, shareholders, partners, suppliers, the community, and regulators.
Secondary stakeholders such as NGOs have a significant impact on aviation. Some of their responsible social initiatives are the Passport to Change program, and the Corporate Social Responsibility is the concept where companies integrate social and environmental concerns in their business operation and in their interaction with stakeholders on a voluntary basis. Porter and Kramer (2011) describe this as creating shared value: enhancing competitiveness while simultaneously improving the social and economic conditions of the company’s environment. Virgin Atlantic would be classified as a socially responsible business based on this definition. Historically Virgin Atlantic has been seen as a company that values profit. Recently, Virgin Atlantic has taken a responsible approach acknowledging the three pillars of sustainability. The company has moved from level 1 to level 2 of the ethical capital scale.
The External Environment
The Virgin Atlantic Airline is an outstanding airplane service, especially in tourism. Several factors affect the company’s operations and subsequently impact the company’s performance. The five factors discussed in this section include barriers to entry and exit, rivalry in the industry, suppliers’ power, buyers’ power, and the threat of alternative products and services (Ramón-Rodríguez, Moreno-Izquierdo & Perles-Ribes, 2011). Virgin Atlantic is one of the pioneers in the low-cost business strategy model and has influenced its competitors to adopt its operating strategies.
Barriers to Entry and Exit
The capital required to enter the aviation industry is high, making it challenging to exit due to the loss in the investments into the business. According to Goetz (2002), airline companies cannot leave the industry due to the regulations forcing them to fulfill their specified contractual mandates to their stakeholders. Similarly, airline companies are required to demonstrate their financial stability in terms of meeting their operational expenses in addition to paying all the stakeholders before entering the industry (Claussen, Essling, and Peukert, 2018. Another significant entry barrier is the proper regulatory framework regarding the safety of all the stakeholders and the airworthiness of the company. Therefore, Virgin Atlantic primarily faces a situation in which new entrants have a formidable barrier to entry.
Rivalry in the Airline Industry
The airline industry continues to thrive, primarily due to the increase in the openness of many economies of discovery of new business hubs around the globe. As a result, many airline companies are joining the sector to share the profit in the market (North et al., 2019). Consequently, Virgin Airlines faces a fierce rivalry, which affects its operation and stability in the sector. Moreover, the idea of working under the umbrella of big names makes most airline companies engage in mergers due to lack of profitability as single entities. Therefore, Virgin Atlantic faces a significant challenge from its rivals who are joining forces in terms of mergers and price quotas, thus significantly lowering the profit margin of the airline.
The Suppliers’ Power
Suppliers play a crucial role in carriers such as Virgin Atlantic. For instance, the manufacturers of aircrafts such as Airbus and Boeing are considered the major suppliers in the aviation industry. Other critical players include fueling companies, ground support providers, and vendors handling various products transported by the airlines. Moreover, the planes’ servicing is done by specialized companies that also supply the needed spare parts. Virgin Atlantic enjoys the superiority of the power of suppliers since there are few airline companies compared to the ever-available pool of suppliers. One of the main challenges resulting from such powers is that the quality of the products or services can be low, hence making the airline fail to meet the industry’s minimum regulatory standards.
Buyers’ Power
Virgin Atlantic deals directly with buyers as its primary source of revenue, either through passenger or cargo transport. The new entrants into the airline industry and constant merging between companies to push competitors out of business have resulted in the buyer’s increased bargaining power. Even though Virgin Airlines is one of the low-cost carriers, the trends in recent years have been characterized by more companies getting into the industry and providing lower costs for their services. At the same time, the buyers’ power has been increased by the regulator’s choice to support the demands of the buyers instead of the carriers. This push makes Virgin Atlantic heed to such demands and pressure to maintain its market share.
Threats From Available Alternatives and Substitutes
Virgin Atlantic remains in a safe zone, especially in its business in the West, because most Western people prefer traveling by air to other means of transport. However, the carrier faces challenges when people consider the available alternatives and substitutes. Some of the reasons people can choose alternatives and substitutes include delays, poor services, virtual meetings, and teleconferencing capabilities. Other alternatives that have been on the rise include considering options such as budget cruises as opposed to leisure travel and the slow tourism approach, which does not require air travel to one spot at a time.
Conclusion
Virgin Atlantic faces several forces against and for its success in the aviation industry. The five forces discussed include barriers to entry and exit, rivalry, suppliers’ power, buyers’ power, and the threat of alternative products and services. The discussion of these forces reveals that Virgin Atlantic Airways is in an industry where it faces fierce competition and a challenging external environment, which affects its activities. Consequently, the carrier has increasingly adopted lean operations to survive the cutthroat slopping fare competition and reduce profit margins.
Value Chain
Value chain analysis refers to the strategic analysis of an organization focusing on serial value generation actions. According to Grant and Jordan (2015), the value chain can be categorized as either primary or support activities, depending on whether their actions transform inputs or interface with buyers or if they are meant to enhance the performance of the initial inputs into the business. All the value chain actions are geared towards increasing the company’s potential profit and remaining strictly competitive against its rivals.
Primary Activities
The primary activities of the airline can be seen in the form of logistics, operations, marketing and sales, and services offered by the company. Virgin Atlantic Airline’s value is seen in its inbound and outbound logistical approaches. According to Memili, Lumpkin, and Dess (2010), inbound logistics are solutions, designs, market research, and developments that a company uses to maintain its operations and market share. The airline devotes itself to ensuring that its natural products and materials remain within its reach. The company has worked with various vendors for a long time, guaranteeing perfect relationships, trust, and quality services (Notis, 2015). The company operates on high-quality services to its customers while at the same time focusing on providing them at low costs. Memili, Lumpkin, and Dess (2010) also mention that outbound logistics entail engaging its customers through its services and products. The companies empower their workforce to be innovative when servicing the customers, who eventually become satisfied with the carrier (Grant, 2012). Consequently, the airline is known for providing services full of fun and value and often result in success.
Marketing and product sales are also critical of the airline’s primary activities. Through its approach on “virgin to achieve,” the airline does comprehensive research and analysis in the aviation industry and, in turn, offers its products and service at lower prices than makes it remain competitive (Berman and Schultz, 2016). Moreover, the company’s primary goal is to offer high-quality services to travelers and cargo owners by training its employees to be proactive and innovate new and more effective solutions to serve customers (Barney, 1991). The company seeks feedback from its serviced clients and acts on the response received, thus making the experiences better for subsequent customers. The primary strategies adopted by Virgin Airline has made it one of the best carriers in the industry.
Supportive Activities
The supportive actions comprise strategic approaches that ensure maximum conversion of the primary inputs to profits and customer satisfaction. According to Stonehouse and Snowdon (2007), a firm’s infrastructure plays a crucial role in its success. Virgin Atlantic Airline operates in over 30 countries globally, where it delivers passengers and cargo. The airline thus has several assets such as lands, structures, and equipment, which it uses to meet its logistical needs (Stonehouse& Snowdon, 2007). The carrier has a robust human resource management team comprising successful managers with top-notch experiences in the aviation industry. At the same time, these managers recruit highly skilled people who are knowledgeable, skilled, and talented in providing the needed services. These join the already established Virgin Airline culture of outperforming their competitors (Martin, 2015). Moreover, the company has a minimal hierarchical approach in its management, making it easier for the staff to provide the best service and assistance.
Virgin Atlantic also leverages technological innovation and development. The airline tapped into digital technologies to provide better experiences to its customers. According to Virgin Atlantic (2018), the company adopted new information technologies that enhanced its service provision and employee connection. In the present day, the company continues to enjoy its adoption of streaming services to give travelers unmatched experiences when traveling. Moreover, the company’s procurement approaches are straightforward and enable it to perform well in acquiring its needed inputs. The airline has mastered the art of contracting services and products at cheaper costs, which it converts to reasonable customer satisfaction.
The Company’s Balanced Scorecard
Virgin Atlantic Airline has fairly remained successful due to its vast opportunities for learning and growth among its workers. Martin (2015) reveals that increasing employees’ knowledge in their specific fields helps them become more effective when delivering services to travelers. This attribute plays a crucial role in serving clients in the airline industry. According to Dresner and Xu (1995), one of the main vital areas is mastering the best ways to ensure that customers get value for the airline’s money. This company approach has made the airline remain one of the favorite carriers among the western communities.
Virgin Atlantic Airline understands the dynamics of customer issues in the service sector. Some of the challenges consumers must go through in the service industry include having no way to test the service for free before booking an air ticket (Teece, 2018). The airline knows that customers may not ask to test the services offered by the company by flying them from one country to another. The customer experience is a one-off treat that, if perfect, makes them return and recommend the airline to other potential travelers. According to Seo and Park (2018), one of the main approaches to getting more clients in the service sector is branding and product campaigns. Virgin Atlantic has mastered the art of branding as a tool for developing perceptions of the company’s personality, as a carrier that offers unique services that distinguish it from competitors. It has strategically placed itself as an organization that provides quality service at low costs.
Conclusion
Virgin Atlantic Airlines’ success in the air travel sector is attributed to its robust internal strategies that ensure it remains at the top of the industry. The airline’s outbound approach involves engaging customers, getting their feedback, and using the responses to increase customer experience. In addition, the carrier has an experienced sales and marketing team, which ensures that the company works within the most current market trends.The airline also leverages its technology in providing its services as well as communicating with clients.
Strategy Development
The dynamics of traveling in the aviation sector have caused different airline companies to find new solutions for managing their travelers. This section evaluates Virgin Atlantic Airway’s passenger scheduling strategy development based on the SAFe framework by Whittington et al. (2020), which comprises the strategy’s suitability, acceptability, and feasibility. This model is chosen in this evaluation because it addresses critical strategic areas that adequately understand the organization.
Passenger scheduling strategy is a suitable approach for Virgin Airline to adopt. The carrier’s infrastructure makes it possible to effectively adjust its schedules and continue serving its customers worldwide. Moreover, its existing online booking systems and communication make it easy for passengers to communicate their challenges, making it easier for the airline to be flexible and solve its clients’ needs effortlessly. Therefore, the passenger scheduling strategy fits well with the company’s purpose of inspiring everyone to take on the world at their convenience.
The customers have readily accepted the passenger schedule strategy due to its advantages in easing communication, flight booking, and rescheduling travel times. Internet penetration has made it easier for people to adopt new technologies and test their limits. The stakeholders understand the value of accepting Internet-enabled solutions, hence have little to no resistance to the passenger scheduling approach, as it also helps solve delays at the airports.
It is feasible for Virgin Airlines to implement its passenger scheduling because it wants to compete against its rivals effectively. Since the Internet has made it easy for cross-communication in text, video, voice, and software interaction, the airline can achieve its desired strategy as its customers have all the needed interfaces. Some of its challenges include tough regulatory systems such as personal data protection laws in different countries and potential system attacks and downtimes.
Virgin Atlantic Airline needs passenger scheduling strategies to compete against its rivals in the industry effectively. The strategy can be accepted readily by the carrier’s clients, who are already facing challenges in strict booking styles. Moreover, the airline needs passenger scheduling to maximize its carrying capacity. Furthermore, passenger scheduling is necessary for the face of the vulnerabilities that exist based on the adopted infrastructure since there are ways to prevent or solve malfunctions or other issues that can arise from the system adopted.
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